Giovas v F.E.V Mono Constructions Pty Ltd [2015] NSWCATCD 16 | Case summary

Giovas v F.E.V Mono Constructions Pty Ltd [2015] NSWCATCD 16 | Case summary | Zoe

[3]

HB 12/31182

HB 12/31182 was lodged on 8 June 2012. In this application, the applicant originally sought payment of damages in the sum of $353 for a range of claimed defect work. The application was listed for directions on 31 July, 19 October and 30 November 2012. It was subsequently listed for a conclave of experts on 7 February 2013.
At the conclave, the parties' experts agreed on a number of defects and disagreed on others. They formed the view that further expert evidence concerning two aspects of the claim (in relation to air conditioning and possible structural defects) was required from an engineer. The matter was subsequently listed for directions on 11 March and 23 April 2013. Directions for the filing and serving of further evidence were made on 23 April 2013.
At the request of the respondent's then solicitor, the application was again listed for directions on 28 June 2013. The applicant had sought to file a further expert report relating to defects that had not previously been claimed. The Tribunal did not accept this report into evidence, although it allowed reports relating to air conditioning and structural defects.
The matter came back before the Tribunal on 2 August 2013, 13 and 27 September 2013. The Tribunal made further directions, including a direction that the parties were to settle the terms of a letter to the experts enclosing the HIA General Housing Specification - NSW Incorporating the HIA Guide to Materials & Workmanship [the HIA Specifications / Guide], seeking a joint expert opinion in the event that the HIA Guide affected the opinions referred to in their previously filed reports.
This occurred because it emerged that the applicant's expert Mr Kavanagh and the respondent's expert Mr Austin, in undertaking their respective inspections of the building work, had not taken into account the HIA / Specifications Guide, which formed part of the contract documents.
The letter ultimately settled between the parties' legal representatives requested the experts to specifically re-consider items 5, 8, 9, 14, 17, 22, 27, 31-33, 36-46, 48-49, 51, 55, 60 and 61. The experts completed a joint report dealing with these items on 12 November 2013. As a result of their application of the HIA Guide, the experts agreed that items 5, 14, 42, 43, 51 were no longer considered to be defects. They disagreed on items 48 and 49.
The matter was listed for hearing on 9, 10 and 11 December 2013. The respondent dispensed with legal representation at the hearing, having been legally represented until that time. It was represented by its director, Ms Eleni Monovasios and by Mr Fotios Monovasios. The applicant was represented by Mr Chrysostomou of Counsel.
At the beginning of the hearing, Mr and Ms Monovasios indicated that they disagreed with the conclusions reached in the joint experts' report and at the conclave. They indicated that they wanted to question their expert witness, Mr Austin. It was put to the Mr and Ms Monovasios that if they chose not to rely on Mr Austin's report and the conclusions reached in the joint report, they could do so, but that this would leave them without expert evidence in the proceedings. They chose not to withdraw Mr Austin's report. However, during the hearing they were able to question Mr Austin. They were also able to question their other witnesses and the applicant's witnesses.
During the course of the hearing, Mr Kavanagh and Mr Austin further updated their joint report. By the end of the hearing of the expert evidence, they were agreed that items 4, 5, 6, 7, 14, 15, 16, 21, 28, 35, 42, 43, 47, 51, 53, 54, 59 and 70 were not defects. The items on which they disagreed were items 55 (internal joinery), 48 (main bathroom wall tiles), 49 (main bathroom wall grout), 58 (finishing of timber quad at windows) and 72 (air conditioning unit). The air conditioning unit and items 30 and 32 (the bi-fold doors and the bedroom 1 floor deflection respectively) are subject to separate expert evidence. Mr Chrysostomou later confirmed that item 63 (finishing of brick wall) was not being pursued. (See paragraph 24 below)
Mr Kavanagh and Mr Austin agreed on liability and quantum in relation to all other items claimed.
There was an issue with Mr Chrysostomou's unavailability on the morning of 11 December. The hearing was due to resume that afternoon, but due to a misunderstanding, Mr and Ms Monovasios did not attend. The hearing was accordingly adjourned to a date to be fixed.

[7]

Background

The background to the applications is as follows. The parties entered into a contract on 4 November 2010. The applicant's wife, Sonia Giovas, was also a party to the contract, although she is not an applicant in these proceedings.
The contract is a standard form Housing Industry Association [HIA] contract, January 2008 version, with a contract price of $414,745.00. The contract specifies that additional contract documents are the:

Special Conditions at Annexure A;
Plans at Annexure B;
Tender at Annexure C;
HIA General Housing Specifications at Annexure D (this is a reference to the HIA Specifications / Guide);
Home owners termite agreement at Annexure E and
Occupational Health and Safety Policy at Annexure F.

The contracted works were the construction of a new dwelling. The contract period was 39 weeks, although the applicant claims to have been told that the dwelling would take only six or seven months to build. The statements filed by the applicant and Ms Monovasios indicate that the parties fell into dispute relatively early in the construction process, with a major source of concern for the applicant being perceived delays in construction. In her statement, Ms Monovasios argues that any delays were caused by the applicant's own behaviour, by the weather and by factors beyond the respondent's control.
The contract works were commenced in late 2010 or early 2011. The dwelling was handed over to the applicant and his wife on 21 January 2012.
The statements filed by the applicant and by Ms Monovasios demonstrate that there is considerable disagreement over factual matters. They also indicate that the relationship between the parties continued to deteriorate over the construction period.
However, most of the factual matters about which the parties disagree are not relevant to the application. That is because the applicant's cause of action in both applications is limited to a claim for damages for breach of statutory warranties set out in s 18B of the Home Building Act. With the exception of that part of the claim that relates to the flooring, the application turns on expert rather than on lay evidence and on the correct interpretation of the contract documents, in particular the HIA Guide. The items that make up the applicant's claim in both applications are detailed below.

[12]

Determination of the issues - HB 12/31182 Should the Tribunal rely on Mr Kavanagh and Mr Austin's amended joint report as expert evidence of liability and quantum or should the report be rejected on the basis of the experts did not conduct their inspections or prepare their report with regard to the HIA Guide or pay sufficient attention to contractual issues?

The HIA Specifications / HIA Guide formed part of the contract documents. Clause 18.1 of the HIA Specifications states: The HIA Guide is to be used by the builder and owner as a point of reference for information on workmanship standards and tolerances, and amongst other things, in deciding whether an alleged defect exists and/or whether the materials used and/or workmanship are in accordance with the plans and specifications. The parties agree to use the HIA Guide in precedence over any other non legislated guide to standards and tolerances.
It is not in dispute that Mr Kavanagh and Mr Austin did not use the HIA Guide when they each inspected the dwelling prior to preparing their respective reports and during the conclave. As noted above, Mr Kavanagh and Mr Austin have amended their joint report to take into account the HIA Guide.
The respondent's primary objection to the Tribunal accepting the findings of Mr Kavanagh and Mr Austin's amended joint is that their respective reports and the original joint report were not prepared in accordance with the HIA Guide and because that no re-inspection took place before Mr Kavanagh and Mr Austin amended their findings. They also assert that the HIA Guide has not been correctly applied. The respondent submits that had the HIA Guide been correctly applied, the alleged defects "would not be found to be defective in the first instance". (Respondent's written submission, paragraph 28).
Whether or not the Tribunal should rely on the amended joint report depends on the status of the HIA Guide, whether Mr Kavanagh and Mr Austin were obliged to reinspect the dwelling, whether they correctly interpreted and applied the Guide, the effect of other contractual provisions and the status of evidence given by expert witnesses in a joint report.

[13]

Status and interpretation of the HIA Guide

Although it forms part of the contractual documents, the HIA Guide is a guide only; that is, it is a document designed to provide instruction and advice. This is indicated both by the name of the document and by material set out in the introduction to the Guide, which relevantly states: When a builder and a home owner enter into a building contract, they generally agree to apply the standards of workmanship and finishes considered appropriate to their building project. This applies particularly when a builder displays their homes with the standard of finishes and level of specification clearly set out by virtue of the displayed product. Sometimes, those agreed particulars of materials performance, workmanship and finishes are sufficiently detailed in the contract or are required by law. However, in many instances they are not. This document is intended to provide guidance to assist the parties on what is acceptable Australian housing industry practice in these grey areas and what is not acceptable. Parties may reference this Guide in the contract to assist in that process. Irrespective of this Guide, by law, parties may not specify standards of performance that are inferior to those prescribed by the relevant legislation and/or called up in the Building Code of Australia (BCA) or where appropriate, Australian Standards referenced by the BCA and other legislation.
Part 1.2 of the Guide goes on to state: The purpose of this document is to provide a guide for the housing industry and its clients as to what are reasonable and acceptable industry standards for the performance of building materials and acceptable workmanship standards and finishes.
Accordingly, I find that the role of the HIA Guide as a contract document is to provide guidance in relation to the identification of building defects only. It does not have the status of the Building Code of Australia or of an Australian Standard. Moreover, I consider that a suitably qualified expert could give an opinion that could lead the Tribunal to conclude that a particular item constitutes defective work in breach of a relevant statutory warranty under s 18B of the Home Building Act, even if the item had not been inspected using the HIA Guide.

[15]

Interpretation and application of the HIA Guide

The respondent's representatives' argued that particular claimed defects were not inspected in accordance with Clause 5 of the HIA Guide, which relevantly states: Including for fixtures and appliances, the inspection of a surface, material or item is to be viewed from a normal viewing position: being defined as a distance of 1500 mm or grater from the observed surface, material or item. Such normal viewing position is to be subject to illumination from a non critical light source…
Non-critical lighting is defined in clause 1.7 of the HIA Guide as follows: Non-critical lighting occurs when the light that strikes the inspected surface is diffused and not projected parallel to that surface.
This definition should be contrasted with that of critical lighting, which clause 1.7 says occurs "when the projected light is nearly parallel to the wall or ceiling surface being inspected".
Both orally at the hearing and in written submissions prepared on behalf of the respondent, Ms Monovasios and Mr Monovasios stated that as Mr Kavanagh admitted having undertaken his inspection with the lights on in some rooms, this meant that he had not conducted the inspection using non-critical light. They claim that non-critical lighting means natural light or "lights off".
It was also submitted on behalf of the respondent that as Mr Kavanagh had undertaken an inspection of alleged defects in a shower recess the dimensions of which are 1 meter by 1 meter and in a powder room that is 1490 mm wide, this meant that his inspection did not comply with the HIA Guide.
At the hearing, in response to a question posed by the Tribunal, Ms and Mr Monovasios indicated that a room with no natural light which is less than 1500 mm wide cannot be assessed for defective work using the HIA Guide. Their view in this regard is reflected in their comments on the alleged defects in the powder room (item 9) and the pantry (item 22), which are set out in the respondent's written submission. In relation to the powder room they state: We respectfully submit the powder room doesn't have a window for natural light and is only 1400 mm wide therefore Mr Kavanagh and Mr Austin could not be standing in Normal Viewing Position to determine this defect in accordance with the specifications. To comply with normal viewing position both experts would have had to be standing in the linen closet looking through a solid wall.
In relation to the pantry they state: We respectfully submit the dimensions of the pantry is only 1300 mm wide and shelving is 600 mm wide therefore to comply with the minimum Normal Viewing Position distance the experts would have to be standing in the meals area by 700 mm looking through a solid wall with no lights on (there is no natural lighting in the room).
I do not accept the proposition that non-critical light means natural light or that for an inspection to be conducted using the HIA Guide, the lights in the dwelling must be turned off. This is not consistent with the definition of non-critical light in the HIA Guide. If non-critical light meant natural light, the definition would have said so. In my view, conducting an inspection with lights in the relevant room turned on is entirely consistent with conducting an inspection using non-critical light. Indeed, it is the only way that an inspection of a room with no natural light could be carried out. What would not be consistent with using non-critical light would be, for example, to shine a concentrated light - such as torchlight - with the beam parallel or nearly parallel to the surface being inspected. There is no evidence to suggest that this was done by either Mr Kavanagh or Mr Austin when they carried out their inspection.
I also do not accept the respondent's submission that a room that is less than 1500 mm wide can only be inspected for defects by standing outside the room, or not at all if standing 1500 mm from the alleged defect would require being on the other side of a wall. The normal viewing position specified in the Guide is just that: a "normal" viewing position. While what is considered normal may usually be 1500 mm, I am not satisfied that a normal viewing position in a room that is less than 1500 mm wide is from outside the room or from the other side of a wall. I am satisfied that that a defect can be found to exist even if inspected from less than 1500 mm in appropriate circumstances, such as when the room in which the claimed defect is located is less than 1500 mm wide.
I note that the respondent has also claimed that the normal viewing position specified in the HIA Guide was not correctly applied in other ways. For example, in respect of item 17 (skirting board behind the oven not fitted to the wall), Mr and Ms Monovasios submit that the missing skirting board (which they say was not fitted because it would have pushed the oven cooktop away from the rear wall because of the placement of the oven's rear legs) should not have been identified because it can't be seen from a normal viewing position. In my view, this submission is misconceived. If the plans required skirting board, no skirting board was fixed and no variation was agreed to, then the absence of the skirting board would constitute incomplete work. The fact that the incomplete work can't be seen from 1500 mm away because the oven obscures the view is irrelevant. The normal viewing position specified in the HIA Guide is accordingly irrelevant to item 17.

[16]

Effect of other contractual provisions

Although the oral submissions made by Ms Monovasios were to the effect that the respondent's substantive objections to the joint report were Mr Kavanagh and Mr Austin's failure to reinspect and their view of the correct interpretation of the HIA Guide, the respondent's written submissions raise other issues.
For example, Mr and Ms Monovasios assert that the applicant breached his contractual obligation by failing to accept a report that was done by David Hall Building Appraisals prior to the handover of the property. They submit that this report does not reflect the findings of Mr Kavanagh and Mr Austin. They likewise claim that the applicant's failure to accept inspections and certificates provided by the Principal Certifying Authority constitutes a breach of contract.
I do not accept this submission. Firstly, there is no application from the respondent seeking orders arising from any alleged breach of contract by the applicant. Secondly, the fact that an earlier inspection by a building consultant took place and the report resulting from that inspection differs from the individual reports prepared by Mr Kavanagh and Mr Austin and their joint report is not relevant to the weight that should be given to the amended joint report. In respect of these building works, it is not in dispute that there is a seven year statutory warranty period. The fact that an earlier report did not identify defects that were later identified is not a basis for rejecting the later reports. Thirdly, the fact that certifications were given as the building works progressed does not mean that there are no defects in the work.
The respondent also submits that Clause 49 of the contract permitted the owner to employ the services of a private building consultant to review the building works. Clause 49.2 states: Should the owner elect to do this then the builder will review the consultant's recommendations and act upon any items of the building works that fall outside the tolerances allowed under the building code of Australia (BCA) and which are noticeably different to the standard of building works and methods as used in the construction of the builder's display or exhibition homes or the allowances as noted in this contract.
The respondent claims that several of the claimed defects are not noticeably different to items in their display home, which they state Mr Kavanagh and Mr Austin should have inspected prior to providing their reports. My difficulty with this submission is that the applicant's claim is based on breach of statutory warranties. Even if particular items were not noticeably different to the builder's display home, if they are in breach of one or more of the statutory warranties set out in s 18B of the Home Building Act, then the applicant's claim in relation to the item may be established.
Overall, I am not satisfied that the respondent's submissions in relation to the application of the HIA Guide, the inspection carried out by Mr Kavanagh and Mr Austin, the lack of reinspection prior to amending the joint report, or other contractual issues justifies rejecting the amended joint report.

[17]

Status of evidence to be given by expert witnesses in a joint report

At the time the expert reports in this matter were prepared, the Chairperson's Directions on the Code of Conduct for Expert Witnesses was in force. (This has now been replaced by NCAT Procedural Direction 3 for Expert Witnesses).
Paragraph 2 of the Code of Conduct for Expert Witnesses states that an expert witness "has an overriding duty to assist the Tribunal impartially on matters relevant to the expert's area of expertise", that "an expert witness's paramount duty is to the Tribunal and not to the parties" and that "an expert witness is not an advocate for any party".
I am satisfied that both Mr Kavanagh and Mr Austin have the qualifications and experience to give an expert opinion on home building defects, other than those that have been dealt with by other expert witnesses in relation to the air conditioning and engineering issues.
I am satisfied that they prepared their individual and joint reports in accordance with the Code of Conduct for Expert Witnesses and in particular that they did so acknowledging that their paramount duty was to the Tribunal and not to the party that had engaged their services.
As noted above, Mr Kavanagh and Mr Austin participated in a conclave of experts, the purpose of which to narrow the issues in dispute. As a result of the conclave, they prepared a joint report that was subsequently amended to take into account the HIA Guide. .
In Davis Homes Pty Ltd v Listowski (Home Building) 2010 NSWCTTT 250 (8 June 2010) [Davis Homes] the respondents and their expert sought to resile from conclusions reached between experts at a conclave. Senior Member Durie found that they were bound by what the experts had agreed. In doing so, he cited the following paragraph from the decision of Brereton J in Lucantonio v Kleinert [2009] NSWSC 929 (5 August 2009): It would entirely defeat the purpose of the expert conclave process, including the production of a joint report, to permit one of the parties now to adduce the evidence of a further expert witness, after the conclave has taken place and after the joint report has been prepared, to give an opinion contrary to at least some of those agreed to by some of the experts in the course of the conclave and joint report. The court manages closely the use of expert evidence. In this case, the purpose of the course of management adopted would be entirely frustrated if the plaintiff were now permitted to call a further expert witness who had not been involved in the conclave and the preparation of the joint report.
Senior Member Durie stated that Brereton J's reasons go further than "the simple rejection of a post-conclave report". He held the respondents to what was agreed at the conclave, stating: His Honour refers to the subversion of the conclave process by the tender of a report giving an opinion contrary to that reached at conclave. I respectfully agree with what His Honour says.
In this case, contrary to the situation in Davis Homes, the respondent's expert Mr Austin did not resile from the agreement reached at conclave or in the subsequent amendment of the joint report brought about by the application of the HIA Guide. Under cross-examination during the hearing, he maintained his opinion concerning the existence of the agreed defects and the agreed quantum.
In these circumstances, I am satisfied that the amended joint report should be relied on, both in respect of liability and quantum. I am not satisfied that the respondent's reasons for resiling from the agreed position of the experts are sufficient to justify a rejection of the amended joint report.

[18]

Findings in relation to agreed defects

Accordingly, I find that the applicant has established a breach of statutory warranty and a basis for an order for compensation as follows. I have dealt with the respondent's submission that they should have the opportunity to rectify defects at paragraphs 118-119 below. Item 1: Drive track in garage door - $28.00 Item 2: Garage ducting - $179.12 Item 3: Exposed edge of plaster board wall lining in garage - $66.35 Item 8: Poor quality grouting and installation of feature tiles in powder room - $250.92 Item 10: Timber trims on staircase unsatisfactory - $216.68 Item 12: Finish on staircase unsatisfactory - $750.00 Item 13: Patching to plasterboard on ceiling and walls at the stairs unfinished - $138.40 Item 17- Skirting board behind oven not fitted to wall - $66.35 Item 18 / 19 / 20: Overhead cupboards in fridge recess poorly installed, missing shelf and incorrect hinge - $1870.00 Item 22: Pantry shelving poorly constructed - $450.00 Item 23: Unfinished / unpainted plaster patching on kitchen ceiling - $20.00 Item 24 / 25: Broom / chute cabinet poorly constructed and finished and laundry tub cabinet not fitted with a central shelf - $450.00 Item 26: Unpainted patching in rumpus room: $202.57 Item 27: Paint patch in family room - $266.76 Item 29: Ceiling and corners patching unpainted in family room - $128.38 Item 33 / 34: Shelving to walk in wardrobe poorly constructed / Robe duct poorly installed - $1250.00 Item 36: Wastepipe to toilet pan poorly finished off - $1218.94 Item 37 / 40: Chipped edges to soap recess / poor quality grouting in ensuite - $1517.76 Item 38: Unfinished plaster patching on ensuite ceiling - $158.38 Item 39: Ensuite window out of plumb - $121.12 Item 41: Screen door to ensuite shower not closing properly - $290.00 Item 44/ 46 Bedroom shelving poorly constructed / construction of boxed ducting position - $192.83 Item 45: Bedroom 3 floor deflected - $1407.16 Item 50: Hole in ceiling beside smoke detector - $55.19 Item 52: Sagging roof sisalation - $50.00 Item 56: Driveway only partly sealed - $200.00 Item 57: Downpipes to be Colorbond - $1500.00 Item 60: Control joints finished in unmatching colour - $500.00 Item 61: Drummy front entry tiling - $561.84 Item 62: Ceiling poorly installed in alfresco area soffit - $2800.00 Item 64: Uneven Colorbond fascia - $881.84 Item 65: Mortar staining on brickwork - $1,125.72 Item 66: Additional downpipe at laundry - $140.00 Item 67: Section of external lining board unpainted - $140.00 Item 68 / 69: Lead flashing not dressed down / insufficient lap - $500.00 Item 71: Termite treatment - $50.00 Total for items agreed in joint report: $19,744.31

[21]

Findings

An issue in relation to these two items is that two sets of engineering drawings exist for the building works. The first set of drawings, which the applicant provided to the respondent, was prepared by HKMA Engineers. The Structerre Report and the costing of the proposed method of rectification are premised on the use of the HKMA drawings.
However, during the course of the project, the parties agreed on the construction of storage space in the attic as a variation of the contract. I am satisfied on the balance of probabilities that the agreed variation led the respondent to obtain alternative engineering drawings from P & S Meares Consulting Engineers Pty Ltd. These drawings make provision for the attic space.
I am satisfied on the balance of probabilities that the drawings prepared by P & S Meares Consulting Engineers Pty Ltd were used in the construction of the dwelling. In relation to this, I note that P & S Meares Consulting Engineers Pty Ltd certified both the timber frame structure and the steel beams. (See attachments EM190 and EM191 to Ms Monovasios' statement). In respect of the steel beams, the certification states: "The beams were installed in accordance with the plans prepared by this office, including the end bearing conditions". While it may be unusual for a builder to obtain a set of new engineering drawings from an engineer other than the owner's original engineer, I consider it implausible that, having done so, the builder would not use those drawings in the construction of the dwelling.
During the hearing, the parties' experts agreed that if the P & S Meares Consulting Engineers Pty Ltd Consulting drawings were used, then the building is structurally sound. I am satisfied that this is the case. However, although the building is structurally sound, I am satisfied on the balance of probabilities that the steel beam above the door frame (item 30) and the timber floor beams (item 32) have deflected and that this constitutes defects in breach of statutory warranty that require rectification
I am satisfied that the reasonable rectification costs are as proposed by the expert witnesses during the hearing; that is, $2.457.00 in respect of item 30 and $4,823.00 in respect of item 32, which totals $7,280.00.

[29]

Evidence

The applicant claims that the air conditioning system was not installed by a licensed air conditioning technician, but by the respondent. The Actron Air warranty documents (Exhibit A1) are relied on in this regard. These documents show that Haden Engineering is the installer. However, the telephone number provided on the warranty documents is said to be Ms Monovasios' mobile phone number. The respondent has provided no evidence to support a conclusion that the air conditioning units were installed by a licensed installer.
In support of the claim that the air conditioning system is defective, the applicant relies on reports dated 14 April 2012 and 11 June 2013 by Mr Doug Condon of Nu-Tech Group Pty Ltd, who is of the opinion that the air conditioning system has been poorly installed in a number of respects, namely:

One system for upstairs and one for downstairs (rather than one for the front half of the house and one for the back part of the house) could have been installed had installation been coordinated in the early building stages.
The system is inadequate to service 265 m2 of living area.
Inadequate air supply grilles have been installed to service conditioned areas.
Ductwork has been crushed and has split due to penetration too small for the size of the duct.
The outdoor condenser units have been installed incorrectly and
The access panel is obstructed by pipe work.

The respondent relies on the report by Brad Lind of Trilogy Servicing Pty Ltd. In this report, Mr Lind specifically addresses Mr Condon's report and states:

The 11kw Actron Air model SRA120 units are configured as per the builder's calculation document.
The units were operational at the time of his inspection.
The outside pipework for both units is exposed, but this is not a defect as boxing in of pipework with an appropriate cover is done for visual aesthetics. Trunking material has been left on site. The cost to install it is $170.00 plus GST.
The units specified in the tender document would be inadequate to service the areas in any other configuration than what has been installed.
The design of the house doesn't allow for the units to be installed in any other way without going to considerable cost.
The building plans and the tender document indicate only two units and do not indicate the use of bulkheads or wall vents.
The units in their current configuration are adequate to service the designated areas, one zone at a time.
After undertaking relevant testing, the return air temperature to the supply air temperature is working within normal parameters.
Manual dampers were not included in the tender document and industry practice is not to include them in residential homes.
One duct is ripped and the entire length of the duct will need to be replaced.
There is no requirement by the manufacturer to have the condenser coils on the outside, away from the house.
Both units meet the manufacturer's minimum recommended clearances.
The access panels are not obstructed by pipe work.

[33]

Findings

I am satisfied on the balance of probabilities that the coating of the flooring is delaminating, that the surface is not smooth, that it is contaminated with dirt and dust and that it shows evidence of boot marks. I am satisfied that this occurred when the flooring was sanded and polished. Given that it is not in dispute that the flooring is a pre-finished bamboo floor, I am satisfied that sanding and polishing it was inappropriate.
I do not accept the assertion that any problems with the floor were caused by the applicant undertaking repairs to a scratch or otherwise by the applicant damaging the floor. While I accept that the applicant's removalists scratched the floor, I am not satisfied that the applicant undertook any repairs. I note that neither a scratch nor an attempted repair to a scratch has been identified as part of item 9 or item 31.
Clause 9(1)(i) of the Home Building Regulation 2004 (which was in force at the date of the application) excludes from the definition of residential building work "any work involved in the installation of any material that forms an upper layer or wearing surface of a floor (even if installed as a fixture) that does not include any structural changes to the floor".
On its face, this excludes a floating floor such as the floor that is the subject of items 9 and 31. However, I am satisfied that where a floating floor is installed as part of a contract for residential building work, the installation of the floor (and work otherwise done to the floor) constitutes residential building work. If this conclusion is incorrect, as the application was brought less than three years after the floor was installed and the claim in respect of the floor does not exceed $30,000.00, the Tribunal has jurisdiction to deal with it under s 7 of the Consumer Claims Act 1998.
I am satisfied that the sanding and polishing of the floor was work not undertaken in a proper and workmanlike manner in breach of the statutory warranty set out in s 18B(a) of the Home Building Act. I am also satisfied that the undertaking of that work was not done with due care and skill. I accordingly find that the respondent is liable for items 9 and 31 in the sum agreed by the experts, which totals $4950.00.

[34]

In respect of items for which the respondent is found liable, what is the appropriate order to make?

In submissions provided on behalf of the respondent, Mr and Ms Monovasios have argued that the respondent has always been prepared to rectify defects. They also argue that the applicant unreasonably refused mediation by NSW Fair Trading and unreasonably refused to allow the respondent access to rectify defects.
The Tribunal has the power to make an order under s 48O(1)(c) of the Home Building Act requiring a builder to do work. Under a recent amendment to the Act (s 48MA - which does not apply in these proceedings), the Tribunal is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
I am not satisfied that an order requiring the respondent to undertake rectification work would be appropriate in this case. This because the respondent's representatives resiled from the findings of the joint expert report and submitted that the building work has no defects. Such a position is inconsistent with a willingness to rectify defects. The respondent's representatives also demonstrated a lack of understanding of the status and requirements of the HIA Guide, which does not inspire confidence in their ability to undertake the required rectification work.
In my view, ordering the respondent to return to the site and undertake rectification work in these circumstances would almost inevitably lead to the matter coming back before the Tribunal on a renewal application. This is even more the case when the poor state of the relationship between the parties is considered. Overall, I am not satisfied that a rectification order would give finality to the proceedings.
I am satisfied that it is appropriate to make an order for payment of damages pursuant to s 48O(1)(a) of the Act. My calculation of the damages payable is as follows: Joint report defects: $1,9744.31 Items 30 and 32: $7,280.00 Items 48 and 49: $1,512.76 Item 55: $1,500.00 Item 72: $400.00 Items 9 and 31: $4,950.00 Sub-total: $35,387.07 Plus 15% preliminaries: $5,308.06 Sub-total: $40,695.13 Plus 25% builder's margin: $10,173.78 Sub-total: $50,868.91 Plus 10% GST: $5,086.89 Total: $55,955.80

[40]

Evidence

In relation to this application, the applicant relies on pages 14 and 15 only of a report dated 23 June 2013 prepared by Mr Howard Ryan of H&K Ryan & Associates.
In his report, Mr Ryan states that:

Three showers in the dwelling were flood tested.
They were found to be leaking under the shower screens and through other wall areas.
One shower had inadequate falls to the shower base and into the floor waste.
The rectification works required are to remove the skirtings opposite the shower to create an invasive measure to see if dampness is penetrating into adjacent rooms, to remove the shower screens, remove wall and floor tiles to the showers, replace and rectify the leaking waterproofing and or replace the inadequate shower stop angles under the shower screens and replace matching floor and wall tiles.
The cost of the recommended rectification works is $14,534.00.

The respondent relies on the report provided by Mr Andrew Montgomery dated 23 July 2014. This report was based on a site inspection carried out on 18 July 2014 by an associate of Mr Montgomery, Mr Roy Bailey, who conducted testing of the showers and took photographs and video footage.
Mr Montgomery's report concludes that:

The flood testing conducted by Mr Ryan is not supported by legislation, by the Building Code of Australia or by AS 3740 and is not an industry practice.
If the shower drain is blocked, (as it was during the flood testing), the water level will rise and overflow.
The tests conducted by Mr Bailey on 18 July 2014 demonstrate that the showers are not leaking.
The description of rectification works is considered extreme, particularly as no water marks were found on the walls and ceiling of adjoining rooms.
Industry practice suggests that prior to demolition, the cause of the alleged defects is first identified, repairs are enacted and further tests are conducted.
Mr Ryan's report does not appear to have given due consideration to inspections carried out by the PCA and compliance certificates from other trades.

Mr Chrysostomou objected to Mr Montgomery's report on the basis that he had not conducted the testing himself and that the report therefore did not comply with the Code of Conduct for Expert Witnesses. It was also noted that part of paragraph 7 on page 2 of Mr Montgomery's report does not relate to this application. This was acknowledged as an error by Mr Montgomery at the hearing.
The report was allowed into evidence on the basis that submissions could be made as to the weight to be given to it by the Tribunal.
Mr Ryan and Mr Montgomery were given an opportunity to discuss their respective reports in order to narrow the issues. As a result of that discussion, Mr Ryan agreed that if no water stop angle has been installed in the showers, one could be put in at a cost of $1500.00 per shower. He stated that the water stop angle might be covered or non-existent.

[41]

Findings

In relation to Mr Montgomery's report, the Chairperson's Directions on the Code of Conduct Expert Witnesses, which was in force at the time the report was prepared did not require the expert who wrote the report to carry out investigations. Rather, it required the expert to specify "any examinations, tests or other investigations, on which he or she has relied and identify and give details of the qualifications of the person who carried them out".
Mr Montgomery's report specified that Mr Bailey had carried out the tests on which his report is based. Although it did not give details of Mr Bailey's qualifications, under cross-examination Mr Montgomery stated that Mr Bailey's role was to take photographs and use a moisture meter. He stated that Mr Bailey is a "non-technical person" and indicated that he does not have any particular qualifications.
In my view, Mr Montgomery's report sufficiently complies with the Chairperson's Direction on the Code of Conduct for Expert Witnesses, in that he sets out his own qualifications, specifies the facts and assumptions on which his opinions are based, gives reasons for his opinion, identifies the material used to support his opinions and gives details of Mr Bailey's tests. Mr Montgomery's report can therefore be accepted as expert evidence.
I am also satisfied that Mr Ryan's report complies with the Code of Conduct and can be accepted as expert evidence.
There is an obvious conflict between the opinions expressed by the experts in respect of the subject matter of this application as to whether the showers do in fact leak. Neither Mr Ryan nor Mr Montgomery resiled from their expressed opinion under cross-examination. In these circumstances, I am not satisfied that it has been established that the shower recesses leak.
However, even if the shower recesses leak as asserted by Mr Ryan, Mr Ryan has not clearly identified the cause of water leaks. In his report, Mr Ryan proposes and costs a method of rectification based on the cause of the problem being either leaking waterproofing OR inadequate stop angles. At the hearing after his discussion with Mr Montgomery, Mr Ryan significantly reduced his estimation of the rectification cost from $14,534.00 to $1500.00 per shower, based on the cause being inadequate or non-existent stop angles. Mr Ryan did not conduct any invasive testing to establish that this was the cause of the claimed leaks. In the absence of evidence as to the cause of any leaks, I am not satisfied that liability, the correct method of rectification or quantum has been established.
Overall, I am not satisfied that the applicant has established a breach of any relevant statutory warranties by the respondent in relation to the showers. I have therefore dismissed the application.

Giovas v F.E.V Mono Constructions Pty Ltd

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