Lasovski v Traj Developments Pty Ltd

Evidence and submissions

1. The Homeowners relied on the following documentary evidence: 1. statement by both applicants dated 11 June 2021 the contents of which were adopted by Ms Julie Lasovski (ex 1); 2. statement of Ms Julie Lasovski dated 15 February 2022 (ex 2); 3. building contract between the Homeowners and the Builder dated 13 March 2018 and the BASIX certificate dated 18 April 2018 (ex 3). This document is pages 9 - 50 of the documents filed by the Homeowners on 1 September 2021; 4. expert report dated 11 July 2021 authored by Mr Brennan of C & M Brennan Management Services Pty Ltd (ex 4): 5. quotation dated 6 August 2021 from Orion Aluminium Pty Ltd (ex 5); 6. quotation dated 21 July 2021 from Ian's Roofing Pty Ltd (ex 6); 7. quotation dated 18 August 2021 from Vista Windows (ex 7); 8. email chain between Ms Lasovski and Konig Surface Repairs (ex 8); 9. Homeowners' Scott's schedule included in a bundle of documents filed 31 August 2021 (ex 13)
2. The Builder relied on the following documentary evidence: 1. Builder's Scott's schedule, which set out the Builder's position in respect of each of the items claimed by the Homeowners (ex 9); 2. expert report dated 19 October 2021 authored by Mr Gramlick of Australian Glass & Window Association (ex 10); 3. expert report dated 23 March 2022 authored by Mr Frigerio of Archi Sustainability (ex 12); 4. statement of Ms Snez Trajcevski dated 22 March 2022 (ex 14); 5. statement of Mr Daniel Trajcevski dated 22 March 2022 (ex 15).
3. A joint expert report dated 22 November 2022 authored by Mr Brennan and Mr Gramlick was jointly tendered (ex 11).
4. Ms Lasovksi and Ms Trajcevski were crossed examined. Mr Trajcevski was not cross examined.
5. The experts, Mr Brennan, Mr Gramlick and Mr Frigerio, were cross examined together and given an opportunity to reply to evidence given by the other expert in that process.
6. In addition to evidence, the parties filed submissions. The Homeowners filed submissions in chief on 28 April 2022 ("the Homeowners' submissions in chief") and submissions in reply on 3 June 2022 ("the Homeowners' reply submissions"). The Builder filed its closing submissions on 25 May 2022 ("the Builder's submissions").
7. At the end of the hearing on 24 March 2022 Mr Manna sought leave to adduce evidence in reply in relation to the issue of sarking and sought to call Ms Lasovski. I did not permit him to do so as the evidence he sought to adduce was as to whether or not sarking had been installed and could have been adduced in chief and the time had concluded.
8. Mr Manna also sought leave to tender photographs on the issue of sarking. Mr Birch objected. I indicated that I would rule on the issue of leave to adduce photographs when submissions were filed. I have determined that no further evidence should be permitted. The Homeowners were legally represented during the preparation of their evidence and the photographic evidence has always been accessible to the Homeowners. Allowing further evidence from the Homeowners on this issue will most likely lead to the Builder seeking to adduce its own further evidence on the issue and it would not be procedurally fair to deny the Builder such an opportunity.
9. The Homeowner's submissions in chief also attached an article. This document had not been tendered. I have not read or had regard to that document.
10. Mr Birch included with the Builder's submissions a document described as an amended BASIX Certificate uploaded by Femme Build and a document from Mr Frigerio of Archi Sustainability dated 6 May 2022. Mr Birch submitted that the effect of Femme Building uploading the amended BASIX Certificate to the NSW Planning Portal is that the amended BASIX Certificate is the relevant BASIX and that the completed dwelling complies with the BASIX (presumably being the amended BASIX).
11. I do not grant leave to the Builder to tender this evidence and I will not have regard to it. This evidence could have been adduced prior to the hearing. Indeed, Mr Birch made a submission during the hearing to the effect that the BASIX Certificate could be amended. Moreover, there is a dispute as to Femme Build's current authority to upload any documents on behalf of the Homebuilders. Mr Manna says Femme Build, or its principals, are connected with the Builder. I do not intend to rule on whether or not Femme Build is connected to the Builder because (i) this evidence could have been marshalled and served prior to the hearing; (ii) the Homeowners cannot now be expected to deal with it; and (iii) there is a genuine dispute as to Femme Build's authority to amend the BASIX Certificate and upload it to the NSW Planning Portal on behalf of the Homeowners.

The Contract

1. By written agreement dated 13 March 2018 the parties entered into a written for the construction by the Builder of a residential premises for the Homeowners in consideration for payment of the contract price, namely, $686,400.00 ("the Contract").
2. Clause 1 of the Contract specified and incorporated the Contract. Clause 1 provided, relevantly: … All plans and specifications for work to be done under this contract, including any variations to those plans and specifications are taken to form part of this contract. Any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by each party to this contract. The documents listed below also form part of this contract and must be attached. Specifications: prepared by No of pages Date Femme Build 1 /3/18 Plans: prepared by Femme Build 6 /3/18 Other documents: prepared by Femme Build - Basix /3/18
3. Consequently, clause 1 of the Contract expressly incorporated documents described as "Specifications" prepared by Femme Build, "Plans" prepared by Femme Build and another document prepared by Femme Build described as "Basix".
4. The Homeowners tendered a BASIX Certificate. That document records a typed date 18 April 2018 and certificate number 9204755. Obviously, the date 18 April 2018 is subsequent to the date the Contract was signed, namely, 13 March 2018.
5. However, there was no dispute between the parties that the BASIX Certificate tendered was part of the Contract. The transcript records the following in relation to this issue: Mr Manna: --- well, we wish to tender the building contract. Tribunal: Okay, that's exhibit 3. Mr Manna: Right. And also the BASIX, well, the BASIX certificate which really is part of the contract. Tribunal: Well, is it, when you say really part of the contract, one, is that an agreed position ? Two, are you tendering one document or two ? Is the building contract including the BASIX certificate or are you tendering separately ? Mr Manna: They're together. Entering it as one document. Tribunal: Mr Birch, is there a problem with that ? Mr Birch: No. No problem. Tribunal: So the BASIX certificate that I have is 18 April 2018, it's 10 pages. Mr Birch: Correct. Tribunal: All right. So that's part of exhibit 3. (Transcript, pp. 33 - 34)
6. The Builder's submissions at paragraph 21 refer to "the BASIX Certificate attached to the Contract" in relation to exhibit 3.
7. Based on the common position of the parties that the BASIX Certificate was attached to the Contract, I infer that the BASIX certificate forming part of exhibit 3, or a document containing the same text, was attached to the Contract or is otherwise the relevant document referred to in the Contract by the words "Femme Build - Basix" in clause 1.
8. Consequently, I find that the BASIX certificate forming part of exhibit 3 formed part of the Contract by incorporation by reference in clause 1 of the Contract.

Windows and glazed doors - Thermally broken frames

1. On page 5 of the BASIX Certificate under the headings "Thermal Comfort Conditions" and "Windows, glazed doors and skylights" the following text appears: • For other glass or frame types, each window and glazed door must be accompanied with certification showing a U value no greater than that listed and a Solar Heating Gain Coefficient (SHGC) within the range listed. Total system U values and SHGC must be calculated in accordance with National Fenestration Rating Council (NFRC) conditions. Frame and glass types shown in the table below are for reference only.
2. Below the text extracted in the preceding paragraph there is a table listing the various windows and glazed doors to be installed in the dwelling. The table contained the following information for each listed window and door: 1. Window/glazed door number; 2. Maximum height (mm); 3. Maximum width (mm); 4. Type; 5. Shading (Dimensions within 10% range); 6. Overshadowing.
3. The critical column is headed "Type". For each window or glazed door the following text appears in the column headed "Type": aluminium: thermally broken, double (argon)
4. A U-value and a range referable to Solar Heating Gain Coefficient ("SHGC") is also recorded in respect of each window or glazed door.
5. There is no dispute in the proceedings that the frames for the windows and glazed doors referred to in the table commencing on page 5 of the BASIX Certificate were not thermally broken (Builder's submissions, paragraph 23).
6. The Homeowners also complain of (i) fogging, (ii) excessive condensation build up on windows, (iii) poor installation in respect of some windows and glazed doors with gaps and/or poor fitting, and (iv) some internal glass units ("IGUs") incorrectly installed in that the surfaces with a low emissivity coating ("low "e" surfaces") were back to front, affecting efficiency.
7. The Homeowners relied on an expert report authored by Mr Brennan in relation to the issues with the windows and glazed doors identified in the preceding paragraph. The Builder relied on an expert report prepared by Mr Gramlick. I heard the evidence of Mr Brennan and Mr Gramlick. Both witnesses were honest witnesses. Where they disagreed I formed the impression that they simply held different opinions on the matter.
8. Mr Frigerio also impressed me as an honest witness. He was completely candid as to the process underpinning his report and the limitations of his report.

Sarking

1. The Homeowners claim that no sarking was installed in certain areas of the roof.
2. There was no dispute that sarking was required. The dispute was whether sarking had been installed.
3. The Builder says that sarking was installed. Paragraph 21 of Ms Trajcevski's statement (ex 14) records the following: I say that sarking was installed to the whole roof area.
4. During cross examination Ms Trajcevski said she knew that sarking had been installed because she had observed sarking after it was installed. Ms Trajcevski also said she had photographs
5. Ms Lasovski's evidence is to the effect that the roofers that provided the roofing quote informed her there is no sarking. I place no weight on that evidence insofar as it is intended to prove that sarking was not installed because Ms Lavoski is merely conveying that what she has been informed.
6. The quotation dated 21 July 2021 from Ian's Roofing Pty Ltd (ex 6) records the following: The top roof above the entrance and on the left side is a KLIPOK roof. Both these roofs do not have sarking….The roofs and flashings in these areas (entrance and left side) need to be replaced and new sarking installed. 1. … 2. … 3. … 4. Supply and fit new PolyAir Multi sarking …
7. In Khan v Kang [2014] NSWCATAP 48 the Appeal Panel, in considering the evidentiary purposes for which a quotation may be used, said at [50]: A quotation from a supplier willing to rectify defects or complete incomplete work can, depending on the circumstances and the nature and content of the quotation, constitute evidence of the defects or incomplete work and of the amount required to remedy the defective work or complete any incomplete work. For example, if the person providing the quotation was suitably qualified or experienced, inspected the work, identified defects or incomplete work on that inspection, recorded his or her observations in the quotation and gave a price to rectify or complete the work, it is difficult to understand why that quotation would not provide evidence in support of a claim for defective or incomplete work. The weight to be given to the evidence would, of course, depend upon many factors. Nonetheless, it would be wrong to conclude that simply because an applicant relied only upon a quotation or quotations for the rectification or completion of work that there was no evidence to support the claim that the work was defective or incomplete.
8. On the basis of the content of the quotation dated 21 July 2021 from Ian's Roofing Pty Ltd I infer the following: 1. that an employee or agent of Ian's Roofing Pty Ltd inspected the dwelling for the purposes of providing a quotation; 2. that the work identified by the person that undertook the inspection included the need to install sarking to two roof spaces; and 3. the person that undertook the inspection identified that the work that was required "new sarking [be] installed" to two areas, namely, the top roof area above the entrance and the area on the left hand side of the KLIPLOK roof; 4. the quotation identified suitable sarking material, namely, PolyAir Multi sarking.
9. The Builder's submissions criticised the evidentiary value of the quotation from Ian's Roofing Pty Ltd. One of the criticisms was that it was not an expert report. That observation is correct. However, that does not render the quotation of no evidentiary value. Rather, it is a question of weight.
10. The Builder also submitted that the quotation was self-serving. I do not accept that submission. Ian's Roofing Pty Ltd is not a party to the proceedings nor does it have any relevant interest in the proceedings.
11. Finally, the Builder submitted that the quotation does not provide evidence to support the allegation of no sarking. I do not accept that submission for the reasons explained above and, having regard to the matters stated by the Appeal Panel in Khan v Kang, the quotation provides evidence of what the person that provided the quote observed and considered necessary to remedy the defect, namely, installation of sarking in two areas.
12. Ms Trajcevski's evidence in chief on the issue of sarking was limited to paragraph 21 of her statement. The photographs to which Ms Trajcevski in cross examination were not annexed to her statement and were not otherwise adduced by the Builder. There was also no reference to the photographs in any evidence filed by the Builder prior to Ms Trajcevski's cross examination.
13. During cross examination Ms Trajcevski was challenged as to how she knew that sarking had been installed. In response, she stated she had seen the sarking after it was installed. My impression of Ms Trajcevski when this evidence was being given is that she was argumentative and I did not find her an impressive witness on this issue.
14. Weighing up Ms Trajcevski's evidence as against the matters recorded in the quotation from Ian's Roofing Pty Ltd I prefer to rely on the quotation. I do so because Ian's Roofing Pty Ltd has no interest in the outcome of these proceedings. I also do so because the quotation is clear in recording the need for sarking in specified areas, due to an absence of sarking. The quotation cannot be reconciled with sarking having been installed in those areas in the dwelling by the Builder.
15. It follows that I find that there was no sarking installed in the top roof area above the entrance and the area on the left hand side of the KLIPLOK roof.

Floor Damage

1. The Homeowners claim that in the process of attending to some remedial work the Builder damaged the floors. The amount of the claim to rectify this issue is $540.00 plus GST and is evidenced by a quotation from Konig Surface Repairs (ex 8).
2. The evidence in relation to this issue was not clear at all.
3. The process that seems to have been agreed was that prior to the Builder attending to remedial work Ms Lasovksi identified by blue marking tape existing areas of damage. The new areas of damage were said to be the areas not previously marked.
4. Ms Trajcevski disputed that damage had been caused. Her evidence was that temporary floor covers to protect the floor were laid out when the remedial work was to be undertaken. When these floor covers were removed the blue tape stuck to the floor covers so that the pre-existing floor damage ceased to be identified by the presence of tape marking.
5. The Homeowner's submissions in effect contended that Ms Lasovki's evidence in her statement dated 11 June 2021 (ex 1) should be preferred to Ms Trajcevksi's evidence. Ms Lasovski's evidence was, relevantly, as follows: …We also agreed to carry out prior work inspections as well as subsequent work inspections to the timber floor boards to each day the contractors were present, we had identified with each day that works were carried out that damage had in fact occurred and the significance of the damage, this was also provided to the builder in writing.
6. The Homeowners did not adduce evidence of what was "provided to the builder in writing" in respect of the floor damage observed or what the parties identified as damage.
7. Ultimately, I am not satisfied that the Homebuilders have displaced their evidentiary burden of proving, on the balance of probabilities, the 'new' damage to the flooring. There were no photographs specific to this issue. There was no evidence from Ms Lasovski focused on each allegedly 'new' item of damage caused during the Builder's remediation. The matters "provided to the builder in writing" were not adduced.

Windows and glazed doors

1. It was common ground, and I find, that the Contract was for residential building work within the meaning of clause 2 of schedule 1 of the HB Act. I also find that the Tribunal has jurisdiction to determine the claim.
2. The findings of fact concerning sarking and floor damage recorded above resolve those issues. However, the findings relating to the window and glazed door frames not thermally broken above do not resolve the legal consequences, if any, that arise for determination. In particular, there is a dispute whether there was compliance with the BASIX Certificate in any event, notwithstanding that the aluminium frames for the relevant windows and doors were not thermally broken.
3. Mr Brennan's view was that the window and glass door Uw value specified in the BASIX report can only be achieved, if aluminium frames are to be used, by using a thermally broken frames. His view was that a standard aluminium frame cannot provide the insulation value required. Consequently, he concluded that the only way this could be rectified was by "replacing all the windows and [glass] doors": ex 11.
4. Mr Gramlick agreed that "the installed windows do not meet the BASIX Report Uw value": ex 11. However, his view was that the "windows and doors are nevertheless high performing products because of the use of IGUs (double glazing) and low e glass and … replacement should not be considered until all other options including an energy assessment on the as built property are explored": ex 11. In relation to the latter point raised by Mr Gramlick the Builder led evidence from Mr Frigerio to the effect that the dwelling as built achieved compliance with the BASIX certificate requirements (see also Builder's submissions, paragraph 27).
5. In relation to the consequences arising from the fact that the frames are not thermally broken the parties' competing contentions can be summarised as follows: 1. the Homeowners say that the BASIX certificate requirements in respect of windows and glazed doors can only be achieved by replacing the existing products with products that have thermally broken frames, in accordance with the matters specified in the BASIX Certificate; 2. the Builder says that the question is whether the relevant component of the BASIX Certificate, namely, thermal comfort commitments, which includes but is not limited to the category of windows, glazed doors and skylights, complies with the requirements of the BASIX certificate for that component and whether there is overall compliance with the requirements of the BASIX certificate.
6. In Clements v Murphy [2018] NSWCATAP 152 the Appeal Panel considered a similar submission to the Builder's submissions in these proceedings. At [37] - [42] the Appeal Panel said: [37] At [15] of his decision Senior Member Goldstein identified the scope of work which the Builder was required by the contract to carry out. The Senior Member determined that, pursuant to the contract, the Builder was obliged to comply with the conditions of the development consent, which referred to a number of documents including the first BASIX certificate. The Senior Member held that: "all work shown, described or depicted in these documents [including the BASIX certificate] formed part of the scope of the work to be carried out and completed by the builder." [38] The Senior Member found, at [88] to [95], that the BASIX certificate required the installation of double glazed windows and that the Builder was liable for the cost of replacing the sliding glass doors to the dining and rumpus rooms as they were not double glazed and therefore did not meet the requirements of the BASIX certificate. [39] Mr Nathan submitted that, because the building had subsequently been certified as complying with BASIX requirements, including in relation to energy efficiency, the double glazing could not be said to be necessary. [40] This submission fails to acknowledge that the Senior Member found that the contract required the Builder to meet the requirements of the original BASIX certificate and that that certificate required that the doors be double glazed. [41] The contract did not merely require the Builder to obtain a BASIX certificate, it required the installation of the features identified on the original BASIX certificate. Those features included double glazing. [42] The second BASIX certificate, which was obtained by the Builder after the contract had been terminated, did not relieve the Builder from the obligation to build in conformity with the contract, including by supplying double glazed doors.
7. I have found that the BASIX Certificate formed part of the Contract in that it was incorporated by reference under clause 1.
8. Under the heading "Windows, glazed doors and skylights" commencing on page 5 of the BASIX Certificate, in the column headed "Type", for each specified window and glazed door there is recorded the text "(aluminium: thermally broken, double (argon)". Similarly, for each specified window and glazed door a U-value of 2.9 is recorded and an SHGC range of 0.459 - 0.561 is recorded.
9. Construing the Contract objectively, and giving meaning to the words used in the Contract, I find that the words "aluminium: thermally broken" mean that the parties have agreed that the windows and glazed doors specified on pages 5 to 10 of the BASIX Certificate will have aluminium frames that are thermally broken. Consequently, and consistently with Clements v Murphy [2018] NSWCATAP 152, I find that the Builder was obliged by the Contract to provide, in respect of the windows and glazed doors specified on pages 5 to 10 of the BASIX Certificate, aluminium frames that were thermally broken. This contractual obligation was not fulfilled by the provision of aluminium frames that were not thermally broken, even if the energy efficiency or comfort required by the BASIX Certificate were otherwise achieved.
10. Section 18B(1)(a) of the HBA implies into contracts for residential building work a statutory warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specification set out in the contract. The plans and specifications included the specifications on the BASIX Certificate that formed part of the Contract, and in particular the specification that the words "aluminium: thermally broken" were a specification that the windows and glazed doors specified on pages 5 to 10 of the BASIX Certificate will have aluminium frames that are thermally broken. I find that the Builder breached the statutory warranty implied into the Contract by s 18B(1)(a) of the HBA by installing windows and glazed doors with aluminium frames that were not thermally broken.
11. Further, clause 3 of the Contract provides: It is agreed, subject to this and the other clauses of this contract, that: (a) the contractor will: • comply with the statutory warranties in section 18B of the Home Building Act 1989 and complete the work in accordance with the requirements of this contract …
12. I find that it was a requirement of the Contract that the Builder install windows and glazed doors with aluminium frames that were thermally broken. I find that the Builder breached clause 3 of the Contract by installing windows and glazed doors with aluminium frames that were not thermally broken.
13. The Builder's submissions also contended that the Homeowners should have investigated alternative methods to achieve the Uw (2.9) value in item 1 of the BASIX Certificate but that they have not served any evidence of having taken any such steps (Builder's submissions, paragraph 26). To the extent that submission is intended to mean that the Homeowners did not establish an entitlement to relief by way of installation of windows and glazed doors with aluminium frames that were thermally broken, I do not accept the submission. The BASIX Certificate specified that thermally broken frames were to be used for the windows and glazed doors. That document formed part of the Contract. The Homeowners seek conformity with the Contract. To obtain such relief, in circumstances where the Builder has supplied and installed a product that does not comply with the Contract, I do not accept that there is an additional requirement that the Homeowners adduce evidence that they have investigated alternative methods to achieve the Uw (2.9) value.
14. In Deacon v National Strategic Constructions; National Strategic Constructions v Deacon [2017] NSWCATAP 185 the Appeal Panel said: [26] When assessing damages for the cost of rectification of defective home building work, the applicable principle was set out by the High Court in Bellgrove v Eldridge (1954) 90 CLR 613 as follows, at pp 617-618: In the present case the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her…her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give her the equivalent of a building on her land which is substantially in accordance with the contract…the work necessary to remedy defects in a building and so produce conformity with the plans and specifications may, and frequently will, require the removal or demolition of some part of the structure…that work which is required to achieve conformity and the cost of the work, whether it be necessary to replace a small part, or a substantial part, or, indeed the whole of the building is, subject to the qualification which we have already mentioned and to which we shall refer, together with any appropriate consequential damages, the extent of the building owner's loss. [27] The "qualification" to which the High Court referred in Bellgrove v Eldridge was that the remedial work must be "necessary to produce conformity" with the contract and "a reasonable course to adopt". However, it is only in "fairly exceptional circumstances" that a method of rectification will be held to be an "unreasonable" course to adopt: Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 at [15]; Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd [2017] NSWCA 27 at 186; Barwick v Shetab [2017] NSWCATAP 127 at [88]. [28] There may be situations where experts identify more than one method of rectification to produce conformity with the contract and the Tribunal must assess the evidence to determine which method (and cost) is the most appropriate to produce conformity. The Tribunal must, in such cases, determine the appropriate method of rectification and be satisfied that it is not an unreasonable course to adopt. However, this was not a case where the experts agreed on the nature and extent of the defect, and the issue of disagreement was the most appropriate method of rectification to produce conformity with the contract. [29] In circumstances where the Tribunal found that Mr Lewer's proposed method of rectification was necessary to produce conformity with the contract, it must follow that unless the proposed method was an unreasonable course to adopt the cost of rectification was the amount identified by Mr Lewer. No finding was made that Mr Lewer's proposed method of rectification was not a reasonable course to adopt. There was no evidence that Mr Shepherd had assessed the cost of rectification based on applying levelling compound and re-tiling the slab. Rather, Mr Shepherd had costed a completely different method of rectification
15. The Builder submits that because the existing BASIX Certificate is compliant, in terms of achieving the required energy efficiency and comfort requirements, it was unreasonable, or unreasonably burdensome, to require that the existing windows and glazed doors be removed and replaced with windows and glazed doors with thermally broken frames. Additionally, or as a related submission, the Builder submits that the Homeowners, by not adducing evidence of alternative ways to rectify the fact that the frames are not thermally broken, have not shown that it is reasonably necessary that the existing windows and glazed doors be removed and replaced with windows and glazed doors with thermally broken frames.
16. I do not accept the submission that, because the existing BASIX Certificate is compliant in terms of achieving the required energy efficiency and comfort requirements, the "qualification" discussed by the Appeal Panel in Deacon v National Strategic Constructions [2017] NSWCATAP 185 at [27] has been established. Firstly, that qualification applies only in "fairly exceptional circumstances" which has not been established. Secondly, no expert has identified a method of obtaining contractual conformity without the supply of windows and glazed doors that have thermally broken frames. As the Appeal Panel in Clements v Murphy [2018] NSWCATAP 152 explained, where the BASIX certificate specifications form part of the contract between the homeowner and the builder, then it is not sufficient that the energy efficiency requirements of the BASIX certificate are achieved. In circumstances where the BASIX certificate forms part of the contract and specifies the supply and installation of certain products then the "contract [does] not merely require the Builder to obtain a BASIX certificate, it required the installation of the features identified on the … BASIX certificate": see Clements v Murphy [2018] NSWCATAP 152 at [41].
17. In these proceedings, to comply with the Contract, the Builder was required to supply windows and glazed doors with aluminium frames that were thermally broken, in accordance with the "features identified on the … BASIX certificate".
18. Furthermore, in these proceedings the Tribunal was not presented with two alternative methods of rectification as discussed at [28] in Deacon v National Strategic Constructions [2017] NSWCATAP 185. The expert retained by the Homeowners proposed a method of rectification, namely, the installation of windows and glazed doors that have aluminium frames that are thermally broken. The expert retained by the Builder did not present an alternative method of rectification. Rather, the expert retained by the Builder merely recorded his belief that "other methods should be investigated" to "achieve the energy requirements".
19. The Homeowners' submissions contended that fulfilment of the commitments listed in the BASIX Certificate was a condition of the development consent by reason of regulation 97A of the Environmental Planning and Assessment Regulation 2000. Section 18B(1)(c) of the HB Act implies into every contract for residential building work a warranty that the "work will be done in accordance with, and comply with, this or any other law".
20. The Builder contends that the occupation certificate has been issued "and therefore the certifying authority has been satisfied the BASIX requirements have been met" (see T 60.35).
21. Having regard to the Tribunal's findings above that the BASIX Certificate forms part of the Contract by reason of incorporation by reference, and the breach of the warranty implied by s 18B(1)(a), it is unnecessary to determine the effect of regulation 97A of the Environmental Planning and Assessment Regulation 2000 on the Contract.
22. The above findings also make it unnecessary for the Tribunal to deal with the other grounds upon which the Homeowners might be entitled to relief. The alternative grounds have been helpfully articulated by Mr Birch in paragraph 17 of the Builder's submissions.

Remedy - rectification

1. Section 48MA of the HBA provides: 48MA Rectification of defective work is preferred outcome in proceedings A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
2. The Homeowner's application initially sought monetary compensation. However, in documents filed with the Tribunal on 20 December 2021 the Homeowners indicated that the orders primarily sought were rectification of the defects, consistently with section 48MA. In the alternative, they sought damages. In the Homeowners' submissions in chief the Homeowners sought orders for rectification and in the alternative damages.
3. During the hearing on 24 March 2022 the Tribunal requested that the parties' submissions include detailed provisions as to how the rectification work, should it need to be undertaken, should be undertaken (T. 161.20). The Tribunal also indicated that proposing an order simply requiring the Builder to comply with the contract would be of little assistance. The Homeowner's submissions sought the following order: That the Respondent rectify the works that do not comply with the …Contract … and the Basix Certificate forming part of the Contract and more specifically set out in the Applicants' Scott Schedule within 6 weeks from the date of making of the order
4. The Homeowners' Scott's Schedule was of limited assistance to the Tribunal as to how the rectification work should occur.
5. Doing the best that the Tribunal can with the material provided, the Tribunal will make orders in relation to remedying the issues with the window and glazed door frames as described in the following five paragraphs.
6. There will be an order that the Builder, at no cost to the Homeowners: 1. remove all the windows and glazed doors referred to at pages 5-10 of the BASIX certificate under the heading "Windows, glazed doors and skylights" which do not have thermally broken frames and replace and install new windows and glazed doors that have aluminium frames that are thermally broken and that otherwise comply with the Contract, including the BASIX Certificate, being the document forming part of exhibit 3; and 2. perform all necessary carpentry, plasterboard work or similar work in connection with the removal of the existing windows and glazed doors and installation of windows and glazed doors that have thermally broken frames, including the provision of the necessary materials, ("the Work").
7. The Work is to be completed within 60 days of the date of these orders. I will also provide some flexibility for the parties to agree to vary that timeframe so as to extend time. However, in the absence of any agreement to vary the timeframe then Work is to be completed within 60 days.
8. The Homeowners are to provide the Builder with reasonable access to undertake the Work.
9. The Builder is to provide and install, at no cost to the Homeowners, the scaffolding and other equipment which may be necessary to undertake the Work in a safe manner.
10. The Builder is to remove and dispose of any rubbish arising from the Work, at no cost to the Homeowners.

Other window and glazed door issues

1. The above findings mean that the cause of the fogging, the significance of the condensation issues, the issues of poor installation and the incorrectly facing IGU's (ie the "low "e" surfaces" being back to front) do not need to be resolved as they will, or should, be attended to by the proposed orders for the Work. However, having heard the matter, I have decided that it I should make factual findings on the other complaints in case it is necessary for any other steps.
2. Mr Brennan and Mr Gramlick agreed that fogging of the IGUs constituted a failure. However, Mr Brennan and Mr Gramlick did not agree on what flows from that identified failure. Mr Brennan was of the view that the IGUs should be replaced. His opinion was that fog "happening so early in an IGU's life is an indication that they have been manufactured poorly and should be replaced" (ex 11). Mr Gramlick was of the view that the IGU's were still under warranty and that "whilst the units that have failed have been replaced" the balance should not be replaced on what he characterised as an "in case" basis (ex 11).
3. The difference between the experts can be distilled to whether the fogging issue necessarily affects all the IGUs, thereby meaning there is a failure with all of them, or whether it does not necessarily affect all IGUs. The evidence of Mr Brennan was not to the effect that fogging was a problem with all of the IGUs.
4. If the issues with the IGUs in these proceedings were only related to issues of fogging then I would not have been persuaded that the Homeowners had shown on the balance of probabilities that all the windows and glazed doors had failed. In particular, the Homeowners' evidence did not show that the cause of the failure was present in all of the IGUs. All of the IGUs may have had fogging issues but the evidence simply did not establish this.
5. In relation to condensation, Mr Brennan considered that the dwelling has been specified and built to have a high insulation value. Mr Brennan's view was that "if a thermally broken frame had been installed the condensation would either be eliminated or a very minor issue" (ex 11). Mr Gramlick considered the condensation issues were indicative of inadequate air circulation and excessive internal water vapour. His view was that the issue was similar to the "vast majority of windows in the Sydney region" and is addressed by a combination of actions, including better ventilation (ex 11).
6. I am persuaded by Mr Brennan's opinions as to the significance of the condensation issues. I find that Mr Brennan's opinion that, because the dwelling has been specified and built to have a high insulation value, the condensation issues would be eliminated or very minor if the frames were thermally broken, to be persuasive and to address the cause of the issue. Although Mr Gramlick's suggestions concerning ventilation and related steps could well assist to reduce condensation, I am persuaded that the frames being not thermally broken has been an important factor or cause of the condensation issues.
7. In relation to the wrong facing IGUs both Mr Brennan and Mr Gramlick agreed that rectifying this issue was not a complicated task. Consequently, had it been necessary to resolve this issue, I would consider that it should be addressed.
8. In relation to the installation complaints, Mr Brennan considered re-installation was required in some instances. Mr Gramlick considered that joint sealant was sufficient to seal gaps. Mr Brennan's position in relation to joint sealant was that some gaps were too wide for sealant. During the hearing Mr Brennan made clear that sealant would be inadequate as a remedy for the poor installation of the items he identified.
9. I do not consider the application of sealant an appropriate way to address the installation issues if the gaps are too wide or if the installation issue is poorly fitting frame corners or gaps in the aluminium joinery. In cross examination Mr Brennan accepted his observations were in respect of two items in relation to the gaps being two wide. In exhibit 4 there is evidence of three photographs of poorly installed frames, namely, photographs 9, 12 and 13. That is the only evidence that the Homeowners adduced on this issue and any relief would have been confined to rectifying the installation of those items in the manner Mr Brennan contended.

Sarking

1. Turning to the issue of sarking, there will be an order that the Builder install sarking in the top roof area above the entrance and the area on the left hand side of the KLIPLOK roof. The Tribunal will not specify that the type of sarking to be used be in accordance with the quotation from Ian's Roofing Pty Ltd because that may not have formed part of the Builder's contractual obligation.

Costs

1. Both parties claimed costs and made submissions to the effect that there were special circumstances within the meaning of s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) ("the NCAT Act") warranting an award of costs against the other party or parties.
2. The application as originally filed claimed sought a money order "to the approximate value of $50,000.00".
3. The applicants' Scott's Schedule identified that the total damages sought was over $143,000.00 (ex 13). One component of the total damages amount was a quotation from Orion Aluminium for replacement and installation of window and glazed door frames (ex 5). That quotation was $106,471.41 including GST. Another component was the quotation from Ian's Roofing Pty Ltd in relation to the sarking. That quotation was $9,084.90 including GST.
4. The Builder's evidence also included a quotation for replacement and installation of window and glazed door frames. That quotation was supplied by Five Star Aluminium Pty Ltd and was for $51,579.00 including GST (ex 15, p. 35). The Five Star Aluminium Pty Ltd quotation required the builder to attend to rubbish disposal, supply scaffolding and attend to flashing and internal finish.
5. In those circumstances, the question is whether r 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 ("the Rules") applies to these proceedings. Significantly, under r 38(2)(b), the Tribunal may award costs even in the absence of special circumstances if "the amount claimed or in dispute in the proceedings is more than $30,000".
6. Based on the application as filed, and the Applicant's Scott's Schedule, the "amount claimed… in the proceedings" is more than $30,000.00.
7. I also find that the "amount… in dispute in the proceedings" is more than $30,000.00.
8. In Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 ("Allen v TriCare") the Appeal Panel said at [57] that the following matters inform the determination of the "amount … in dispute" for the purposes of applying r 38(2)(b): (1) … (2) The phrase "in dispute" is to be construed as meaning truly in dispute or at issue or, inversely, not unrealistically in dispute; (3) Whether "the amount … in dispute" in each appeal is more than $30,000 depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000; (4) The fact that the value of the property the subject of any appeal exceeds $30,000 does not, of itself, mean that "the amount … in dispute" in that appeal is greater than $30,000.
9. The principles in Allen v TriCare were stated in the context of an appeal but they also apply in relation to proceedings at first instance.
10. Having regard to the Builder's quotation from Five Star Aluminium Pty Ltd and the Homeowner's quotation from Orion Aluminium, I am satisfied that the amount in dispute in the proceedings exceeded $30,000.00. Had the relief that was secured by the Homeowners been by way of a money order, rather than a work order, then the realistic minimum would have been the sum of the amount of the Five Star Aluminium Pty Ltd quotation and the Ian's Roofing Pty Ltd quotations, or about $60,000.00. Had a monetary order been made then the "wealth" of the Homeowners would have changed (positively) by more than $30,000.00.
11. Consequently, the costs issue falls to be determined under r 38 of the Rules and not s 60 of the NCAT Act.
12. In Nguyen v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen [2015] NSWCATAP 264 the Appeal Panel said at [94] - [95]: Rule 38 gives the Tribunal (or the Appeal Panel when making a decision in substitution for the decision under appeal), a discretion to award costs. While unfettered that discretion must be exercised judicially. While the discretion to award costs under rule 38 is unfettered, in our view costs should generally "follow the event", recognising however that factors may exist that militate against the successful party recovering all of its costs: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [134]. Fairness dictates that the unsuccessful party typically bears the liability for costs unless it is demonstrated that some other order is appropriate: Currabubula and Paola v State Bank NSW. Currabubula v State Bank NSW [2000] NSWSC 232. We find no reason to depart from the "usual rule" in this case.
13. Costs are in the discretion of the Tribunal, but that discretion must be exercised judicially. The general rule is that costs follow the event. The Homeowners have been generally successful.
14. There is no reason in these proceedings justifying a departure from the general rule. The small issue on which the Homeowners were not successful was the flooring damage and that issue took only a very small amount of hearing time and the evidence on the issue was very narrow.
15. There will be an order that the Builder pay the Homeowners' costs of and incidental to the proceedings on the ordinary basis, as agreed or assessed.

Orders

1. The Tribunal orders: 1. Traj Developments Pty Ltd, at no cost to Julie Lasovski and David Ristevski, remove all the windows and glazed doors referred to at pages 5-10 of the BASIX certificate under the heading "Windows, glazed doors and skylights" which do not have thermally broken frames and replace and install new windows and glazed doors that have aluminium frames that are thermally broken and that otherwise comply with the Contract, including the BASIX Certificate, being the document forming part of exhibit 3, and perform all necessary carpentry, plasterboard work or similar work, including providing the necessary materials ("the Work"); 2. Traj Developments Pty Ltd complete the Work within 60 days of the date of these orders, or such other time as the parties may agree; 3. Traj Developments Pty Ltd perform the Work in a proper and workmanlike manner; 4. Traj Developments Pty Ltd provide and install, at no cost to Julie Lasovski and David Ristevski, the scaffolding and other equipment which may be necessary to undertake the Work safely; 5. Traj Developments Pty Ltd remove and dispose of any rubbish arising from the Work, at no cost to Julie Lasovski and David Ristevski; 6. Traj Development Pty Ltd install, in a proper and workmanlike manner and at no cost to Julie Lasovski and David Ristevski, sarking in the top roof area above the entrance of the dwelling and the area on the left hand side of the KLIPLOK roof within 60 days of the date of these orders, or such other time as the parties may agree; 7. Julie Lasovski and David Ristevski provide Traj Developments Pty Ltd and/or its contractors reasonable access to the dwelling and the property for the purpose of carrying out the Work and/or installation of the sarking; 8. Traj Developments Pty Ltd pay Julie Lasovksi and David Ristevksi's costs of and incidental to these proceedings on the ordinary basis as agreed or assessed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 15 September 2022 - minor typographical errors DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 September 2022