Di Lullo v JG King Pty Ltd

Representation: Counsel:
A Barnett (Plaintiffs)
F Galvin (Defendant/Cross-Claimant on the First Cross-Claim)
T E O’Brien (First Cross-Defendant on the First Cross-Claim/Cross-Defendant on the Second Cross-Claim)
R A Parsons (Second Cross-Defendant on the First Cross-Claim/Cross-Claimant on the Second Cross-Claim)
Solicitors:
Holding Redlich (Plaintiffs)
Champions Lawyers (Defendant/Cross-Claimant on the First Cross-Claim)
HBA Crawford (First Cross-Defendant on the First Cross-Claim/Cross-Defendant on the Second Cross-Claim)
Hicks Oakley Chessell Williams Lawyers & Notary (Second Cross-Defendant on the First Cross-Claim/Cross-Claimant on the Second Cross-Claim)

File Number(s): 2022/00133113

Publication restriction: Nil

JUDGMENT

1. The plaintiffs, Adrian and Letticia Di Lullo (‘the Di Lullos’) engaged JG King Pty Ltd (‘the Builder’) to build a house on the Di Lullos’ property in a town in south-western New South Wales (‘the property’). The house was completed in June 2017. Subsequently, elements of the house, including the roof, the wall bracing, the walls, wet areas, cornices, floors and fixtures have suffered damage because of significant movement in the house. The movement has been attributed to the slab on which the house is built, which is a waffle slab, becoming distorted in a process referred to as ‘edge heave’.

2. In these proceedings, the Di Lullos allege that the Builder has breached statutory warranties provided for under s 18B(1) of the Home Building Act 1989 (NSW), has breached its contract with them, and has breached the duty of care imposed on it under s 37 of the Design and Building Practitioners Act 2020 (NSW). The Builder denies that it breached statutory warranties, breached the contract and/or breached the duty of care under s 37 of the Design and Building Practitioners Act 2020.

3. The Builder has brought a cross-claim (‘the First Cross-Claim’) against both Mr Enio Sciessere, the engineer who designed the slab for the Di Lullos’ house pursuant to an agreement with the Builder, and against Newpoint Reinsurance Company Ltd (‘Newpoint’), the reinsurer for General Professional Indemnity Ltd, which is allegedly in liquidation. The applicable version of the First Cross-Claim is the amended version of 18 May 2023. The First Cross-Claim needs to be considered only in the event that the Builder is found to be liable to the Di Lullos on at least one of the bases alleged. A claim was made against Newpoint under the insurance policy in force from 1 June 2021 to 1 June 2022.

4. Mr Sciessere has brought a cross-claim (‘the Second Cross-Claim’) against Newpoint seeking an order that Newpoint indemnify him against any liability that he may have arising out of the slab design. Mr Sciessere was the sole director and principal engineer of Enrik Engineering Pty Ltd (‘Enrik’), which was the firm engaged by the Builder to design the waffle slab. Enrik is now in liquidation.

5. This judgment deals only with the liability issues raised by the claim and cross-claims. The plaintiff bears the onus of proof, in relation to its claim, on the balance of probabilities. The cross-claimants bear the onus of proof, in relation to their cross-claims, on the balance of probabilities (s 140 Evidence Act 1995).

6. At the hearing of the matter, oral evidence was given by Ms Di Lullo, Mr Di Lullo, Mr Andrew Simmie (Building Manager of the Builder), Dr Peter Redman and Mr Robert van Heusden (Geotechnical Engineering evidence, concurrently) and Mr Philip Xeros, Mr John Tamaressis and Mr van Heusden (Structural Engineering evidence, concurrently).

Facts

7. The Di Lullos purchased the property in October 2010. The Di Lullos engaged the Builder to construct the house and the parties entered into a contract on 31 August 2016. The contract was a contract to which the Home Building Act 1989 applies. In Schedule 3, the contract listed plans prepared by the Builder as the plans identifying the work to be completed by the Builder under the contract. The contract provided for ‘standard inclusions’, including (see CB p 226 and 228):

3. FOUNDATIONS and FOOTINGS:

Thermally efficient, engineer designed ‘M’ class concrete waffle pod slab (site specific).

…

25. EXTERNAL CONCRETE:

Plain concrete paving to porches, verandahs, porticos, and alfresco area (product specific – to suit Class ‘M’ soil conditions).

8. The Builder engaged Enrik to design a waffle slab for the house. The Builder obtained a site investigation report from Macgregor Geotechnical Pty Ltd (‘Macgregor’) (‘the Macgregor Report’), which classified the site as H2. The content of the Macgregor Report, including the classification of the site, was provided to Enrik and informed the design of the waffle slab. The Macgregor Report is dated 15 April 2016 and the engineering design produced by Enrik is dated 18 August 2016 (see CB p 192-209).

9. Enrik’s waffle slab design document included some notes on erosion control (CB p 196) including:

3. All stormwater should be re-directed from the construction area via appropriate grading of the site and/or placement of open drains.

The notes on drainage requirements included the following:

2. Surface drainage shall be constructed to avoid water ponding against or near the footing. The ground in the immediate vicinity of the perimeter footing … shall be graded to fall 50mm away from the footing over a distance of 1m and shaped to prevent ponding of water. Any perimeter paving shall also be suitably sloped away from the footings.

3. Where perimeter paving slabs are constructed they must have a 10mm layer or ableflex or similar between the paving slab and the footing/wall. An agricultural drain or similar must be installed at the outer edge of the perimeter of the paving slab as per detail and is to be diverted to the legal point of discharge.

10. The Builder poured the slab on or about 24 October 2016. Ms Di Lullo’s evidence was that, in September and October 2016, the property experienced frequent rainfall and that the ground was muddy. This was disputed to some extent by Mr Simmie.

11. The Builder built the house on the slab, and laid concrete paving along the length of the front (southern side) of the house which comprised a wide porch section in the middle of the front elevation of the house and narrower verandah sections on either side of the porch. These areas are open to the south, east and west sides and have a roof. The Builder also laid concrete paving to an “alfresco area” of 5.05m x 3.375m at the centre of the outdoor area to the rear (northern side) of the house. The alfresco area has a roof, and is open to all sides. The installation of the concrete paving for the front of the house, under the verandah, and the installation of paving for the alfresco area, involved the placement of a layer of sandy clay on the natural clay ground, and the placement of a layer of silty sand on top of the layer of sandy clay, with the concrete path on top of the layer of silty sand. The fill, which extends up to the second course of bricks on the wall of the house, sits against the side of the edge beam of the waffle slab and much of the footing. Aitken Rowe, Geotechnical Engineers, undertook an investigation of the site in August 2020 and provided a report dated 11 September 2020 (see CB p 944.7). Aitken Rowe noted that the concrete paths are approximately 300mm higher than the surrounding natural ground level. It was further noted as follows (CB p 944.8):

…weep holes within the brickwork were located at or slightly below the existing concrete paths which have been raised from natural ground height with poorly compacted clay and sand fill.

12. Mr Di Lullo, in his affidavit of 18 October 2024, said that he had dug some pits around his house to investigate certain matters, at Dr Redman’s request. In mid-March 2024, Mr Di Lullo dug a pit 30 by 50cm wide and 20cm deep at the outer edge of the verandah paving, in front of the bedroom. He saw, in the first pit, that the concrete verandah slab and the slab footing had a layer of uncompacted fill between them. Mr Di Lullo took a photograph, which is annexure B to his affidavit. In early April 2024, at the request of Mr Xeros, Mr Di Lullo set about investigating what was underneath the verandah slab and what was the width of the strip footing. Mr Di Lullo dug a second pit (‘the second pit’) near the Aitken Rowe pit at the south-eastern end of the front of the dwelling. He dug about 20cm below the verandah slab and dug a tunnel from the second pit towards the Aitken Rowe pit for about 60cms. Observation of the tunnel shows that the only thing between the verandah slab and the verandah slab footing is uncompacted fill. Mr Di Lullo took photographs of the second pit which are annexure C to his affidavit.

13. Prior to the hand-over of the house to the Di Lullos, with the knowledge of the Builder, the Di Lullos engaged a contractor to construct a concrete pad between the garage and the house, for use as a car parking area and a concrete approach to the entrance to the garage.

14. Before hand-over by the Builder, in about April 2017, the Di Lullos also installed a septic tank, an air-conditioning unit and ducting, five ceiling fans, and four down lights in the kitchen.

15. In her affidavit, Ms Di Lullo said the following:

39. In or about late 2016, during construction I noticed that down pipes had not been installed. I also noticed water was sitting around the perimeter of the house. I observed that the guttering did not have any downpipes installed, and water was dripping from the gutters to where water was sitting on the ground. The guttering and roofing have been leaking since before handover. From my observations, it appears that the gutters are not able to deal with moderate to heavy rainfall. …

16. In cross-examination, Mr Di Lullo referred to a photograph he took on 14 February 2019 of the roof gutter overflowing at the front of the house to the left of the porch.

17. After hand-over, which took place on 22 June 2017, in about October or November 2017, Mr Di Lullo dug a trench to take power to the shed and, in doing so, accidentally damaged a stormwater pipe, which is a PVC pipe. The stormwater system is a charged system, so the pipe immediately gushed water through the hole. Mr Di Lullo immediately repaired the pipe.

18. In November and December 2017, the Di Lullos engaged a concreter (‘the concreter’) who installed concrete paving on either side of the alfresco area along the rear face of the house at a width of 1.3 metres at the same level as the paving in the alfresco area which had been installed by the Builder. Concrete steps were installed at the edge of the alfresco area. The paving also extended along the eastern side of the house, at the same level. The installation of the concrete paving included the placing of silty sand around the edge of the house and compacting it with a machine, the construction of formwork, and the pouring of concrete.

19. In April of 2020, T&M Plumbing found a puncture in a stormwater line adjacent to the paving undertaken by the concreter. The puncture was repaired on 20 May 2020 (Ms Di Lullo’s first affidavit paragraphs 75-78). It has been assumed that the puncture occurred in November or December 2017 and that it was caused by the concreter piercing the stormwater pipe with a star picket used for constructing the formwork for the concrete path.

20. When the Builder installed the paving at the front of the house and in the alfresco area, the material laid as the base for the paving was levelled by patting it with a Dingo Digger bucket. For the paving installed by the concreter engaged by the Di Lullos, the base material for the paving was compacted with an upright rammer, sometimes referred to as a Whacker Packer.

21. Expansion joints were not installed by the concreter between the paving and the house or the downpipe for the house.

22. In about October 2017, about three months after hand-over, prior to beginning the preparation for the seeding of the front and back yard with lawn seed, the Builder sought a “Maintenance List” from the Di Lullos. The list the Di Lullos provided appears at p 269 of the Court Book and includes, relevantly and in summary:

23. Bed 3 Door screws pulled out, crack in wall at window

24. Bed 4 Door screws pulled out, crack in wall at window

25. Living windows – cracking on corners (movement)

26. Living room – Large window Air drafts and window needs adjusting

27. Front bedrooms – condensation on windows with heater on

28. Front verandah leaks in one spot after heavy rain

29. Beams pulling away on front beam on verandah

30. Movement on alfresco corner boards

31. Bed 4 door doesn’t shut

32. Laundry door - need adjustment

33. Shelf under sink starting to swell due to …..cracks in concrete.

34. In November or December 2017, the Di Lullos prepared the front yard for the planting of grass seed. Mr Di Lullo spread earth, which had been placed in mounds on the area from the building of the house, over the front yard. He subsequently spread manure over the area and then used a tractor, pulling an offset disc, to plough the land and mix in the manure. Mr Di Lullo then ran a levelling bar over the area. The soil adjacent to the concrete pavers at the front of the house was, by the end of those processes, approximately 50mm lower than the concrete pavers in front of the house, and was graded down to the street (see transcript p 68 – 70). Grass seed (Upper Murray Hardy Lawn) was sown in April 2018. Mr Di Lullo installed a watering system for the front yard in mid-February 2018.

35. Ms Di Lullo’s evidence was that the watering system in the front yard was used two or three times per week for a couple of weeks after the grass seeds were sown in April 2018. Thereafter, it was programmed to run once per week for 10 to 15 minutes until March 2019, when it was re-programmed after the Di Lullos received a report from Enrik Engineering Pty Ltd which led them to water, in Ms Di Lullo’s words “only when absolutely necessary to prevent our lawn from dying”.

36. In cross-examination, Ms Di Lullo said that the back yard was prepared for landscaping in April 2018 and grass seeds were sown. Mr Di Lullo said that he went through the same process to prepare and seed the back yard as he undertook for the front yard, including creating a slope away from the house. A watering system was installed. The watering system was set to water at night, on a timer.

37. For two years after handover, when the Di Lullos had moved into the house, the air-conditioner discharged water onto the concrete on the eastern side of the house when it was operating during the winter months. After two years, Mr Di Lullo installed a temporary drain to take the water away from the house, and that temporary drain was eventually replaced with a permanent drain.

38. Mr Di Lullo installed a sump pit near the western wall of the garage to capture underground water. He uses a submersible pump to remove the water from the sump pit as needed.

39. Enrik inspected the Di Lullos’ property on 15 January 2019 and produced a report dated 22 February 2019 (‘Enrik’s first report’). Enrik’s first report said, among other things (CB p 274):

At the time of the inspection the distress observed at the property included, but is not limited to:

- separation of window and door frame below brick lintel (2mm)

- compression and expansion of articulation joints on the eastern façade and bedroom 4 window external.

- cornice separation in alfresco area (3mm approximately)

- cornice separation along hallway of kitchen/family room (up to 15mm approximately)

- tile cracking along skirting board family room/bath wall and wc/bedroom 4 (2mm)

- plaster cracking diagonal from door Bedroom 2 and 3 and window of Bedroom 3 and 4 (5mm)

Floor levels recorded at the property indicate a total variation in floor levels of 60mm throughout the entire footprint of the house and garage, after reducing floor levels to account for changes in floor coverings and slab step downs. The highest point of the slab was recorded in the south-east corner of the bedroom 3. The lowest point of the slab was recorded on the south wall in the family room.

29. It was also observed, in Enrik’s first report (CB p 275):

Whilst there is paving surrounding the perimeter of the property with fall away from the residence, there is currently no evidence of surface/subsurface drainage apparent to collect stormwater runoff around the perimeter of the slab. This is strongly recommended on highly reactive sites such as this to minimise and regulate moisture ingress around the perimeter of the property. Currently any water runoff from the paving or the surrounding site would infiltrate the soil beneath the paving slab, which would then remain damp as the paving would prevent the soil from naturally drying at the surface.

30. In her affidavit of 15 November 2021 (‘Ms Di Lullo’s first affidavit’), at paragraph 50, Ms Di Lullo said that the following defects were also present on the property:

(a) the verandah roof leak defect …. This continues to be an issue and has been since handover. There are no downpipes at the front verandah to direct water away from the house. In moderate to heavy rain, I observe the gutters fill and overflow. The water will then pour into the roofing, and observe some water staining on the ceiling of the front verandah. …

(b) the garage slab is cracking;

(c) the eaves lining of the rear verandah appear to have separated from the cornice trimming. A gap between the cornice and the eaves lining is visible;

(d) decorative bracket trims to the porch and verandah are falling off. We have attempted to fix these, but they keep falling off; and

(e) the timber frame of the verandah is screwed into the frame of the house, through the brick lining. This fixing, the brick lining and the edge of the framing is exposed to the weather. …;

31. Ms Di Lullo said the following in relation to cracking and distortion in the house at paragraph 52 of her first affidavit:

(a) the steel framing has started to push through plaster in the kitchen and entryway, and the plaster in the walls and ceiling has bowed inwards….;

(b) the air conditioner vent is now protruding from the plaster ceiling;

(c) there is cracking at the cornice, which is becoming more severe as time passes and I have observed that the cracking appears to track behind the cornices;

(d) the bathroom wall has bowed outwards and the surface of that wall is rounded, which appeared 6 months after handover; and

(e) nearly every run of cornice in the house is separating from the ceiling.

32. Ms Di Lullo said the following in relation to the windows:

110. The windows let in water, dust and debris. In particular the front windows become mouldy frequently, as they are constantly wet. The painted reveals in the front rooms are damaged and the paint is progressively peeling away.

33. The Di Lullos were given a copy of Enrik’s first report in about early March 2019. In response, they ceased the regular watering of their lawns, watering only when necessary to prevent the lawn from dying.

34. The Builder engaged T&M to undertake some investigations. T&M conducted a flood test on about 5 December 2019.

35. Enrik conducted a further inspection on 12 March 2020, with Mr Simme. Enrik produced a further report dated 19 June 2020 (‘Enrik’s second report’). In Enrik’s second report, the following observations were made, among others (CB p 290-291):

It is apparent that distress has increased throughout the property since the previous inspection, particularly evident toward the western side where plaster cracking and cornice separation has further developed in bed 1 (including the dressing and ensuite), the butler’s pantry and the western hallway leading toward the garage.

…

An additional set of floor levels were conducted during the site inspection. The overall deviation recorded was 78mm throughout the entire foot print of the property, once levels were reduced to accommodate for the different floor coverings and the stepdown to the garage. This has increased from the 60mm variation which was previously recorded.

…

The sewer test passed with no issue detected. Multiple concerns were found with stormwater drainage. These include:

- Elbows detached from downpipes causing water leaks to charged down pipes feeding the water tank. This is likely due to footing movement with no lagging to the downpipe through the concrete paving to mitigate damage from thermal and seasonal movement.

- Evidence of star picket puncturing through the stormwater pipe, possibly during the installation of concrete paving to the perimeter.

Evidence of a previously repaired section of the sealed pipe to the water tank was also evident. It is unknown how long ago this was damaged or when this was repaired.

36. T&M conducted further investigations on 27 April 2020. T&M produced a report dated 5 May 2020. As I have said, on 20 May 2020, T&M repaired the stormwater line which, it is assumed, the concreter damaged with a star picket in November or December of 2017.

37. In June 2020, the Di Lullos engaged Turdinator Plumbing to investigate further. On 26 June 2020, Turdinator Plumbing located a waste pipe join which was not operating correctly. On 22 July 2020, Turdinator Plumbing conducted a flood test and found that the sewer failed to hold water.

38. T&M conducted a further flood test on 6 August 2020 and found a damaged section of sewerage line under the house slab, near the back verandah. A subsequent flood test showed the sewerage system operating correctly. A report of 10 August 2020 was produced by T&M Plumbing.

39. The Di Lullos obtained a geotechnical report from Aitken Rowe dated 11 September 2020 (‘the Aitken Rowe report’).

40. The Di Lullos lodged a complaint with NSW Fair Trading in May 2021.

41. The Commissioner for Fair Trading issued a Rectification Order on 9 June 2021 (see CB p 367).

42. Ms Di Lullo provided an affidavit of 9 March 2023 (‘Ms Di Lullos third affidavit’), in which she listed the following further observations of the house (CB p 394 – 397):

43. On 14 February 2023, Ms Di Lullo noticed the wall to the left of the entry into the dining room was wobbling, with the bottom baseboard lifting about 20mm off the floor if the wall was nudged.

44. On 17 February 2023, Ms Di Lullo noticed:

45. that the cracking of the cornice of the ceiling in bedroom 1 was becoming larger and was radiating from the cornice across the ceiling towards the light fitting,

46. an area of discolouration and mould on the main bathroom ceiling had become larger and ran across the length of the ceiling.

47. On 1 March 2023, Ms Di Lullo noticed:

48. the gap between the floor and bottom baseboard for bedrooms 3 and 4 and for the linen cupboard appeared to have become larger,

49. the tilt of the wall adjoining the left side of the kitchen bench, and the bench itself had increased since mid 2020. There are a gaps between the kitchen bench and the walls to the side of the bench,

50. the gap between the floor and bottom baseboard on the left hand side of the entry door frame to the laundry had become larger since first noticed in late 2020,

51. The gap between the floor and the bottom baseboard on the right hand side of the door frame of bedroom 1 had become larger since first noticed in early 2020.

Geotechnical Evidence

43. Dr Peter Redman is a qualified and experienced geotechnical engineer. He gave expert evidence in the plaintiffs’ case in the field of geotechnical engineering.

44. Mr Robert van Heusden is a qualified engineer with experience in geotechnical engineering and structural engineering. Mr van Heusden gave expert geotechnical and structural engineering evidence in the Builder’s case.

45. Dr Redman provided a report dated 22 February 2023 (‘Dr Redman’s first report’) and a further report dated 15 May 2024 (‘Dr Redman’s second report’).

46. Mr van Heusden provided a report dated 18 February 2022 (‘Mr van Heusden’s first report’) and a further report dated 5 January 2024 (‘Mr van Heusden’s second report’). Both of Mr van Heusden’s reports deal with both structural and geotechnical issues.

47. Dr Redman and Mr van Heusden met via Teams on 10 October 2024 to discuss their views in relation to the geotechnical aspects of these proceedings. They have both adopted a report of that meeting dated 11 October 2024 (‘the Geotechnical Conclave Report’).

48. Dr Redman and Mr van Heusden gave oral evidence concurrently in relation to geotechnical issues.

49. Dr Redman and Mr van Heusden agreed that the house slab has been affected by abnormal moisture conditions. The moisture content of the soil near the edge of the house slab is higher than would normally be expected.

50. Dr Redman and Mr van Heusden also agreed that the movement of the house slab is properly characterised as edge heave. Edge heave is where the edges of a slab move upwards in response to the soil under those edges swelling with moisture. The resultant distortion in the shape of the slab causes cracking and other defects to appear in the house on the slab.

51. Dr Redman and Mr van Heusden agreed that, although a slab designed and constructed in accordance with the requirements of AS2870-2011 would be expected to undergo some movement in normal conditions, the movement experienced by the Di Lullos’ house slab is more that would normally be expected, and that is attributable to the abnormal moisture conditions around the edges of the slab.

Was the waffle slab suitable for the site?

52. Dr Redman and Mr van Heusden addressed the question of whether the house slab, as constructed, was suitable for the site. The house slab was designed by Enrik with reliance on the H2 classification of the Di Lullos’ site in the Macgregor Report.

53. Mr van Heusden said, in the Geotechnical Conclave Report (CB p 1712):

The site conditions as identified by MacGregor soil report resulted in MacGregor classifying the site as H2. In the process of making this classification, MacGregor omitted to include a Climatic factor/designation indicating the presence of a deep soil profile located in an area with semi-arid weather conditions.

The soil/site conditions prior to construction (based on information in the borehole logs from MacGregor) only required an H1-D site classification, which is essentially the same as an H2 site.

Recent extensive testing has confirmed the H1-D requirement, So, I would consider the house slab proposed as suitable for the site, even though the nominated site classification may not have been strictly correct in the MacGregor soil report.

54. Dr Redman said, in the Geotechnical Conclave Report (CB p 1712 - 1713):

In my opinion:

1. The site conditions indicated by the MacGregor Report were boreholes to 2m depth indicating 0.2m fill over clayey silt, sandy silt and clay and a site classification in accordance with AS2870-2-11, prior to any site works, of Class H2.

2. The soil conditions on site prior to construction of the house were probably as indicated in the MacGregor soil report.

3. At the time of the slab construction, and immediately prior, abnormal moisture conditions did not exist, but did develop later.

4. The site classification in the MacGregor Repot was incorrect. The correct site classification was H2-D, as I explain in section 3.1 of PR Report 1. Consequently, the slab did not meet the AS2870-2011 “deemed-to-comply” requirements for a H2-D site classification. That is, it had undersized edge beams and internal ribs. I acknowledge that the overall structural adequacy of the slab is outside my area of expertise.

5. A further reason why the slab was not suitable relates to the filling that took place adjacent to the main slab. At the time the house slab was constructed, and prior to any filling to construct the Alfresco slab, the front verandah and the external paving there was an absence of normal moisture conditions. The as-constructed detail at the edge of the slab as shown on the structural drawings provided only a limited fall of the ground away from the slab edge, and did not consider the subsequent filling that took place to elevate ground levels to closer to the main slab level.

6. Following the construction of the additional elements of the Alfresco and front verandah slabs, and external paving, the as constructed slab, which is assumed to now include these additional elements, was not suitable because the circumstances existed in which the absence of abnormal moisture conditions could no longer be relied on. This is because of the probable presence of a sand fill under the Alfresco and verandah slabs and the external paving, providing a preferred pathway for the infiltration of water toward the edge beam of the main slab. I also refer to section 3.2.2 of PR Report 1 and section 2.3 of PR Report 2.

What has caused the abnormal moisture conditions?

55. Mr van Heusden said, in the Geotechnical Conclave Report (CB p 1714 – 1715):

In my opinion, the abnormal moisture conditions have been caused by 5 main factors

1. Irrigation undertaken (by the owner) contributing approximately 50% of the observed perimeter heave to entire perimeter

2. Raising the surrounding ground around the house/slab and house paddock by 250mm+ (by the owner) contributing approximately 15% of the observed perimeter heave to entire perimeter

3. Plumbing leak near the NW corner (caused by owner) with a local contribution to the NW corner and rear wall of approximately 25% of the heave at that location

4 A/C unit water discharge to the NE corner (unit installed by the owner) with a local contribution to the SE corner and East wall of approximately 25% of the heave at that location

5. Close proximity of the septic tank to the slab footing along the north side (installation by owner) with a local contribution to the NE corner of approximately 5% of the heave at that location

I believe the configuration and construction of the slab footing have in no way contributed to the abnormal moisture conditions.

56. At paragraph 51 of Mr van Heusden’s second report, he says (CB p 1296):

51. The concrete paving constructed by the Builder includes a continuous concrete strip footing that is located at the perimeter of the paved area. This greatly inhibits water from getting under this paving by forming a physical barrier between the paved area and the surrounding exposed ground.

Furthermore, the concrete paving constructed by the Builder is under the house roofline and hence protected from the weather, with all rainfall controlled by the available roof plumbing.

57. As I set out above, at [12], the photographs of the pits dug by Mr van Heusden, at the request of Dr Redman and Mr Xeros, show that the verandah slab and the concrete strip footing relied upon by Mr van Heusden in the formation of his opinion were separated by a layer of uncompacted sandy fill, which means that the concrete strip footing did not inhibit water from getting under the verandah pavement, in fact, it facilitated the movement of water under the pavement to the edge beam of the house slab.

58. Furthermore, as I set out below at [126], the roof plumbing does not control all rainfall, but includes valley gutters, which are prone to overflow. One of the valley gutters, over the front verandah, overflows every time it rains.

59. In oral evidence, Mr van Heusden’s attention was drawn to the presence of loose fill between the verandah slab and the strip footing and he conceded that this provided a pathway for water to the house footings. Mr van Heusden indicated that it was not just rainwater that was using that pathway, but also irrigation water (transcript Day 2 p 155).

60. In Dr Redman’s second report, Dr Redman reproduced the contour plot of surveyed floor levels from Mr van Heusden’s report. Dr Redman said (CB p 1564-1565):

74 There is a consistent increase in differential movement from the centre outward in the central part of the house and an increase to the east and west in the eastern wing and in the garage area to the west.

75 In my opinion, this overall shape of differential movement does not indicate any significant difference between the front and rear of the house. There are some exceptions: points A and B at the front Verandah demonstrate a lesser movement and a tailing-off with time.

76 Nevertheless, there is no consistent indication from the survey data of a different response related to the extent, timing of construction, or method of construction of the external paving. This is consistent with what the individual time series plots indicated, as discussed in sections 2.4.1 and 2.4.2 above.

61. Mr van Heusden said, in oral evidence (transcript Day 2 p 139):

…We’re talking about the paving and the sand underneath the paving, so it’s like a deep roof collecting that water, discharging it off the property through the legal point of discharge would be getting rid of at least 50 per cent of the water. If you say the roof, hypothetically, goes 1.3 metres over the grass which is beyond the verandah, then at least it’s got 50 per cent less water in the situation where it could potentially threaten the slab. So that’s the point that I’m making. I’m not trying to say on this particular job we have had 90 per cent fortuitous response from the pavement. I’m saying that it takes 50 per cent of the water out of play.

62. Dr Redman said (transcript Day 2 p 139):

Well, it takes out a certain amount of the water, I agree with that, but you still have the rain falling on the ground outside, whether it be the verandah or the paving, and that of itself is what’s really driving – may be enough to be driving the behaviours, and what I’m saying is that the empirical data of what’s actually happened to the slab is consistent with that rainfall that’s falling on the ground outside of the paved areas. It’s sufficiently significant over the life of the property thus far to have led to the development of the moisture conditions and heave that we see. When we compare these specific points that I’m talking about.

63. Dr Redman said, in the Geotechnical Conclave Report (CB p 1715:

In my opinion the presence of the abnormal moisture conditions is caused by the nature of the edge detail of the paving and slab.

In summary, this is because:

1. The designed and as constructed waffle slab edge detail did not adequately protect the slab against wetting-up under the slab edge.

2. The probable presence of the sandy fill under the Alfresco slab, front verandah slab and external paved areas, has allowed water to be directed to the level of the base of the edge beam to the main slab, producing abnormal moisture conditions and excessive heave of the edge beam.

3. The survey of slab levels shows that edge heave has continued to occur, notwithstanding the absence of services leaks or normal irrigation practices.

I also refer to PR Report 1 section 4.5.2 and PR Report 2 section 2.3, where I set out my reasoning in arriving at this opinion in detail.

In my opinion the edge detail is the main factor and has influenced the slab movements during the period of irrigation and subsequently. I note that surface drainage may have had an effect locally at times, and an earlier services leak probably had a local influence prior to the leak being repaired. Neither of these secondary factors has had a significant effect on the scale or distribution of the slab movements indicated by the survey data and observations of damage.

64. In his first report, Dr Redman says (CB p 1133):

The waffle raft footing system involves the construction of the waffle raft on a level platform without the need to excavate for beams. It is a feature of the waffle raft system that the absence of an embedded edge beam makes the system more vulnerable to moisture changes near the edge. (fn See Commentary to AS2870-2011 clause C3.1.1, p125. Walsh and Cameron (1997) section 3.6, p66 also make this point in their discussion of the advantages and disadvantages of the waffle raft).

65. In his first report, Dr Redman describes Enrik’s design of the waffle slab, noting that, in a cross section drawing, Enrik shows a “fillet” of fill against the base of the edge of the slab, with the balance of the side of the edge clear of fill.

66. Dr Redman says (CB p 1134):

From a geotechnical perspective the main difference between what is shown on the Enrik Civil Structural drawings and the as constructed condition is the relationship of the edge of the waffle raft footing system to the surrounding ground. As noted in the Aitken Rowe Report test pit logs, and in the Xeros Report, the paving and ground levels around the perimeter of the Dwelling are approximately 100mm below the floor level of the slab. That is, the land has been built up around the slab to bury the main part of the waffle raft system edge beam.

67. Dr Redman, in his first report, used data from test pits dug by Aitken Rowe of 2020 to illustrate what lies beneath the paths adjacent to the house (see CB p 1136). At Test Pit 2, which was drilled into the paving adjacent to the northern side of the house, there is silty sand fill for 175mm under the concrete path and sitting against the brick wall. Below that, there is more silty sand fill for a further 180mm against the side and base of the edge beam and then, below that, there is a 120mm layer of clay fill sitting on top of the natural sandy clay. This was consistent with Test Pit 3, which was drilled at another location along the northern side of the house. Test Pit 1 was dug in the southern, or front verandah of the house and showed a soil profile under the path consisting of a layer of silty sand for 160mm directly under the path to the top of the edge beam, with a 160mm layer of sandy clay from the top of the edge beam to natural ground. The silty clay sits against the side and base of the edge beam. The Aitken Rowe report said that an abnormal moisture condition existed on the property, indicating that the moisture content of the ground was higher than expected and higher than the moisture content described by the Macgregor Report. Dr Redman says, in his first report (CB p 1136 – 1137):

57. The basic geotechnical issue with this edge detail is that the presence of the sandy fill provides a preferred, and high permeability (where permeability represents the capacity for the flow of water) pathway for infiltration from rainfall, or other sources of water such as lawn irrigation, to enter the zone under the paving and be directed to the natural ground at the level of the base of the edge beam footing.

58. In the paved areas (excluding the covered front Verandah and the Alfresco area) the stormwater and sewer services pass under the paved surface. Therefore, any services leaks occurring under or near to the paved areas could also be collected and distributed laterally along the fill zone, because of the thickness and high permeability of the sandy fill.

59. Infiltrated water would be expected to pond at the interface of the base of the fill and the natural ground and provide a boundary condition of the development of a wetting front over time that progresses into the natural ground underlying the edge beam. The consequent change in suctions would be expected to lead to swell movements in the ground under the edge beam.

60. Such an outcome negates the advantages usually provided by an impermeable surface paving adjacent to the main slab. That is, the paving usually provides a protections to the main slab with the seasonal impacts of climate largely confined to the width of the paving.

68. In oral evidence, Mr van Heusden said (transcript Day 2 p 134):

…the notion of horizontal movement by water has to be considered in the picture of that water has a mind of its own. It will tend to use a combination of gravity and suction differences in the materials that are available. Now gravity tends to dominate, we all know that water runs downhill, but it would have to be considerably wetter below the outside material. So, in other words, a depth beyond the paving. Everything has to be virtually at a point where water can no longer be absorbed by that material before that water would start to look for a path of least resistance which would be towards the house, so I – yeah, that’s pretty well my answer.

69. Dr Redman responded as follows (in part) (transcript Day 2 p 134):

…water doesn’t have a mind. It actually follows the laws of physics, but one of the circumstances that you have at the outside of the paved area is you’ve got sandy fill overlaying natural ground, and that natural ground has a much lower permeability than the sandy fill.

70. Mr van Heusden said (transcript Day 2 p 135):

…on this site, the overall site, it’s a … alluvial floodplain, a bit of underlying black soil, maybe, even impact every now and then. There’s some reactivity component, which is a long debate in itself, but what I’m - why I say that is that type of profile is incredibly variable. So from one location to another you can have quite a permeable area, and then you can have an impervious area not far away. So for – to be consistent around the total perimeter, I can’t see that the water would just want to look for a path under a concrete paving as distinct from runaway in a less permeable area within the expected soil profile of the – of lot [street name].

71. Dr Redman responded (transcript Day 2 p 135):

…I mean, the water doesn’t look. The water follows the laws of physics, and the relationship between the permeability of the sand fill versus the permeability of the underlying ground, and that permeability could be variable, but – because of the nature of geology, but it will tend to be a lot lower than the sand fill. There will be infiltration that takes place, but because of the higher permeability laterally of the sand, versus that of the material underlying it, if you did your flow net, if you like, you end up with a higher proportion of movements to the – laterally within the high permeability material than vertically. It’s a relationship between the vertical component of permeability versus the horizontal component of permeability, and that is why it’s inappropriate to use a sand fill in this sort of circumstance on a reactive site.

72. In oral evidence (transcript Day 2 p 140), Dr Redman said that the house slab was poured in October 2016. In 2017, rainfall was 95% of average, and then there was a drought in 2018 and 2019. Damage was first observed in the house in early 2018. Dr Redman said:

… so 2018 and 2019 were dry. So in that dry period, in my view, if there had been no irrigation, there would have been a delay to the observations that were made in – there wouldn’t have been any change to what was seen in January 2018, because by – the irrigation hadn’t started at that time. So the onset of damage, when we had average rainfall conditions, had already started. When – the significance of the irrigation, and to some extent I’m probably answering a later question here, but, in my view, the significance of the irrigation has to be viewed in terms what was the background climactic circumstances when the irrigation was undertaken. You can have excessive – you can have a certain level of irrigation which will be excessive in one circumstance, and not in the other.

When you look at that dry period of 2018 and 2019, that is the period when the irrigation took place, and the analysis that I took – undertook, which was looking at the assumptions I’d been asked to make about the rate of irrigation and compared it against the actual rainfall and presented it in my plot in my first report as the additional effect of rainfall, plus irrigation, because the rainfall was so much less in that period, the combination of rain, plus irrigation water meant that the conditions overall were close to average. In other words, the circumstances which ought to be able to be accommodated by a properly designed and constructed slab.

73. Mr van Heusden said (transcript Day 2 p 142):

…I have a different view on that. When a design of a slab or detailing of a slab is undertaken, there’s an aspect of that it will rain and it will have drier years and it will have wetter years, but in the overall sense it reaches some form of average. So to bring into that equation an external source of water, such as irrigation, completely disrupts that average, or disrupts that whole process, because now we’ve just interfered with what normally happens through the climactic conditions by adding a significant amount of water.

74. Dr Redman said (transcript Day 2 p 143):

I fundamentally disagree with what Mr van Heusden is saying, that somehow there’s this thing called irrigation that’s going to come in and just disrupt everything. I’m going to go back to what the fundamental process of assessing a design for the effects of climate cycles involves. AS 2870-2011 sets out things that you can do, and should do, such that you’ll end up with a stiffness of slab, which will perform adequately within certain parameters for the usual cycles of climate, but with a – sort of, a 95 per cent confidence that things won’t go really bad. It’s – and there can be lots of difference sources of wetting up of the ground. Irrigation is one of them, rainfall is one of the, drought’s one of them, leaking services is another one.

75. In relation to the plumbing and stormwater leaks, including the passage of water through trenches, Dr Redman said, in oral evidence (transcript Day 2 p 157):

…To some extent, whilst I acknowledge the potential for the leak to be a factor locally, and I think Mr van Heusden talked about a distance of ten metres around that north-western corner – I’m sort of comfortable with that sort of scale – when you look at the overall contours of the slab heave, and make allowance for the shape of the slab, and the fact that you’ve got a driveway and forward to the west, you’ve got a fairly consistent shape to the head, so whilst you could argue that there’s been localised effect from the pipe, I don’t see it as being significant.

76. In relation to the effect of water being discharged by the air conditioning unit, Dr Redman pointed out that the only evidence of a discharge of water from the air conditioning unit was a photograph of a “minor amount of water” on the concrete pavement near the unit on one occasion, which, Dr Redman said, would not have been of any significance (see transcript Day 2 p 159).

77. Dr Redman said that the primary factor in creating the moisture conditions was rainfall, with the finite period of irrigation acting as the equivalent of rainfall in a time of below average rainfall. There have been other, secondary sources of water, such as the hole in the pipe caused by the star picket, but these were localised. However, the mechanism for bringing about the edge heave which has caused the damage to the house has been the same for the primary and secondary contributors to the moisture conditions, and that mechanism is infiltration of the water to the edge beam under the pavement through the fill (transcript Day 2 p 171).

78. Dr Redman said that any effect from the irrigation would be expected to disappear within months of it ceasing in 2019 (transcript Day 2 p 177). Dr Redman disagreed with Mr van Heusden’s approach of differentiating between rainfall and irrigation as “wanted” and “unwanted” water, respectively. The issue is the impact of all of the water affecting the site, and the mechanism by which that water arrives at the base of the edge beam of the house slab (transcript Day 2 p 193).

What has been the extent of the house slab movement?

79. Dr Redman and Mr van Heusden agree that the extent of the movement of the slab is indicated by the various slab surveys, which are listed in the Geotechnical Conclave Report. They are:

Enrik Civil Structural 2019 Investigation Report 15 January 2019

Enrik Civil Structural 2020 letter 12 March 2020

Xeros Report 8 February 2021

RvH Report 1 30 November 2021

Docherty survey 10 December 2022

RvH Report 2 5 January 2024

80. Dr Redman and Mr van Heusden note that they have differing interpretations of the data collected.

81. Using the available data, Dr Redman prepared a graph which shows the movement of points A to H (CB 1153)), around the perimeter of the house over the period from 1 October 2016 to 1 October 2022 (see CB p 1153). Near the south-west corner of the house (at the front of the house), at point A, the slab heaved about 32mm between 1 October 2020 and 1 October 2021 and then returned, after 1 October 2022, to about 23mm from its position on 1 October 2016. On the south-east corner of the house, at point C, the total heave of the slab over the period plotted was 92mm, with the highest point at the end of the period plotted. Five points, D to H, were plotted for the northern face of the house. The lowest amount of heave over the period plotted was 38mm at point F, which was at the back door by the Alfresco area, and the highest amount of heave was at point D, on the north-eastern corner, which is plotted at 92mm. The graph showed a possible movement to settlement at A and possibly B, but not at any other of the points. The graph shows that the possible movement to settlement at A and B follow the plumbing repair on 20 May 2020.

82. In his first report, Dr Redman gives a detailed analysis of the movement of the edges of the slab over the time plotted in Figure 10.

83. Dr Redman and Mr van Heusden agree that the edge heave of the slab has distorted the slab to an irregular dish shape (see Figure 9 at CB p 1151).

84. Dr Redman said that there was a generally drier than average rainfall cycle between January 2019 (‘the first Enrik Civil Structural survey’) and March 2020 (‘the second Enrik Civil Structural survey’). Subsequently, there was average or above average rainfall.

85. Dr Redman noted that the trends shown in the data, particularly at points C and D on the eastern corners of the house, do not show a direct relationship to rainfall.

86. Dr Redman noted that damage was observed by January 2018, including cracks and settlement issues. By April 2018, there were observations by the Builder of plaster cracking in the hallway along bed 2 and bed 3 walls and cornices cracking along the hallways in the kitchen. Dr Redman noted that these observations were made before irrigation of the lawn began.

Is the house slab and/or the building still moving? If so in which direction (heaving or returning)?

87. Mr van Heusden said, in the Geotechnical Conclave Report (CB p 1717):

In my opinion, the measured movements of the slab are indicating a recovery phase in which future movements will continue to reduce the current magnitude of the heave being observed.

88. Dr Redman said, in the Geotechnical Conclave Report (CB p 1717):

In my opinion, based on the last survey in December 2022, movement was still occurring at some locations, including those where the greatest movement had occurred to that time. Some locations showed a flattening of movement, and some a small recovery. The movements are shown in PR Report 2 Figure 5.

89. Dr Redman said, in oral evidence (transcript Day 2 p 193):

... the empirical data, the survey, does not show a general recovery has taken place, at least at the time of the last survey. There are a couple of points which are showing a turnover, and they’re in certain, specific locations, but the other data is showing a fairly consistent upward trend of continuing heaving movement, at that time. So I’m unable – I think the building is still moving, based on that, and if so, in which direction – generally, it’s still heaving.

90. Mr van Heusden agreed that a couple of points of the edge beam were still heaving, but said that the rate of heave at those points had reduced. Dr Redman disagreed, saying that at eight points “there’s quite a consistent slope to the trend upwards, of all of the points, which sort of leads me to the relationship of that shape of the heave contoured, and a generalised influence of continuing above-average rainfall” (transcript Day 2 p 194).

91. In oral evidence, Dr Redman said that the wetting up of the ground takes months, but general recovery takes years. Mr van Heusden agreed (transcript Day 2 p 173).

Is the building (including the slab) in its present state reasonably fit for occupation as a dwelling? Has it ever been reasonably fit for occupation as a dwelling? What conditions present in the building support each answer?

92. Mr van Heusden said, in the Geotechnical Conclave Report (CB p 1718):

I consider that the building in its present state is reasonably fit for occupation as a dwelling. I also consider that it has always been fit for occupation as a dwelling. I note that I have structural engineering expertise as well as geotechnical and comment on that basis.

93. Dr Redman said, in the Geotechnical Conclave Report (CB p 1717 – 1718):

I consider that the question “fit for occupation” is not a question that relates to my geotechnical expertise but probably a question to be asked of the structural experts. I note that in terms of a serviceability question, the slab surveys provide data that enables the slope of the slab to be addressed at different locations. The slopes vary up to about 1:135 at some locations. I note that AS2870-2011 refers to slopes steeper than 1:150 as being “undesirable” (AS2870-2011 Appendix C, Table C2, note 3, p 73)

Consideration of expert Geotechnical evidence

94. I take into account the reports of Dr Redman and Mr van Heusden, the Geotechnical Conclave Report and the oral evidence of both experts.

95. Dr Redman’s opinions were based upon evidence, including physical examinations of the Di Lullos’ property, surveys and rainfall data. They were arrived at with reference to a detailed knowledge of the history of the site. They were based on the laws of physics and an understanding of the behaviour of materials, including fill.

96. Mr van Heusden’s first report was dated 18 February 2022. It stated some factually wrong assumptions, including the following (CB p 1029):

3. The construction of the slab footing was in accordance with the slab footing design.

…

5. Over the past 1½ years there has been no significant further movement of the slab footing and footing appears to have stabilized.

97. Mr van Heusden resiled from these assumptions in oral evidence.

98. In Mr van Heusden’s second report, dated 5 January 2024, Mr van Heusden assumed that “the concrete paving constructed by the Builder includes a continuous concrete strip footing that is located at the perimeter of the paved area. This greatly inhibits water from getting under this paving by forming a physical barrier between the paved area and the surrounding exposed ground”. As I have said, above, at [12], physical investigations by Mr Di Lullo, at the request of Dr Redman and Mr Xeros, reveal that there is loose sandy fill between the verandah slab and the strip footing, which has provided an ingress pathway for water. This is true for the front and the back of the house, as the survey levels show that the alfresco paving is not protecting the northern edge beam of the house slab, in the same way that the verandah paving is not protecting the southern edge beam of the house slab (see transcript Day 2 p 135-139 and 152).

99. Mr van Heusden said, in his second report, that the owners “backfilled” around the slab footing “after handover”. He objected to the description of the house slab as having been “buried” (CB p 1313). It seems that Mr van Heusden did not know, at the time of writing the second report, that the Builder constructed the alfresco area paving and the paving across the southern elevation of the house and used sandy fill directly under the slab used to lay the paving.

100. These incorrect assumptions of Mr van Heusden’s led him to cast about for explanations for what was happening to the Di Lullos’ house on a basis that was mistaken.

101. A further difficulty with Mr van Heusden’s evidence was his failure to take into account the impact of rainfall on the moisture conditions of the ground in assessing the causes of the edge heave of the house slab. This led him to overlook the fact that, in 2018 and part of 2019, which were drought years, when the Di Lullos were watering their lawn, the quantity of water being received by the ground from the sprinklers would not have exceeded rainfall in an average year. The distinction made by Mr van Heusden between “wanted” and “unwanted” water according to its source caused him to fall into error when formulating his opinion in relation to the cause or causes of the edge heave of the house slab because the impact of water on the house slab is not determined by whether it is “wanted” or “unwanted”.

102. In explaining his opinions in oral evidence, Mr van Heusden had a tendency to anthropomorphize substances and objects. For example, he referred to water as having “a mind of its own” as “wanting” and “not wanting” to travel in various ways (transcript Day 2 p 134 – 135). He also said, “the slab will want to move, move, move” (transcript Day 2 p 193). Whilst colourful, this was less helpful than describing and interpreting the events in scientific terms might have been.

103. I prefer and accept Dr Redman’s approach to ascertaining the cause of the edge heave of the house slab. Dr Redman said that the moisture conditions at the house site have arisen primarily on account of rainfall, together with irrigation to varying degrees in 2018 and part of 2019, and secondarily on account of the leaking pipe caused by the star picket, the pipes in the trenches leaking on account of failed elbow joints, and other things causing significant quantities of water to be deposited next to the paving around the house, arising and resolving from time to time. The moisture conditions are the circumstances in which the edge heave of the house slab has occurred. The edge heave, however, would not have occurred in those circumstances unless the abnormal level of moisture in the ground had access to a pathway to the base of the edge beam. I find that the sandy fill between the slab under the paving and the strip footing, together with the layers of fill containing sand around the edge beam, provide that pathway. The placement of the sandy fill between the paving slab and the strip footing and the placement of the sandy fill around the edge beam is the cause of the edge heave of the house slab which, in turn, is the cause of the damage to the Di Lullos’ house.

Structural Engineering Evidence

104. Mr van Heusden, whose qualifications and experience I have referred to above at [44], gave evidence in the defendant’s case in relation to structural engineering issues concurrently with Mr Philip Xeros, in the plaintiff’s case, and Mr John Tamaressis, in Mr Sciessere’s case.

105. Mr Xeros is a Director of Xeros Piccolo Consulting Engineers. He is a qualified and experienced engineer. Mr Xeros provided a report of 11 May 2021 (Mr Xeros’ first report), a report of 6 April 2023 (Mr Xeros’ second report) and a report of 31 May 2024 (Mr Xeros’ third report).

106. Mr Tamaressis is the Managing Director of JT Consulting Engineers Pty Ltd. He is a qualified and experienced civil engineer. Mr Tamaressis provided a report dated 3 May 2024 (‘Mr Tamaressis’ first report’), and a report of 4 September 2024 (‘Mr Tamaressis’ second report’).

107. Mr van Heusden, Mr Xeros and Mr Tamaressis met via Teams on 16 October 2024 to discuss their views in relation to the structural engineering aspects of these proceedings. They have all adopted a report of that meeting dated 16 October 2024 (‘Structural Conclave Report’).

108. Mr van Heusden, Mr Xeros and Mr Tamaressis gave oral evidence concurrently. When considering their evidence, I take into account all of their reports, the Structural Conclave Report and their oral evidence.

Suitability of the house slab

109. In the Structural Conclave Report, the three structural engineers agreed that the slab, as constructed, generally complies with the Enrik drawings and was generally satisfactory for a site of a Class H2 classification. It is common ground that the slab has a deeper edge beam (620mm) than the Enrik drawings provided for.

110. Mr Xeros says, in his second report (CB p 1233):

The AS 2870 deemed-to-comply design is considered satisfactory for a Class H2 classification, which is the classification noted in the MacGregor report, provided the edge was not backfilled to above the footing base level with uncompacted porous fill material.

In other words, the way the slab has been installed and buried has defeated the chance of satisfactory performance of the footing design, even though the structural proportions of the footing do comply with a Class H2 classification.

111. In oral evidence, Mr Xeros said that it was his opinion that the Di Lullos’ site was not suitable for a waffle house slab, even if it complied with the deemed to comply standards (transcript Day 3 p 225). In his first report, Mr Xeros said:

… it is not considered possible for the average house owner to maintain a site in the extreme fine-tuned state required to maintain a waffle raft in the circumstances such as this site where there is a highly reactive site with high-level porous backfill.

112. Mr van Heusden’s view is that the initial site classification should have been H1-D, which is essentially the same as H2, for present purposes. In his opinion, the slab was suitable for the site, both as Macgregor classified it, and as the classification Mr van Heusden considers that it was, prior to building. In his first report, Mr van Heusden says that the slab is 150% stiffer than the deemed to comply H2-D slab (CB p 1029). Mr Xeros and Mr Tamaressis do not agree. Mr Xeros does not believe that the deeper edge beam improves the structural performance of the slab. Mr Tamaressis, in his second report, says that the slab is 5% stiffer than the Class H2-D “deemed to comply” slab.

113. Mr Xeros said that the slab designed by Enrik was not suitable for the site as the site was before the house was built, which, in Mr Xeros’ view, was a H2-D site. Mr Xeros said that the site was too flat for a waffle slab. For satisfactory drainage to be achieved, the site levels would have needed to be built up with a controlled-fill building pad. Mr Xeros said that a Class H2-D classification required a larger footing system, even in the absence of abnormal moisture conditions.

114. Mr Tamaressis said, in the Structural Conclave Report, that the slab was adequate for class H2-D soil reactivity in the absence of abnormal moisture conditions.

115. I find, on the basis of the evidence of all of the structural engineers on the question, that the waffle slab designed by Enrik was generally suitable for a Class H2 site, according to AS2870, which is the applicable Australian Standard. There was no suggestion by any of the engineers that the Enrik design departed from AS2870, bearing in mind that Enrik was relying on the classification of the site as H2 by Macgregor. Mr Xeros’ criticism of the use of a waffle slab on the Di Lullos’ property is a disagreement with the classification of the site by Macgregor and a disagreement with AS2870. To the extent that Mr Xeros said that the waffle slab constructed was not stiff enough or strong enough, that view was based on Mr Xeros’ disagreement with the classification of the site prior to building as H2. Enrik, a “Civil Structural” engineering firm, relied on the Macgregor report in designing the waffle slab, Macgregor being a Geotechnical engineering firm. Enrik was not asked to form its own view of the classification of the site. The Builder was aware of this, because the Builder obtained the Macgregor Report and provided it to Enrik.

Has the house slab been affected by abnormal moisture conditions?

116. Mr van Heusden, Mr Xeros and Mr Tamaressis agreed that the slab has undergone considerable deformation because of edge heave. The slab is now generally higher around the perimeter and lower in the middle, forming a dish shape. The extent of the edge heave is considerable and has caused damage to the house.

117. In the Structural Conclave Report, the question is posed “what factors have caused/permitted the abnormal moisture conditions?” Mr van Heusden’s (RvH) answer is the same as the answer he gave in the Geotechnical Conclave Report, and is set out at [53], above. Mr Xeros (PX) and Mr Tamaressis (JT) give the following answers (CB p 1718.3):

PX

- The incorrect installation of the slab, which is not in accordance with the engineering and architectural details, whereby the slab is buried/backfilled around the perimeter with uncontrolled porous material.

This backfill material, subject to normal landscaping practice, will cause moisture seepage to the footings, causing abnormal conditions to develop.

- The failure of the stormwater system whereby there are excessive overflows from the roof drainage system dumping excessive moisture adjacent to the building. This is contributing to the seepage around the perimeter and, ultimately, the abnormal moisture conditions at the footing level.

PX, JT and RvH agree that the builder did not follow the engineering and architectural drawings for the slab edge.

JT would also add

- Poor site drainage to push water away from the edge beam

- Build up levels around the waffle and porous and loose backfill.

- Lack of clay plug installation as discovered in Test Pit 2 of Aitken Rowe Investigation

- Broken stormwater pipe, star picket installed in the charged pipe [sic]

- Irrigation system

- Dislodged elbow join in downpipe and drainage pipe

- Poorly compacted and porous site filling

- Air conditioning unit in the south east of the property.

- Location of the septic tank, althoug h only minimal effect

118. In oral evidence, Mr Tamaressis said that the absence of clay plugs in service trenches could lead to water travelling through those trenches to a location under the house. The Aitken Rowe Test Pit no. 2 disclosed that there were no clay plugs in the service trench at the location of that Test Pit.

119. In oral evidence, Mr Xeros said that there was no “real evidence” of water travelling “right under” the slab. Mr Xeros pointed out that, in any event, that would not be the cause of the observed edge heave. Mr Xeros pointed out that the heave of the house slab edge in the area in which the stormwater pipe was damaged, perhaps by a star picket, was among the least in the extent of the heave.

120. Mr van Heusden said that he did not believe that the configuration and construction of the slab footing contributed to the abnormal moisture conditions.

121. Mr van Heusden, Mr Xeros and Mr Tamaressis agreed that the house slab movement has arisen because of the abnormal moisture conditions on the site.

122. Mr Xeros believes that the slab, as constructed, is not stiff enough or strong enough for an H2-D site. Mr Tamaressis and Mr van Heusden did not agree.

123. In oral evidence, Mr Xeros and Mr Tamaressis agreed that the house slab, as it was constructed, was vulnerable to edge heave at the time of handover, in July 2017.

124. In oral evidence, Mr Xeros explained that the edge beams, which are deeper than the edge beams specified in the Enrik design, do not add to the structural stiffness of the slab. This is because the deflection is parallel to the edge under edge heave. Mr Xeros said that the waffle slab was originally designed not to have an embedded edge beam. The original documentation for the waffle slab also warned that waffle slabs were susceptible to moisture around the edge, and that drainage had to be well designed. Mr Xeros said that an edge beam “kind of defeats the purpose of a waffle”. It does not improve the strength of the slab and it restrains the slab from shrinkage, which is not always beneficial.

To what extent is the house slab movement a result of the abnormal moisture conditions?

125. Mr van Heusden and Mr Tamaressis said that any slab designed and constructed in accordance with AS2870-2011 would be expected to undergo some movement. However, the movement in the case of the Di Lullos’ house slab is more than would be expected, because of the abnormal moisture conditions.

126. In oral evidence, Mr Xeros pointed out that the identified leaks “and other things” had been fixed for some years, and yet the situation on the Di Lullos’ property had continued to deteriorate, to the point that the wet areas inside the building have now failed. Mr Xeros said that the reason for this is the buried edge of the waffle slab. He said that the roof system has failed, and the gutters will overflow once or twice a year. He said that the roof gutters do not comply with AS3500, the Australian Standard for, among other things, stormwater drainage. There are four valley gutters, two at the front of the house and two at the back, and they all overflow. The valley gutter on the front verandah has a slope of less than 12.5 degrees and overflows every time it rains. That is another source of water which continues to affect the site. Mr Xeros said that the stormwater system is inadequate and liable to overflow because it does not contain the water to be drained back uphill to the road. In Mr Xeros’ third report, he said (CB p 1606 - 1607):

The roof drainage system is deficient and does not comply with Australian Standard AS 3500; this has caused the gutters to overflow regularly and along the front of the building, dumping stormwater to the back of the verandah on top of the pavement, which would leak to the foundation soils. Refer to the calculations by Xerox Piccolo Consulting Engineers attached and the summary below based on which I conclude.

a. There are insufficient downpipes for the residence roof area, and this will cause the gutter to overflow more often and at a number of locations.

b. Downpipe size does not match the manufacturer’s recommendations. This will cause more overflows to occur at downpipe locations.

c. The upper roof catchment area downpipe and spreader locations concentrate flows to the verandah roof valley gutter, exceeding its capacity. This will cause the valley gutter to overflow along its length in addition to overflow at the eaves gutter at its termination. See Figure 1. below [figure 1 is a photograph of water leaking through the verandah next to the house wall].

d. The gutter size installed is too small for the majority of the roof catchments, and this will cause the gutter to overflow more often and at numerous locations.

e. The valley gutter size for the lower verandah is too small as the area draining to the valley gutter is in excess of AS3500 requirements and requires a performance-based engineered solution. The undersized gutter will lead to more frequent overflows.

127. Mr Xeros said that, on a flat site such as the Di Lullos’ property, it is not possible to drain effectively around a waffle slab unless a secondary pad, 700-800mm above the ground is built. Putting the waffle slab on the ground made it impossible to drain, and it is still not drained.

128. Mr Xeros pointed out that the engineering drawings prepared by Enrik show an agricultural drain put around the house. This has not been installed.

129. Mr Tamaressis agreed that the porous nature of the fill under the pavement is part of the problem, but, he said, it is not the whole problem. Mr Tamaressis agreed that water spilling from the roof gutters would aggravate the moisture conditions for the house. He agreed that the historical issues with the hole in the stormwater and leaks in the drainage trenches, as well as the watering of the grass on porous soil have also contributed to the structural issues with the house.

130. All of the engineering evidence supports the finding that the moisture in the ground has gained access to the edge beam by way of the sandy fill placed by the Builder under the pavement and around the edge beam of the house slab.

Is the house slab and/or the building still moving? If so, in which direction (heaving or returning)?

131. The answers given by the engineers in the Structural Conclave Report were as follows (CB p 1718.6):

PX:

I do not have any current measurements of the deformations. However, the house owners recently have advised me that moisture is damaging the wall in the hallway opposite the main bathroom. This indicates a failure of the wet area seals, which was flagged as a latent condition in the original XP report. This failure is considered to be due to the excessive movement of the slab, which caused the walls to be pulled off the floor.

However, due to the deficiencies in the as-constructed slab and the ongoing abnormal moisture conditions, there should be no reasonable expectation of any satisfactory performance with this building. In other words, this building will continue to move both up and down as seasonal variations occur.

JT is of the opinion the heave in this residence is starting to plateau and the slab will start to recover once all of the causes of abnormal moisture conditions are rectified.

I believe we all agreed the extent of changes to the movement had reduced. PX agrees that the rate of movement has reduced.

RvH: In my opinion, the measured movements of the slab are indicating a recovery phase in which future movements will continue to reduce the current magnitude of the heave being observed.

132. I find that although the rate of heave has reduced as at the date of the most recent survey, the house slab is still heaving to some extent. I accept Dr Redman’s evidence on this point (see [88] – [90] above), which is largely consistent with Mr Xeros’ evidence.

Is the house, in its present state, reasonably fit for occupation as a dwelling?

133. Mr Xeros said that the house is not presently fit for occupation as a dwelling, for the following reasons (CB p 1718.7):

- The cracks and deformation in the building do not comply with AS2870 for a residential building.

- The building is considered structurally unsound because the bracing diaphragm system has been damaged by gross deformations.

- The wet area seal in the bathroom has now failed, causing mould buildup in the wall structure.

- The building may have given the appearance of being fit for occupation when the owners first moved in; however, there were latent conditions existing, all including faults in the roof bracing system rendering it not fit for occupation.

134. Mr Tamaressis said that the house is presently reasonably fit for occupation as a dwelling. He said that it was fit for occupation at handover. Mr Tamaressis further said:

The building has undergone excessive deformations resulting from abnormal moisture conditions. Once these are remedied the building will reverse some of its movement and stabilise based on its new moisture regime. At this stage permanent repairs can be undertaken.

135. Mr van Heusden said that he considers that the house is presently reasonably fit for occupation as a dwelling and has always been fit for occupation as a dwelling.

The Statement of Claim

Breach of contract and breach of warranties in s 18B(1) Home Building Act 1989

136. It is alleged by the Di Lullos, in the statement of claim, that:

13 The Defendant has breached the terms of the Contract by:

(a) failing to carry out the works under the Contract in a proper and workmanlike manner;

(b) failing to carry out the works under the Contract in accordance with, and will comply with, the Act or any other law;

(c) failing to carry out the works under the Contract to result in a dwelling that would be reasonably fit for occupation as a dwelling.

Particulars

The Reports.

137. “The Reports” refers to the report of Xeros Piccolo Consulting Engineers dated 11 May 2021 and the report of Kevin Roben dated 16 November 2021.

138. It was further alleged that the Builder breached warranties implied into the contract under s 18B(1) of the Home Building Act 1989, which provides:

18B Warranties as to residential building work

(1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work—

(a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,

(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,

(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,

(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,

(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,

(f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder’s or person’s skill and judgment.

(2) The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the principal contractor) who has contracted to do residential building work contracts with another person (a subcontractor to the principal contractor) for the subcontractor to do the work (or any part of the work) for the principal contractor.

139. It is alleged by the Di Lullos in their statement of claim as follows:

14 The Defendant has breached the statutory warranties contained in the Act by:

(a) failing to carry out the Work with due care and skill and in accordance with the plans and specifications set out in the Contract;

(b) failing to carry out the Work in accordance with, and in compliance with, the Act or any other law;

(c) failing to produce a dwelling that is reasonably fit for occupation as a dwelling;

(d) failing to ensure that the work and any materials used during the work were reasonably fit for the specified purpose or result.

Particulars

The Reports

140. The claims, as pleaded, overlap.

141. I find that the Builder breached the statutory warranty in s 18B(1)(a) of the Home Building Act 1989 by failing to carry out the residential building work with due care and skill and in accordance with the plans and specifications set out in the contract, in that it:

142. Placed sandy fill adjacent to the edge beam of the house slab for the length of the southern side of the house and for the length of the alfresco area at the northern side of the house, contrary to the Enrik footing design drawings,

143. Failed to instal an agricultural drain or similar at the outer edge of the perimeter of the paving slab as required by the Enrik footings design,

144. Placed sandy fill between the paving slab and the strip footing for the paving.

145. The placement of sandy fill next to the edge beam of the house slab and between the paving slab and the strip footing for the paving was work which was not reasonably fit for purpose, in that it created the potential for water to gain access readily to the edge beam of the house slab, which has caused it to heave.

146. As to the warranty in s 18B(1)(e) of the Home Building Act 1989, the experts agree that the house was reasonably fit for occupation as a dwelling on the day of handover from the Builder, which was 22 June 2017. However, I am satisfied, on the balance of probabilities, that, at handover, the building was subject to a defect, in that sandy fill had been placed next to the edge beam and between the paving slab and the strip footing, so that, over the succeeding years, the ingress of water to the edge beam, from rainfall and other sources, was inevitable and would cause edge heave, which, in turn, would cause damage to the house.

147. I accept Ms Di Lullo’s evidence as to the progressive damage to the house (see [22], [28], [30], [31], [32], [35], [42] above).

148. Mr Xeros said that the cracks and deformation in the building mean that the house does not presently comply with AS2870. The wet area seal in the bathroom has failed, causing mould build up in the wall structure. Critically, Mr Xeros also said that the bracing diaphragm system has been damaged by “gross deformation”, rendering the house “structurally unsound”.

149. Both Mr van Heusden and Mr Tamaressis believe that, if the moisture conditions around the slab are stabilised, the slab will recover to the point that the house can be repaired. Neither commented on the specific matters Mr Xeros attested to. I accept Mr Xeros’ evidence on this issue. I bear in mind Mr Xeros’ evidence that it is not possible for a home-owner to maintain a site in the fine-tuned state required by the circumstances of a site such as this (see [111] above).

150. The house is presently still moving. Parts of the edge beam of the slab are still heaving. The building is presently structurally unsound and is presently not fit for occupation, regardless of whether there is the potential to remediate it in the future to the point that it is, again, fit for occupation. Building work which renders a house unfit for occupation within eight years of being built on account of defects which are present at handover from the builder cannot be said to be reasonably fit for occupation within the meaning of the Home Building Act 1989*.* The Builder has breached the statutory warranty in s 18B(1)(e).

151. For the same reasons, the work was not fit for purpose under s 18D(1)(f), the purpose being use as a dwelling.

Breach of duty of care under the Design and Building Practitioners Act 2020

149. It is further alleged in the statement of claim that the Builder breached its duty of care to the Di Lullos under the Design and Building Practitioners Act 2020:

16 By performing, supervising, co-ordinating, project managing and/or controlling the work under the Contract, the Defendant:

(a) carried out construction work within the meaning of Part 4 of the Design and Building Practitioners Act 2020 (NSW) (D&BP Act); and

(b) assumed a duty of care to the Plaintiffs to avoid economic loss caused by defects:

(i) in or related to a building for which the work was done; and

(ii) arising from the construction work.

Particulars

Section 37 of the D&BP Act

17 The scope of the duty of care owned by Defendant included a duty to manage the risk of the completed work under the Contract having insufficient structural integrity by adopting precautions, including:

(a) ensuring that the site was correctly classified for the purposes of the work under the Contract;

(b) ensuring that the slab design it provided for the purposes of the work under the Contract was suitable and correct for the site;

(c) ensuring the work under the Contract (particularly as to the perimeter and external ground levels of the Property) was carried out in accordance with the engineering and architectural drawings;

(d) ensuring that a structural engineer made all inspections necessary to ensure that the slab, framing and roof works were completed in accordance with the structural designs;

18. It was reasonably foreseeable that if the above precautions were not adopted by the Defendant, that there was a real, and not insignificant, risk that the completed work under the Contract would have insufficient structural integrity and that the owners of the Property would suffer economic loss.

Breach of the Builder’s duty of care

19 The Defendant breached its duty of care, including by:

(a) failing to ensure that the site was correctly classified for the purposes of the work under the Contract;

(b) failing to ensure that the slab design it provided for the purpose of the work under the Contract was suitable and correct for the site;

(c) failing to ensure that the work under the Contract (particularly as to the perimeter and external ground levels of the Property) was carried out in accordance with the engineering and architectural drawings;

(d) failing to ensure that a structural engineer made all inspections necessary to ensure that the slab, framing and roof works were completed in accordance with the structural designs;

20 As a result of these breaches, the Property suffers from defects arising from the construction work carried out by the Defendant within the meaning of the D&BP Act.

21. In performing, supervising and co-ordinating, project managing and/or controlling the work under the Contract, including the Defects, the Defendant breached its duty of care, in that the Defects have caused and will cause the Plaintiffs to suffer economic loss.

150. “The Defects” referred to in the statement of claim are the defects set out in the Reports.

151. I find that the Builder has breached its duty of care under the Design and Building Practitioners Act 2020 (NSW), s 37, in that it failed to ensure that the work carried out under the contract with the Di Lullos was carried out in accordance with the structural designs prepared by Enrik, and, further, that it negligently placed a layer of sandy fill between the pavement slab and the strip footing for the pavement. These failures have resulted in defects, namely the deformation of the house slab by edge heave which has, in turn, led to significant damage to the house. The Di Lullos have thereby incurred economic loss.

152. In the context of a claim against it under the Design and Building Practitioners Act 2020 (NSW), the Builder cannot rely on the failure of any other person to take reasonable care in carrying out construction work to limit the Builder’s liability under Part 4 of the Civil Liability Act 2002 (NSW) to an amount reflecting the proportion of the loss the court considers just having regard to the extent of responsibility of each for the damage or loss (see Pafburn Pty Ltd v The Owners – Strata Plan No 84674 [2024] HCA 46 (‘Pafburn’) at [1] per Gaegler CJ, Gleeson, Jagot and Beech-Jones JJ). The Design and Building Practitioners Act 2020 (NSW) provides that the Builder’s duty of care is non-delegable. The effect of the Civil Liability Act 2002 (NSW), s 5Q, is that the Builder is vicariously liable for the whole of the economic loss caused by the Builder’s breach of its non-delegable duty (see Pafburn [61] – [65]).

The Builder’s Cross-Claim

153. The Builder filed an Amended Statement of Cross-Claim against Newpoint Reinsurance Company Ltd (‘Newpoint’) and Mr Enio Sciessere on 18 May 2023.

154. In the Amended Statement of Cross-Claim, the Builder claimed that Newpoint was bound, under a policy of insurance with Enrik (‘the Policy’), to indemnify the Builder in relation to “the civil liability that it incurs as a direct result of a claim made against it by any person or entity which results directly from civil liability that Enrik incurred in the performance of professional services” up to but not exceeding $AUD500,000.

155. In the alternative, the Builder claimed that General Professional Indemnity Ltd (‘GPIL’) was the issuer of the Policy, and that Newpoint was the reinsurer of GPIL for the purposes of the Policy. GPIL was placed into liquidation on about 2 September 2022, and a notice of winding up was published on 14 October 2022. It was claimed that the Builder is entitled to enforce “its rights pursuant to the Policy directly against” Newpoint.

The Builder’s Cross-Claim against Mr Sciessere – the allegation of negligence

156. In relation to Mr Sciessere, the Builder alleges, in the Amended Statement of Cross-Claim, that he was, at all material times, a director of Enrik.

157. The Cross-Claim says, with reference to the plaintiff’s proceedings:

5. In these proceedings the plaintiffs make claims that:

(a) the Slab Design was defective; and also, that

(b) the Slab Design failed to comply with law.

(Design Defects) and further that they have and will in the future suffer losses as a consequence of those Design Defects (Plaintiffs’ Allegations) as set out in their Statement of Claim, a copy of which is served herewith.

158. It is claimed in the Cross-Claim that, on or about 30 June 2016, Mr Sciessere and Enrik represented to the Builder that Mr Sciessere had prepared the slab design and that it complied with (in summary) all relevant Australian Standards, Codes and Regulations. It is alleged that Mr Sciessere knew or should have known that the Builder would rely on the representations and would suffer loss or damage if they were untrue, and would further rely upon Mr Sciessere to exercise all due care, skill and diligence in making the representations. It is alleged that Mr Sciessere owed the Builder a duty of care to exercise all due care, skill and diligence when making the representations.

159. The Builder pleads, in the Cross-Claim, as follows:

20. If the Plaintiffs’ Allegations are made out, which is not admitted but expressly denied:

(a) the Second Cross-Defendant breached his Duty of Care to the Cross Claimant, and as a consequence the Representations were made negligently;

(b) the Cross-Claimant will suffer loss and damage as a consequence of relying upon the truth of the Representations.

21. The acts of the Second Cross-Defendant were foreseeable in that the Second Cross-Defendant as a professional who could certify the slab ought to have known that in the event that it did not comply there would be a risk of it failing.

22. The risk referred to in paragraph 21 above was not insignificant, and in fact as the slab was integral to the design of the dwelling a failure of it would in fact be significant and damages to the dwelling foreseeable. [sic]

23. In the aforesaid circumstances, a person in the Second Cross-Defendant’s position would and should have taken precautions to ensure that the slab complied with all laws and ordinance and was fit for purpose.

24. In the event that the Plaintiff’s case is made out, which is not admitted and expressly denied, the Second Cross-Defendant should have taken precautions against the risk of harm having regard to the probability that the harm would occur, the likely seriousness of the harm and the lack of any burden upon him to ensure the certification was correct and the design appropriate for the site conditions.

160. Dr Redman gave evidence that, in his opinion, the Macgregor Report was incorrect in classifying the site as H2. Dr Redman believes that the site, prior to the construction of the house, was H2-D. To comply with AS2870-2011 “deemed to comply” requirements, a slab for an H2-D site would need larger edge beams and larger internal ribs than the Enrik design.

161. Mr van Heusden’s view is that the site was H1-D prior to the construction of the dwelling, which he said was “essentially the same as an H2 site”. He said that the Enrik slab design was “suitable for the site”.

162. Mr van Heusden, Mr Tamaressis and Mr Xeros agreed in the Structural Conclave Report that the Enrik slab design was generally satisfactory for an H2 site.

163. Mr Xerox based his opinion on the site having been an H2-D site when the house slab was designed, despite the Macgregor classification of the site as H2. He said that a “larger footing system” was required for an H2-D site. Mr Xeros expressed the opinion that the slab was not stiff enough or strong enough for a class H2-D site. Mr Xeros attributed the edge heave of the slab to the fact that moisture had access to the edge beam through the unsuitable fill. Mr Xeros believes that a deemed to comply waffle slab for a class H2-D site is much stiffer than a slab which complies with AS for a class H2 site.

164. Mr Tamaressis said that the slab was adequate for an H2-D site, in the absence of abnormal moisture. In his report, Mr Tamaressis said (CB p 1418):

171. My opinion is the as-build waffle slab is marginally stiffer than the Class H2-D “deemed to comply” slab. Therefore the performance of the Class H2-D would be similar if not a little worse than the performance of the as-built waffle slab.

172. A Class H2-D “deemed to comply” waffle slab would show slightly greater movement and cracking than the as-built waffle slab as constructed, as a result of a more pronounced “dishing” effect.

173. In my opinion, the abnormal moisture conditions which have developed on this site are significant and are the cause of the slab edge heave. No standard “deemed to comply” slab would be able to effectively resist the soil movements resulting from these abnormal moisture conditions.

165. Mr Sciessere admits, in his Defence to Cross-Claim, that he represented to the Builder that “the Slab Design complied with the standards and provisions applicable to the Slab Design”. He further admits that he knew that the Builder was relying on him to exercise all due care, skill and diligence in making the representation. He admits that he believed that the Builder was likely to act upon the representation in the belief that it was true.

166. Mr Sciessere denies that the slab was built in accordance with the house slab design. He further denies that he breached his duty of care to the Builder or that he made representations negligently.

167. Mr Sciessere denies that the Builder will suffer loss or damage as a result of relying upon the slab design.

168. The Macgregor Geotechnical Report is dated 15 April 2016, and was prepared for the Builder.

169. The Builder’s drawings of the Di Lullos’ house, which form part of the contract with the Di Lullos, are dated 3 June 2015 and noted as having been certified on 17 August 2016. The third page of the Builder’s plans is a “Part Site Plan”, which has a note over the house site which says:

PROPOSED RESIDENCE

FFL:108.915 Approx FOR

WAFFLE SLAB “CLASS H2”

170. The Builder engaged Enrik to prepare the slab design. The first page of the Enrik slab design (CB p 192) notes in the bottom right hand corner:

Job No: (number given)

JG King Homes - Shepparton

(Address of site)

Site Classification: Class H2

Footing System: WAFFLE RAFT

Classifier: MACGREGOR GEO P/L

Soil Report Number: (number given)

171. The Builder instructed Enrik to prepare a waffle raft slab for the site, based upon the classification of the site as H2 by Macgregor. Enrik was a structural engineering company. Macgregor is a geotechnical engineering company. Enrik relied upon Macgregor’s classification of the site as H2 and was entitled to rely upon that classification when designing the waffle raft slab that the Builder had requested it to produce. In other words, Enrik was not responsible for either the classification of the site or the decision to choose a waffle raft slab. Enrik’s duty of care to the Builder was limited to the design of a house slab in accordance with the Builder’s instructions, which included the Macgregor classification.

172. I note that the site was not reclassified until the Aitken Rowe report was prepared on 11 September 2020, more than three years after the house was handed over to the Di Lullos.

173. The “Plaintiff’s Allegations” (see [157] above) upon which the allegation of negligence against Mr Sciessere is predicated have not been made out. In the context of his instructions, Mr Sciessere’s house slab design was not defective, and it has not been shown that it failed to comply with any law.

The Builder’s Cross-Claim against Mr Sciessere – the allegation of misleading and deceptive conduct

174. The Builder’s Cross-Claim alleges as follows, in relation to the representations:

25. Further, the representations were made in trade or commerce.

26. By making the Representations Enrik engaged in conduct which was misleading and deceptive and a contravention of s 18 Sch 2 of the Competition and Consumer Act 2010 (Cth) (Contravention).

Particulars

In the event that the Plaintiff’s Allegations are made out, which is not admitted but expressly denied, the Representations were false as the slab as designed did not comply with the law or the matters referred to in paragraph 16(b) above.

27. The Second Cross-Defendant:

(a) induced the Contravention; and

(b) was knowingly concerned in and a party to the Contravention;

within the meaning of ss2 and 236, Sch 2 of the Competition and Consumer Act 2010 (Cth).

Particulars

(a) The Second Cross-Defendant was the controlling mind of Enrik;

(b) The Second Cross-Defendant held himself out to be qualified to certify the slab with knowledge that the Cross Claimant would rely upon his certification and expertise;

(c) The Second Cross-Defendant issued and certified that the slab complied with the requirements of the codes, regulations and standard referred to in paragraph 16(b) above in circumstances where if the Plaintiffs’ Allegations are made out, which is not admitted and is expressly denied, was a misleading and deceptive misrepresentation.

175. It is implicit that the Builder is alleging that Mr Sciessere falsely and misleadingly represented that his slab design complied with AS2870, when it did not so comply because it was designed for a site classified as H2 and not a site classified as H2-D. I reject that allegation. Mr Sciessere represented that his slab design complied with AS2870 on the explicit basis that the site had been classified as an H2 site, which it had been. That representation, in context, was neither false nor misleading. The Builder provided the parameters of the design brief to Enrik, including the Macgregor site classification and the designation that the slab was to be a waffle raft slab. Enrik complied with its brief.

176. The allegations of misleading and deceptive conduct against Mr Sciessere in the Cross-Claim are based upon accessorial liability.

177. The Co**mpetition and Consumer Act 2010 (Cth), Schedule 2, s 236, provides:

236 Actions for damages

(1) If:

(a) a person (the claimant ) suffers loss or damage because of the conduct of another person; and

(b) the conduct contravened a provision of Chapter 2 or 3;

the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.

(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.

178. The Competition and Consumer Act 2010 (Cth), in s 4, defines “involved” to mean:

"involved" , in a contravention of a civil penalty provision of an SPF principle or of a civil penalty provision of an SPF code, means:

(a) aiding, abetting, counselling or procuring a contravention of the provision; or

(b) inducing, whether by threats or promises or otherwise, such a contravention; or

(c) being in any way, directly or indirectly, knowingly concerned in, or party to, such a contravention; or

(d) conspiring with others to effect such a contravention.

179. In Yorke v Lucas (1985) 158 CLR 661, the High Court dealt with the equivalent provision of the Trade Practices Act 1974 (Cth), which was the predecessor to the Competition and Consumer Act 2010 (Cth) and said (per Mason ACJ, Wilson, Deane and Dawson JJ):

9. Turning first to par.(a), the appellants immediately encounter the difficulty that the words used, "aided, abetted, counselled or procured", are taken from the criminal law where they are used to designate participation in a crime as a principal in the second degree or as an accessory before the fact. Both in the case of felonies where the principal offender and the secondary participant commit separate offences, and in the case of misdemeanours where no distinction is drawn between the two, a person will be guilty of the offences of aiding and abetting or counselling and procuring the commission of an offence only if he intentionally participates in it. To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. So much was affirmed recently in Giorgianni v. The Queen (1985) 59 ALJR 461; 58 ALR 641 where the relevant authorities were examined. That was a case in which the appellant had been convicted of culpable driving under s.52A of the Crimes Act 1900 (N.S.W.) in reliance upon s.351 of that Act. The latter section provides that a person who aids, abets, counsels or procures the commission of any misdemeanour may be proceeded against as a principal offender and was held to be declaratory of the position at common law. The offence of culpable driving under s.52A is an offence of strict liability which, putting the defence of honest and reasonable mistake to one side, requires no proof by the prosecutor of any mental state on the part of the accused. Nevertheless it was held that to have aided and abetted or counselled and procured the offence of culpable driving the appellant must have intentionally participated in that offence and to have done so must have had knowledge of the essential matters which went to make up the offence on the occasion in question. Those matters included the defective condition of the brakes upon the vehicle being driven, because the culpable driving alleged consisted of the driving of that vehicle with defective brakes. Proof of such knowledge on the part of the principal offender was, however, not part of the prosecution case because the principal offence was one of strict liability.

10. If par.(a) of s.75B imports the requirements of the criminal law, it is clear in the light of Giorgianni v. The Queen that Lucas could only be brought within that paragraph if he intentionally aided, abetted, counselled or procured a contravention by the Lucas company of s.52 of the Trade Practices Act. Upon the findings of the trial judge, however, Lucas lacked the knowledge necessary to form the required intent. A contravention of s.52 involves conduct which is misleading or deceptive or likely to mislead or deceive and the conduct relied upon in this case consisted of the making of false representations. Whilst Lucas was aware of the representations - indeed they were made by him - he had no knowledge of their falsity and could not for that reason be said to have intentionally participated in the contravention.

11. The appellants sought to meet this difficulty by submitting that s.75B(a) should not be construed in accordance with the requirements of the criminal law and that no intent was necessary in order to constitute a person an aider, abettor, counsellor or procurer within the meaning of that paragraph. A contravention of s.52, it was said, requires no intent and it follows that there is no reason why intent should play any part in secondary participation in a contravention of that section.

12. The nature of the prohibition imposed by s.52 is, however, governed by the terms in which it is created and the context in which it is found. Section 75B, on the other hand, in speaking of aiding, abetting, counselling or procuring, makes use of an existing concept drawn from the criminal law and unless the context requires otherwise, there is every reason to suppose that it was intended to carry with it the settled meaning which it already bore. Cf. Barker v. The Queen (1983) 153 CLR 338. Nor is there any reason to suppose that because the application of s.75B may occur in conjunction with a provision such as s.52, which requires no intent, it must also be construed so as to dispense with intent as an element of aiding, abetting, counselling or procuring. In Giorgianni v. The Queen it was held that secondary participation required intent based upon knowledge, notwithstanding that the statutory provision creating the principal offence imposed strict liability.

13. True it is that s.75B deals with civil rather than criminal liability. It does so by defining the term "involved in a contravention" which is used in s.82 to impose civil liability in respect of contraventions of the provisions of Pts IV and V of the Act. The method adopted by s.75B may be compared with the way in which criminal liability is imposed upon accessories under the provisions of the Trade Practices Act. Section 79, which makes contraventions of Pt V of the Act, other than s.52, criminal offences, does not speak of involvement in a contravention. However, in Reg. v. Australian Industrial Court; Ex parte C.L.M. Holdings Pty. Ltd. (1977) 136 CLR 235 it was held that s.5 of the Crimes Act 1914 (Cth) might be called in aid to render a natural person guilty of an offence created by the Trade Practices Act in respect of a corporation. Section 5, so far as is relevant, provides:

"Any person who aids, abets, counsels, or procures, or by act or omission is in any way directly or indirectly knowingly concerned in, or party to, the commission of any offence against any law of the Commonwealth ... shall be deemed to have committed that offence and shall be punishable accordingly."

We can see, however, no basis for confining the ordinary meaning of the words of s.75B by assumptions that particular parts of that section were intended to have a wider effect than the combined operation of s.79 of the Trade Practices Act and s.5 of the Crimes Act. Our conclusion in that regard is confirmed by consideration of the history of s.75B itself.

180. There is no evidence that Enrik or Mr Sciessere had any basis to think that the correct site classification for the Di Lullos’ site was H2-D. Mr Sciessere was entitled to rely on the Macgregor geotechnical report for the site classification when designing the slab and making representations as to its suitability.

181. As I have set out in some detail, the Builder did not comply with the Enrik house slab design in all respects. The cause of the edge heave of the slab, which has damaged the house, is the water which has travelled through the sandy layers under the pavement and next to the edge beam and caused the ground to swell around the edge beam. The sandy layers around the edge beam and the sandy layers under the pavement across the front of the house and for the length of the alfresco area at the rear were put in place by the Builder and were not in compliance with the Enrik slab design. The damage has not been attributed by the expert engineers to any aspect of the house slab as designed.

Conclusion on Cross-Claims

182. The brief given to Mr Sciessere and Enrik was to design a slab for a house with an H2 classification under AS2870. The Macgregor Report, which Mr Sciessere relied upon for the classification of the site, is described on its frontsheet as a “Report prepared for JG King Homes”. Given the brief that Mr Sciessere and Enrik had from the Builder, which included the Macgregor Report, and therefore implicitly sought a slab design for an H2 site, it cannot be fairly said that a representation that the house slab design complied with all relevant Codes, Standards and Regulation was a misrepresentation, or that Mr Sciessere was in breach of a duty of care to the Builder in making that representation. The Builder’s allegation that it may suffer loss or damage as a result of relying upon the slab design has not been made out.

183. The Cross-Claim against Mr Sciessere has not been made out.

184. It follows that the Builder’s Cross-Claim against Newpoint and Mr Sciessere’s Cross-Claim against Newpoint, both of which are dependent upon liability being established against Mr Sciessere, fall away.

Conclusion

185. The defendant is liable to the plaintiffs for damages for its breach of s 18B of the Home Building Act 1989 (NSW) and its breach of the duty of care owed to the plaintiff pursuant to s 37 of the Design and Building Practitioners Act 2020 (NSW), with damages to be assessed.

186. Neither Mr Sciessere nor Newpoint is liable to the cross-claimant/defendant under the cross-claims.

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Amendments

13 June 2025

Paragraph number formatting correction

22 May 2026

Paragraph [11] - "northern" in first sentence changed to "southern". Paragraph [63] - "proceeding" changed to "producing".