Craftsman Homes Australia Pty Limited & 3 Ors v TCN Channel Nine Pty Limited... [2006] NSWSC 519 | Case summary

Craftsman Homes Australia Pty Limited & 3 Ors v TCN Channel Nine Pty Limited... [2006] NSWSC 519 | Case summary | Zoe

[31]

6 The ACA staff decided that they wanted to speak to Mr F R Cox, the principal behind the first and second plaintiffs and confront him with a number of allegations which reflected adversely upon him and CHNR. Mr F R Cox was thought to be unlikely to agree to such an interview. Perhaps TCN Nine primarily wanted to show viewers the chief executive of the offending company. Sarah Stinson, a lady employed or retained by TCN Nine telephoned CHNR at Alstonville and discussed with Ms J Santin, a sales lady, building two houses in that area. Ms Stinson insisted that she needed to speak to a builder and to see someone in Sydney. This was a stratagem. Ms Santin told Ms Stinson that her (Santin's) boss was in Sydney and gave Ms Stinson Mr Cox's telephone number. Ms Stinson telephoned Mr Cox and made an appointment with him for her and her husband to discuss the construction of a Craftsman home. The Trespasses - Edmondson Park & The Mosses 7 On the appointed day (22 February 2002) Ms Stinson arrived at the Edmondson Park premises accompanied by a man now known to be Mr Ben Fordham. They discussed the strategy they would use. Ms Desley Cox admitted them to the house. They were expected and they gave the appearance of a young couple interested in building a home. Ms Stinson was carrying a bag in which there was a camera and recorder. They were not obvious. After introductions and pleasantries in which no mention was made that Ms Stinson and Mr Fordham were from TCN Nine, Ms Cox took them through to the office area of Mr Cox. There were further introductions and while the correct names were used there was no hint that Ms Stinson and Mr Fordham were from TCN Nine. Mr Fordham apologised for leaving his phone on, explaining that he was working and not supposed to be there. Ms Stinson and Mr Fordham indicated that they were interested in building in Lennox Head or 'that sort of area'. During some further discussion Mr Fordham's mobile telephone rang and while Ms Stinson and Mr Cox talked, Mr Fordham attended to his telephone call. Mr Fordham walked across to the front door of the house and admitted a TCN Nine crew with a camera (or cameras) and a microphone (or recorder). Mr Fordham walked across from the front door, stood in front of Mr Cox's desk in the office area and said, "Fred, I just want to ask you a couple of quick questions, we're from A Current Affair".

[37]

Mike Munro Now to a builder who's won several awards during his twenty years in the business. But all that is cold comfort to some of his latest customers because they claim that he has left them with their dream homes that are riddled with faults and it can take years to get commitments to fix them 2. Ben Fordham Are you signing up a new business in Sydney? 3. Fred Cox Am I? 4. Ben Fordham Mmmmm 5. Fred Cox Why? 6. Ben Fordham Well you've left a trail of devastation on the North Coast of New South Wales. 7. Fred Cox I don't think I have, I've got nothing to say to you. 8. Ben Fordham Are you proud of the houses you build? 9. Fred Cox Yep. 10. Ben Fordham All of them? 11. Fred Cox Yep 12. Ben Fordham Fred Cox may be proud of his handiwork but some of his customers are far from satisfied. 13. Wayne Moss What is behind us here is nothing more than a litany of errors and mistakes that no self respecting trades person would ever do. 14. Noel Allan In all I think we've had over 100 complaints I mean we can't list them all here with you. 15. Gloria Vimpany I've nearly had a nervous breakdown over the bricks because it was a great disappointment. This was the last home we're going to build and we really want to get it right. 16. Ben Fordham But according to Gloria and Ian Vimpany Craftsman Homes Northern Rivers made obvious mistakes. For starters they say the brickwork was supposed to be this colour (indicating) but many were laid the wrong way around. 17. Gloria Vimpany We went to a lot of trouble to get these to get really nice bricks that we liked, we paid a lot more for them and to have them so poorly laid was a great disappointment. 18. Wayne Moss We have a patio which has been put down on fibro sheeting which was mounted on green timber. The green timber has shrunk leaving a brick wall hanging in mid air. 19. Ben Fordham Wayne and Jacquie Moss have been waiting more than two years for their home to be completed on the New South Wales North Coast. 20. Wayne Moss This ah problem here is a result of the floor being put down incorrectly. The floor has buckled and it is also pushed the wall right out of align. 21. Jacquie Moss They totally ignore us they have not replied we have pages and pages and pages of grievances and [points] that we wanted addressed not one has ever been answered. 22. Wayne Moss At the last minute they rushed back and they put these engaged piers in and this is what we've got as a result of it. These engaged piers are a complete waste of time they are doing absolutely nothing to strengthen this wall. 23. Ben Fordham The Mosses halted payment so now Craftsman Homes Northern Rivers is taking them to Court. They've launched a cross claim seeking damages over delays and poor workmanship. The matter is listed for hearing next month. 24. Jacquie Moss It's placed an enormous strain on our whole family we just wanted to be on our block of land in our own home and to get on with our lives. 25. Fred Cox The Moss's is not up for comment I'm sorry. 26. Ben Fordham They've been waiting two years to get into their place. 27. Fred Cox Well. 28. Ben Fordham I've had a look at it and it's a disgrace. 29. Fred Cox I'm sorry. 30. Ben Fordham Can we just ask you a couple more quick questions? 31. Fred Cox No, and if you don't leave I will call the Police. 32. Ben Fordham You want us to go? 33. Ian Vimpany The whole wall was left very messy covered in cement um … I've taken it on myself to clean the top part of the wall. But the bottom half of the wall I've left so we can show what a mess they did leave the bricks in and that appears right around the house in places. 34. Leanne Wilton He treated his customers like they were nothing um yeh he was just horrible. 35. Ben Fordham Why did you start to have concerns? 36. Leanne Wilton I noticed him ripping up documents, variations the clients had done um denying he ever said things he did. 37. Ben Fordham Leanne Wilton used to be a sales rep for Fred Cox but says she quit after a heated argument over her allegations he was overcharging clients. 38. Leanne Wilton One client actually did a handshake deal on some fill that was needed on his block to raise it to a floor level and they agreed that it would cost five thousand dollars um it actually blew out by about seven thousand dollars Fred never phoned them to tell them that it was actually blowing out so they just basically got a bill to say its now thirteen grand instead of five. 39. Ben Fordham But he knew all along that it was going to be thirteen thousand? 40. Leanne Wilton Oh yeh definitely oh yeh. 41. Ben Fordham What would happen if a customer complained? 42. Leanne Wilton If ever anyone hassled him about when they were getting to site then they would be put to last he'd go and start somebody else's. 43. Ben Fordham So people who complained were punished? 44. Leanne Wilton Oh definitely yeh. 45. Noel Allan Well before the house was started they submitted the wrong plans to the council. 46. Ben Fordham Noel and Ann Allan are also unhappy customers. 47. Noel Allan Let me show you an example of one of the problems we had with our house. The foundations are completely off centre to the footings and the bearers on top of the footings are completely off centre to the foundation blocks. 48. Ben Fordham They took Cox to the Fair Trading Tribunal and rectification work was carried out on a number of areas. Including the foundations. The Tribunal accepted a report by an engineer hired by Craftsman who declared that the rectified piers were adequate. 49. Noel Allan They say that's a proper concrete footing but it cannot be because I dug under there and put a bit of timber there's nothing there it only laying on top of the sand. 50. Ann Allan If you bought a brand new car and it was scratched and dinted and all that sort of thing you'd want a different car wouldn't you? 51. Ben Fordham The allegations we've put to Craftsman Homes Northern Rivers have all been rejected but Fred Cox refuses to give any further comment on camera despite our offers. 52. Wayne Moss Fred you know um the system very well you were right it did take two years, you could keep us off the job for two years but we will eventually get this house built. 53. Mike Munro We want to make it clear that Fred Cox runs only the Craftsman Homes Northern Rivers franchise in New South Wales. We are certainly not casting doubt on any other Craftsman Homes' franchises.

[39]

Defamation Defences 15 As to the promo the defendants rely on the following defences: (i) substantial truth of the imputations in relation to a matter of public interest (in NSW - s15, Defamation Act ) and as to States and Territories other than NSW the comparable defences in those States. (ii) Contextual truth under s 16 of the Defamation Act NSW . No separate contextual imputation is pleaded but the defendants rely on the substantial truth of any of the plaintiffs' imputations as "swamping" any of the other imputations not found to be a matter of substantial truth. (iii) In NSW on the statutory defences of comment and comment of a stranger and the comparable interstate defences. 16 As to the program the defendants rely on the following defences: (i) Substantial truth of the imputations in relation to a matter of public interest (NSW) and as to States and Territories other than NSW, the comparable defences. (ii) In NSW contextual truth under s 16 Defamation Act, NSW; also on the substantial truth so found of any of the plaintiff's imputations as "swamping" any of the other imputations not found to be a matter of substantial truth; and on this additional pleaded contextual imputation: "The second and third plaintiffs were unfit to be allowed to remain in the business of building residential houses." This contextual imputation is pleaded to be a matter of substantial truth and to relate to public interest and accordingly the publication of any of the plaintiff's imputations found to be untrue would not further injure the plaintiff's reputation. The roughly comparable Polly Peck plea is made for the interstate jurisdictions. This plea follows the judgment of O'Connor LJ in Polly Peck (Holdings) Plc v Trelford 1986 1 QB 1000 at 1032: "Where a publication contains two or more separate and distinct defamatory statements, the plaintiff is entitled to select one for complaint, and the defendant is not entitled to assert the truth of the others by way of justification." and "Whether a defamatory statement is separate and distinct from other defamatory statements contained in the publication is a question of fact and degree in each case. The several defamatory allegations in their context may have a common sting, in which event they are not to be regarded as separate and distinct allegations. The defendant is entitled to justify the sting and once again it is fortuitous that what is in fact similar fact evidence is found in the publication.

[175]

153 Mr Moss made the following complaints about the work done by CHNR in 2002: (a) Soft wood was used as bearers when reconstructing the back decks, the bearers were not properly attached to the wall of the house; (b) no flashings were provided to the wall of the house and along the backs of the decks; (c) the levels and straightness of the back deck are inadequate; (d) no provision of tie downs onto the footings from the back deck; (e) use of broken and damaged materials in the reconstruction of the back deck; (f) CHNR filled the columns on top of the pine timber with concrete. This led to considerable compression of these bearers and cracking of the floor decking on top of the decks. The columns at the front of the house are still some 50mm out of alignment; (g) there was no evidence of an attempt to prevent termites entering the house from the columns in the deck; (h) no flashings were provided when the window in the front main bedroom was repositioned; the water still travels underneath that window which sits on top of the flooring; the deck in front of the window holds water when it rains and about 10mm is received. The water drips down through the middle of the deck; (i) the securing of the bearers to a pole plate underneath the deck was inadequate. The bearers hang down from the bottom of the pole plate. It should have been below the bearer with the bearer sitting on top of the pole plate. (j) In attempting to refix the vent bricks liquid nails were used in some cases instead of mortar; (k) the termite barrier around the house has not been rectified; (l) numerous other defects; Mr Moss claimed that the list was just too endless to rattle off from his mind. 154 On 13 September 2002, being the day of the final hearing before the referee the parties entered into an agreement for Mr Zakos to determine whether at that date the works had reached completion of Stage 3. Mr Zakos was to act as an expert and the parties were bound by his determination. On 18 September 2002, Mr Zakos issued his determination that at the time of his inspection on 13 September 2002 (with Messrs Hollyoak and McDonald) the works had reached the completion of Stage 3 as described in the building contract.

[247]

226 The defendants relied on the serious defects covered by the whole report and submitted that it revealed unsatisfactory work on a large scale. They drew attention to the following: (i) Para 2.1.3 - The nailing of softwood battens to the side of the hardwood joists to support ends of timber flooring boards. Thus the ends of floorboards are supported on softwood battens of less density than the adjoining hardwood joists and rely on nails in shear to support the battens which will also have variable shrinkage compared to the hardwood joists. This was not carried out in accordance with the applicable standards (see photograph 6) (ii) Para 2.1.7 - The sub-floor under the front landing has collapsed. The corrugated iron formwork has deformed because of excessive spans and the use of old and rusting corrugated iron sheeting. A temporary support under the formwork seems to have been ineffective. The addition of a masonry pier under the centre of the slab intended to add stability may not provide the essential structural stability for the entire system (See photographs 10, 11 and 12) (iii) Para 2.1.10 - Inadequacies in the termite protection system including installation of termite shielding in some walls at a height which was above the timber, ineffective termite capping on engaged piers and non-compliance with Australian Standards (See photographs 16-23). (iv) Para 2.3.1 - Sundry deficiencies in the flooring including lack of provision for expansion within the overall body of the floor, displacing of the timber frame work resulting in some movement being transmitted. There was a lack of stability in the secret nail system. (v) Para 2.3.5 - The absence of flashing at the sliding aluminium doors to the balconies permitted water entry under the sill and did not satisfy the building code. Water staining on the timber floors was visible. There was no flashing located between the outer sill brick and the end of the floor boards. (vi) Para 2.3.7 - The timber trusses over the main bedroom designed to transfer load thrust to the top plate were incorrectly positioned. (vii) Para 2.4.1 - Misalignment of the hip rafters on the roof which do not meet the corners of the fascia is a prominent eyesore although not a structural issue. The valley gutter does not conform with SAA HB39-1992 and has insufficient throat capacity. This could lead to leaf and hail blockages and thence to an overflow (viii) Para 2.4.2 - Series of defects identified in the external brickwork including severe irregularities in the plane of the brickwork, the absence of fully bonded closure bricks to the bed joints in the ventilating masonry openings resulting in loose bricks, distortion to aluminium sills due to mortar being placed tight under the sills, all cement mortar sills require removing and rebuilding, an add-on wall extension at the rear of the dwelling of poor workmanship, poor workmanship in the construction of the walls, the mortar work and the sills, and ill-formed articulation joints, lack of provision in the brickwork for over flashing to the balcony at all the balcony abutments with the external masonry walling, failing to build in a cavity flashing which extended out sufficiently to over flash the membrane turn-up around the balconies. (ix) Para 2.4.3 - The use of concrete filled support columns supported by an inadequate base of compressed fibro floor sheets sitting on timber floor framing. 227 Mr Monteith was critical of the balcony decking. His report referred to sagging and irregularities and noted that there was no detail attached to the contract documents to show how the area was to be constructed. He thought that additional supports would be required to the front edge of the balconies to provide adequate support.

[433]

418 By FAX of 25 February 2002 to Mr Fordham, Mr Chaseling confirmed that he and Mr Cox would be available for an interview, subject to: 1. The Moss matter was not to be discussed or used in any program until after the District Court had ruled on the claim and cross-claim. There was a warning that if Channel Nine had been to the site, they may be subject to prosecution for trespass as CH had exclusive possession of the site under the building agreement. Channel Nine was expressly refused permission to enter the site. 2. Other specific matters could be discussed provided the questions to be put are supplied in writing by 4.30pm today. This was to enable files to be retrieved. They undertook not to contact any past clients whose names were provided by Channel Nine. 3. Written agreement to the above conditions was to be faxed by 4.30pm on 25 February 2002 for an interview to be had in Sydney on 26 February 2002. 4. Any approach made to CH by past clients will be addressed and if rectification is required CH will complete those works. 5. Letters marked "return to sender" (presumably addressed to CH) and held by Channel Nine to be available on 26 February 2002. 419 There was a telephone call from Mr Fordham to Mr Chaseling about 3.50pm in which delaying the interview until Wednesday or Thursday was raised and to which CH was agreeable. In his confirmatory note of 25 February 2002 Mr Chaseling wrote that if any of the terms in previous correspondence were not met CH would consider the matter at an end. 420 In his FAX of 26 February 2002 Mr Fordham wrote confirming the following points for "tomorrow's interview with Messrs Cox and Chaseling at ACA in Sydney: "1. The Moss matter listed for hearing in the District Court Sessions commencing 11 March 2002 in Lismore would not be mentioned in the interview. Mr Cox and Chaseling will not be asked to comment on the matter before the Court. 2. Topics to be discussed in interview (a) The Vimpany house at Alstonville, in particular, bricks the wrong way around and others still coated with cement. (b) The Allen house at East Ballina, in particular, problems with three piers and concrete problems. (c) General questions on workmanship issues, such as piers, meter boxes, floors, variations, general construction (d) How CH deals with complaints from clients. (e) History of CH - satisfied customers and awards."

[547]

Some Findings as to Crandon Report & Evidence 542 I set out in summary form some of the evidence of Mr Cox on some of the issues and my opinions: (i) He claimed that the patio set down on green timber was an item of incomplete work which would have been replaced. However, when CHNR rebuilt the entire decking in 2002 substantially the same fault remained (T128, T843-844, T707, T744); (ii) He claimed that Mr Moss had fabricated the buckling of the floor shown in the program and that an adequate 10-15mm expansion gap had been left by CHNR all around (T134-135). Mr Moss denied the fabrication allegation (T804). I have earlier rejected that allegation; (iii) He claimed that the probable cause of the collapsed formwork was a prop which had slipped and that he saw evidence of this himself on an inspection. (T200, 201, 206, 207). Mr Moss said that this did not occur (T709). A 2002 photograph (Exh 67(2)) shows the prop still in place. Mr Moss was on the site daily or virtually daily, whereas Mr Cox was on the site on a limited number of occasions. Mr Moss is probably correct; (iv) As to the irregularity of the brickwork (photograph 37 of the Monteith report) Mr Cox said that this was "not necessarily" an item of shoddy building work. He would have to inspect the job. This was shoddy work. He agreed that photographs 41 and 42 show a substantial twist in the wall to the south side of the entry. Mr Chaseling told him about this. The work was to be demolished and redone. That had not happened; (v) I will not further refer to the articulation/control joint controversy; (vi) He agreed that if the columns were filled with concrete and sitting on timber this "would certainly be engineered before it went any further" (T221). It needed to be; (vii) He stated, "We don't flash sliding doors" [below them]. The defendants submitted, correctly, that this was poor building practice and contrasted the evidence of Mr Harley (T608-610, 612-614). Mr Monteith was not cross-examined about this being reasonable practice; (viii) He claimed (T297) that the mixture of hardwood and softwood joists was a regular practice of CHNR. Mr Monteith had never previously observed such a practice and was critical of it. Mr McDonald agreed, correctly, it was defective - see the referee's report and the Schedule based on the Scott Schedule, Items 29 and 31; (ix) He claimed that the floor timbers were allowed to season outside the house for quite some time prior to it being installed (T303), whereas Mr Moss stated that it was installed the day after its arrival. Mr Cox spoke of the timber being in slings outside the house and his taking steps to ensure that it was covered and not damaged by any rain. Mr Moss spoke of not being able to sort the boards so that those with faults were placed where the faults would not be visible, for example, under cupboards. Both Mr Cox and Mr Moss had good reason to recall the true position. I am not able to determine the true position on this point. It is possible that the floor timbers were in the slings for a few days and then laid promptly. Both Messrs Cox and Moss may have faulty recollections on this point. I am not prepared to hold that either was giving evidence which was deliberately untrue on this point. This is a discrete issue on which I am not helped by general impressions of credit;

[548]

Defendants' Comments Upon Plaintiffs' Responses to Alleged Justification of Imputations - Mosses 543 The defendants contended that it was apparent from the evidence of Messrs Cox and Chaseling, the remarks of the plaintiffs' counsel and the cross-examination of Messrs Monteith and Moss, that the plaintiffs were relying on the following responses with respect to the defective works and the imputations of - shoddy building practices; - incompetence as a building contractor; - homes riddled with faults; and - not competent in business of building homes. 544 Response (a) House incomplete and Ilvarity willing to return, complete and rectify The defendants pointed out that at T115 Mr Cox put the position thus: "The house was under construction and incomplete so you know anything that was wrong with it, all he needed to do was point it out and if he wasn't happy with it we would have rectified it, regardless of what it was. We never objected to doing anything on the house at all, nothing." 545 That statement does not reflect the true position. Ilvarity and Mr Cox were reluctant to rectify defects which were major or costly. They sought economic compromise solutions which they hoped, if not expected, the Mosses would accept. Such solutions were not an adequate substitute for the work being done in accordance with the plans and specifications, the applicable standards and in a good and workmanlike manner. One example is the poor quality brickwork. Some defects would probably have been ignored. 546 The defendants submitted that the mere fact that items were amenable to rectification could not affect the truth of the imputations. This submission goes too far. While it is the duty of the builder to erect the house in a good and workmanlike manner in accordance with the plans and specifications, if a builder rectified a defect within a reasonable time, that is, fairly promptly of its own accord, or on the proprietor or his agent pointing it out, it would be incorrect to describe the builder as being guilty of shoddy building practices or as incompetent as a building contractor or as building homes riddled with faults. A matter of degree is involved. If there were an appreciable number of defects or aesthetic defects, one or more of the descriptions just mentioned may not be incorrect. Rectification of defects can delay the completion of the works. 547 In the present case there were major defects and an appreciable number of defects. Rectification would have taken some time and been costly. 548 The defendants submitted that the sheer gravity of the defects meant that the work should properly be regarded as shoddy and incompetent. I agree, that that is so in the present case. 549 Relying on the expert evidence and the expert reports led in the defendants' case (and earlier summarised) they submitted that the Mosses' house was riddled with serious faults. While it is true that the experts conclave was of the opinion that the house did not need to be demolished, it became apparent during Mr Monteith's evidence and especially during his cross-examination, that the roof would have to be removed, the trusses fitted correctly and the roof re-laid. While the mistake made did not affect structural stability, it was quite gross. Much of the flooring would have to be taken up and re-laid. Rectifying the faults in the brickwork would have involved demolishing sections of it and rebuilding. 550 The limited amount of rectification work performed when CHNR returned to the site in mid 2002 and its refusal or failure to return to the site in late 2002 - early 2003 after payment of the Third Progress Payment about 12 November 2002, robs the assertion of a willingness to return to the site to remedy defects of value. 551 Many of the defects listed in the reports of Mr Weir of Ballina Shire Council and that of Mr Monteith would best be attended to prior to the installation of internal linings (ie, before Stage 4). In other words, they required attention before Stage 3 was truly complete, ie, ready for internal linings. 552 Some of the rectification work performed was deficient, for example, the reconstruction of the back decks, the second attempt at a termite control system and the flashing on the balconies. Mr Cox acknowledged in cross-examination the failure of CHNR to attend to termite protection and tie down straps. 553 Response (b) Mr Moss was responsible for the suspension of works which prevented CHNR from finishing the job. The Mosses caused the letter of 30 June 2000 of their solicitors suspending the progress of the works to issue. The defendants submitted that the Mosses did so in circumstances where they had no choice. Mr Moss knew that there were serious unrectified defects. Repeated requests by the Mosses to remedy the defects had not been acceded to. Mr Moss had been told by Mr Chaseling that the following Monday CHNR would paint the brickwork and that if CHNR did not do so there would be extra costs for scaffolding and that CHNR wanted to commence sheeting or installing the internal linings. Mr Moss knew that once the sheeting went on many defects would be covered up and that they would have a difficult task to prove that the defect was there. 554 On Saturday 1 July 2000 Mr Chaseling had a discussion with Mr Moss enquiring whether he would like to purchase the gyprock already in the house so he could avoid paying the GST. That suggests the gyprock lining was in the house about to be installed. 555 CHNR also purported to suspend the works. By letter of 30 August 2000 to the Mosses' solicitors, its solicitors wrote: "We are also instructed to advise that by reason of your client's failure to pay within 14 days the progress payment requested 27 June 2000 our client hereby suspends the works wholly until your client's default is remedied." 556 The reason given for the purported suspension was unjustified and so was the purported suspension. It is unnecessary for the Court to consider whether the service of that notice was repudiatory conduct entitling the Mosses to rescind the contract. 557 The defendants submitted that it was the conduct of CHNR in 2000 and in particular its delays, unjustified demands for payment, shoddy building practices, failure to attend to complaints and defects and the risk of it covering up the problems which led to the Mosses serving a notice of suspension. The defendants submitted that that suspension was overtaken by the purported suspension of CHNR and its decision to sue the Mosses for the third progress payment. 558 The defendants contended that the Mosses' suspension was in itself no answer to the failure by CHNR to return to work after the payment of the Third Progress Payment about 12 November 2002. That is correct. 559 When in early June 2002 the Mosses withdrew their previous suspension and CHNR returned to the site and executed further works, that earlier suspension ceased to provide a justification for not returning to the site. The real reason for CHNR not returning to the site was the non-payment by the Mosses (and their refusal to pay) the extra moneys which CHNR demanded. CHNR was not entitled to those moneys. The parties agreed to accept Mr Zakos' determination whether the works had reached Stage 3 as at 27 June 2000. 560 Response (c) Ilvarity could not return to work because of the stopwork order by Mr Nowlan. This response was allied to the further response which was expressed in evidence by Mr Chaseling (T454). "the only reason the house is not completed is Mr Nowlan will not issue a certificate for prelinings inspection." 561 Leaving aside the point of the former Building Surveyors and Allied Professions Accreditation Board which was not pursued before me, that Mr Nowlan had not been validly appointed as the Principal Certifying Authority (PCA), it was not seriously contended that the PCA had the power to issue a stopwork order. 562 Section 109L of the Environmental Planning and Assessment Act empowered the PCA to issue a notice requiring work to be carried out. Mr Nowlan agreed, and correctly so, that the letter (Exh T) he sent was not a notice under s 109L. It did not purport to be. Section 121H provides for notice to be given of a proposed order, but the letter sent purports to direct that work cease forthwith. From Mr Nowlan's evidence I gathered that he hoped that his letter would bring matters to a head and result in a practical resolution of the dispute between the Mosses and CHNR. Mr Moss gave evidence that he told Mr Chaseling on two occasions during 2000 (T766) that Mr Nowlan did not have power to issue a cease work order. I think that Mr Moss probably did so and Mr Chaseling took no notice. 563 As the defendants pointed out Mr Chaseling agreed that the cease work order was not an impediment to CHNR installing the linings. He saw CHNR not doing any work on the back area (where Mr Moss' works were located). Mr Chaseling said that Mr Nowlan's order would not have stopped CHNR doing any other work on any other part of the house (T444-445) Mr Nowlan's cease work order did not stop CHNR returning to the site in June 2002 and carrying out work on the site. 564 As earlier mentioned, the issue of the rear stairs and planter boxes had been resolved at a site meeting about 31 July 2002 involving Messrs Weir, Chaseling and Moss, and by Mr Moss promptly separating the rear stairs and planter boxes from the house. They were to be treated as landscaping. There is no evidence of Mr Nowlan being told of this. Mr Moss did not obtain a confirmatory letter from the Council, but there did not seem to be any dispute as to the solution devised by Mr Weir and implemented by Mr Moss. 565 The Mosses declined the request of CHNR to contact Mr Nowlan concerning a pre-linings inspection to resolve issues between the Mosses and Mr Nowlan. The Mosses no longer regarded Mr Nowlan as the PCA. 566 The point was also made that while the Mosses no longer regarded Mr Nowlan as the PCA, it had not arranged for the Council to take over as the PCA and obtain a certificate that the house was ready for linings. Nor had steps been taken to clear up the position as to the footings. It is normally the builder who procures the compliance certificate. It appoints the PCA. 567 It seems that the Mosses did not have the money to pay both the costs of rectification of the house to date, and the cost of completing the house. The Mosses depended upon obtaining insurance compensation moneys from HOW to cover the former. The Mosses faced formidable hurdles to obtain such moneys. It was in the financial interests of CHNR to assist HOW to repel the Mosses' claims. The Mosses thought that there was no point in dealing further with the appointment of the PCA until its claim against HOW was resolved.

[549]

568 I do not accept that Ilvarity could not return to work because of the stopwork order of Mr Nowlan or his declining to issue a certificate of satisfactory completion of the works, so that they were ready for the installation of the internal linings. 569 Response (d) CHNR could not return to the site because of the failure of the Mosses to make appropriate colour and material selections. This alleged failure appears in the letters of 3 and 17 February 2003 from CHNR's solicitors to the Mosses' solicitors. The defendants submitted that the Mosses had made all appropriate selections - see the evidence of Mr Moss at T749-751 and the correspondence in July 2002 between CHNR and the Mosses. 570 When in 2000 a Tuffcoat finish was agreed as part of the compromise, as the originally selected bricks were no longer available, the colour selected was Molasses, being the closest colour to that of the originally selected bricks. When the colour Molasses was not available, the Mosses' plans were given a major jolt as they did not regard the other available colours in the Tuffcoat range as suitable. The dilemma had to be resolved. The Mosses either had to select another colour from the Tuffcoat range or propose another finish where there was, in their opinion, a more desirable colour. The matter could not be allowed to drag on. As at February 2003 the brickwork needed much rectification and the walls were not ready for the application of the Tuffcoat finish, but the matter would have needed resolution within two to three weeks of work resuming on the site, assuming the rectification works proceeded with reasonable diligence. 571 Response (e) Joint Expert Witness Report of 12 September 2002. The plaintiffs attached considerable importance to this report and the entry against many of the items taken from the Scott Schedule of "No longer in issue". The plaintiffs treated that as meaning that the defects complained of had either been rectified or were not being pursued by the Mosses. 572 I have earlier referred to the circumstances in which this report was prepared and the significance which should be attached to it. In the light of their lifting the suspension of the works, CHNR returning to the site and carrying the house to Stage 3, the Mosses, on the advice of their legal representatives, discontinued their cross-claim. It was premature if CHNR continued with the contract. The evidence, especially that of Mr Monteith and the Council's report of May 2003 revealed that there were still many defects, some of which were substantial and not capable of easy rectification. Some of the rectification would have been costly to execute. 573 I do not regard the Joint Expert Witness Report with the frequent entry of "No longer in issue" as a bar precluding the Mosses from relying on the defects set out in the expert evidence and reports adduced by the defendants.

[551]

Conclusions as to Mosses' Home 575 I agree with the referee in his determination in his report of 26 November 2002 as to the items which constituted defective work carried out by Ilvarity. As well as acting on his own assessment he was acting on the assessments of Messrs Hollyoak and McDonald. I also agree that the works had not reached Stage 3 as at 27 June 2000 and that Ilvarity was not entitled to the Third Progress Payment. The latter two matters were not in dispute in these proceedings. 576 Some of the defects were major and particularly serious, as highlighted by Mr Monteith. These are referred to earlier, generally in summary form. Troubling defects included the defects in the flooring, rectification of the "incorrect handing" of the roof trusses and misalignment of the hip rafters and the prominent resulting eyesore, the poor quality brickwork, the lack of adequate termite protection, inadequate flashing and defects in the columns and balconies. The excessive excavation, the incorrectly placed wall under the stairwell and the inadequacy of the construction of the rear deck were not minor matters. 577 As earlier mentioned, Ilvarity seized on the works carried out by Mr Moss to deflect attention from the poor qualify of its own work and to justify its own withdrawal from and non-return to the site. Ilvarity was focussed on obtaining payment of its third progress claim, even though it did not become entitled to that money until September 2002. 578 As to the Mosses' house, the defendants have established that Ilvarity and Mr Cox were guilty of shoddy building practices, constructed a house that was riddled with faults and displayed incompetence in the building of that house. The Mosses were difficult and demanding clients, but much of the work performed was below an acceptable standard. Matters were not helped by the poor relationship between the Mosses and Mr Cox and the even poorer relationship between Mr Chaseling and the Mosses. Both Messrs Cox and Chaseling were dominating and endeavoured to enforce their will. Mr Moss was inclined to be stubborn and very particular, demanding a high standard of work. CHNR, through Messrs Cox and Chaseling wanted the Mosses to accept an inferior standard of work. 579 The obsession and lack of objectivity on the part of Messrs Cox and Chaseling and Moss, as they gave their evidence, was marked. Each saw events through partial eyes. I have approached their evidence with caution. Mr Crandon saw matters through the interests of CHNR and Mr Cox.

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(c) The commencement of the District Court proceedings seeking payment of the Stage 3 progress claim moneys which CHNR knew were not owing. Comment: CHNR knew this action was insupportable as the moneys claimed were known not to be due, but Mr Chaseling claimed it was done on legal advice. That advice probably depended on the version of the facts given to the solicitors. (d) Threats, intimidation and delays by CHNR and its officers during 2000 including threats to cease work unless Mr Moss agreed to variations and threats to tie the Mosses up in litigation for 2 years. Comment: Litigation over building disputes is frequently protracted. The delay by the Mosses in supplying particulars of their cross-claim in the District Court held up those proceedings for 12 to 18 months. When building disputes occur there are usually robust exchanges and not a lot of weight should be attached to these. Mr Moss was not likely to be cowed into submission. (e) CHNR's obstruction of the Mosses' insurance claim, particularly the dishonest letter by Mr Chaseling. Comment: Mr Chaseling's undated letter (sent after 14 September 2000) was misleading and untruthful as previously explained. CHNR had an interest in the course being taken by HOW which would probably look to CHNR to reimburse it for any moneys expended in meeting the Mosses' claim. (f) The pressure applied by CHNR to Mr Craig Nowlan to issue the stopwork order and the dishonest reliance by CHNR on the stopwork order. Comment: "Pressure" is too strong; it was "influence". CHNR was not entitled to rely on the stopwork order. (g) The unjustifiable oppressive and dishonest demands for interest and costs in late 2003 following the District Court proceedings. Comment: A large sum was sought to which CHNR was not entitled. This was oppressive. (h) The threat of criminal prosecution by CHNR against the Mosses. Comment: That puts the matter too high. The suggestion was that the Mosses may be liable for prosecution under the Home Building Act 1989 .

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(k) The refusal of CHNR to return to the site and complete the contract in the November 2002 - February 2003 period after the Mosses had made the Stage 3 payment. Comment: CHNR did not return to the site and sought the payment of further moneys. It also preferred to focus upon seeking the demolition of the works built by Mr Moss at the rear of the house. (l) The refusal of permission for the Mosses to reside in the shed on the Mosses' property. Comment: The shed was approximately 100 metres from the house and the property was about 6 acres in area. Mr Cox and CHNR relied on the terms of the contract which they believed gave them exclusive possession of the whole site. There was no discussion about fencing off the construction site. No builder or insurer would want the owners having unrestricted access to the construction site until after the house was completed. 581 There was detailed evidence on many of the matters mentioned in the foregoing subparagraphs and I will not attempt to summarise it. Mr Cox and CHNR strongly contested the allegations that they had acted dishonestly or improperly and applied pressure on Messrs Nowlan and Crandon to issue documents which appeared to favour the interests of Mr Cox and CHNR. Pressure is probably too strong a word but CHNR and Mr Cox did use influence. Mr Cox effectively communicated what he wanted. 582 There is no doubt that this job went sour and adversely affected all parties involved. One act of misconduct by a builder or its managing director in the course of erecting a building would not generally be sufficient to hold that a person was unfit to remain in the building industry. I am not considering serious frauds or serious crimes in this context. Nor would I consider that shoddy building practices on one job would normally be sufficient to so hold unless such practices were extensive on that particular job. 583 Where a builder and its managing director have built a large number of homes satisfactorily (or with only minor complaints) I would generally be slow to hold that one bad job should see them classed as unfit to remain in the building industry. This applies even more strongly where the builder with its managing director has won industry awards for building good quality homes.

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The late Mr Allan's statements 592 Mr Allan died in July 2002. On 19 February 2002 he was interviewed by Mr Fordham and the defendants sought to rely on the previous representations he had made. I allowed those representations to be admitted in evidence. Mr Allan, referring to underneath the house, said that the foundations were completely off centre to the footings and the bearers on top of the footings were completely off centre to the foundation blocks. Three out of six of them were off line. Mr Allan said as to one of them that a brick pier was offset by 400mm and that the bearer on top of that was offset another 200mm. The pier should be in the centre of the concrete slab. Mr Allan pointed out that the concrete put in was only 50mm thick. He had removed the sand and inserted a piece of timber under the concrete. There was no adequate concrete footing. The pier was just lying on top of the sand. There should be a solid concrete footing. The builder had done a "cover up" job. There was an allied problem in that under-strength bolts were used in connection with the bearers and the footings. 593 Mr Allan said that the mortar was of very light construction and crumbled readily. The brick piers were 400 to 600mm out of line. The linen cupboard doors crept as they were rolled. That meant the floor was not completely straight. This was probably caused by the piers being out of line. The exhaust fan was kinked and did not work properly, that was also over where the piers were. Mr Allan complained continually about the foundations and said that nothing was done, and Ilvarity ignored him and when it came close to the occupancy date they put it back to keep him quiet. The representative of Ilvarity inferred that the occupancy date was put back because he was complaining. He had had the Council and their own engineer examine the piers. 594 Mr Allan summarised the position thus: "That is what they've put down supposedly to fix the problem which has not done a thing because the concrete they had there at the maximum would be 50mm which is 2 inches and it should be 600mm deep. … … They're all different piers." 595 Mr Allan detailed these defects: (a) Ilvarity put the water meter on the wrong side of the block. (b) The power points (in the kitchen) were covered by the cupboard that Ilvarity forgot to put in and new power points were installed dangerously close to running water. (c) Ilvarity replaced the gutters and downpipes three times and still did not get them right. The Allans had to sign a waiver. (d) Ilvarity drilled a hole in one of the roof panels. Ilvarity took 18 months to finish that and water was pouring on the plaster and the floorboards. (e) The fourth sink had been installed - it is not entirely satisfactory, but it has to do. 596 Mr Allan stated that items that Ilvarity should have finished within 35 days took almost two years and only under threat of a Fair Trading hearing. This placed considerable strain on both Mr and Mrs Allan. 597 Mr Allan said that when the foundations went down he asked the foreman about them and was told not to worry, they would be taken care of. The house was built over them and nothing was done until 12 months after they moved in and they are still in an unsatisfactory state. 598 Mr Allan said that in all they had over 100 complaints. He said that Ilvarity put their occupancy date back once for two weeks and when they complained further Ilvarity put it back a further four weeks. 599 It is a strong inference from Mr Allan's statements that relations between the Allans, on the one hand and Messrs Cox and Chaseling on the other, were poor. Mr Allan made this statement: "The only reason they finished most of the major things off is we took them to Fair Trading and they had to fix them up before they went to Fair Trading because all the items were listed. We've had basins replaced, both low-down suites replaced, bathroom mirrors replaced. Almost everything in the house had to be fixed." 600 Mr Allan said that he kept a very close eye on the works and that upset Ilvarity and made them very annoyed. Ilvarity told them the house was off limits and when the house finally got to lock-up stage Ilvarity locked it up and they could not get in to see what was going on. 601 Mr Allan stated: "Another thing we're invited by the painter to come up here to have a look at the paint. We were banned from the house at this stage. We come up and I noticed all the tiles in the wet areas being laid the wrong way around. It stated on the plans: 'lay tiles on diagonal'. All the tiles were being laid square and we told the tiler and he just ripped them all up and he took off somewhere. And that would have been a major catastrophe if all the cement, all grouting had set around those tiles and that was another disaster we averted." and "The house has turned out nice but only because we've been hammering them for 2½ years to get it that way." 602 Mr Allan was still very worried about the foundations and concerned that difficulties may arise if anyone wanted to add an extra storey, or on resale, because of the report an engineer would make on the foundations. 603 It was apparent that Mr Allan had had building and engineering experience and was able to detect faulty work. I have kept in mind that Mr Allan's evidence could not be tested by cross-examination. His statements were supported by other evidence.

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Mrs Allan 604 Mrs Allan detailed the following defects: (a) there were no steps to the front, rear and side entries to the house. The house was a metre off the ground. She heard her husband speak to Mr Cox about this after completion of the house. Eventually, Ilvarity provided steps at each of the three locations at no extra cost to the Allans. (b) the brickwork was of poor quality and at the insistence of Mr and Mrs Allan it was bagged. There were several arguments with Mr Cox about this. (c) black marks came through in the grout between the tiles, they were worse in the wet areas (d) the water meter was put on the wrong side of the block (e) initially Ilvarity did not put in the appliance cupboard shown on the plan and then altered the kitchen to instal the cupboard. On installing that cupboard the power points were covered up. Ilvarity located the power points in the side of the cupboard barely six inches from the kitchen sink. This was too close (f) Ilvarity put in the wrong size kitchen sink - it differed from the one the Allans ordered. The second sink buckled - it did not fit the hole properly. The Allans had to shop around for another sink and find one to fit the hole already in the bench (g) a hole was drilled in error in one of the roof panels. Despite frequent requests it took a long time to fix. Eventually, about 12 months after the Allans moved in the whole panel was replaced. If it rained heavily, the occasional drip was heard (h) the Allans selected ebony downpipes but slate green downpipes were installed. 605 About 23 September 1999 Ilvarity issued a Final Account for $13,305 and required payment to enable the keys to be handed over so the Allans could occupy the home. By letter of 24 September 1999 the Allans enclosed a cheque in that amount. They stated that the payment was made without prejudice to any rights that they may have under the contract, and on the basis that the payment was not to be deemed acceptance by them of the completion by the contractor of its obligations pursuant to the contract. 606 By letter of 4 November 1999 the Allans enclosed "a list of defects and faults (pages 2 and 3) requiring attention, most of which were made known to the foreman at a previous time." There were 34 items on the list, most of which were comparatively minor. By letter of 10 December 1999 the Allans forwarded an additional list of 11 faults and defects and by letter of 20 December 1999 a further list of 6 defects. Apart from the item as to the piers and foundations most of the other items on these additional lists were comparatively minor. In its reply of 21 December 1999 CHNR stated that some items had been attended to and that the remaining items would be the subject of appropriate action to complete the outstanding maintenance when its tradespeople returned from annual leave at the end of January 2000. 607 Some of the complaints were attended to by Ilvarity, but Mrs Allan could not recall whether this was before or after Christmas. Ultimately, the Allans made a complaint to the Fair Trading Tribunal. 608 Mrs Allan said that on 25 January 2001 Mr Chaseling arrived at the Allan's home, without notice and uninvited and banged on the door. Mrs Allan was minding her grandchildren. She said that Mr Chaseling was rather loud. Her husband attended to him. She heard "thump" and walked outside. Mr Chaseling was banging on the front of the garage door, which was a bone of contention. She said that her husband asked him to leave because he was upsetting them and that Mr Chaseling did, eventually. He was still not in a good mood and banged his car door and drove away at speed with his tyres screeching. On 28 January 2001 Mrs Allan wrote a detailed letter of complaint about Mr Chaseling's abrasive conduct to Mr Cox. She confirmed that the contents of this letter were true. 609 Mrs Allan could not recall exactly when Mr Crandon came to their house, but it was after they had moved in. She got her husband and he went with Mr Crandon to the door to under the house so he could have a look at the foundations, but they were only gone a few minutes. She did not observe Mr Crandon make an inspection of the underneath of the house. There is a small door on the eastern side of the house which gives access to the foundations. 610 In cross-examination Mrs Allan agreed that the house looked 'terrific' at the moment. She intended to continue to live there. Her husband told Mr Fordham that the house had turned out "nice". Mrs Allan agreed that her husband was a perfectionist. She agreed that a lot of their complaints were remedied eventually. She believed that the piers were there to help support the load bearing walls. She did not know exactly where the out of alignment piers were, as she did not go under the house. Mrs Allan agreed that the first application the Allans made to the Fair Trading Tribunal included a complaint about the piers and a complaint about two panels of the garage door. Mrs Allan agreed that at the hearing of the Allans' first application their complaint about the piers was dismissed because of the certification (by Mr Crandon) that the rectification was satisfactory. There was an order for IIvarity to rectify the garage door.

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Mr Crandon 613 Mr Crandon said that Ilvarity asked his office to undertake engineering designs, site investigation and preparation of engineering documents for Ballina Shire Council. His office prepared the engineering or foundation design off the plans prepared by Ilvarity. This was probably in 1999. Mr Crandon said that in 2000 he was contacted by Mr Cox consequent upon Mr Allan's call to him of concern about the foundations. Mr Crandon made an appointment to inspect the foundations and thought he was accompanied by Mr Harley or Mr Creighton on his inspection. Mr Allan pointed out that the piers supporting the floor under the rumpus room and lounge room area were out of alignment and "wanted some degree of satisfaction that there was not going to be a future failure of the foundation or alignment of the floor in the house". Mr Crandon found it very difficult to get under the house because it was very low to the ground. He was able to get his head through the doorway and shine a torch, but he went no further. Mr Crandon was not a small man. He gave this description: "I was able to observe from some distance the problem of piers being offset from their footings and some degree of offset with (? where) the bearers were coming down onto the piers. I could only locate that on three piers. I then advised Mr Cox with a letter and photographs that were taken later by Mr Harley, who was a lot smaller stature at the time than I was. He was able to get in there and photograph the site so that I could comment on it." 614 Subsequently, by letter of 21 September 2000 to Mr Allan, with a copy to Ilvarity, Mr Crandon wrote: "A misalignment of specific footings to the internal support piers under the residence had seen the placement of the brickwork offset the pad footing of which you have photographs. My verbal instruction to Brett Harley … was to enlarge the footings to give adequate support to the existing brickwork. This work was completed by Brett of which he has photographed his rectification. The photographs are explicit and detail accurately the extent of the remedial works. It is my opinion these works comply with my instructions and the rectified piers adequate to support all normal loads implied." 615 Mr Crandon said he had made the normal recommendation to strengthen the side of the pad that was limited "by digging down and adhering the extra concrete to the side of the footing and maintaining the structural identity or integrity of the pier to support the bearer." When asked whether he referred to any depth Mr Crandon replied: "Yes, it's normal practice to area it over 150, 8 inches in which you dig down beside the sand, keeping in mind you are in a very restricted area 18 inches or 450 millimetres high, to dig down and pack concrete and adhere it to the footing." 616 Mr Crandon explained that the house was on sand and the site was regarded as stable and that in "the order of 150 to 200 (mm) would have been quite adequate to get enough area just to stop any form of eccentricity movements of the pier". Mr Crandon said that as he could not get in physically to have a look at the site of the piers, he asked for photographs to be taken of the completed works. Mr Crandon regarded Mr Harley as a very competent builder. 617 Mr Crandon envisaged Mr Harley getting right under the house and being on his stomach as he added extra concrete to the footings. Mr Harley was working in a restricted space of about 18 inches or 600mm. Mr Crandon said that he did not make a further visual inspection after Mr Harley reported that he had done the work which had been specified. Mr Crandon disagreed that this was inadequate. He had carefully instructed Mr Harley what had to be done and they had discussed it. He relied on Mr Harley's known competence, his previous compliance with instructions, Mr Harley's report that he had done the work specified and the supporting photographs. Mr Crandon disagreed with the suggestion that the photographs revealed that the so-called repairs carried out by Mr Harley consisted of a layer of concrete being put adjacent to the original piers. Mr Crandon said that Mr Harley assured him that he (Harley) "dug down beside the footings and placed the concrete in there and adhering the concrete to the footings." 618 Mr Crandon said that Mr Cox, under the name of Craftsman Homes, had a very good reputation for building good quality homes.

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Mr Lee 621 Mr D Lee, a well qualified and experienced engineer inspected the Allans' property on 28 January 2005 and was provided with copies of the building agreement, the specification, the certificates of 17 March 1999 of Richard Crandon and Associates Pty Limited of Sufficiency of Design and Soil Profile Classification, Mr Crandon's letter of 21 September 2000 and the report of 19 September 2004 of T J Hollyoak Building Consulting Pty Limited. 622 Mr Lee was asked to advise as to the sufficiency of the piers and the misalignment or non-alignment of the bearers over the piers. During his inspection Mr Lee took photographs, some of which were attached to his report. Mr Lee reported: "The photos will demonstrate that essentially most of the piers have an eccentric load on them from the point of view that double member joists have been used and where they overlap they have to actually swap from one side of the pier to another and in most cases the offset is satisfactory. However there are half a dozen or so piers where the bearer is right over the edge of the pier. There are also a number of piers that have virtually no support to their base where the pier is completely off centre and in fact almost right on the edge or beyond the original pier hole that was bored. Some repairs have been attempted to the piers to provide support to the actual brick columns and these repairs to the pier bases appear to be a thin layer of concrete placed adjacent to the original piers that were bored. This appears to be inadequate in terms of providing adequate base support to the pier itself which makes it even worse from the point of view of the eccentric loading having double eccentricity. The other concern which hasn't been picked up in previous reports is the fact that hollow cored bricks have been used on edge or otherwise in a number of piers. This basically means that the pier is not a solid mass which is a normal requirement for piers and this should be rectified. Essentially you've got very little bearing space for what is left of the piers because of the hollow cores. Other than that there is obviously misalignment between some of the piers when you look straight down the edge of the piers because of the fact that the differences between the bearer positions on the piers varies as you sight along the line of the bearer. The ground conditions are sandy and there is no evidence of any subsidence from inspection under the house. There does not appear to be any major cracking observed in the walls so the strip footings seem to be intact. The floor internally seemed level and did not creak under foot. The bearers that run along the strip footings are sitting on the engaged piers sufficiently and no other problems were observed. Plumbing seems to be intact and no leaks were observed in the pipe work." 623 Mr Lee went under the house from the entry door across to the other diagonal corner and came back around the piers. As to his observation that the floor internally seemed level and did not creak under foot, Mr Lee said that he walked on the floor in the lounge area as he walked into the right of the hall, that is above the two piers. 624 Mr Lee said that the piers under the Allans' house were load bearing. Different piers bear different areas of floor. The piers themselves supported about 9 square metres of the floor and some of the piers possibly support some walls which would run across them, but he (Lee) had not checked the plans to cross-reference that further. 625 Mr Lee said rectification works had been done to four piers. They were under the middle of the lounge room floor approximately. Mr Lee was unable to check that the piers which had been "rectified" were not bearing the load of any wall because he did not have a set of plans to cross reference the particular pier positions. Mr Lee gave this evidence: "Q: But they positioned under … the lounge room floor? Some were A: I am just trying to think because the lounge is offset relative to a bedroom at the front of the house but generally speaking I would say yes."

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Mr Harley 630 Mr Harley said that he came to the Allans' site after the foundations had been poured, the base had been bricked up and the carpenters had started on the floor framing. Mr Harley said that Mr Allan's first concern was that a dog could get underneath the house and dig around the piers and cause them to topple over. He thought that this was a fairly exaggerated opinion. Mr Harley said that he discussed the matter with Mr Allan and told him that they would dig down beside the piers, put some concrete there and fix it up for him. Mr Harley believed that this discussion took place about the time the house was ready for linings. Mr Harley said that they (Ilvarity) dug around the piers and put a small amount of concrete on the top of the footings. 631 Mr Harley said that about six to twelve months after the Allans had moved into the house he received a further instruction. He was not sure whether it was at a construction meeting at the office, or during a telephone call. He believed the instruction came from Mr Crandon and that "the instruction was to dig down beside the pier, pull out from the pier and mass fill it with concrete." Mr Harley could not recall seeing Mr Crandon attempt to inspect under the house. He was not sure of the full depth of the pier but possibly it was 450mm. Mr Harley said that he did the work with Gary Creighton and Marshall Ryan. He was physically under the house doing the work which was difficult to carry out. They made up and used a metal sleigh which they pulled with a rope to take the material and pour in the concrete. 632 Mr Harley spoke of having rectified minor defects of which Mr Allan complained. 633 In cross-examination Mr Harley was not challenged as to the work he said he performed at the Allans' house. Mr Harley said that the foundation piers on which he worked were not close to the entry door under the house, but he would only be guessing as to how far they were from the entry door. 634 The rectification work required was difficult to execute. The available space in which to work was very confined. I do not doubt that Mr Harley and his co-workers worked under the Allans' house, removed materials, poured concrete and believed that they had carried out the instruction which they had received. Their work was never inspected by Mr Crandon. The photographs taken by Mr Lee illustrate the poor initial workmanship and some of the problems. The evidence of Mr Lee establishes that the necessary rectification works were not satisfactorily executed. There is no good reason to reject Mr Lee's evidence. He made a careful and detailed inspection, physically going under the house and then a final assessment. He adopted most of the recommendations of another engineer who was formerly with the same engineering firm, Mr Raymond Sergeant, in his report of 22 October 2004. 635 I have noted the difference between the evidence of Mr Lee and Mrs Allan as to the creaking of the floor. Mrs Allan seemed to be directing her attention to a different part of the lounge area floor from that on which Mr Lee walked. 636 I have not overlooked that the Fair Trading Tribunal dismissed the Allans' complaint as to the piers. It probably acted on the view of Mr Crandon. The Tribunal did not have the benefit of Mr Lee's report. 637 Counsel for the plaintiffs, in cross-examining Mr Lee, elicited that Mr Crandon was an engineer with lengthy experience in the Northern Rivers area and highly respected as a competent professional engineer. Mr Lee said that if Mr Crandon had certified that the bearers (in the Allans' house) were structurally sound, he (Lee) would accept that opinion. While these general observations set the background, I must concentrate primarily on the evidence relating to the particular issues which have been raised. 638 It is a great pity that the defects in the piers and their positioning in relation to the footings and the defects in the positioning of the bearers were not rectified at an early stage of the works, when the floor framing was being undertaken. Once the house reached lock up stage rectification became difficult. 639 It remains an issue for the future whether the problems with the foundations will adversely affect the resale value of the house, or the raising of money by way of mortgage using the house as security, or the addition of another storey. The house has stood since late 1999.

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Mr Cox 645 Mr Cox was referred to the segment of the ACA program in which Mr Allan is shown as saying, "Let me show you an example of one of the problems we have had in our house. The foundations are completely off centre to the footings. The bearers on top of the footings are completely off centre to the foundation blocks." Mr Cox was also reminded of Mr Fordham's comment, "They took Mr Cox to the Fair Trading Tribunal and rectification work was carried out on a number of areas including the foundations. The Tribunal accepted a report by an engineer hired by Craftsman who declared that the rectified piers were adequate." Mr Allan's voice was heard over a picture of a pier with a piece of wood. He was heard saying, "They say that's a proper concrete footing but it cannot be because I dug out under there and put a bit of timber there. There's nothing there. It only just laying on top of the sand." 646 Mr Cox said that what was said was incorrect because the pier was a concrete pad with a brick pier on it and there was a direct load from the bearer onto the brickwork down onto the pier. Even if it was off centre it was in stable ground which is sand, with virtually no movement or nil movement or settlement of any description either downways or sideways. (T141) 647 Mr Cox said (T141-142) that when he was told of the Allans' complaint of the piers being off centre on the foundation he went to the site and looked at the piers. He said "There was a solid concrete pad with a brick pier on it. The bearer carries across the brick. It's bolted with an endless thread rod into the concrete and into the bearer and there is no way you are going to get any movement on it, so it's a direct load. The only thing above it, loading onto it, is the floor and people walking on it, so it's more than ample to carry the weight, so I classified it as being quite acceptable." Although Mr Cox spoke in the singular, I took him to be referring to the brick piers under the floor of the lounge area. After Mr Cox's inspection he sought an opinion from Mr Crandon. Mr Cox saw Mr Crandon's letter of 21 September 2000 shortly after that date. 648 Mr Cox was upset by Mr Allan's earlier quoted comment, because he thought that it was incorrect. Mr Cox added, "It's only a bit of over spillage from the top of the pier. He raked the sand underneath it and put a timber in there …". 649 When Mr Cox gave this evidence I took him to be referring to an inspection he made shortly before he sought an opinion from Mr Crandon. However, Mr Cox may have been referring to an inspection he made at an early stage of the job. He explained: "I inspected the piers when the bearers and joists were just laid - I inspected the foundations and the brickwork when the bearers and joists were down and I had noticed they were on the edge of the pier pad and it had a full load bearing down onto the pier and into the ground, so there was, in my opinion, no detriment."

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Mr Cox said that there were footings under the pier pad. The footings were normally 450 to 500 to 600 mm deep. Mr Cox explained that as the concrete is poured on the top it spills over a little. The pad does not go down beneath the spillage, that is on the edge. In the centre the pad would go down at least a minimum of 400 mm, with an average of 500 to 600mm depending on the engineer's detail. In the previous sentence Mr Cox was dealing with the usual situation as to the depth of the pad. He said that from his observations the brick piers were on the pad so far as it extended down to the full depth. At T326 Mr Cox said that he did not inspect the piers after the floor went down. 650 Mr Cox thought when Mrs Allan referred to buying a new car and the expectation that it would be free from scratches and dents, this was "a little bit one sided". Mr Cox insisted that the Allans had got an excellent house. 651 In cross-examination Mr Cox agreed that the letter of 21 September 2000 of Mr Crandon indicated that he had not actually examined the foundations himself. Mr Cox said the work initially done was accepted, that he did not know what Mr Crandon had done, but Mr Crandon would have known what he was doing. Mr Cox was taken to the photographs attached to Mr Hollyoak's report on the Allans' home and coloured versions of them. 652 Mr Cox agreed that the piers were off centre on the concrete footings. He said that as a consequence there were very light eccentric loads on the footing because the only load was a bearer and joist in the floor. There was no roof load. He added, "Being tied down with a rod into the footing would transfer it to the bottom of the pier. I don't think that was bad building practice." 653 Mr Cox agreed that the aim was to put the pier in the centre of the footing. He regarded this as the ideal, but said that it did not happen in every case and that was "why you put 400 by 600 and a nine by nine or 225 pier on it." Mr Cox said, "There is no such thing as a pier being in the actual centre [of the concrete footing] every time." Mr Cox said "If the pier was half way … off the footing or overhanging it, it would need to have something down the side. Richard asked for concrete down the side [of] it and that was what I was understanding was done." Mr Cox thought that it was for the engineer to decide what should be done so that there was no movement. 654 Mr Cox agreed that the bearers were sitting on the edge of the piers and that the aim was to get the bearers close to the centre of the piers. Again, this was the ideal. Mr Cox contended that it was sufficient if the bearers "have a direct load down to the ground on a direct line it will carry." 655 In determining whether the bearers had been installed in a competent manner, Mr Cox was not prepared to form an opinion based on the photographs he was shown because photographs can be very deceiving and he would have to go into (under) the house. 656 Mr Cox said that he was not aware that some repairs had been attempted by Ilvarity on the Allans' piers (T325). While this reflects what Mr Cox said I am not sure that this is what he meant. He may have meant that he was not aware of the full details of the repairs. He was not in a position to comment on the repairs as he had not inspected them after they were done. He was told that they were "okay" and Mr Crandon was happy to certify them as adequate for the load they were carrying. 657 Mr Cox did not think there was a problem in the first place as he thought that the piers would carry the load down to the ground. 658 It seems from Mr Cox's evidence that he first inspected the piers when the bearers and joists were just laid. That inspection included the foundations and the brickwork and probably took place in the early part of the construction of the Allans' house. The contract was signed on 11 March 1999 and the final payment was made on 24 September 1999. Mr Allan had raised the adequacy of the foundations with the foreman. 659 Mr Cox may have made a further inspection or site visit after Ilvarity received the letter of 10 December 1999 and he was told of the complaint about the foundations. Mr Cox (T141) said that when he was told about the complaint of the piers being off centre he attended the site. At T325 when he was asked if he had ever looked at these piers Mr Cox replied: "I did once but I didn't get under the house because I was told … that it had been concreted down the side of the pad and … they are quite happy. The engineer was happy to certify that so I didn't go any further with it." Mr Cox said that at the time he did not know that Mr Crandon had certified on the basis of photographs. 660 Mr Cox said that then "we called an opinion from the engineer" (Mr Crandon). Mr Cox was then referred to Mr Crandon's letter of 21 September 2000 and said he had seen it shortly after the date. 661 The effect of Mr Cox's evidence is that he made a detailed inspection of the footings, piers and bearers fairly early in the construction of the house, that there were defects but there were direct loads and that overall the work was structurally acceptable. He probably made a more limited site inspection after the later complaint was received but this is not clear. He called for the opinion of an engineer. Mr Cox was not so concerned with the detail of what had been done by and at the behest of the engineer, but relied on the fact that Mr Crandon had certified the work as acceptable and adequate. 662 Mr Cox denied that the Allans had to fight tooth and nail to get Ilvarity to rectify the problems which they had identified. Mr Cox did not know the details of the three complaints the Allans made to the Tribunal and denied that if they had not made those complaints nothing would have been done.

[582]

Footings Piers and Bearers 663 I accept Mr Cox's evidence that the ideal of the pier being exactly in the centre of the footings is often not achieved and similarly that the ideal of the bearers being exactly in the centre of the piers is often not achieved. However, when Mr Lee spoke of the piers being off centre on the concrete footings he was talking of a number of piers that have virtually no support to their base, where the pier is completely off centre and almost right on the edge or beyond the original pier hole that was bored. In other words, the work done was beyond any reasonable tolerances that should be allowed. Mr Lee also referred to there being half a dozen or so piers where the bearer is right on the edge of the pier. I agree that a pedantic approach should not be taken to the requirement that the piers be in the centre of the footings and that the bearers should rest on the centre of the piers. Mr Lee did not take a pedantic approach. His report and his evidence was to the effect that there were significant departures from good building practice. 664 I found the report and the evidence of Mr Lee and his careful and detailed inspection and examination of the works executed and the problems persuasive. I have preferred his assessment and opinions to those of Mr Cox. I do not accept Mr Cox's evidence that there was no problem with the initial works and that they were acceptable. Mr Cox accepted that Mr Crandon recommended extra work and that the matter had to be appraised by a professional engineer. I do not discount the many years of experience, building knowledge and skill of Mr Cox. The lack of an inspection by Mr Crandon (or another engineer of smaller physical stature) after the rectification works had allegedly been executed deprived Mr Crandon's opinion of some weight. I prefer the opinions of Mr Lee. I add that I have no doubt that Mr Lee was able to distinguish between concrete spillage and additional concrete added to some of the existing footings. 665 The work of Ilvarity as to the footings, piers and bearers has been proved to be unsatisfactory, that is, it was not done in a good and workmanlike manner. 666 As to the sundry complaints of comparatively minor defects of the Allans, it seems that most of these were ultimately rectified, but that it took a long time for this to occur. That rectification probably occurred because of the persistence of the Allans. I take into account that the Allans were fastidious and demanding. Relations between the Allans and Messrs Cox and Chaseling became very strained.

[585]

(b) The construction of the house initially without steps. Comment: There was evidence explaining how this occurred. There were no steps on the display home on which the Allans' house was based. Mrs Allan said that one just walked straight into it. She did not notice any "ramping up" of the sand. Mr Cox had envisaged that there may be some ramping up. The Allans' house was about a metre off the ground. This made it obvious that steps or some other means of gaining access to the house was required. After the Allans complained to Mr Cox steps were installed. The defendants submitted that the original state of the house (without a reasonable means of access) reflected shoddy and/or incompetent building. No steps were shown in the plan but Mrs Allan relied on the provision in the contract documents that anything necessary for the house was deemed included within the plan or specified (see Exhibit 39, the sixth paragraph under the page headed "Generally" in the specification.) Mrs Allan could not recall exactly when the question of the house having no steps arose. She thought it was fairly close to the date of completion, probably after completion. Mrs Allan agreed that CHNR built steps at the three points of entry to the house at no cost to the Allans. It was not suggested that there was significant delay in building the steps, although Mr Cox initially maintained the stance that CHNR was not obliged to provide them. There was obviously an initial decision not to provide the steps, as they were not shown on the plan, but the specification required all things necessary to be provided and steps or some other means of access was necessary. This was not an example of shoddy building practice or incompetence, but a misinterpretation of CHNR'S contractual obligations. (c) Various other faults including poor external brickwork and the problems referred to in the statements (previous representations) of Mr Allan, the evidence of Mrs Allan and in the letters they sent. Comment: The poor brickwork had cement hanging off the bricks. The brickwork, after much argument, was eventually bagged. I have earlier summarised some of the other defects. I note from Mr T Hollyoak's report of 19 September 2003 that Mrs Allan handed to him a list of defects allegedly notified to the builder as requiring attention and numbering 74 items. 668 Some of the defects earlier mentioned were of consequence, for example, black marks on the tiles on the floor of the wet areas, the appliance cupboard in the kitchen, the closeness to water of the electrical power points and a damaged roof panel. There were a lot of minor complaints. Some were not rectified. It took about 2½ years and much persistence by the Allans before most of the defects were rectified. The delay in attending to the defects, although some were very minor, was excessive. It was the combination of a lot of minor defects and their tardy rectification which the Allans, understandably, found intolerable. There were examples of shoddy building practices amongst these other faults. 669 Without wishing to engage in semantics the defendants have as to the Allans' home established an appreciable number of examples of poor workmanship and poor building practices. Using the word "shoddy" in the 5th sense set out in the Macquarie Dictionary, 1982 Reprint, namely "of poor quality or badly made" CHNR and Mr Cox have engaged in shoddy building practices. Some of the defects exhibited incompetence in building matters. 670 The defendants relied on all the materials proved as to the Allans' house in relation to shoddy building practices as materials supporting the substantial truth of the imputation of unfitness to remain in the building industry. In particular, they relied upon the installation of the piers, and the refusal to make adequate repairs. I have earlier expressed the view that there was an error of judgment on the part of Mr Cox. He did seek engineering assistance, but it turned out to be of dubious quality. Mr Cox understood, as was the fact, that Mr Crandon had certified that the rectified piers were adequate to support all normal loads implied. The facts relating to the installation of the piers and the steps taken to rectify the piers upon the advice of the engineer are not sufficient to support an imputation of unfitness to remain in the building industry. The various other faults are not of themselves, even in combination, sufficient to support an imputation of unfitness to remain in the building industry. The aspect which has troubled me most was the protracted delay in rectifying the minor complaints and probably only doing so because of the persistence of the Allans. The Vimpanys 671 On 7 February 2000 Gloria and Ian Vimpany entered into a contract with Ilvarity for the latter to build a brick veneer house at 72 Panorama Drive, Alstonville (Lot 205) for $117,421. The house was to have three bedrooms, a study and living areas of reasonable size. 672 Mr Vimpany was employed by the State Department of Agriculture for 35 years as a soil scientist. He was retired when he gave evidence. In the Vimpanys' negotiations with Ilvarity the question of the bricks to be used in the house was discussed. Mrs Vimpany did not like the colour of any of the bricks within the standard range used by Ilvarity. It was suggested that they look elsewhere and if they preferred other bricks they pay the extra money to obtain such bricks. They visited various brick suppliers and chose the brick which is Exhibit 3, being the Majorca brick manufactured by PGH. The Vimpanys also went and looked at a house, suggested by the brick supplier, which was built of the selected bricks.

[586]

The Brickwork 673 Mrs Vimpany has a distinct dislike of terracotta orange colours. The brick selected has pink in some places and a whitewashed finish to the outside. They knew from the displays that there were some bricks that were a little dark. They wanted and expected that the side of the brick with the sandy wash (and sandy texture) would face outwards from the house and be visible externally. The other side of the brick did not have the sandy texture. Mr Vimpany said that the majority of the bricks on the other (or wrong) side have a terracotta colour and they did not want this to be visible. 674 The After Contract Variation of 30 March 2000 contains as one of the variations: "PGH Majorca bricks $1150" This amount was paid by the Vimpanys. 675 The site was cleared and levelled and the footings were constructed. When the bricklayers first commenced on the job the Vimpanys went and spoke with them and ensured that they understood that the bricks were to be laid with the side with the sand wash and texture facing outwards from the house. This bore fruit. Mr Vimpany stated that the footings were almost perfect. 676 Mr Vimpany said after the footings were laid, the slab was poured, the frame went up, the roof was put on and the bricklayers returned and started to put up the walls. When the Vimpanys next visited the site the bricklayers had commenced construction on the first portions of the brick walls and there were a lot of bricks laid with the terracotta (or wrong) side facing out. The Vimpanys asked the bricklayers to lay the bricks with the correct (or sand wash and texture) side facing out. The bricklayers continued to lay the bricks with many of them having the wrong side out. The Vimpanys approached Ms Jenny Santin, the sales lady at Ilvarity with whom they had dealt. Ms Santin was horrified and thought that the walls may have to be pulled down. She said that she would speak to the bricklayers and see if they could get the wall better. Mr Vimpany said that if anything it got worse, with the Vimpanys asking the bricklayers to stop. Mr Chaseling came to the site and met the Vimpanys there. Ms Santin and the bricklayers were also present at the meeting. The Vimpanys protested to Mr Chaseling that so many bricks were placed the wrong way and expressed their disappointment that that had happened and their hope that things would improve. Mrs Vimpany had marked some bricks in an area of the wall close to their large living area which were very bad. The Vimpanys asked whether they would change several bricks on that wall. Mr Chaseling agreed to change bricks, and nine bricks on that wall were changed and not the 20 bricks which Mrs Vimpany had marked 677 The Vimpanys were concerned about asking for further changes in case they affected the strength of the wall. Mr Vimpany said that they were never told by anyone on behalf of Ilvarity that it was the bricklayer's choice "best side out " as to how those bricks were to be laid. Exhibit 72, which consisted of two photographs taken by Mr Vimpany, indicated the difference between a wall where the bricks were laid satisfactorily and one where they were laid unsatisfactorily. 678 Mr Vimpany said that the last portion of wall which was constructed was much better and much of it was constructed correctly. Mr Vimpany said that they understood that about 70 per cent of the bricks, a large proportion, would be the paler colour, but that there would be a percentage of darker coloured bricks, that they would be spread on the wall as evenly as possible, but they would not be anywhere near the majority of bricks. Mr Vimpany estimated that 20 to 30 per cent of the bricks were incorrectly laid. He thought 20 per cent would be a conservative assessment. 679 Mr Vimpany denied that the complaint was that there were too many light coloured bricks in the back wall and that the Vimpanys wanted to sprinkle a few darker ones in. Mr Vimpany pointed out that every one of the bricks replaced in the wall had the pale colour put outside. 680 Mrs Gloria Vimpany said that she never saw Mr Cox at the site. She was referred to the evidence of Mr Cox: "Mrs Vimpany pointed out the bricks. There were too many light bricks in the back wall, I think it was the living room and they asked if we could organise the bricklayers to just sprinkle a few darker ones, take some out and replace with the bricks with black patches."

[589]

Cleaning of Bricks 685 Mr Vimpany said that when the house was finished the bricks were extremely messy, with quite a large amount of cement smeared over the bricks externally. The bricks have never been adequately cleaned except one small portion of a wall, which he had cleaned. He estimated that the portion he had cleaned was perhaps less than 5 per cent of the total wall area of the house. By letter of 19 November 2000, addressed to CH and faxed on 20 November 2000 the Vimpanys stated, amongst other things that the bricks outside were still covered in cement in many areas. They requested early attention to this and other defects. They pointed out that they had moved into the house 12 weeks previously. 686 Mr Vimpany said that after their complaint Ilvarity arranged for a handyman to attend. He had a bottle of acid. He was not prepared to do the cleaning, because it could damage the bricks. The handyman referred the matter back to Mr Cox, who was going to have the bricklayers come back and do the cleaning. 687 Mr Vimpany said that cleaning the bricks was quite complicated. Hydrochloric acid is used to remove the surplus cement. The acid then has to be neutralised with a substance such as sodium carbonate or bicarbonate. The bricks then need to be treated with phosphoric acid (or other suitable substance) in case there is any iron staining to remove. 688 Mr Vimpany said that after the handyman declined to do the cleaning, he spoke to Ms Jenny Santin. He also visited the office of Ilvarity and asked that the bricks be cleaned. Mr Vimpany believed he spoke to Mr Cox, who said that he would get the bricklayers back to do the cleaning. They never returned and the cleaning was not done. There was a suggestion in the cross-examination that the Vimpanys had not sufficiently pursued Ilvarity to have the work done. Mr Vimpany replied that, having written a letter and subsequently seen Mr Cox, there was no point in continuing to press Ilvarity as it was patently obvious nothing was going to happen. Mr Vimpany said that when they made requests for rectification, nothing happened. Mr Vimpany described cleaning the walls as a fairly difficult and tedious exercise. It was not a task that he should have to do. He said that they had not considered paying somebody separately to do that task. Mr Vimpany said that at the moment they have to accept the house as it is until they pay somebody to do the cleaning, or do it themselves. Mr Vimpany stated that if the house were to be sold, the messy brickwork would affect the value substantially, and they might have to do something. If the house is left in its present condition this would affect its sale value. 689 On 23 August 2000 Mr Craig Nowlan undertook a final inspection of the dwelling and issued an Interim Occupation Certificate. The Schedule of Outstanding Work contains this item: "Complete external brick cleaning."

[595]

Mr Cox 699 Mr F R Cox was taken in his evidence in chief to the promo. He saw Mr Vimpany saying, "We have given up" and the "Craftsman Homes" signage. Mr Cox was then shown on the video refusing to answer any more questions and telling Mr Fordham and the TCN9 crew to get out or he would call the police. Mr Mike Munro, the presenter, concluded by saying "Ben Fordham with that investigation tomorrow." Mr Cox said that he felt pretty devastated, because the thing was so incorrect. 700 The promo records Mrs Vimpany saying, "I nearly had a nervous breakdown when they did it" and shows her near the bricks. Mr Cox said that he regarded this as a pretty low sort of act as Ilvarity never had any complaint from her when it handed over the house. The program records a similar remark by Mrs Vimpany about the bricks. She said that what happened was a great disappointment. 701 Mr Fordham then commented that, according to the Vimpanys CHNR made obvious mistakes, the brickwork was to be a specified colour (the intended lighter colour) but many of the bricks were laid the wrong way round. 702 Mr Cox said that he was at the site when Mrs Vimpany asked to have bricks changed, that the meeting occurred as Ilvarity was finishing the house off and there were a lot of people there. He could not remember whether the bricklayers were present (T125). Mr Cox said that there was no sign of any nervous breakdown on the part of Mrs Vimpany. She put a black cross in texta on the bricks she wanted changed. I have earlier declined to accept Mr Cox's evidence that Mrs Vimpany wanted some dark bricks sprinkled through the wall or walls and that the bricklayers did this. Mr Cox said he gave a direction to this effect. Mr Cox has confused the bricks which had to be reversed. Only some of the bricks marked by Mrs Vimpany were changed. The meeting over the bricks took place after the Vimpanys had spoken to Ms Jenny Santin and after most of the walls had been built. I accept the evidence of Mr Vimpany, that there was a considerable improvement in the building of the last portion of the bricks. Mr Cox said that if the Vimpanys had wanted anything changed, this would have been done. I do not accept that statement as correct. 703 Mr Cox said that the bricks used in the Vimpanys' house were ones where the bricklayer chooses the best side out and that is the way such bricks are laid. That is an erroneous assertion. I do not believe that such information was given to Mr Cox in a telephone call to the manufacturer or otherwise. Mr Brunnot from the manufacturer, P.G.H Bricks gave evidence that all P.G.H. bricks were sold with one face and one header (T649) and the standard Terms of Sale state "Face bricks are sold with one face and one header unless otherwise specified." The Price List of PGH does not otherwise specify in respect of Majorca bricks. Cross-examination did not weaken this evidence of Mr Brunnot. 704 Mr Cox thought that the wall shown in the promo and in the program was the one where the bricklayers had changed the bricks, and on the program the darker bricks were marked with white tape and were changed within a few days of handing the house over to the Vimpanys. 705 The Vimpanys signed the certificate of practical completion on 23 August 2000. The certificate recorded that the Vimpanys had inspected the works and acknowledged that "the works have been constructed to our satisfaction." The Defects Liability period commenced on 23 August 2000 and expired on 22 November 2000. It was contended that the Vimpanys would not have signed that certificate if they had any outstanding complaints. That does not follow. The Vimpanys felt that they could not make any more changes to the bricks in the walls. There was a defects liability period of some three months in which notified defects could be rectified. Further, they needed to move into the house because they had to vacate the rented premises in which they were living. 706 Mr Cox said that he felt terrible when he heard (and saw) Mrs Vimpany state that it was a great disappointment to have the bricks laid so poorly. Mr Cox did not think the bricks were poorly laid, but they were. 707 On being referred to Mr Vimpany's statement on the program - "The whole wall was left very messy covered in cement um … I've taken it on myself to clean the top part of the wall. But the bottom half of the wall I've left so we can show what a mess they did leave the bricks and that appears right around the house in places."

[600]

714 This was what Mr Cox hoped had been done. He did not know whether it had been done. Mr Cox was acting on assumptions, not knowledge. He said that he had no knowledge of what was done in response to Mr Vimpany's letter dated 19 November 2000. The acceptable evidence establishes that the brickwork was not adequately cleaned by CHNR. 715 Mr Cox departed from some earlier evidence he had given and said that he did not agree that it would be shoddy building practice not to clean the brick walls. This was after he realised that the brickwork may not have been adequately cleaned and that his earlier assertions may have been wrong. 716 Mr Cox agreed that if a builder put a meter box in the middle of a window, the builder would be engaging in shoddy building practice. He was not privy to the information about shifting the meter box over and whether it was as a result of an agreement with the owner. Mr Cox said that Mr Chaseling mainly dealt with Mr Vimpany as Mr Chaseling was at the office when Mr Vimpany came in. Mr Cox added "Either John or my wife." Mr Cox doubted whether either his wife or Mr Chaseling would have threatened to stop construction if the Vimpanys did not pay the variation. If this was true it would be, Mr Cox agreed, an unreasonable way to behave towards the Vimpanys. What Mr Vimpany said on this point was true. 717 Mr Cox agreed that the variation would have been and was signed by him. He explained that the variation would have been done and sent to him "and I would have changed (sic) and there would have been a reason for the meter box change taking place. Why at this stage I can't tell you but there would have been a reason for it." 718 Both Mr Cox and Mr Chaseling stated they had no knowledge of the meter box variation. The variation, on its face, is explicit and provides for the meter box to be changed to beside the garage where the plans state it to be. On the evidence as it stands Mr Vimpany was charged $420 for shifting the meter box from a window area to the side of the garage where the plans show it should be. This appears to be an incorrectly charged variation. It is probable that Mr Vimpany had to sign it to avoid holding up the completion of the house. 719 It has been established that the bricks were laid incorrectly in that many were laid with the wrong side out and that some bricks were changed so the correct side faced out. Further the Vimpanys, although disappointed with the laying of the bricks which they regarded as poor, did not insist on the brick walls being demolished and rebuilt. They had strong personal reasons for wanting the house finished. 720 It has also been established that the external brick walls of the house were not adequately cleaned and left a lot to be desired, particularly from a visual aspect.

[601]

Shoddy Building 721 The defendants relied on the following in respect of the shoddy building imputations: (i) the construction of the house with a large percentage of the bricks facing the wrong way around; (ii) the dirty and unclean condition the bricks were left in at the time of completion; (iii) other errors including the misplacement of the meter box, careless painting, the inadequate installation of the roof insulation and other matters referred to in the letter of complaint of 19 November 2000 from the Vimpanys and the report of Mr Hollyoak. 722 I have previously concluded that some of the walls of the Vimpanys' house were constructed with a large percentage of the bricks facing the wrong way out. It is remarkable that when the Vimpanys drew attention to the mistake, and they did so on several occasions, that CHNR did not stop the bricklayers proceeding erroneously and have them lay the bricks with the face side out. The lack of action by CHNR after being alerted to the error being made in laying the bricks was never satisfactorily explained. The suggestion that bricklayers like to lay bricks in their own way is no justification for what happened. Time and the pressing needs of the Vimpanys to be able to move into the house did not permit the defects to be properly rectified at a late stage in the job. I have also concluded that CHNR did not clean adequately the bricks in the wall of the Vimpany's house and left them in a dirty and unclean condition. This was a shoddy way to leave the house. 723 The defendants relied on other matters, which they conceded were of various seriousness, as indicative of shoddy building practice, including: (a) The incompetent painting of the kitchen and bathrooms where a spray paint used on the ceilings splattered on the benches, sinks vanities and bath (T868); (b) the failure to lay properly or at all the roof insulation which was left in its original plastic bales in the roof (T868). The story as to this and the attempted rectification is a sorry saga. The Vimpanys ended up getting an outside contractor to come in to do the job properly and paid him; (c) the construction of at least three windows in the wrong place during construction; these had to be moved. These errors were noticed by the Vimpanys on their almost daily site visits; (d) the absence of the kitchen skylight; (e) poor paint finishes in several areas and bulging plasterboard; (f) left hand overhead cupboards in kitchen were out of square and sagged; (g) truncated truss and rafter crossings in roof not clipped back or back-blocked; (h) front entry posts not installed in accordance with the specification; and (i) Temperature pressure relief drain from hot water unit was not discharging at least one metre away from the base of the unit. Mr Hollyoak recommended that heat traps be installed on the delivery pipe from the unit.

[603]

Unfitness 725 As to the unfitness imputation, the defendants submitted that the allegation of CHNR and Mr Cox that the Vimpanys' assertion as to the failure to clean the bricks was a fabrication was evidence of their unfitness to remain in the building industry. The defendants further submitted that Mr Cox had told lies when he asserted that Mrs Vimpany complained about an excess of light coloured bricks through the walls. It was also false for Mr Cox to say that the Vimpanys' last complaint about the brickwork was the only complaint ever made. Perhaps, that was the only complaint Mr Cox remembered. The defendants also submitted that Mr Chaseling's evidence that he was not involved with the Vimpanys until some months after they took possession of the home and that he did not recall speaking to Mrs Vimpany about the bricks was deliberately false. 726 I am satisfied that Mrs Vimpany did not make the statements attributed to her by Mr Cox and that Mr Cox erred when he said that the only complaint made by the Vimpanys was what he described as the last complaint. I am also satisfied that Mr Chaseling did speak to Mrs Vimpany about the bricks. However, whatever suspicions I may have as to whether Mr Cox or Mr Chaseling was giving deliberately untruthful evidence on these points, the evidence is not sufficient to enable me to make findings to that effect. 727 The defendants also relied on the whole of the conduct of CHNR and Mr Cox previously detailed as to the Vimpanys' house as establishing the substantial truth of the unfitness imputation. The defendants highlighted the gravity of the error as to the laying of the bricks and what they described as the substantial failure to address the complaint, the dirty condition of the bricks and the total failure by CHNR to address a number of complaints about this and the unexplained insistence that the Vimpanys pay extra for the meter box to be moved. 728 The critical failure by CHNR was not to address the problem of the bricks being laid the wrong way around when the Vimpanys made their early complaints about the laying of the bricks. Ms Santin was not called to deny that such early complaints were made. By the time of the site meeting the constraints affecting the Vimpanys meant that it was too late to demolish the walls and rebuild them with the correct or face side facing out. The failure by CHNR to heed the dirty condition of the bricks and have them cleaned adversely affected the appearance of the house. The house should not have been left in that condition. The dirty condition affected the enjoyment of the house by the Vimpanys and probably its value. 729 As to the meter box, Mr Hollyoak in his report, identified one possible basis for the extra charge for moving it, but did not regard that basis as valid. CHNR did not specify that basis. 730 Serious as the defects in the Vimpanys' house were I would not regard them, taken individually, as being sufficient to justify the imputation that CHNR and Mr Cox were unfit to remain in the building industry. Taken together, my mind has vacillated as to whether they are sufficient to justify the unfitness imputed. On the balance of probabilities I think they fall marginally short of justifying that imputation. However, these defects in the Vimpanys' house need to be considered in conjunction with the defects in the Mosses' house, the Allans' house and the Willoughbys' house.

[611]

Crandon Report 740 Mr Crandon was the engineer. He expressed the opinion that the cause for the differential settlement in the NE corner of the building was "a large mature Moreton Bay fig tree approximately 8 metres from the SE corner of the building" and that this was evident from the pattern of the cracking of brickwork and internal linings. 741 Mr Crandon wrote: "I believe at the time of construction the Builder had raised the future problems of such a large tree in close proximity and its effects on the long term serviceability of the building foundations. Piering to solid ground was constructed into all perimeter foundations in fill areas to encounter this tree problem. It is now evident that the tree influence, although greater in the fill areas, is now showing influence in the natural soils say 2 - 3 metres below. To correct the problem I can only suggest the deeper underpinning to say 3 - 4 metres to found the building below the area of influence of the tree. Placement of a 900 wide pathway against the building would help maintain the permanent moisture level under the footings that are being effected by the tree roots. This work should be completed under the direct supervision of a Geotechnical Engineer. The other area of concern is the minor cracking of the brickwork in the western wall in the garage area. Again this area of the building is in fill area and subject to tree influence similar to above. In this situation I am of the opinion, because of the very minor/slight cracking in the brickwork, the defects should be monitored for possible deterioration over the next twelve (12) months and the matter reviewed." Aungle Report 742 On 18 March 2001 Mr Rob Aungle, a consulting engineer inspected the Willoughby's house and site. He had the Geotechnical report of December 1996, the foundation drawing of 4-55-96 Sheet E1 with engineering certification by Col Jenkins of 5-12-96, Mr McLisky's report and Mr Crandon's report. 743 Mr Aungle wrote: "General comments: The problems which the owners are experiencing with the movement and cracking of the house are being caused by a major design fault and the effects of this will get worse as time goes on. Even if parts of the house were to be underpinned as suggested by Richard Crandon, there could still be no guarantee that this would solve the problem, as the fault is with the adequacy of all of the concrete footings. In our opinion the perimeter strip footing is half the thickness required by the relevant Australian Standard, and is not founded to an adequate depth. The piers as designed which support the strip footings in the filled zone are completely inadequate. Similarly the pad footings in this zone are not founded to an adequate depth and are exhibiting lateral and vertical movement. The geotechnical report (prior to clearing and earthmoving operations) classed the site as 'SR' - slightly reactive. However, upon completion of clearing, root grubbing and filling, as shown in the design drawings, the site should have been re-classified as Class 'M' or 'H' and the foundations designed accordingly. As the Fig Tree to the east of the house was to be retained as a feature, the design should have made allowance for this. Pruning of subsurface roots as well as the limbs within the building envelope, subsoil drainage and re-siting the house are issues which should have been considered before construction commenced. Geotechnical Report Our overall classification for this site is 'M' - moderately reactive, although the foundation conditions in the NE corner could be classified as 'H' - highly reactive. This is indicated by differential movements of up to 30mm between the highest and lowest points on the perimeter of the building and the clay content of the fill material. The report by Col Jenkins states that the soil here is krasnozem and behaves like confined wet sand - ie little differential movement as soil moisture conditions change The soil as observed beneath the house has a high clay content and behaves like a clay, ie the volume changes significantly with soil moisture - shrinking and cracking when dry, swelling when wet. Earthworks The Moreton Bay Fig tree eastern side of the house, estimated age: 50+ years, was existing when Craftsman Homes began construction in 1997. The building pad was created by clearing a stand of Camphor Laurel trees, cutting the high side of the site (southern) by one metre and filling the low side (northern) It is our opinion that the control of compaction of the fill, the choice of filling material and the subsoil drainage works are unsatisfactory." and

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Dept of Fair Trading 744 About 11 May 2001 the Willoughbys lodged a complaint with the Department of Fair Trading and provided copies of the relevant correspondence, reports, a statutory declaration from Mr Willoughby and quotes from builders. 745 A note of 4 March 2003 of J Palombo, Senior Technical Consultant of the Building Assessment Unit of the Department of Fair Trading records that a site meeting was held by Mr Palombo with Mr J Chaseling of Ilvarity, its engineer, Mr Crandon and the Willoughbys. Mr Palombo wrote: "This meeting was successful in that the builder represented by John Chaseling and their engineer Richard Crandon accepted that the problems were as a result of the company's negligence and that they were responsible for an appropriate method of rectification. The builder agreed and the engineer will design an appropriate remedy. As the work is to be rectified by the original builder I advised the claimants that their insurance claim would be closed pending a satisfactory outcome. This they accepted." 746 The proposed settlement did not eventuate. In their letter of 30 April 2003 the Willoughbys set out their understanding of the proposed settlement. However, in an attachment to their letter they stated that they were unhappy with Mr Crandon's substitute plans as they differed from what had been discussed. The Willoughbys summarised the problems as wrong soil classification and inferior piers and footings. 747 The further report of 1 May 2003 of Mr Rob Aungle sets out "Deficiencies with Structural Rectification Works & Specifications." Mr Aungle makes some ten points and his criticisms of what Mr Crandon proposes have considerable bite. 748 The Department of Fair Trading obtained a report from Bonacci Rickard (NSW) Pty Limited, consulting engineers. The report states: "Based on the documentation at hand, it is our opinion that the method of rectification put forward by Mr Crandon does not provide a reliable long-term solution. This is reverberated in the disclaimer provided by Mr Crandon which states that his design is 'a compromise between an effective repair & reasonable costs. These measures will not necessarily eliminate future cracking". A more reliable approach in our opinion would be to underpin the entire length of the strip footing located within the fill zone which would require approximately ten new underpinning piers. The underpinning detail put forward by Mr Crandon is a typical underpinning method used by contractors in NSW and is acceptable. We believe that some cost savings can be made with this detail as the capping beam to the pier can be introduced at pier locations only instead of along the entire length of the strip footing. Consideration should also be given to either underpinning each isolated brick pier in the fill zone or installing supporting steel beams which would need to incorporate the installation (of) four new piers. These measures would in our opinion alleviate any issue with settlement of the fill due to inadequate compaction." 749 By letter of 18 September 2003 to the Willoughbys the Office of Fair Trading advised that approval had been granted to settle their claim for $73,789 and that such approval had been based on the quotation from the contractor RA & KM Boyle and the tax invoice of Rob Aungle & Associates. The letter stated that the Deed of Release enclosed and to be signed by the Willoughbys did not preclude them from making a further claim against the comprehensive insurance scheme should further defects become apparent. The Willoughbys were advised that upon returning the Deed of Release duly executed a cheque would be issued to them in the amount of $73,789. 750 Ms Rosa Cheung, Claims Officer made this file note on 22 September 2003: "Fred Cox of Ilvarity Pty Limited (the contractor) rang in response to FTAC's approval letter dated 18 September 2003 at folio 221. Mr Cox said that he intended to attend to the problem and his engineer was preparing the plans for rectification work. I advised Mr Cox that FTAC had written him a letter in May 2003 with its engineer's report, to date we have not received a response for the letter. Mr Cox said that he had not received the said letter I confirmed the address of the letter to which it was sent. I advised Mr Cox that this matter has been going on for more than a year and he has not contacted FTAC since May 2003, the claim has been approved based on all available information in file. I also advised Mr Cox that FTAC could not rescind its decision once it has been made. I advised Mr Cox to send us his representation if he disputes against the decision to the Director of Home Building Insurance or to seek advice from his legal adviser. I ensured that all information submitted would be taken into consideration when debt recovery action takes place."

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Mr Cox 752 In cross-examination, Mr Cox denied, erroneously, that there were a number of serious problems with the house. Mr Cox stated that in 2000 there was some mention that there was some movement in the house. Mr Cox said that he did not remember seeing the letter of 30 June 2000 from the Willoughbys, but did remember having people go up and have a look at rectifying the house. 753 Mr Cox said that the letter of 13 March 2001 from the Willoughbys, and the attached report of Mr McLisky, did not come to him. They would have gone to Mr Chaseling. Mr Cox said that Mr Chaseling also dealt with the site inspection and the retention of an engineer. Mr Cox said that he did not know whom Mr Chaseling arranged to attend at the site. 754 Mr Cox accepted that the front part of the house was built on fill and that it was notorious that fill, depending on the compaction of it, was highly likely to be less stable than ordinary soil. 755 Mr Cox said: "When the house was first talked about and I inspected the block of ground I made reference to the fig tree and it should be removed as a matter of urgency. The only thing I neglected to do was put that in writing. Any fig tree that's within 200 metres of a house has to be moved. …" 756 Mr Cox said that the tree was 45 to 50 feet in height with a spread of probably more than that; it was massive. Mr Cox said that CH employed an engineer (Mr Col Jenkins) to do the design for the foundation, and the footings for that building and that block, and followed his design to the letter. It was inspected and passed by the Council. Mr Cox said that he was not particularly saying that he was aware before building the house that the fig tree posed a potential threat to the stability of the house. He said, "the reason I worried about it is it had a limb that came out right over the top of the house. … eventually Mr Willoughby had it trimmed back. …" 757 Mr Cox seemed to accept that the fill was or might be inadequately compacted as he said, "That was one of the reasons there was piers put down." Mr Cox said that the house should not have been inadequately drained as CH put a dish drain around the back of the cut." 758 Mr Cox said that he had not seen Mr Chaseling's undated letter of response to the Willoughbys' letter of 13 March 2001 and had no input into that letter. 759 The letter or certificate of 28 April 2003 from Richard Crandon & Associates Pty Limited was headed "Attention Mr Fred Cox" and proposed certain rectification works. By April 2003 Mr Chaseling had left. Mr Cox said that Mr Chaseling was still handling this matter. Both in the letter and on Drawing 2 the engineer disclaimed liability. When asked as to the propriety of suggesting a compromise between an effective repair and reasonable costs, Mr Cox said that he thought that the repair would have worked. 760 Mr Cox maintained the position that the problem which had arisen was essentially an engineering one. When it was put that it was not merely an engineering problem and that Ilvarity's workmen knowingly did not put the piers down to solid ground, Mr Cox responded that the Council had inspected the piers and passed them. He assumed that the piers went down to solid ground. 761 The evidence indicates that the piers were too shallow to be effective. Mr Cox said that he did not know why the problem with the piers was not fixed. He referred that issue to Mr Chaseling. 762 Mr Cox did not recall, and said he was not aware of, the Department of Fair Trading writing to Ilvarity in May 2003 with an engineer's report. Mr Cox said that there was one letter that went missing, or was misplaced. It may have been put in with something else. Mr Cox said: "When it came out, I was going to appeal against it but apparently somewhere along the line there was a copy of it, I don't know the full story of that. It would have to go to John because he would have dealt with it again."

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(It is not clear to what letter Mr Cox was referring). 763 Mr Cox denied that initially he received a copy of the letter of 18 September 2003 from the Department to the Willoughbys, or a letter containing identical information. Mr Cox said he was told that the Department of Fair Trading had resolved to pay the Willoughbys' claim in the sum of $73,789. 764 Mr Cox said that he could not recall whether he, or Mr Chaseling, telephoned the Department on 22 September 2003. Ms Cheung's note was that Mr Cox telephoned. 765 Mr Cox then said: "When I found out that they had settled it I rang them to find out why it had been settled and they told me they had sent a letter which at that stage I had not received. I don't know where it went." 766 Mr Cox added that this letter did come. He was taken to the diary note of Ms R Cheung. He did not dispute the contents of her note. At one stage Mr Cox seemed to be confusing the letters sent and received. 767 Mr Cox said he did not receive the letter, which the FTAC had written to him in May 2003 with a copy of its engineer's report, at that time. He said he found that letter some time later. It was in a separate folder with all of the legal documents. He found it when he was going through a heap of legal papers. Mr Cox said that on his instructions and those of Mr Chaseling, Mr Crandon was, in the month prior to 18 September 2003, preparing revised plans, that is, a new detail for the house. 768 When asked about the delay of three years in resolving the issues relating to the Willoughbys, Mr Cox replied: "Again you would have to speak to John because the dealings with the Department of Fair Trading and the rest John handled. That was the process I had to follow … " 769 It is apparent from the answer of Ilvarity in the Fair Trading proceedings that Ilvarity wanted to be excused from the proceedings and, instead, action taken against Mr Col Jenkins and Byron Shire Council for approving the works. Mr Aungle's point that the design had to accommodate the fig tree has considerable force.

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Mr Crandon 771 Mr Chaseling's evidence in chief (T420-421) was to the same effect. He also set out how Mr Crandon suggested to him that the foundations problem might be solved. Mr Crandon later submitted a detailed plan. 772 Mr Crandon said that he was engaged by the surveyors handling the subdivision in Gardenia Court, Mullumbimby to undertake the site investigations and report on the individual lots and determine the soil classification of each lot. He did so. This would have been some years previously. He inspected the Willoughbys' residence in early 2001 at the request of CH and prepared a report. 773 Mr Crandon said that it was a simple case of differential settlement in the order of a maximum of 10mm and a matter of jacking up the corner of the house and realignment and making good any damaged brickwork, tiles or internal linings. 774 By FAX sent on 5 March 2003 (Exh BR) Mr Crandon advised Ilvarity to notify Mr Colin Jenkins of the potential claim of and the procedure to be followed thereafter to recover the cost of rectification from him. 775 Mr Crandon said that he was given a copy of the report of Bonacci Rickard (NSW) Pty Ltd. Mr Crandon said that after he saw this report he was contacted by Mr Cox to review the rectification work and come forth with a solution to satisfy the Willoughbys and the Department of Fair Trading. On 3 September 2003 he wrote to CH and annexed three plans which he had prepared. Unfortunately, neither the letter nor the plans were discovered by Ilvarity. He had no further involvement with the Willoughby residence. 776 Mr Crandon was shown a copy of a letter of 28 May 2003 from the Office of Fair Trading to Ilvarity, Attention Mr Chaseling. He said that he did not see a copy of that letter. That is probably the letter enclosing the copy report of 19 May 2003 of Bonacci Rickard. 777 Mr Crandon adhered to his earlier view that while the large Moreton Bay fig tree was over the house and had its effect on the house foundations, there was no guarantee of maintaining the stability of the house. He regarded this as the major problem of the job.

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781 At T583 there was a mixing up of what occurred in March 2001 and March 2003 and this was not noticed at the time the evidence was given. Some of the propositions put and answers given in cross-examination are unlikely to be correct. According to Mr Crandon's report of 6 March 2001, which is marked "Attention Mr John Chaseling" he (Crandon) inspected the Willoughby site and residence with Mr Brett Harley. Mr Crandon said that he could remember discussing the contents of his report (the letter of 6 March 2001) because "we travelled in the same vehicle back to Lismore after the meeting with Mr Palombo." That is probably incorrect. The meeting with Mr Palombo was on 4 March 2003 and it was attended by Messrs Chaseling and Crandon and the latter two men would have travelled back to Lismore together on that day. Mr Crandon said that Mr Chaseling probably made suggestions as to what he wanted in Mr Crandon's report. 782 Mr Crandon said that the fifth paragraph of his report of 6 March 2001, namely, that at the time of construction of the house the builder had raised the future problems of such a large tree in close proximity and its effect on the long term serviceability of the building foundations, was information provided by Mr Chaseling. Later he said it was provided by Mr Cox or Mr Chaseling. 783 There are a number of possibilities. Messrs Crandon and Chaseling may have discussed the tree issue either before or after the inspection on 8 February 2001, or both. Messrs Crandon and Harley may have discussed the tree issue before, during or after the inspection. Mr Cox may have told Mr Crandon. It is probable that somebody from CH raised the tree issue with Mr Crandon and either directly or indirectly suggested that it should be in Mr Crandon's report. The descriptions under three of the four photographs attached to Mr Crandon's report of 6 March 2001 each make reference to the tree and two of them attribute different aspects of the problem to the tree. 784 Mr Crandon was well aware that Mr Chaseling was going to pass his report on to the Willoughbys. Mr Crandon did not think Mr Chaseling told him that he (Chaseling) knew of the problems prior to building the house. Mr Crandon added "I was the one who raised the tree when I walked on the site." 785 Mr Crandon disagreed that the tree had nothing to do with the problems of the Willoughby's house. He thought that the tree placed the house in jeopardy because of the tree's influence on the moisture content in the earth. That affected the platform and the building. Mr Crandon said it was his opinion that the long term serviceability of the building foundations was affected by the close proximity of the large fig tree. He relied on his observations and his previous knowledge of the subdivision site conditions. He also had regard to the information supplied by Mr Cox or Mr Chaseling. 786 While Mr Crandon agreed that he was retained to look after the interests of his clients and was prepared to sign reports to suit the expressed wishes of CH, he said there were definite limits. Mr Crandon denied that he was prepared to suppress the truth. 787 Neither of the elderly Willoughbys gave evidence. There was no evidence as to their actual age, their health or their ability to give evidence. Largely, but not exclusively, the issues involving the house fell to be determined on expert assessment. There was no explanation why Messrs McLisky and Aungle were not called. Their clients had received their compensation moneys and few potential witness are keen to give evidence, especially when they have nothing or little to gain and are likely to be attacked in cross examination.

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Shoddy Building 788 There was a major problem with the Willoughbys house for which CHNR was responsible but that responsibility arose as a result of poor quality engineering work by a consulting engineer (not Mr Crandon) whom it had retained. To the extent that CHNR relied on the design work of the consulting engineer, it cannot be correctly said that CHNR was guilty of shoddy building practices. 789 Although open I would not in the circumstances draw the inference that nothing Messrs McLisky and Aungle could say would advance the interests of the defendants. The reports of these two experts point in the opposite direction. The plaintiffs pointed out that the only evidence was given by Mr Crandon who was cross examined. 790 On the materials before the Court the design work of the engineer (Jenkins) was faulty and negligent. There was some suggestion of, poor execution of the works, for example, poor soil compaction in the fill section of the building site and the foundations not being adequately bedded into stable ground. On the evidence I am not able to say how much of the defective work was attributable to one particular cause. 791 Mr Crandon and Mr Cox were convinced that the fig tree was either the major cause or a contributing cause to the foundations lacking long term serviceability. One question which arose was whether it was reasonably possible to devise a design to overcome the problems presented by the fig tree. The plaintiffs pointed out that there was no tested evidence to the contrary of that given by Messrs Crandon and Cox on this issue of the effect of the fig tree. Mr Crandon advanced a solution to the problem which he accepted was a compromise between effective repair and reasonable cost. It was not a reliable long term solution which was what was required and therefore could not be accepted. 792 The defendants pointed out that there was no evidence that CHNR had sued the designing consulting engineer despite the advice it had received from Mr Crandon nor that that consulting engineer had contributed to the eventual payout by Ilvarity. There may be a number of explanations and I do not propose to speculate. 793 Neither the Willoughbys nor their house was mentioned in the promo or program but reliance was placed on the defects which developed in that house and the work and conduct of Ilvarity in relation to it.

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Unfitness 794 As to the unfitness imputation, the defendants submitted that the Willoughbys had been the victims of a long and sorry saga of delay, ineptitude and disavowal of responsibility by Ilvarity. The initial complaint was made by letter of 30 June 2000, but it was not until 8 February 2001 that there was an inspection by Mr Crandon. He did not report until 6 March 2001 and, according to the Willoughbys he did not assess the foundations and footings for adequacy on his inspection. Mr Crandon's report was not immediately sent to the Willoughbys. It was ultimately sent after receipt of the Willoughbys' letter of 13 March 2001 enclosing a copy of Mr McLisky's report. There was a denial of liability - the Willoughbys would have to pay for the rectification. 795 Two years later, namely in mid March 2003 and after the intervention of the Department of Fair Trading, consequent upon a complaint in May 2001, Ilvarity accepted responsibility. Mr Crandon's suggested method of rectification was deemed unsatisfactory by both the consulting structural engineer retained by the Willoughbys and the structural engineer from whom the Department of Fair Trading sought advice. The latter report was sent to Ilvarity in May 2003 and apparently misplaced by it initially. 796 Mr Cox gave instructions to Mr Crandon to prepare a further engineering solution and plan. Mr Crandon apparently forwarded these to Ilvarity in early September 2003, but they were not sent promptly to either the Willoughbys or the Department. 797 By letter of 18 September 2003 the Department, not having heard from Ilvarity since May 2003, decided to settle the Willoughbys' claim. The Office of Fair Trading or FTAC cannot be expected to chase up a dilatory builder. This is especially so when the solution its engineer proposed contained a disclaimer and it had obtained its own engineering advice and notified the builder of it. 798 As the Department pointed out there had been considerable delay not only from May 2003, but prior to that. Ilvarity had been dilatory in attending to the complaint, had initially tried to avoid responsibility and even after accepting responsibility, its dilatoriness continued. The complaint involved major defects to the Willoughby's home and broadly it took from the receipt of the Willoughbys' letter of 30 June 2000 to 18 September 2003 for the matter to be resolved along with a great deal of effort on the part of the Willoughbys and the Department. The dilatory conduct of Ilvarity and Mr Cox as to remedying the serious defects raised justifies the imputation that Ilvarity and Mr Cox are unfit to remain in the building industry.

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(c) As to the Vimpanys' house - laying the bricks wrong side out and failing to clean the brickwork. 804 Mr Cox had much experience in building matters, considerable knowledge and skill and an ability to overcome difficulties and defects. Mr Cox was not personally incompetent as a building contractor but the supervision of the work of others on houses was inadequate and therefore incompetent. Some of the work done on behalf of Ilvarity was incompetent. Neither Ilvarity nor Mr Cox ensured that adequate supervision, particularly of subcontractors, was in place. This lack reached its high water mark in the case of the Mosses' house; there were difficulties in obtaining competent and experienced subcontractors because of the volume of work available due to the impending introduction of the GST and the completion of the Olympic Villages. Some of the subcontractors had work to perform which required some care, for example, setting out and pouring the footings and locating the piers and beams and determining the correct amount of excavation. The lack of adequate supervision of the work to be done resulted in a lack of competence in the business of building the residential houses of the Mosses, Allans and Vimpanys. Ilvarity and Mr Cox were, for practical purposes, indivisible and the parties were content to approach the matters on that basis. That was realistic. (T210) 805 The four houses about which I have heard evidence constitute a small segment of the houses built by Ilvarity and Mr Cox. I express no opinion as to the competence of Ilvarity and Mr Cox to engage in the business of building residential houses as to the vast majority of residential houses which they have built. Those jobs may have been competently supervised, or the subcontractors may have done better work. 806 The evidence relied on by the defendants established that as to three houses (the Mosses, Allans and Vimpanys) each of Ilvarity and Mr Cox was not competent in the building of residential houses because Ilvarity and Mr Cox did not adequately supervise the construction of the houses, particularly the work of subcontractors.

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Width of Imputations 807 The plaintiffs submitted that each of the imputations on which they relied and the suggested contextual imputations are all defamatory imputations of a general state or condition and must be shown to be matters of substantial truth as general allegations. Further, the truth of general bad conduct or condition cannot be justified by proof of a single act or instance but must be 'proper' in substance as a generally applicable matter. 808 The plaintiffs also submitted that as each of the imputations was a charge of general conduct (or misconduct) on the part of each of CHNR and Mr Cox the defendants can only justify them by proving that CHNR and Mr Cox, respectively, in the conduct of their building activities habitually engaged in gross misconduct in that they were in the habit of doing the things of which they were accused of in the matters complained of. They submitted that the defendants had failed to do so. The plaintiffs submitted that the imputations related to "practices", "incompetence as a building contractor", "unfitness to remain in business" and "construct houses". There was no limitation. 809 The plaintiffs submitted that taking the most favourable view of the evidence from the aspect of the defendants: (a) They had demonstrated that out of some 800 homes CHNR had three sets of extremely difficult, if not unreasonable clients. (b) A number of faults were apparent in the Mosses' house at a time when the house was not complete, that by September 2002 the defects which then existed were not sufficiently serious to prevent the third progress payment falling due (although they had been earlier) and that the Mosses prevented CHNR from completing the house and correcting any matters requiring remedy before completion. (c) Possibly, some very minor faults in the case of the Allans and Vimpanys and in the case of the Willoughbys faults which were the responsibility of the consulting engineer and possibility of the plaintiffs and which have been almost entirely, if not entirely rectified. 810 I do not agree that the faults in the cases of the Allans and Vimpanys respectively were very minor. Some of the faults were matters of consequence as I have earlier held. The Mosses were demanding and difficult. The Allans were demanding. The Vimpanys were neither demanding nor difficult. They did make the mistake earlier mentioned. The Willoughby's complaints were substantial and they exhibited a considerable degree of patience despite the delay on the part of CHNR and Mr Cox. There is no evidence as to the final outcome of the rectification works at the Willoughbys but they did receive a substantial sum to carry out rectification. Messrs Moss, Allan and Vimpany wanted a good job. All three men had the ability to assess the quality of the work being done. Each took a keen interest in the work being carried out, on their sites. 811 In Greek Herald Pty Limited v Nikolopoulos (2001) 54 NSWLR 165 at 172-3 Mason P said: "The pleaded imputation is itself a statement extrapolating something from the matter complained of… Words, a fortiori words not found in the text, are necessarily to be read in context…"

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There were observations to the same effect in the judgment of Young CJ in Eq at 175. 812 The defendants submitted: (a) There are not just four examples of shoddy building and unfitness. Each of the four houses evidences a significant number of serious faults. Also, the dealings of the plaintiffs with each of the four couples who owned these homes show a consistent course of conduct establishing the unfitness of the plaintiffs to remain in the industry; (b) The imputations were found to be conveyed in the context of three homes owned by three couples. The substance of the allegations made in the telecasts in respect of these homes has been established. As well, many other serious matters (including building faults and instances of improper conduct indicative of unfitness to remain in the industry) have been established. Although not determinative, this is an overwhelming indication that the imputations have been justified; (c) Most of the apparently adequate homes were built in the eighties and nineties prior to 1998 and were of no relevance; and (d) Some of the actions taken by CHNR against the Mosses were sufficient to establish the truth of the unfitness imputation. In particular, the defendants relied on the telling of lies to HOW, the lodging of a caveat and the institution of proceedings on the basis of a demand for moneys which the plaintiffs knew were not then due, the demand for interest and legal costs which the plaintiffs knew were not owing, and the pressuring (or, as I think the influencing) of the engineer to delete unfavourable statements in his report. Each individually established the unfitness of the plaintiffs to remain in the industry. Reliance was also placed on the many defects in the Mosses' house and the failure to rectify them. 813 I do not agree that the long record of the plaintiffs in building apparently homes apparently of some quality and the awards received were of no relevance. However, the main focus has to be on what it did in the period from 1998 to 2000. It has not been established that Mr Cox knew of the terms of the letter Mr Chaseling sent to HOW but Mr Chaseling would have told Mr Cox in general terms what was happening. They had a close working relationship in the affairs of the CH group.

[638]

In context, the imputation as to shoddy building practices is a reference to those which are going to be investigated in the program shown on the following night. That is a reference to specific instances, namely, the houses of the Mosses, the Allans and the Vimpanys. In the promo but not in the program, one example shown is of Mr Vimpany pointing to and stating "Within 2 months of moving in here these tiles have fallen off". The impression was incorrectly created that this was the work of CHNR. The following two examples in the promo are of the problems with the floor at the Mosses' house and the brickwork at the Vimpanys' house. While the portion of the promo as to the lifting tiles was untrue so far as it attributed the work to Ilvarity, there were instances on the Vimpanys' house and the houses of the Mosses and the Allans of shoddy building practices. 819 The imputation from the promo that Mr Cox was incompetent as a building contractor and the imputations from the program that each of Ilvarity and Mr Cox was not competent in the business of building residential houses are not based on specific statements to that effect in the promo and program respectively but are based on their general tenor and the assertions and depictions in those telecasts. In my opinion those imputations have to be understood in the light of the context in which they occur, that is, the three houses and the experiences of the Mosses, Allans and Vimpanys. The promo and programs are about the houses built for those three couples, the defects and their experiences. 820 The imputation from the promo that Mr Cox was unfit to be allowed to remain in the business of building residential houses is probably based on the recorded comment of Mr Moss, "I cannot believe that anyone can build something like this and remain in business". Mr Moss was reflecting on the defective work carried out on his house. That imputation has to be understood in the light of the context of the matter complained of. Read in context the imputation means that because of the defective work carried out on the Mosses' house the builder was unfit to remain in the building of residential houses. 821 Care has to be taken to read the imputations in the light of the context from which they arise. To give the imputations the wide ranging effect which the plaintiffs have suggested is to give the matter complained of in both the promo and the program a greater sting than is warranted. The program was limited to some of Mr Cox's latest customers. I have not overlooked the statements in the program of Ms Leanne Wilton. They relate principally to some alleged misconduct of Mr Cox towards his customers. The imputations do not seem to be based on her statements. 822 In my opinion, based on reading the imputations which the jury found arose from the promo in the light of the context of the matter complained of and not treating them as of more general application the defendants have established the substantial truth of those imputations. It is also my opinion, based on reading the imputations which the jury found arose from the program in the light of the context of the matter complained of and not treating them as of more general application the defendants have established the substantial truth of those imputations.

[647]

The defendants submitted that the imputation and part of the matter from which it was derived were expressions of opinion. 832 The defendants accepted that the position with respect to the remaining imputations for both the promo and the program was less clear because they appeared to arise from many parts of the broadcast, but contended: (i) Imputation (c) arising from the promo, that Mr Cox was incompetent as a building contractor was an expression of opinion and arose from the earlier quoted statement of Mr Moss and the reference to shoddy practices at the start of the promo. (ii) Imputations (a) and (b) ("shoddy building practices") arising from the promo were also expressions of opinion. The defendants accepted that although strictly speaking the statement including the words "shoddy practices" unfolds as a statement of fact, this was a case of argumentative inference (permissible as comment) arising from the statement of fact. The defendants relied on this statement of principle: "The comment may sometimes consist in the statement of a fact, and may be held to be a comment if the fact so stated appears to be a deduction or conclusion come to by the speaker from the facts stated or referred to by him … and from which his conclusion may reasonably be inferred." O'Brien v Salisbury (1889) 6 TLR 133. (iii) Imputation (b) arising from the program (not competent in the business of building residential houses) was an expression of opinion. The defendants relied on Mr Moss' statement in item 13 after referring to a litany of errors and mistakes "that no self respecting trades person would ever do" and Mrs Vimpany's reference in each of items 15 and 17 to the laying of bricks as "a great disappointment", Mr Fordham's comment in item 28, "it 's a disgrace", Ms Wilton's comment in item 34 about Mr Cox "he was just horrible" and Mrs Allan's comment in item 50, after her reference to buying a new car and it being scratched, "you'd want a different car wouldn't you." (iv) Imputation (a) arising from the program (Ilvarity/Mr Cox "constructs homes that are riddled with faults") was an expression of opinion, defensible as comment. The defendants submitted that the imputation derives from the whole of the matter complained of but drew attention to the specific reference to "riddled with faults" in item 1. The defendants submitted that this was a case of argumentative inference permissible as comment arising from the statement of fact. 833 Ilvarity and Mr Cox contended that the imputations and the matter giving rise to them were allegations of acts and conduct and factual states or conditions and were not put forward as expressions of opinion. 834 In NSW Aboriginal Council v Perkins (1998) 45 NSWLR 340 at 344 Priestley JA said that in Lloyd (1985) 3 NSWLR 728: "their Lordships held that the comment a defendant relies on in the defence of comment is 'that which is embodied in the imputations pleaded by the plaintiff'. See at 735. They also held that the comment alleged by the defendant as a defence must necessarily be one that 'conveys such of the defamatory imputations as the jury find to have been established.' (also at 735)" 835 It also emerges from the judgment of Priestley JA when discussing the judgment of Clarke JA in Radio 2UE v Parker (29 NSWLR 448), especially at 345 that, when the defendant is endeavouring to show that the defamatory imputation was a comment and not a statement of fact, the defendant is entitled to require the tribunal of fact to consider the published matter which made the defamatory imputation in order to determine whether that matter made an imputation which was comment. At pp 344-345 Priestley JA noted that Clarke JA had said that a defendant seeking to rely on a defence of comment "is obliged to establish that the imputation which the jury has found that the published matter conveyed was conveyed by the writer or speaker as a comment. In this respect…the actual form of the pleaded imputation is not a relevant consideration."

[648]

836 I regard imputations (a) and (b) of the promo (that Ilvarity and Mr Cox respectively was guilty of shoddy building practices) as statements of fact. They follow from the assertion at the start of the promo, "Tomorrow night we investigate some of his shoddy practices which have left home owners high and dry." They are not defensible as comment. They are factual assertions that Ilvarity and Mr Cox have been guilty of shoddy building practices, details of which will be supplied.. On the following night they are, when specific instances are given. 837 I also regard imputation (c) of the promo as probably a factual assertion that Mr Cox was incompetent as a building contractor. Some illustrations were given, one of which was erroneous. The position presented was straightforward and smacked of incompetence on the part of Mr Cox. The theme of the promo was one of poor workmanship. 838 Imputation (d) of the promo (Mr Cox was unfit to be allowed to remain in the business of building residential houses) should probably be regarded as comment. It was saying that, because of his past conduct, he should not be allowed to build houses in the future. Mr Moss was expressing disbelief that the builder can remain in business after he had built a house with so many defects. As earlier mentioned unfitness can be due to many causes. The focus in the promo seems to be on poor quality work. There is also a reference to home owners being left high and dry and customers giving up trying to get Mr Cox to attend to defects. These matters bear upon his fitness to be allowed to build houses in the future. That is a value judgment and a matter for comment. The notion of unfitness in the imputation involved making an assessment of past conduct and likely future conduct. A significant element of opinion is involved. 839 Imputation (a) of the program (that (each of) Ilvarity and Mr Cox constructs homes that are riddled with faults) is a statement of fact rather than comment. It is a factual assertion that the homes built by them have many faults. The phrase "riddled with faults" appears at the start of the program. Illustrations follow. 840 Imputation (b) of the program (that (each of) Ilvarity and Mr Cox is not competent in the business of building residential houses) is probably a statement of fact rather than expression of opinion. Lack of competency covers a wide field including appreciable defective workmanship and failure to rectify defects in a timely manner. From the examples given in the program they seem to be the main areas of complaint.

[657]

(f) The suspension of works and purported termination of contract by the Mosses, the inspection and requirements of Mr Nowlan and his direction to CHNR and the implications of those matters were not mentioned, nor the reason for CHNR being unable to complete construction to Stage 3 and subsequently, but statements were made to suggest that it was the Mosses' halting payment and CHNR, as a result refusing to complete which had prevented works and kept the Mosses out for two years. Comment: There was no need for the defendants to give a full contractual history. Having regard to the existing and unrectified defects and the wrongful demand for money not then due, it could not be said that the suspension by the Mosses was unjustified. The Mosses did decline to pay the Stage 3 progress claim and correctly so. The so called stopwork direction of Mr Nowlan lacked validity and CHNR was not entitled to act on it. It was not until June 2002 when a referee had been appointed to report on the disputes between the Mosses and CHNR that an accommodation was reached which allowed CHNR to return to the site and bring the works to Stage 3. Prior to that CHNR wanted to be paid the moneys the subject of the Stage 3 progress claim before returning to the site. CHNR had sued for these moneys and placed a caveat on the title. The root cause of the contractual stalemate which developed and the delay was the extensive defective work and CHNR pressing hard to be paid moneys to which it was not entitled. Some of the delay admittedly was due to the delay of about 18 months in the Mosses supplying particulars of their cross-claim. If the particulars had been supplied with reasonable promptitude the referee could have been appointed at an earlier date. His appointment and practical approach provided the catalyst for much progress in progressing partial resolution of some of the dispute. Of course, at the date of the program the appointment of the referee had not been made and the case was in the District Court's Lists at Lismore awaiting hearing, with both the Mosses and CHNR taking up entrenched positions. It was inaccurate for the Mosses and the program, in effect, to attribute all or most of the delay to CHNR. Through their delay in supplying particulars of their cross-claim, the Mosses were responsible for a significant portion of the delay. The delay may not have been that of the Mosses personally but that of others, whether consultants or lawyers, acting on their behalf. This was not investigated. The point is that the delay was incorrectly attributed to Ilvarity.

[658]

(g) Many of the defects complained of by Mr and Mrs Moss particularised in the cross-claim were matters which, in the main, were not defects at all, did not require rectification and in any event were matters which CHNR was prevented from completing and/or rectifying by the actions of the Mosses by excluding CHNR from the site. Comment: I do not agree that many of the defects listed in the Scott Schedule did not require rectification. I would follow what the referee found. The problems arose from CHNR's defective work. 842 Hitherto I have discussed the submissions of CHNR and Mr Cox as to why the facts were not truly or adequately stated or referred to. The defendants insisted that the facts were truly and adequately stated or referred to. As to imputation (d) the defendants submitted that the comment was supported by Mr Moss' statement at item 3, "this problem is a result of the floor being put down incorrectly" and 3 pieces of footage from the Mosses' house being of the floorboards, the sliding doors (without flashing) and the supposedly engaged piers. Mr Moss' evidence was that the matters he pointed out to the defendants in the course of the ACA interview were accurate. I have earlier rejected the suggestion that Mr Moss or anyone on his behalf, or indeed anyone else, has tampered with the floorboards. I rejected Mr Cox's allegations. I did not accept Mr Cox's assertions as to the flashings. I preferred Mr Monteith's evidence. Mr Moss consistently complained about the "engaged piers" in 2000. These were the same piers shown on the program. Reference is also made to the problem in the report of Mr Hollyoak, p 4 and in item 12 of Appendix A to the referee's report. There is no acceptable evidence that the footage of the brick piers was misleading or failed to show a genuine defect. The faults identified and depicted were established. On the basis that imputation (d) from the promo was an expression of opinion the viewer could see that it was based on the true and accurate depiction of faults. The comment was sufficiently supported by facts stated and indicated. They were shown. 843 As to the other imputations arising from the promo (incompetence and shoddy building practices) in addition to the three matters just mentioned, the imputations were based on two further matters, namely the statement by Mr Allan that he thought that he had had over 100 complaints and Mr Vimpany's complaint about the tiles lifting. 844 Mrs Allan gave evidence that she and her husband "probably did" have more than 100 complaints. Exhibits 40 and 42, being letters from Mr Allan contained 51 complaints from the time of completion. These letters do not include the numerous complaints made by the Allans during construction. On the whole of the evidence, including Mr Hollyoak's report as to the Allans' list of defects containing 74 items, it is probable that Mr Allan had over 100 complaints. Irritatingly for CHNR he kept a very close eye on the construction of the Allans' house, noted the defects and complained about them. The late Mr Allan described the process, at one stage, as 'averting disasters'. 845 While the tiles on the front porch of the Vimpanys' house lifted within two months of the Vimpanys moving into their house, this was not the responsibility of CHNR and it was wrong to create the impression that this error was CHNR's responsibility. In this regard the facts were not truly stated. 846 However, in my opinion the Moss material and the Allan material and the showing of the poor brickwork in the Vimpany's house was sufficient to support the comment contained within the other imputations (incompetence and shoddy building practices.) 847 As to the imputations arising from the program, the defendants submitted that the substantial accuracy of each of the different factual allegations relating to the building of homes riddled with faults and the lack of competence of Ilvarity and Mr Cox as builders had been made out. They relied on having proved the truth of the imputations. They drew attention to the following items in the program and the supporting evidence:

[669]

(3) The defences under this Division are available as to any comment if, but only if: (a) the comment is based on proper material for comment, or (b) the material on which the comment is based is to some extent proper material for comment and the comment represents an opinion which might reasonably be based on that material to the extent to which it is proper material for comment." 854 Thus under s 30(3) for the defence of fair comment to succeed it must be based on "proper material for comment" or based, to some extent, on proper material for comment. In the latter case the comment must represent an opinion which might reasonably be based on that material to the extent that it is proper material for comment. 855 In Sims v Wran 1984 1 NSWLR 317 at 325, Hunt J said: "The introduction of the concept of reasonableness in lieu of that of honesty as the test to determine whether a particular statement is a comment places a far greater burden upon the defendant in establishing his defence. That greater burden was no doubt intended by the legislature to offset the advantage which the statutory variant gives to the defendant by permitting the continued availability of the defence of comment notwithstanding the defendant's failure to establish the truth or the existence of the whole of the material upon which his comment was based." 856 Those remarks are of importance in the present case, particularly in New South Wales when the defendants were not able to establish the truth of the whole of the material in the promo upon which the comment was based. I refer to the filming of the lifting tiles and the accompanying text from Mr Vimpany in Item 2 of the promo. However, the Moss material and the Allan material in the promo (and especially the Moss material) provides a sufficient basis on which the comments made and contained in the imputations might reasonably be made. In other words the comment represents an opinion which might reasonably be based on that material as proper material for comment. 857 There is also as to the program, the filming, albeit a still, of works of Mr Moss giving the wrong impression that such works were those of CHNR. The remainder of the material (both verbal and visual) in the program provided ample and substantial justification for the comments made and contained in imputations (a) and (b) of the program. The comments made represent an opinion which might reasonably be based on the material which is proper material for comment.

[672]

Queensland 859 The defendants relied on s 14(1)(b) and (g) of the Queensland Defamation Act 1889. They provide: "14(1) It is lawful - … (b) to publish a fair comment respecting the public conduct of any person who takes part in public affairs, or respecting the character of any such person, so far as the person's character appears in that conduct. … (h) to publish a fair comment respecting any communication made to the public on any subject. 860 Reference was also made to s16(1)(h) which provides that it is a lawful excuse for the publication of defamatory matter - (h) if the publication is made in good faith in the course of, or for the purposes of, the discussion of some subject of public interest, the public discussion of which is for the public benefit, and if, so far as the defamatory matter consists of comment, the comment is fair. 861 Ilvarity and Mr Cox sell the services of Ilvarity as a builder of homes to the public. The building of homes for members of the public is a matter of public interest as are the terms and conditions on which they are built, the conduct of the builder and the quality of homes that are built. The marketing to the public of the service of building homes and building them constitutes taking part in public affairs. In building homes the provisions of the relevant Planning and Local Government legislation and regulations (or ordinances) must be complied with and council consent to the development and building usually has to be obtained. It is not just a private activity. The building may affect the neighbourhood. These considerations outweigh the private contract signed by the owner and the builder. 862 There is a substantial public interest in the public discussion of the building of homes, the difficulties which may be encountered including the defects, standards of construction and the conduct of the builder. Such public discussion is for the public benefit. The builder's conduct in constructing the home constitutes public conduct. S14(1)(b) protects fair comment respecting any communication made to the public on the subject of the building of homes and the homes or proposed homes of the Mosses, Allans and Vimpanys. 863 To the extent that any of the imputations contain comment such comment is defensible in Queensland under that State's Defamation Act 1889.

[678]

871 In the present case the promo and the program were dealing with the construction of the homes of the Mosses, Allans and Vimpanys, the conduct of Ilvarity and Mr Cox in such construction and the quality of that construction. The promo and the program mentioned and showed some of the defects. There was also the section in the program in which Ms Wilton appeared. The substratum of fact was justified. 872 Underlying the requirement that the facts be truly stated or referred to is the principle that if the facts on which the comment is based are true the viewer can agree or disagree with the opinion expressed but if they are not true, or are incomplete, it will not be possible for the viewer to assess the comment accurately. See Peter Walker and Son Ltd v Hodgson 1909 1 KB 239 at 256. 873 In Hunt v Star Newspaper Company Limited 1908 2 KB 309 at 317 Cozens-Hardy M R said: "The defence of fair comment only arises in the event of the plea of justification failing, but the plea of justification may fail by reason of the facts stated not being substantially true. But there still remains the question whether if, and only if the facts are substantially true, the comment made by the defendants, based upon those true facts, was fair and such as might, in the opinion of the jury be reasonably made." 874 Turning to the promo and the Vimpanys although there was the mistake as to the tiles falling off, the comment contained in the imputations turned primarily on the defects highlighted by Mr Moss. The assertion by Mr Allan of over 100 complaints helped to explain the extent of the defective work in the Allans' house. Putting aside the Vimpanys' mistake as to the tiles there remained the major defect of the brickwork in the Vimpanys' house. Putting together the defects indicated in the Mosses' house, the over 100 complaints mentioned by Mr Allan and the defective brickwork indicated by Mrs Vimpany the facts were truly stated and amply supported the comments in the imputations arising from the promo. Overall it can be concluded that the facts on which the comment was based were substantially true. 875 I have earlier referred to the two instances in which the facts were not accurately stated in the program, one being in error and one being a lack of completeness. The error as to the back steps constructed by Mr Moss appeared but briefly. There were a number of serious defects in the Mosses' house. The delay in the progress of the Mosses' house through the failure to supply particulars of the cross-claim for some considerable time was somewhat indirect although it did hold up the resolution of the court proceedings and thus the completion of construction. The many defects were the prime cause of that delay. However, apart from completing Stage 3 to obtain the Stage 3 progress payment, it is unlikely that Ilvarity would have resumed work without further moneys being paid to it. The two matters mentioned could not be regarded as major. It can be concluded that the facts on which the comment was based were substantially true.

[680]

Trespass - Edmondson Park 877 The defendants did not dispute that there had been a trespass. Nor did they dispute that Mr Cox was entitled to sue for damages. The defendants disputed that Craftsman Homes Australia Pty Limited and Ilvarity were entitled to sue in respect of the trespass on the ground that neither was entitled to the actual or exclusive possession of the Edmondson Park premises. 878 Mr Cox was the lessee of the residential premises. The term of the written lease was for 6 months beginning on 20 July 2001. In February 2002 Mr Cox was holding over on a monthly basis. Mr Cox said that he paid the rent on the premises, used them as a place of residence and to run part of his business on a temporary basis. There was an office in part of the premises. He and his daughter worked there. He usually resided in the premises four to five days per week, that is from Monday to Thursday or Monday to Friday. Occasionally he resided there on the weekends. Mr Cox said that his daughter, Desley, who did the paperwork for "the business", lived there as well. Ilvarity conducted the business of building private contract houses in the Sydney area where it trades as Craftsman Homes, Sydney South West and also on the Far North Coast of New South Wales. 879 Mr Cox said that he directed and basically ran almost all of the Craftsman Homes business in the Sydney South West. It had traded as Craftsman Homes Sydney South West for almost two and a half years. Mr Cox said that the two things he controlled from Edmondson Park were the contract housing and the franchising. 880 Mr Cox said that Ilvarity also conducted its business from Alstonville. It formerly traded under the name of Craftsman Homes Northern Rivers but now trades mainly under the name of Craftsman Homes Richmond Valley. Mr Cox was the managing director of Craftsman Homes Australia Pty Ltd and Ilvarity in the period 2000-2002. He and his wife were the shareholders in both companies. 881 Mr Cox said that in the period 2000-2002 in the office at Edmondson Park he organised plans for Craftsman Homes Australia Pty Limited (to be made available to franchisees), spoke to the franchisees of that company and helped them as required. He re-organised all the franchise documents from Edmondson Park. Generally, he worked in conjunction with the office at Alstonville. Mr Cox said that Mr Chaseling helped him with Craftsman Home Australia Pty Limited that he (Cox) controlled what happened from Edmondson Park, that generally Mr Chaseling asked him (Cox) what should happen and that he gave directions to Mr Chaseling on what was going to happen. Mr Chaseling did not have a free and easy hand. Mr Cox said that there was not a lot done at Edmondson Park in relation to CHNR except that he exercised control from there to make sure that its operations stayed on course and ran reasonably correctly. Mr Cox added that he did all the designing, and supervision of the daily workings from Edmondson Park. He did the pricing for Craftsman Homes South West Sydney from Edmondson Park but not for CHNR, that being done at Alstonville. Mr Cox said that the payment of the staff of CHNR was mostly done from Edmondson Park. His daughter organised that and she also conducted most of the banking from Edmondson Park. Mr Cox confirmed that he understood that for Ilvarity to succeed in its trespass claim it had to show that it operated a business from the Edmondson Park premises. 882 Mr Cox said that he referred to and treated Craftsman Homes Australia Pty Ltd and Ilvarity as one and the same; what happens in one, happens in the other. It would be expected that there would be a free inter-change of design work. Mr Cox said that Craftsman Homes Australia Pty Limited was a franchise company and did not build homes. It marketed franchises and supplied franchisees with information (plans, designs etc). Ilvanity was a building company and did not sell franchises. The two companies had separate businesses. It was apparent from Mr Cox's evidence that there was a lot of interchange between them. 883 Senior Counsel for the defendants sought to establish in cross examination that it was not until after Mr Chaseling left at the end of February 2003 that any of the business relating to the franchises and franchisees was conducted from the Edmondson Park premises. Mr Cox explained that while Mr Chaseling was the manager he (Cox) still dealt with the franchisees and that when Mr Chaseling left he (Cox) assumed full responsibility for all the work done for the entire franchise operation, except for the accounting. Mr Cox said that he never lost touch with the franchise operation. He kept in touch with all the franchisees. Mr Cox was very much "a hands on" managing director. While he valued and welcomed Mr Chaseling's work and assistance with the franchisees and the franchise operations Mr Cox always remained in control of them and directed what was to be done. He also attended to the design work. Mr Chaseling referred matters concerning the franchises to Mr Cox for decision. 884 Mr Cox stated that he was the managing director of Craftsman Homes Australia Pty Limited and that where he was Craftsman Homes Australia Pty Limited was. He took the same stance with Ilvarity. Basically he operated these businesses and controlled them from where he was based. 885 Mr Cox was taken to the evidence he gave at the section 7A trial in February 2003 where in answer to the question "Craftsman Homes Australia also carried on its franchise business at the Edmondson Park address didn't it?", he replied "No". 886 In the hearing before me Mr Cox explained, "the business would be run from both offices when I'm present." In answer to the further question, why didn't you say that rather then the answer "No", Mr Cox replied, "I didn't think it was relevant". When asked whether the answer "No" which he had given was inconsistent with the evidence given earlier in these proceedings Mr Cox replied, "Possibly, yes". 887 Mr Cox explained his position further by saying that prior to Mr Chaseling leaving the majority of the business of Craftsman Homes Australia Pty Limited was carried on at Alstonville but he carried on a small part of that business at Edmondson Park. As the managing director of that company he was consulted on a regular basis and he was at Edmondson Park. 888 Ms Desley Cox was working in the Alstonville office of Craftsman Homes in 2000. She signed the claim dated 27 June 2000 for the Stage 3 progress payment but was unable to recall the circumstances in which she came to prepare and sign it and who told her to send it. She did not discuss it with her father before sending it. She believed that she did not move to Sydney until 2001. When her father came down to Sydney to take over a franchise operation which had been running in Western Sydney and was in difficulties she came down from Alstonville to Sydney to help him. 889 Ms Cox said that at Edmondson Park in relation to Craftsman Homes Australia she again did the wages, superannuation and helped her mother (Helen Cox) with the accounts and any general printing or anything else Mr Chaseling asked her to do. She helped "get stuff ready for the tax and stuff". Her father was paid by Craftsman Homes Australia. Ms Cox said that in relation to Craftsman Homes Australia her father spoke to franchisees regarding any plans they wanted, helped organise conferences (of franchisees); he basically designed the plans for the draftsmen to draw "and any time the franchises needed anything he made sure they got it". This was the case from February 2000 to February 2002. In re-examination Ms Cox gave this evidence:

[682]

She was referring to the wages etc generally and the jobs Ilvarity had in Sydney. 893 When asked what her father did for Ilvarity in Sydney in the period 2000-2002 she responded: "He spoke to clients, He went on site and met clients on site. He went around the jobs and had a look. Did all the costings and he got all the information ready for me to do the purchase orders or what I needed. He took off the quantities on the jobs and everything." (T282-T283.) 894 Ms Cox recalled that in February 2002 she opened the door of the Edmondson park premises to a young couple (Miss Stinson and Mr Fordham) who were subsequently related to a camera crew from ACA. 895 I am troubled by the evidence which Mr Cox gave at the section 7A hearing. He there gave evidence that Ilvarity permitted Craftsman Homes Australia to carry on business from premises in Kays Lane Alstonville as at February 2002 and continued (T1278 26/2/03): "Q. Craftsman Homes Australia also carried on its franchise business at the Edmondson Park address didn't it? A. No. 896 He was asked if he was sure about that. Mr Cox requested that the question be rephrased and gave the following evidence: "Q. Craftsman Homes Australia also carried on its franchising business at the Edmondson Park address, didn't it? A. So far as building was concerned, it does. But it builds under Ilvarity Pty Ltd name and it traded as Sydney South west. Q. You would agree with me, wouldn't you, that Craftsman Homes Australia Pty Ltd occupies the premises at 250 Jardine Avenue, Edmondson Park as franchisor of the brand name, Craftsman Homes? A. Edmondson Park is not the franchise, there has been no franchise document drawn for it, it is part of Ilvarity Pty Ltd and it is traded as Sydney South west. Q. Is this true or false; the property at 250 Jardine Avenue, Edmondson park is occupied by Craftsman Homes Australia Pty Ltd as the franchisor of the brand name "Craftsman Homes"? A. Well, I'm not exactly sure how that works because the, I mean, I'm the managing director of Craftsman Homes Australia and also Ilvarity Pty Ltd and I'm at Edmondson park, so it quite possibly would be. Q. Thank you. What I'm suggesting to you is that Craftsman Homes Australia doesn't only carry on business as a franchisor at the Alstonville premises, does it? A. The Alstonville premises carries out all the dealings with the franchise operation. I just have run this one here." 897 The reference, "I just have run this one here" is not clear but probably refers to Craftsman Homes Sydney South West. 898 When he gave evidence at the 7A hearing Mr Cox was endeavouring to show that the asserted imputations extended to Craftsman Homes Australia Pty Limited. His evidence in the hearing before me on the point at issue, was directed not to the defamation proceedings but to the trespass proceedings. That should not alter the basic facts.

[687]

907 In Newington a review of the evidence showed that for nearly 50 years the owners of Nos 1-4 The Grove had engaged in many acts of ownership of the disputed land in The Grove. They occupied the land and told uninvited visitors that The Grove was private land and that they were trespassing. Those owners were in possession of The Grove. That is a very different case from the present. The corporate plaintiffs relied on it to establish that as occupiers they were in possession of the land and could maintain an action for trespass. 908 The corporate plaintiffs also relied on Harris v McKenzie (1987) 9 NSWLR 139. That was a very different case from the present one and turned on the construction of provisions of the Liquor Act 1982. In the course of his judgment Kirby P at 147B made these remarks: "Occupier' normally means the person who has the immediate supervision and control of premises and the power of permitting or prohibiting the entry of other persons…"(citations omitted). 909 Mahoney JA after pointing out at 152E that "occupy" and its derivatives take their meaning essentially from the context in which they are used said at 153A: "In the end, occupation, as a term, describes what a person is doing in relation to particular premises. To assign a meaning to the word is, in this sense, to determine what that person must be seen to do or, possibly to be able to do in relation to the premises. This will involve, not merely what he may do by way of exclusion of strangers: see Newcastle City Council v Royal Newcastle Hospital (1959) 100 CLR 1 at 4; but also what he does or may do in relation to them generally." 910 In Newcastle City Council at 4 Lord Denning in delivering the judgment of their Lordships said: "But legal possession is not the same as occupation. Occupation is a matter of fact and only exists where there is sufficient measure of control to prevent strangers from interfering: see Pollock and Wright on Possession in the Common Law (1888) pp1213. There must be something actually done on the land, not necessarily on the whole, but on part in respect of the whole". 911 The corporate plaintiffs contended that Mr Cox was the alter ego of each of Craftsman Homes Australia Pty Ltd and Ilvarity as well as the lessee and represented them and licensed them to carry on and by him they carried on the business of each of them in varying degrees at the premises. They were joint occupiers, each with a right to control entry and presence on the premises, exclusive of all others except themselves. It was further contended that Ilvarity as Craftsman Homes South West Sydney necessarily required such a licence for its activities, as did Craftsman Homes Australia Pty Ltd as the franchisee. The appointment was made by Ms Stinson to gain evidence for ACA that is, for the defendants and it was represented that she and her companion (who turned out to be Mr Fordham) were intending or possible purchasers of a Craftsman Home from Ilvarity managed by Mr Cox and franchised by Craftsman Homes Australia Pty Ltd. 912 Each of the corporate plaintiffs was the alter ego of Mr Cox. The premises were let to Mr Cox using the standard Residential Tenancy Agreement (1997 edition) of the Real Estate Institute of New South Wales. The agreement provided that no more than 4 persons may ordinarily live in the premises at any one time. The holding over provision states that at the end of the term "the tenant can stay in the residential premises…unless or until the agreement is ended…" 913 Under clause 6 the landlord agrees to make sure the residential premises are vacant so the tenant can move in on the date agreed and under clause 13.1 the tenant agrees to keep the residential premises reasonably clean. From a study of the terms of the lease it is apparent that the premises are to be used for residential purposes. No other use is envisaged. In the definitions "residential premises" means any premises or part of premises (including any land occupied with the premises) used or intended to be used as a place of residence. 914 By clause 20 the tenant agreed to be responsible to the landlord for any act or omission by any person the tenant allowed on the residential premises who broke any of the terms of the tenancy agreement. By clause 21 a tenant may with the landlord's prior permission assign the whole or part of the tenant's interest under the agreement or sub-let the residential premises. 915 The tenancy agreement does not envisage any business being conducted from the premises but it does not expressly prohibit Mr Cox or his companies from carrying on business from such premises. Mr Cox did conduct part of the business of Ilvarity from the residential premises at Edmondson Park. He also conducted a very small part of the business of Craftsman Australia Pty Ltd from there, that is, principally making some decisions. The premises at Edmondson Park were being used for residential and business purposes. 916 The tenancy agreement was in Mr Cox's name and he was entitled to and did control what happened at the Edmondson Park premises. He used them to run part of his businesses and this was probably intended initially to be a temporary measure. Franchisees or intending franchisees could come to the Edmondson Park premises to sort out business details and discuss, receive or refine house plans. Prospective customers and customers having legitimate business with Ilvarity could also come to the Edmondson Park premises to discuss their proposed homes or homes in the course of construction. Similarly sub-contractors of Ilvarity trading as Craftsman Homes South West Sydney could come to the Edmondson Park premises or telephone and obtain information or directions. While Mr Cox would primarily attend to their requirements his daughter would also speak to them and handle enquiries. The evidence establishes that Mr Cox and his daughter were engaged on behalf of each of the corporate plaintiffs. As might be expected, Mr Cox left the Edmondson Park premises to attend site inspections and other meetings. If, while Mr Cox was absent from the Edmondson Park premises and people be they suppliers, sub-contractors, franchisees or customers came to the site in respect of the business of either of the corporate plaintiffs they could be asked or told to leave. 917 For practical purposes, but not legally, Mr Cox and Craftsman Homes Australia Pty Limited were inseparable and so also were Mr Cox and Ilvarity. Mr Cox regarded himself as operating through his companies and he authorised each of them to conduct part of its business from the Edmondson Park premises and assisted each to conduct that business and also conducted it on their behalf. While Mr Cox was the tenant of the premises he licensed each of the corporate plaintiffs which he regarded as his companies to operate from the premises. Mr Cox enjoyed a coincidence of interest with his companies. 918 In McIntosh v Lobel, supra at 454 Kirby P quoted with approval a passage from Clarke and Lindsell on Torts 16th Ed (1989) which included the sentences: "Possession means generally the occupation or physical control of land. The degree of physical control necessary to constitute possession may vary from one case to another, for by possession is meant possession of that character of which the thing is capable." 919 Wheat v C. Lacon and Co Ltd 1966 AC 552 involved the liability of occupiers for dangerous premises. At 578 Lord Denning said in that context: "In order to be an occupier it is not necessary for a person to have entire control over the premises. He need not have exclusive occupation. Suffice it that he has some degree of control. He may share the control with others. Two or more may be "occupiers". And whenever this happens each is under a duty to use care towards persons coming lawfully on to premises, dependent on his degree of control." 920 As with the other members of the House he agreed that an occupier is "he who has the immediate supervision and control and power of permitting or prohibiting the entry of other persons." However, Lord Denning thought that test was too narrow and he gave a number of examples. While I do not question the applicability of those principles to cases dealing with the liability of occupiers for dangerous premises the question remains whether they should be applied to a case such as the present one. 921 I would not cavil with the proposition that two or more persons may be occupiers and that for a person to be an occupier it is not necessary for the person to have entire control over the premises. In the present case all control over who enters the premises is vested in Mr Cox and the activities of the corporate plaintiffs are subject to his direction and control. I am not persuaded that either corporate plaintiff has some degree or control over who enters the premises. 922 Not without some doubt I have reached the conclusion that the corporate plaintiffs do not have sufficient title to sue the defendants in trespass.

[689]

Damages for the Edmondson Park Trespass 927 This was a very bad trespass against Mr Cox. There was a calculated course of deception to gain entry to Mr Cox's premises for the purpose of gathering evidence critical of Mr Cox and showing the television viewers the man whom they believed was responsible for some poor building work in parts of the far north coast of New South Wales. The footage (or part of it) was intended to be shown nationally. By the trespass Mr Cox was confronted without notice and expected to be able to deal with serious allegations and complaints about a number of houses. Even when told to leave Mr Fordham and the television crew were slow to do so with Mr Fordham and the television crew hovering around the front door of the house with Mr Fordham calling out to Mr Cox to respond to the allegations and not to avoid them. The phrase used was "running away". 928 I have derived considerable assistance from the judgment of the Chief Justice in Anning supra. I am bound by that decision. The major debate in the present case centred on how much Mr Cox should receive for this blatant and high handed trespass. 929 Mr Cox is entitled to compensatory, aggravated and exemplary damages. If, as is the case, neither of the corporate plaintiffs was entitled to sue, Mr Cox sought $150,000 by way of general damages to compensate him for the harm caused to him by the wrongful acts of TCN Nine and Mr Fordham (the first and third defendants). 930 Mr Cox submitted that the first and third defendants acted with demonstrable contempt for his rights as the occupier and a person of good character. Those defendants were not prepared to provide details of specific matters so the files could be retrieved and studied prior to any interview and deliberately engaged in deception to gain entry for Ms Stinson and Mr Fordham. There was also the obviously pre-arranged telephone call on Mr Fordham's mobile telephone and his opening the door of the house to admit the TCN Nine camera crew. Part of what occurred at the house was shown on the promo and the program to Mr Cox's disadvantage. Mr Cox also relied on what happened after he told Mr Fordham and the camera crew to leave. Mr Cox pointed out that the defendants were aware of the awards won for excellence in building and the franchise operations. Mr Cox complained that the first and third defendants had complete disregard for any damage the results of their incursion and trespass might do and that the conduct in which they engaged was for TCN Nine's commercial purposes, in promoting and gaining ratings for ACA. 931 Mr Cox relied on ACA being telecast nationally during prime viewing time and having a viewing audience in New South Wales of 694,000. The first defendant's financial reporting package (confidential Ex AJ) shows a large operating revenue for the last 2 years and a fluctuating operating profit. It was part of the Publishing and Broadcasting Limited (PBL Group), a major public company. 932 It was submitted correctly, that Mr Cox was affronted by the incursion and trespass and the conduct during it and felt offended, angry, stitched up, feared for his reputation and was shocked and horrified. 933 It was submitted that a substantial award for aggravated damages in the order of $75,000 should be made to compensate Mr Cox for his injured feelings as his sense of injury resulting from the wrongful physical act was justifiably heightened by the manner in which the first and third defendants committed the trespass. 934 It was further submitted that a very substantial award of exemplary damages to punish TCN Nine and its reporter was merited and that award should be between $500,000 and $1 million. In XL Petroleum v Caltex Oil (1985) 155 CLR 448 after holding that exemplary damages may be awarded against only one of several defendants the High Court went on to consider whether the award of the jury of $400,000 by way of exemplary damages was so large as to be unreasonable and whether the reduced sum of $150,000 was excessive. XL which intended to set up in business in New South Wales as a seller of petrol at discount prices acquired the right to occupy certain land as a service station. The land had formerly been used as a service station by Caltex, a large oil company, which had installed underground petrol tanks but it had not been so used for about two years before XL obtained its right of occupancy. On the morning XL took possession, Caltex employed an industrial plumber to spike the tanks. In an action for trespass, the jury awarded XL $5527 for damages for the cost of replacing the tanks and the loss of profits and $400,000 exemplary damages against Caltex. Gibbs CJ held that the Court of Appeal was correct in reducing the amount of $400,000. He regarded the amount of $150,000 as neither too low nor excessive and said that the circumstances justified a large award. Mason J and Wilson J agreed. 935 At 471 Brennan J said: "As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories. In Merest v Harvey substantial exemplary damages were awarded for a trespass of a high-handed kind which occasioned minimal damage, Gibbs CJ saying:

[690]

"I wish to know, in a case where a man disregards every principle which actuates the conduct of gentlemen, what is to restrain him except large damages?" (footnotes omitted). 936 That passage was referred to with approval in Lamb v Cotogno (1987) 164 CLR 1 at 9 and by Spigelman CJ in Anning, supra at 363. 937 Anning was the legal occupier of 92 acres at Wyee on which he had built a motorcycle track constructed with second hand tyres 1.68km long. It was used to train young motor cyclists. Others used the track as well. The property was also used for the storage of used tyres. Anning purchased used tyres which were delivered to the property by truck. At the relevant time he had been receiving at least one thousand tyres every week. The presence of the tyres was a worry to the Environmental Protection Authority (EPA). The EPA had been watching the road near the property. On 10 November 1995, a journalist - employee of TCN Channel Nine accompanied by a camera crew was waiting near the property. Upon a delivery of tyres arriving by truck and being admitted to the property by Anning and the truck and Anning leaving the area of the entrance gates a number of vehicles containing persons employed respectively by the EPA, the Lake Macquarie City Council, the NSW Police Service and TCN Channel Nine travelled through the entry gates onto the property. Anning began to sort the newly arrived tyres. Four camera men about 50 feet away held video cameras pointed towards him and filmed him. On asking and being told by an officer of the Lake Macquarie City Council that the camera men were the media Anning told them, "Get off the property, I don't want you here". A little later he came across the journalist and when she said that she wanted to do a story now he replied, "I just want you to go." At 349 the Chief Justice held that the implied licence was limited to entering the land to request permission to film but TCN Nine did not enter for that purpose. It entered to film the raid, record Anning's use of the land, and conduct such interviews as it could with a view to broadcasting a program. 938 I have narrated the background facts to show that Anning was a markedly different case from the present and in response to Mr Cox's contention that it should not be used as a guide as to amounts in the present case. However, the discussion of damages in the case is helpful. 939 At [178] the Chief Justice said: "General damages should reflect the significant purpose of vindicating [Anning's] right to exclusive occupation. This requires a substantial award. (See Plenty v Dillon (1991) 171 CLR 635 at 654-655 per Gaudron J and McHugh J). I would assess such damages as $25,000." 940 The right of exclusive occupation was important in the present case. The first and third defendants intruded into the home occupied by Mr Cox and his daughter and in which they were working and carrying on business on behalf of Craftsman Homes Australia Pty Limited and, mainly, Ilvarity. The first and third defendants were aware that no such intrusion would have been permitted if the significance of the identities of Ms Stinson and Mr Fordham, their employment by the first defendant and their purpose had been known. Further once inside the premises Mr Fordham facilitated a further violation of Mr Cox's rights by admitting the camera crew. This was close to a virtual 'take-over'. The first and third defendants knew that Mr Cox would never have sanctioned this. The first and third defendants were slow to withdraw after being asked to leave and continued the intrusion from the doorway. A substantial award is required. I assess the general damages at $60,000 in the present case. 941 As to aggravated damages the Chief Justice in Anning at [179] said: "This is also an appropriate case for aggravated damages. The hurt to feelings, humiliation and affront to dignity experienced by the respondent was aggravated by the way in which the appellant acted in the course of its trespass. It confronted the respondent with cameras rolling and indicated clearly that it was filming for purpose of broadcast to the public at large. Furthermore, whether before or after the confrontation with the respondent, it widened the trespass from merely approaching him and felt able to film elsewhere on the property, both in front of the stacks or tyres and in the interview with the truck driver. This conduct justifies an award of aggravated damages which I assess in the amount of $25,000." 942 The present case is also an appropriate one for aggravated damages. The hurt to feelings, humiliation and affront to dignity experienced by Mr Cox was aggravated by the way in which the first and third defendants acted in the course of their trespass. That included Mr Fordham letting the camera crew into the home at Edmondson Park, then, with cameras rolling, confronting Mr Cox with broad general allegations of poor work and an accusation of having left a trail of devastation and filming him. No prior notification was given. The statement that Mr Cox should answer questions rather than "running away" aggravated the hurt, especially when it was shouted out from the front door while Mr Fordham and the camera crew were hovering around. Mr Cox must have been aware that his reputation and the business in which he was deeply involved were being attacked and damaged. 943 The conduct of the first and third defendants justifies an award of aggravated damages which I assess at $50,000. 944 As to exemplary damages Spigelman CJ in Anning said at [180] - [188]: "Exemplary damages are awarded for "conscious wrongdoing in contumelious disregard of another's rights" (Whitfeld v De Lauret & Co (1920) 29 CLR 71 at 77), a phrase which covers "at least the greater part of the relevant field": Gray v Motor Accident Commission (at 7 [14]). Other expressions used have included "high-handed, insolent, vindictive or malicious" conduct. (Uren v John Fairfax (at 129) per Taylor J. See also Gray v Motor Accident Commission (at 5 [8]-[12]).) The conduct on the part of the appellant to which I have referred in my consideration of aggravated damages, is conduct of a character that could justify an award of exemplary damages. A number of additional factors could also support such an award. The public appeal of a program like "A Current Affair", in the success of which the appellant has a clear financial interest, is significantly enhanced by actual footage of "dastardly deeds" and "guilty men" or "guilty women". Intrusion onto the respondent's land was an important part of the value to the appellant of its investment in the story, of a character that it could not obtain without committing a trespass. Furthermore, the power of the mass media in comparison with an individual like the defendant is, in my opinion, a material consideration when determining whether conduct should be punished or should be deterred. In a democratic society power is not wielded only by instrumentalities of government. (Cf Uren v John Fairfax (at 130-131) per Taylor J.) High-handed conduct approaching arrogance may well be manifest by private corporations. (See, eg, Wasson v California Standard Co (1964) 47 DLR (2d) 71 esp at 79, 80, 86. Note XL Petroleum (at 461) "a large company" per Gibbs CJ.) I would not, myself, have interfered with her Honour's award of exemplary damages on the basis that it was not open to her Honour to find that the circumstances were such as to justify such an award. In view of the errors of law committed by her Honour, the discretion falls to be re-exercised by this Court. I have come to the conclusion that, on balance, this is not an appropriate case to award exemplary damages. Such damages are awarded rarely and require something more than a finding of fault. (See Gray v Motor Accident Commission esp (at 6[12], 9 [20]). See also Ellison v L [1998] 1 NZLR 416 at 419.) In my opinion, the appellant's conduct was not, in the circumstances of this case, of sufficient gravity to be described as contumelious disregard of the respondent's rights. In reaching this conclusion I have in mind the fact that the conduct did not, for the reasons I have expressed above, affect privacy interests in the way an intrusion into a residence with respect to personal, rather than business, affairs would do. Furthermore, the issues involved raised matters of genuine public interest in the context of investigations by public regulatory authorities. Finally, the tone of the appellant's questioning, while forceful, was not insulting or overbearing. The context of the confrontation is also of significance. At one point the respondent engaged the appellant's representatives in discussion about telling his side of the story. Furthermore, when specifically asked to leave, Ms Brown indicated that they would. There is no evidence that they did not do so promptly. In all the circumstances, in my opinion, exemplary damages should not be awarded." 945 In the joint judgment of four Justices in Gray v Motor Accident Commission (1998) 196 CLR 1 at 7 this passage appears: "In considering whether to award exemplary damages, the first, if not the principal, focus of the inquiry is upon the wrongdoer, not upon the party who was wronged. (The reaction of the party who is wronged to high-handed or deliberate conduct may well be a reason for awarding aggravated damages in further compensation for the wrong done. But it is not ordinarily relevant to whether exemplary damages should be allowed). The party wronged is entitled to whatever compensatory damages the law allows (including, if appropriate, aggravated damaged). By hypothesis then, the party wronged will receive just compensation for the wrong that is suffered. If exemplary damages are awarded, they will be paid in addition to compensatory damages and, in that sense, will be a windfall in the hands of the party who was wronged. Nevertheless, they are awarded at the suit of that party and, although awarded to punish the wrongdoer and deter others from like conduct, they are not exacted by the State or paid to it." 946 I have applied those principles. I would also refer to the discussion of exemplary damages and the reasons of Palmer J by Heydon JA in Harris v Digital Pulse Pty Ltd (2002-2003) 56 NSWLR at [241]-[256]

[695]

Messrs Stephensons were the solicitors for the Mosses in July 2000. 956 In my opinion there is no evidence that Mr Munro, the program's presenter was in any way responsible for, or liable for, this alleged trespass. 957 The defendants contended that Ilvarity could not maintain this claim because, as at early 2002 when the first and third defendants visited the Mosses' land and the house being built for them, Ilvarity was not in actual possession of the site and therefore did not have suffciient title to maintain an action for trespass. Having received the notice of suspension of progress of the works about 30 June 2000 Ilvarity was required to cease work and vacate the site after the removal of all equipment and building materials on or about the site (cl 5.01). It Is not easy to reconcile a requirement for Ilvarity to vacate the site upon being served with a written direction of suspension and an entitlement to exclusive possession under cl 19.01 "from the commencement of works until the date of receipt by the builder of all moneys due under the contract pursuant to clause 9.01 hereof". Assuming 9.01 should be 10.01, as I believe, that is a reference to the contractors entitlement upon the issue of a certificate of practical completion "to receive all moneys due and payable under this contract and variations". Under clause 9.01 the works are deemed to be practically completed when they are reasonably fit for occupation by the proprietor or when the proprietor takes possession whichever may be earlier. Practically, subject to any rectification of defects under the defects liability clause, that is, virtually at the end of the job. 958 The resolution of this difficulty may be that the entitlement to exclusive possession of the land is also in suspension while the progress of the works remains suspended. The builder has to secure the site and remove all equipment and materials. Those are significant steps to avoid the risk of injury to persons coming onto the land. Upon suspension the builder may have to notify both its insurer and the Home Owners Warranty insurer but that is another issue. 959 The facts reveal that Ilvarity was not present on the site after July 2000 save for three visits. and therefore not in actual possession, whatever its entitlement may have been. Mr Crandon visited the Mosses' property in August 2000 at the behest of Ilvarity and Mr Cox. Mr Chaseling was present at the inspection of Mr Larry James on 18 October 2000 and indicated the course which Ilvarity was going to take. Mr McDonald inspected the property in April 2002. Ilvarity did not physically return to the site until June 2002 when the suspension was lifted. 960 Mr Moss was entitled to be on the property to attend to matters such as the ducted vacuum air conditioning and electricity trench back filling. The Mosses were in sole possession of the property from August 2000 until early June 2002 and had sole access to the partly built house except for the inspections. Mr Moss went to the property at least two or three times per week undertaking general maintenance works, gardening and mowing. With the size of the property there was much to be done. Mr Chaseling was aware of this. 961 By fax of 25 February 2002 to Mr Fordham, ACA, which was written after Mr Chaseling became aware of ACA's intended program, he stated that if Mr Fordham had been to the Mosses' site he may be subject to prosecution for trespass as CH had exclusive possession of the site under the terms of the building agreement. Mr Chaseling did not suggest that Ilvarity was in actual possession of the site. He had previously advised Mr Fordham by letter (or fax) of 21 February 2002 that Mr Moss had exercised a cease work clause in the building agreement on 29 June 2000 and that the Mosses' home had a stop work order issued by the certifying authority due to unapproved and deficient works completed by Mr Moss and not by CH. I do not think that either fax affects the position. 962 As at February 2002 the Mosses were in exclusive possession of their land and had been since at least August 2000. Ilvarity had vacated the site as it was bound to do and the progress of the works was suspended and had not resumed. The first and third defendants were present at and on the Mosses' land with the consent and approval of the Mosses, the owners. 963 In the circumstances which existed as at February 2002 Ilvarity was not entitled to sue the defendants in trespass. It did not have sufficient title. 964 I have found it unnecessary to resolve the question whether the Mosses had validly terminated the building agreement by their solicitors' letter of 7 July 2000. There is the Mosses' contention that as at that date the works were serious defects, that the defects were not being remedied, that Ilvarity was intending to cover up the defects and that Ilvarity was demanding moneys to which it was not entitled. Ilvarity has denied the extent and seriousness of the defects alleged and contended that it was prepared to fix any defects. It rejects the suggestion of a covering up of defects being in contemplation. 965 The defendants submitted that it was completely irrelevant that following settlement negotiations in June 2002 the contract was effectively re-instated. Ilvarity would challenge that this is a correct summary of what had occurred. The alternative view is that the letter of 5 June 2002 was an acknowledgment on behalf of the Mosses that the building agreement had not been terminated by the letter of 7 July 2000 from the Mosses' solicitors. 966 The defendants also rejected the suggestion that they were put on notice of Ilvarity's claim to exclusive possession of the Mosses' property contending that the letter of 25 February 2002 arrived some six days after the interview on the Mosses' property. The letter arrived before the promo and the program showing shots of the Mosses' house were screened. The issues raised in this and the two preceding paragraphs do not need to be determined. As at February 2002, Ilvarity was not in possession of the Mosses' property. There must be a verdict for the defendants on the trespass count in respect of the Mosses' property.

[696]

False Representation and Misleading and Deceptive Conduct 967 In recapitulating the plaintiffs' claims I will go into greater detail: (a) TCN Nine and Mr Fordham were guilty of fraudulent misrepresentation by Mr Fordham and Ms Stinson on or about 22 February 2003 representing to each of the plaintiffs that Mr Fordham's name was John Stinson and that he was a prospective customer of one or more of the plaintiffs and was seeking an appointment and meeting for Mr Fordham under the name of John Stinson and one Sarah Stinson his wife with Mr Cox to discuss and obtain advice concerning the construction of a Craftsman Home. [In fact the representations were made prior to 22 February 2002 by Ms Stinson] That representation was alleged to be false with each of the first and third defendants knowing it to be false and intending to deceive each of the plaintiffs. It was also alleged that in reliance upon the representation each of the plaintiffs agreed to an appointment and meeting with Mr Cox, met Mr Fordham and Sarah Stinson and suffered loss and damage (para 13A). (b) TCN Nine and Mr Fordham contravened section 52 of the Trade Practices Act 1974 (TPA) and section 42 of the Fair Trading Act 1987 (NSW)(FTA) by reason of the matters set out in paragraphs 13A (summarised in sub-para (a)), 13B and 13C of the Third Amended Statement of Claim. Para 13B alleged that on a date prior to 21 February 2002 the defendants by Mr Fordham requested the plaintiffs to grant an interview but until 26 and 27 February 2004 and thereafter failed and refused to meet all the conditions requested by the plaintiffs and in particular to provide particulars in writing of the questions to be asked to enable the plaintiffs to have available the relevant files. 968 Para 13C alleges that A. The first defendant has by itself and by its servant or agent the third defendant, in trade and commerce engaged in conduct that is misleading and deceptive or likely to mislead or deceive in contravention of section 52 of TPA and s42 of the FTA; and B. The third defendant has in trade and commerce engaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of s42 of the FTA; and C. The second and third defendants have aided, abetted, counselled and procured and been directly and indirectly knowingly concerned in the contravention by the first defendant of TPA s52 and FTA s42 within the meaning of TPA s75B and FTA s61 respectively and are liable in damages for those contraventions. 969 In support of these allegations in para 13C the plaintiffs relied on: (1) TCN Nine and Mr Fordham entering and remaining upon the Edmondson Park premises which was occupied by and in the lawful possession of the plaintiffs and remaining upon the premises for the purpose of filming or taking video recordings of Mr Cox and telecasting the whole or part of that matter; and (2) Obtaining entry by the misrepresentations and conduct earlier mentioned; and (3) Doing so in the circumstances and with the knowledge of the plaintiffs' request and other matters pleaded in paragraph 13B (summarised earlier); and (4) Acting as pleaded in sub-paragraphs (1) (2) and (3) for the purpose of filming or taking video recordings and telecasting the whole or part of that matter in a program concerning the plaintiffs and for the purpose of damaging the plaintiffs (I have corrected the typographical errors in sub-para (4)) 970 The plaintiffs further and alternatively relied on the matters referred to in sub-paragraphs (1)-(4) and by ( 5) including the matter filmed or videoed and referred to in sub para (1) above, in the matter complained of in paragraph 5 (the promo - both the text and the visual images) and/or in the matter complained of in paragraph 7 (the program - both the text and the visual images) and publishing and telecasting that matter for general reception (nationally). 971 In paragraph 13D of the Third Further Amended Statement of Claim the plaintiff alleged: (a) Each of the Mosses and the Vimpanys and Noel Allan, in trade and commerce, engaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of s42 of FTA; and (b) The first, second and third defendants have aided, abetted, counselled and procured, and induced and been, directly and indirectly knowingly concerned in, the contravention by those persons of s42 of FTA within s61 and are liable in damages for those contraventions. 972 In support of those allegations the plaintiffs relied on:

[698]

(2) the publication and telecasting of that matter by the defendants. 973 Senior counsel for the plaintiffs explained (T1027) that their more straightforward pleadings as to misleading and deceptive conduct were paragraphs 13A, 13B and 13C (summarised earlier) and that paragraph 13D was an alternative formulation. 974 What tends to mark out this case is that there were four instances of misleading or deceptive conduct namely, when Ms Stinson first spoke to Ms Santin by telephone, when the initial appointment for an interview was made with Mr Cox, when access to the Edmondson Park house was gained without telling Ms Cox that they were from ACA and in the initial part of the interview when Mr Fordham and Ms Stinson told Mr Cox that they were considering building a house. Mr Fordham and TCN Nine realised that they would not be admitted to the house if it was realised who they were and the purpose of their visit. 975 The defendant's submitted that paragraph 13A of the Third Further Amended Statement of Claim appeared to be in the nature of fraudulent/negligent misrepresentation at common law. They noted that it was also used to support the trade practice claims in paragraphs 13B-D. 976 The plaintiffs replied that the claims have nothing to do with negligent mis-statements, that the intentional misrepresentation was clearly established. It was intended to gain material unfavourable to the plaintiffs to achieve (or enhance) publication. 977 The defendants submitted that the defendants or their agents made no representation to Craftsman Homes Australia or Mr Cox. In their interrogatories the plaintiffs set out the substance of the telephone conversation allegedly held between Ms Stinson on behalf of the defendants and Ms J Santin on behalf of Ilvarity, the former being in Sydney and Ms Santin in Alstonville. With the exception of the telephone number furnished by Ms Stinson the defendants in their answers to interrogatories accepted that such a conversation occurred. In it Ms Stinson said she wanted to build two homes on two blocks of land she had in the Alstonville area and that she needed "to talk to a builder to explain what she wanted and see how you build". Ms Stinson declined Ms Santin's offer of assistance and stated that she needed to see someone in Sydney. Ms Santin replied, "Our boss is in Sydney. I will give you the phone number for Fred in Sydney to talk to him and then we can make a time to go and look at your land". Ms Stinson stated, "That would be fine". 978 The defendants admitted in their answers to interrogatories that prior to 22 February 2002 Ms Stinson telephoned Mr Cox and asked in substance if she and her husband John could make an appointment with Mr Cox to discuss the construction of a Craftsman Home on land in northern New South Wales. An appointment was made for 1pm on 22 February 2002. 979 The defendants admitted that a camera used to produce the images on video number four was contained in a bag carried by Ms Stinson so it would not be obvious to onlookers, that Mr Fordham was not married to Sarah Stinson and that Mr Fordham and Ms Stinson were not prospective customers of the 1st, 2nd and 3rd plaintiffs and that they (Fordham and Stinson) were not seeking an appointment with Mr Cox to discuss and obtain advice concerning the construction of a Craftsman Home and did not have such an intention or any intention to commission the construction of a Craftsman home.

[753]

1037 The damage said by the plaintiffs to flow from the making of and reliance on the misrepresentations and by the misleading and deceptive conduct, according to the letter of particulars of 27 July 2004 comprised: (a) general damages for trespass; (b) loss and damage to the plaintiff's reputation which was caused by the publication containing matter obtained unlawfully by reason of the misrepresentations and misleading and deceptive conduct; (c) damages for pain and suffering to Mr Cox (hurt to feelings affront and such like); (d) exemplary damages. The letter also stated: "The plaintiffs contend that all these heads of damage arise both by reason of the trespass and by reason of the misleading and deceptive conduct and representation". 1038 The defendants submitted that apart from damage to reputation (which only arises in defamation actions) all of the damages claims relate to and are co-extensive with those of the Edmondson Park trespass. Exemplary damages are not available under s82, TPA, and by analogy, under s68, FTA: Miller's Annotated Trade Practices Act, 27th Edn 2006 1.82.85 and cases there cited. 1039 The defendants submitted that when exemplary damages (not available), damage to reputation (only available in defamation actions) and that part of hurt to Mr Cox's feelings attributable to the broadcasts (also damage relevant only to the defamation actions) were excluded, all that was left was general damages for the Edmondson Park trespass and hurt to Mr Cox's feelings from the Edmondson Park trespass. In respect of that trespass an award has already been made. 1040 The plaintiffs submitted that there is no public policy to limit recovery of damages for fraud or misleading and deceptive conduct under legislation to a cause of action in defamation and that the causes of action do not overlap; the mischief they seek to remedy is different. Sattin v Nationwide News was a very different case. The plaintiffs submitted that the presence of s65A TPA and corresponding sections in FTA show that absent s65A etc the Acts apply. 1041 The plaintiffs submitted that s65A did not operate to nullify s52 in its application to the present case. They contended that the causes of action under s52 were not the mere publication by the prescribed information provider but they start with the deceitful conduct which led to the trespass followed by the false and misleading statements in the publications, that is in the promo and the program. It was submitted that there was a course of conduct going far beyond what s65A protects. I accept that the false and misleading conduct starts with the deceitful conduct which led to the trespass. Except to the very limited extent which I have indicated, I do not accept that there were false and misleading statements in the promo and the program. What was there said was substantially true. 1042 In contending that s65A had no application Mr Garnsey QC invited the Court to look at the whole course of conduct from the initial misrepresentations to the telecasts. Mr McClintock SC contended that the core of the matter and the damage lay in the publication of the promo and of the program. This involves focusing on the words in s65A(2)(b) that the publication was by way of a television broadcast by the prescribed information provider. Once the publication was treated as exempt there was either no damage or nominal damage. It was the publication which caused the damage and gave rise to the imputations.

[754]

1043 The calculated deceit constituted both a false representation and false and misleading conduct and led to the trespass and the trespass led to TCN Nine and Mr Fordham questioning and filming Mr Cox and this was distressing for Mr Cox. He was particularly angry at being asked about the Moss house. The telecast not only showed Mr Cox and his reactions but portions of the allegedly defective works and the Mosses, Vimpanys and Allans with their complaints. There were portions of the "meeting" with Mr Cox which were recorded but not telecast. However, it was the telecast of the program which caused him the major damage and that enjoys the protection of s65A. For the reasons given earlier the promo does not enjoy that protection. 1044 The plaintiffs further submitted that the test for causation ("by") under s82, TPA and s68 FTA meant that on the facts of the present case, damages in respect of trespass and injury to reputation (irrespective of any trespass or defamation defences) is recoverable by each of the plaintiffs as a result of the publication achieved by the initial misrepresentations, conduct and intentional trespass and that this included general damages and aggravated damages where appropriate. 1045 I do not accept this proposition nor do I think that the authorities of Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525 require it and Marks v GIO Australia Holdings Ltd & Ors (1998) 196 CLR 494 require it. It would be anomalous to take into account the trespass or defamation but not the defences when considering the damages to which the plaintiff was entitled when there had been false or misleading conduct leading to a trespass and thence in part to a defamation publication. 1046 In Wardley at 525 the joint judgment states: "As loss or damage is the gist of the statutory cause of action for which s82(1) provides, the cause of action does not accrue until actual loss or damage is sustained. The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person." (footnote omitted) 1047 After remarking that the concept of loss or damage, like the concept of causation must be applied in a wide variety of situations they said at 525-526 as to a contravention of s52(1) in the form of misleading conduct constituted by misrepresentations: "In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connexion to satisfy the concept of causation. And, if those acts result in economic loss, that is, loss other than physical injury to person or property, that economic loss will ordinarily be recoverable under s82(1). In the context of the area of commercial conduct in which the Act operates, the reference to "loss or damage" in s82(1) plainly includes economic or financial loss. In determining when a plaintiff first suffers economic loss or damage in an action under s82(1) based on misleading conduct constituting a contravention of s52, it is necessary to have regard to the applicable measure of damages. In this respect, it would not be right to conclude that the measure of damages recoverable under the sub-section necessarily coincides with the measure of damages applicable in an action for deceit or in an action for negligent misrepresentation. The measure of damages recoverable under s82(1) can only be fully ascertained after a thorough analysis of those provisions in Parts IV and V of the Act for contravention of which the statutory cause of action may be maintained. But the common law measure of damages will in many cases be an appropriate guide, though it will always be necessary to look to the provisions of the Act with a view to ascertaining the existence of any relevant legislative intention. In a case such as the present, it may safely be assumed that the plaintiff is entitled to recover "a sum representing the prejudice or disadvantage [the plaintiff] has suffered in consequence of his altering his position under the inducement"of the misleading conduct or "the actual damage directly flowing from" that conduct, to take up and adapt well-known statements of the measure of damage applicable in an action of deceit." (footnotes omitted) 1048 The misrepresentations led to Mr Fordham and Ms Stinson gaining access to Mr Cox and speaking to him. While there was a real trespass for which Mr Cox must be compensated most of the damage which followed came from the contents of the program, that is from what the Mosses, the Vimpanys, the Allans and Ms Wilton said, what was shown of the defects alleged and Mr Fordham's comments. While the exchanges between Mr Cox and Mr Fordham and the pictures shown of what occurred enhanced the program the core of the program came from what was otherwise said and shown. Apart from the trespass I am not persuaded that the act of granting Mr Fordham and Ms Stinson access to the house at Edmondson Park and an interview with Mr Cox resulted in economic loss. It is necessary to avoid any form of double counting when the same misrepresentations lie behind the action of trespass and false and misleading misconduct and defamation proceedings have been instituted. 1049 In Wardley, as a result of untrue representations made by it to the State of Western Australia that State executed an indemnity in favour of the National Bank under which the State was obliged to make a payment when the loss of the party to be indemnified was ascertained and quantified. It was held that the indemnifier suffered no loss until the contingency was fulfilled and that time within which to commence proceedings did not run under s82(2), TPA until that event occurs. The present case is very different. 1050 In Marks v GIO Australia Holdings (1998) 196 CLR 494 the High Court considered the operation of ss52, 82(1) and 87, TPA. In the joint judgment of McHugh, Hayne and Callinan JJ this passage appears at 509: "Secondly, s82 provides, in effect, that the loss or damage that may be recovered by action is the amount of the loss or damage suffered "by conduct of" another person that was done in contravention of Pt IV or V. It contains no stated limitation of the kinds of loss or damage that may be recovered and contains no express indication that some kinds of loss or damage are to be regarded as too remote to be recovered." 1051 At p510 this passage appears: "It can be seen therefore, that both ss82 and 87 require examination of whether a person has suffered (or, in the case of s87, is likely to suffer) loss or damage "by conduct of another person" that was engaged in the contravention of one of the identified provisions of the Act. That enquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s82 or 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s82(1), or that the orders that may be made under s87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg, s52) or with equity (eg, s51AA) but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies."

[761]

At 532 Gummow J said: "The purpose and scope of s82 is to provide compensation for the injuries sustained, by contravention, in the present case, of s52." 1061 Returning to the facts of the present case, it is apparent that from the time of Ms Stinson's telephone call to Ms Santin of Ilvarity (CHNR) and Ms Stinson's lies that she was angling to set up an appointment in Sydney with Ilvarity and Mr Cox. Ms Stinson, with an untruthful story made an appointment with Mr Cox to see him at Edmondson Park along with "John Stinson" at 1pm on 22 February 2002. The latter role was to be filled by Mr Fordham. 1062 If Mr Cox had been told that Ms Stinson and John Stinson were from ACA or TCN Nine they would not have been given an appointment nor access to the house at Edmondson Park. In turn Mr Fordham would not have been able to admit the camera crew. 1063 After admitting the camera crew Mr Fordham said, "Fred I just wanted to ask you a couple of quick questions, we're from A Current Affair". The text and the video footage is covered by items 2 to 11 and 25-32 of the program. Item 25 was preceded by a question from Mr Fordham, What about the Mosses? I have at the start of this judgment summarised what else occurred. That did not appear on the program. 1064 The misleading and deceptive conduct of TCN Nine and Mr Fordham was carefully contrived. Both Mr Cox and Ilvarity suffered damage over and above the trespass and the core of the defamatory material, namely the statements made by the Mosses, Vimpanys, Allans and Ms Wilton and some of those of Mr Fordham. 1065 The misleading and deceptive conduct enabled TCN Nine and Mr Fordham to obtain access to Mr Cox, to surprise and confront him, to film him and to ask a series of questions and make assertions. Although not in the program Mr Fordham's exhortation (or harangue) to come out and talk to them, and especially his comment that Mr Cox was running away were offensive. He was under no obligation to grant interviews to TCN Nine. All this distressed Mr Cox and rightly so.

[764]

c) The passage earlier quoted from Wardley at 525 d) A comparison must be made between the position in which the person who suffered loss or damage is in and the position that person would have been in had there been no contravention. This may not be decisive. (e) In Enzed Holdings Ltd v Winthen Pty Ltd 57 ALR 167 at 182 the Federal Court said: "If the court finds damage has occurred it must do its best to quantify the loss even if a degree of speculation and guess work is involved…We emphasise, however, that the principle applies only when the court finds that loss or damage has occurred. It is not enough for a plaintiff merely to show wrongful conduct by the defendant" See also Jones v Schiffmann (1971) 124 CLR 303 at 308. f) Damages for mental stress may be awarded in appropriate cases: Miller's Annotated Practices Act, 27 Edn (1.82.68) g) Exemplary damages are not available under either ss 82 or 87, TPA: Musca v Astle Corp Pty Ltd (1988) 80 ALR 251; Marks v GIO Australia Holdings Ltd supra. 1069 If the misleading and deceptive conduct had not occurred there would have been no admission to the Edmondson Park premises, no discussion with Mr Cox, no filming of Mr Cox and no opportunity for TCN Nine to enhance its program by a personal confrontation in unfair circumstances. He would not have been harrangued and accused of running away which is often associated with guilt. Mr Cox would not have suffered the damage of his visual representation being exposed to hundreds of thousand people in adverse circumstances. He was stunned, distressed and seething at what happened. 1070 While I have held the imputations were justified and also covered by the comment defences, he and Ilvarity have suffered damage as a result of the representations. 1071 It is not easy to assess the damages. I take into account that s 65A, TPA does not apply to the promo. The damages which I assess do not include aggravated damages or a punitive element. The principal damage was suffered by Mr Cox. I take into account that he has been awarded damages and that the defences to the imputations have been upheld. I must avoid double counting and be careful not to award damages in respect of the material in the promo and the program covered by the imputations. In assessing the compensatory damages I can do no better than make an estimate of the damage flowing from the misleading or deceptive conduct. I assess the damage suffered by Mr Cox by the misleading and deceptive conduct as $50,000. 1072 Ilvarity (CHNR) was not entitled to damages for trespass but it was the builder of the houses under attack in the promo and the program. The name of Craftsman Homes Northern Rivers is mentioned four times in the program and there is a video picture of "Craftsman Homes" signage in the promo. The misleading and deceptive conduct practised on Mr Cox also affected CHNR adversely and led to the enhancing of the program against it but to a lesser extent than Mr Cox.

Craftsman Homes Australia Pty Limited & 3 Ors v TCN Channel Nine Pty Limited & 2 Ors

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