Metricon Homes Pty Ltd as trustee for Metricon Homes Unit Trust v Lipari

Solicitors: Salim Rutherford Lawyers (Plaintiff/ First Cross-Defendant on First Cross-Claim/ Cross-Claimant on Second Cross-Claim) Barrak Lawyers (Defendant/ Cross-Claimant on First Cross-Claim) Colin Biggers & Paisley Pty Ltd (Second Cross-Defendant on First Cross-Claim, Cross-Defendant on Second Cross-Claim) File Number(s): 2021/95090 Publication restriction: Nil

JUDGMENT

1. In 2017 to 2018, the Plaintiff, Metricon Homes Pty Ltd as trustee for Metricon Homes Unit Trust (Metricon), constructed a house for the Defendant, Antonia Lipari, on a property in Leppington, New South Wales (the Property). Since completion, Mrs Lipari has lived in this home with her husband, Vincenzo Lipari.
2. Metricon has brought these proceedings against Mrs Lipari, claiming the unpaid balance of the contract price under the construction contract.
3. Mrs Lipari does not dispute that the balance of the contract price remains unpaid. However, she contends that she is entitled to set off her liability to pay this balance against Metricon's liability to her in respect of the matters pleaded in the First Cross-Claim. Accordingly, the First Cross-Claim was the primary focus of evidence and argument at the hearing.
4. There are three main claims advanced by Mrs Lipari in the First Cross-Claim.
5. First, Mrs Lipari has brought a claim regarding the concrete slab which was designed by the Second Cross-Defendant, Rafeletos Zanuttini Pty Ltd (Zanuttini) and was laid by Metricon. Mrs Lipari alleges that the concrete slab did not comply with the requirements of the relevant Australian Standard, and seeks, as damages, the costs of demolishing and rebuilding her home. Metricon and Zanuttini accept that the concrete slab did not comply with the applicable Standard in certain respects, but dispute the majority of the defects alleged by Mrs Lipari and contend that it would not be reasonable to award damages on a "knock down and rebuild" basis. The principal issues to be determined in respect of this claim are therefore the extent of the defects in the slab, the consequences of such defects, and the proper measure of loss.
6. Secondly, and in the alternative to her claim for the costs of demolishing and rebuilding her home, Mrs Lipari claims against Metricon the costs of remedying various defects. Metricon accepts some, but not all, of these alleged defects, and there was agreement regarding the costs of rectifying a number of them. The remaining disputes concern only a small number of matters.
7. Thirdly, Mrs Lipari has brought a claim against Metricon regarding the location of a swimming pool which has been installed on the Property. She alleges that Metricon made misleading representations to her to the effect that it was not possible to install the swimming pool between the side of the house and the northern boundary of the Property, which led her to agree to the placement of the pool at the rear of her house, near the eastern boundary of the Property. She claims that she has suffered damages as a result, being the additional costs of placing the pool at the rear of the Property (due to the necessity to construct terracing in this area) and the loss in value of the Property consequent upon the location of the pool being farther away from the house.
8. In addition, Metricon has brought a cross-claim against Zanuttini, seeking contribution to any liability which Metricon may have to Mrs Lipari in respect of the concrete slab, on the basis that such liability results from Zanuttini's defective structural design (the Second Cross-Claim). In closing submissions, Zanuttini accepted that if Mrs Lipari is successful in her claim against Metricon and Zanuttini in respect of defects in the concrete slab, then Zanuttini is liable for the whole of this loss.
9. I deal below with the following issues: 1. Metricon's claim against Mrs Lipari for the outstanding amount due under their contract (Section A); 2. Mrs Lipari's claim against Metricon and Zanuttini for defects in the concrete slab (Section B), including: 1. the respects in which the slab did not comply with the relevant Australian Standard; 2. the consequences of such non-compliance in terms of the strength, capacity and performance of the slab; 3. the proper measure of damages in respect of the concrete slab; and 4. Zanuttini's liability to Metricon in respect of any such damage; 1. Mrs Lipari's claim against Metricon for general defects (Section C); and 2. Mrs Lipari's claim against Metricon regarding the location of the swimming pool (Section D);

The Contract

1. On 4 April 2017, Mrs Lipari entered into a contract with Metricon for the construction of a house on the Property (the Contract). The contract price was specified to be $509,902.
2. Clause 18 of the General Conditions of the Contract provided, relevantly, that any variation to the Contract must be in writing and signed by Metricon and Mrs Lipari, and that the price of a variation is due and payable at the next progress payment after it is carried out, unless a different time is agreed.
3. There were a number of subsequent variations to the Contract, some of which are referred to in Sections B to D of the judgment below.
4. Clause 17.2 of the General Conditions of the Contract provided that Mrs Lipari must pay the contract price progressively as claimed by the builder. Clauses 17.3 and 17.4 provided that Metricon must provide Mrs Lipari with a written claim for a progress payment for the completion of each of the stages of work described in Schedule 2, and that a progress claim is to state: 1. the amount claimed and not paid for the stage substantially completed; 2. the amount claimed and not paid for contract price adjustments; 3. the amount claimed and not paid for variations; and 4. the sum of the above amounts.
5. Clause 17.5 provided that Mrs Lipari must pay a progress claim within 5 working days of Metricon giving the claim.
6. Schedule 2 to the Contract set out the progress payments to be made in respect of six stages of the project. The last of these stages was "Completion". Clause 17.6 of the General Conditions of Contract provided as follows: "Other than in relation to the final progress claim: … (b) the owner has no right of set off."
7. Clause 21 of the General Conditions of the Contract provided that Metricon must give Mrs Lipari a notice of practical completion at least 5 working days prior to "practical completion" being reached. "Practical completion" was defined as meaning "when the building works are complete except for minor omissions and defects that do not prevent the building works from being reasonably capable of being used for their usual purpose" (cl 1.1).
8. Clause 21 further provided that Mrs Lipari must meet Metricon on site for an inspection at the date and time stated in the notice of practical completion, or at another time agreed by the parties, and must either: 1. pay the amount of the final progress claim; or 2. if Mrs Lipari believed that the building works had not reached practical completion, give Metricon a written notice detailing anything to be done to reach practical completion.
9. Clause 33 of the General Conditions of the Contract provided as follows (bold in original): "Clause 33. Interest on Late Payments 33.1 The builder may charge the owner interest at the rate stated in Item 12 of Schedule 1 from the day on which an amount falls due to be paid to the builder up to and including the day that amount is paid."
10. Item 12 of Schedule 1 to the Contract specified that "Interest on late payment is: 12.00%".

Practical Completion and Final Statement

1. On 4 May 2018, Mrs Lipari and Metricon signed a "Completion of Works" certificate, which set out a number of defects or incomplete works, each of which was said to have been "actioned". This certificate stated that: "It is now agreed that the defects or incomplete works listed above have been completed".
2. On 21 May 2018, an Interim Occupation Certificate was issued for the Property.
3. On 23 May 2018, Metricon issued an invoice to Mrs Lipari for the sum of $93,257.10. The invoice indicated that this amount was for work up to "Stage 06 COMPLETION". The invoice also stated that the terms of payment were "Strictly 7 days", and that: "In accordance with the Penalty Interest Clause of your building contract, all claims must be paid by the due date or penalty interest will apply".
4. On 28 May 2018, Metricon issued a Notice of Practical Completion, which stated that the construction works at the Property were practically complete in accordance with clause 21 of the Contract as at 30 April 2018.
5. On the same date, Metricon issued a "Final Statement" to Mrs Lipari. This statement set out the contract price ($509,902), the total amount of variations ($41,711), the amount paid to date ($458,355.90), and the resultant balance, being $93,257.10.
6. The sum of $93,257.10 remains unpaid.

Issue - Extent of Any Set-Off

1. In closing submissions, Counsel for Mrs Lipari confirmed that there was no dispute that the final progress payment of $93,257.10 had not been paid.
2. However, Mrs Lipari contended, in answer to Metricon's claim for this amount, that Metricon breached the Contract and the warranty in section 18B(1)(a) of the Home Building Act 1989 (NSW), as pleaded in the First Cross-Claim, and that she was entitled to set off against the outstanding balance of the contract price the loss and damage that she has suffered as a result of such breaches (see Technology and Construction List Response, [14]-[16]). The claims raised in the First Cross-Claim are considered in Sections B to D of these reasons for Judgment.
3. Metricon did not dispute Mrs Lipari's entitlement to set off any such liability against the amount of the final payment. Further, Metricon accepted that some amounts were due to Mrs Lipari in respect of the defects pleaded in the First Cross-Claim. The key issues in dispute are the extent of the defects, and therefore the extent of the amount of Metricon's liability.
4. Those matters need to be determined in order to determine whether, after Metricon's liability for defects is set out against the outstanding balance of the contract sum, any part of that balance remains outstanding, and to determine any question of interest.

B. CLAIMS IN RESPECT OF CONCRETE SLAB

1. Mrs Lipari claims that there were defects in the concrete slab which was designed by Zanuttini and laid by Metricon. She has brought: 1. a claim against Metricon for damages for breach of clause 39.1(a) of the Contract, breach of the statutory warranty in section 18B(1)(a) of the Home Building Act 1989 (NSW) and breach of the duty of care owed by Metricon pursuant to section 37 of the Design and Building Practitioners Act 2020 (NSW) for having supplied a deficient or defective slab; and 2. a claim against Zanuttini for breach of the duty of care owed by Zanuttini pursuant to section 37 of the Design and Building Practitioners Act, for having negligently prepared engineering plans that resulted in defects in the slab.
2. Metricon and Zanuttini accept that there were defects in the slab and that each of them is liable to Mrs Lipari. There is, however, a substantial dispute between the parties both regarding the extent of the defects in the slab and regarding the proper measure of loss.

The Contract

1. Item 8 of the Contract, which appeared under the heading "Site & Connections - Standard", was in the following terms: "Concrete slab: Waffle pod construction up to Class 'M' classification, designed and certified by a qualified Engineer."
2. Item 8 indicated that the cost of this "M" class slab was "included" in the Contract price.
3. Similarly, a document setting out "Standard Inclusions", which was attached to the Contract, indicated that one of the standard inclusions in the Contract was as follows: "Concrete slab to be 'M' classification constructed in accordance with AS 2870.1 -1996, designed and certified by a qualified Engineer."
4. As at the time of entry into the Contract, the relevant form of the applicable standard was not as stated above, but rather was Australian Standard 2870-2011 "Residential slabs and footings" (AS 2870).
5. Despite an "M" class slab being one of the Standard Inclusions in the Contract price, the "Site Works" specified in the Contract included Item 17, which was as follows: "Provide 'H1' class slab in lieu of standard 'M' class slab as per Structural Engineers requirements." The additional cost of an H1 slab (above the included cost of the M slab) was specified to be $5,850.
6. The reason that the Contract made provision for an "H1" class slab was because of an assumption made at the time of entry into the Contract regarding the applicable site classification. Item 13 of the Contract stated as follows: "This Preliminary Contract is subject to receiving a Borehole Report (not available at time of Preliminary Estimate preparation). * 'H1' site classification has been assumed, and any additional costs such as site classification, additional piering or rock excavation will be addressed by way of variation."
7. AS 2870 explains that site classification is based on the expected ground surface movement and the depth to which this movement extends. AS 2870 identifies that an "H1" site classification is used for "Highly reactive clay sites, which may experience high ground movement from moisture changes". In contrast, an "M" classification is used for "Moderately reactive clay or silt sites, which may experience moderate ground movement from moisture changes".
8. The effect of Items 13 and 17 of the Contract is that, in advance of any borehole report being received, which was necessary to determine the site classification, the Contract assumed an "H1" classification, and on this basis provided for an additional cost for providing an "H1" class slab in lieu of the standard "M" class slab.
9. Clause 2 of the General Conditions of Contract required Metricon to "carry out and complete the building works in accordance with this contract". A note alongside clause 2 stated: "Refer to Clause 39 for Statutory Warranties. Refer to Clause 40 for Mandatory Conditions."
10. Clauses 39 and Clauses 40 of the General Conditions of the Contract provided as follows: "Clause 39 Statutory Warranties 39.1 To the extent required by the Home Building Act, the builder warrants that: (a) the building works will be done with due care and skill and in accordance with the plans and the specifications attached to this contract; (b) all materials supplied by the builder will be good and suitable for the purpose for which they are used and that, unless otherwise stated in this contract, those materials will be new; (c) the building works will be done in accordance with, and will comply with, the Home Building Act or any other law; (d) the building works will be done with due diligence and within the time stipulated in this contract, or if no time is stipulated, within a reasonable time; (e) if the building works consists of the construction of a dwelling, the making of alterations and additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the building works will result, to the extent of the building works conducted, in a dwelling that is reasonably fit for occupation as a dwelling; and (f) the building works and any materials used in doing the building works will be reasonably fit for the specified purpose or result, if the owner expressly makes known to the builder, or other person with express or apparent authority to enter into or vary contractual relationships on behalf of the builder, the particular purpose for which the building works are required or the result that the owner desires to be achieved, so as to show that the owner relies on the builder's skill and judgment. Clause 40 Mandatory Conditions 40.1 To the extent required by the Home Building Act and subject to clause 40.2, the building works will comply with: (a) the Building Code of Australia (to the extent required under the Environmental Planning and Assessment Act 1979, including any regulation or other instrument made under the Act); (b) all other relevant codes, standards and specifications that the building works are required to comply with under any law; and (c) the conditions of any relevant development consent or complying development certificate."

Borehole Report and Variation 9

1. On 13 April 2017, shortly after the execution of the Contract, Metricon requested that Zanuttini "order surveys and borehole" for the Property.
2. On 27 and 28 April 2017, Zanuttini provided the requested reports in relation to the Property. The first of these reports was entitled "Shrink Swell Test Results" and recorded that the Property had a site classification of "M", rather than the "H1" classification which had been assumed in Item 13 of the Contract. It also indicated that bedrock was encountered at a depth of 1.1m.
3. Because the Property had an "M" classification, it was not necessary to install the "H1" class slab which had been provided for in the Contract at an additional cost.
4. Despite this, Mrs Lipari confirmed that she wanted to pay the additional money to obtain an "H1" class slab. She gave the following evidence in her affidavit regarding the reasons why she did so: "I wanted an 'H1' slab upgrade because my husband and I insisted on having the maximum amount of capacity or strength in our slab because we wanted to rest assured that we would have no problems in the future."
5. Mr Lipari also gave evidence regarding the choice of the "H1" slab, in the following terms: "… my wife and I had selected a superior slab called an 'H class' slab at an additional cost of $5,000. We did this because we wanted a strong slab with no cracking in it for the long haul. This was our dream home for our retirement for the rest of our lives, and we didn't want any problems. By paying more for the 'H class' slab, I understood that my wife and I were getting a stronger slab which should not crack."
6. On 19 June 2017, Mrs Lipari signed Variation 9 to the Contract. Item 3 of Variation 9 deleted Item 13 of the Contract, which had referred to the Contract being subject to receiving a borehole survey. Item 6 of Variation 9 provided as follows: "Owner has requested to maintain 'H1' class slab in lieu of standard 'M' class slab."

Slab is designed and laid

1. On 22 June 2017, a Metricon representative sent an email to Zanuttini, requesting that Zanuttini prepare the "structural details" for the work to be performed on the Property.
2. In late June 2017, Zanuttini prepared structural designs for the concrete slab. These designs noted that the site classification was "M". A further version of these designs was prepared in early July 2017.
3. On 27 July 2017, a Metricon representative sent an email to Zanuttini, requesting amended engineering for an urgent site start. The email specifically asked Zanuttini to note Item 6 of Variation 9 (which confirmed that an "H1" slab would be provided) and requested that: "All drawings are updated to R.L's as per H1 slab thickness."
4. Zanuttini subsequently prepared further versions of the plans for the concrete slab dated 28 July 2017 and 14 August 2017.
5. By around September 2017, the concrete slab had been laid. On 5 September 2017, Zanuttini issued a Structural Certification in relation to the Property, which stated as follows: "This is to certify that an inspection of the slab reinforcement was undertaken at the above mentioned site prior to the placement of any concrete. The slab has been constructed and the reinforcement placed based on the current engineers details and our approval."

Failure to supply H1 slab

1. Mrs Lipari's "Statement of Issues for Determination" included the following matters: 1. Did Metricon agree to provide Lipari with an H1 class slab under the contract? 2. Was the slab provided an H1 class slab?
2. Metricon accepted that the Contract required the provision of an H1 class slab, and each of Metricon and Zanuttini accepted that an H1 class slab was not in fact provided, because the slab did not comply in certain respects with the requirements for an H1 class slab set out in AS 2870.
3. However, there was a substantial dispute between the parties regarding the extent of the non-compliances with AS 2870, and the significance of such non-compliances in terms of the strength, capacity and performance of the slab.
4. These matters were addressed by expert evidence. Each of the parties called an engineer: Mr Camenzuli was called by Mrs Lipari; Mr Keighran was called by Metricon; and Mr Hartcher was called by Zanuttini.
5. These experts met in conclave on two separate occasions: initially in June 2023 and again in March-April 2024. However, they were unable to agree on the terms of a joint report. Following the June 2023 conclave, Mr Hartcher and Mr Keighran prepared a joint report; and Mr Camenzuli prepared his own separate report. Following the March-April 2024 conclave, Mr Hartcher and Mr Keighran again prepared a joint report, and evidence was led in chief from Mr Camenzuli on his responses to that report. The three experts gave concurrent evidence at the hearing.
6. Before dealing with the specific issues raised in relation to the slab's compliance with AS 2870, it is necessary to address a number of criticisms of Mr Camenzuli's expert evidence, which were made by Zanuttini and Metricon. There were no submissions advanced by Mrs Lipari regarding the credit of the other two experts.

Mr Camenzuli's evidence

1. I accept a number of the criticisms made by Metricon and Zanuttini regarding Mr Camenzuli's evidence.
2. First, Mr Camenzuli's oral evidence was, at times, discursive, repetitive and non-responsive, making it difficult to identify the opinions being advanced by him, the basis of those opinions, and whether those opinions were based on specialised knowledge.
3. An example is set out below. It is necessary to provide some background to place this evidence in context. The Contract between Mrs Lipari and Metricon annexed a CSIRO publication entitled "Foundation Maintenance and Footing Performance: A Homeowner's Guide". It included the following information on "Seasonal swelling and shrinkage of soil": "All clays react to the presence of water by slowly absorbing it, making the soil increase in volume (see table below). The degree of increase varies considerably between different clays, as does the degree of decrease during the subsequent drying out caused by fair weather periods. Because of the low absorption and expulsion rate, this phenomenon will not usually be noticeable unless there are prolonged rainy or dry periods, usually of weeks or months, depending on the land and soil characteristics. The swelling of soil creates an upward force on the footings of the building, and shrinkage creates subsidence that takes away the support needed by the footing to retain equilibrium." In his report of July 2023, Mr Camenzuli had stated that "it is accurate to conclude that we have undergone a number of shrink and swell cycles over the last 5 years". In their joint report, Mr Hartcher and Mr Keighran also referred to the "seasonal weather patterns and ground moisture fluctuations and cycles" which would have been completed in the six years since practical completion, and set out data from the Bureau of Meteorology (BOM) detailing the extreme weather that had been experienced in this period, concluding: "The periods of dry weather along with the periods of extremely wet weather experienced over the last 6 years as verified by the Bureau of Meteorology data, means that all expected soil swelling and shrinkage extremes that can be allowed for and are to be considered under AS 2870-2011 have already occurred". On being taken to this evidence, Mr Camenzuli expressed the view, contrary to the opinion stated in his report, that there had in fact not been a single shrink and swell cycle in the past six years: "I don't see how anyone can say 'The cycles that we have experienced' because we haven't received one cycle of wetting and drying and wetting again".
4. When Mr Camenzuli was asked whether he now said what was stated in his report was inaccurate, he responded as follows: "LE PLASTRIER: So you'd say that it's not accurate to conclude that we've undergone a number of shrink and swell cycles over the last five years? WITNESS CAMENZULI: Okay, now, when you talk about that, you have to talk about the order of magnitude that we're talking about. Now, the code says 95% of expected movement; it dwells on that. Now, the issue is that from day to day you have some moisture change. Yesterday, it didn't rain. Today, it rained. There's a moisture change. But those moisture changes are not significant to be, you know, to use as a basis for determining, as a professional, 'look, okay, the house is experienced the loading that is expected.' I mean, Australia has drought, seven year droughts; we just went through one a few, a decade ago or something. Don't hold me to it. I don't work for BOM. But a while ago, there was a seven year drought. Now, I consider that a dry period, right. Now, we're going through the wettest period in a long time. I think three years ago was a wet period. So, you know, a drought. You go through a wet period. If we go through another drought, I say we've accomplished one major cycle. I mean, but every, in every cycle, you have harmonics; you have little cycles based on a large, if someone can see my finger, little cycles all on a major cycle. I'm talking about the major cycles. People prefer to talk about day to day changes as a cycle. I don't. LE PLASTRIER: So I'll just ask the question again. Do you say that it's not accurate to conclude that we have undergone a number of shrink and swell cycles? WITNESS CAMENZULI: If we talk about a day to day cycle, yes, we've achieved that. If we talk about major seasonal things, the data provided by BOM provides the order of accuracy of what we're talking about. They gave yearly averages. So I'm talking about yearly cycles. Now, not yearly cycles, but yearly periods. That data provided two wet period - two dry periods, three, three wet periods, and a near normal period. If we look at that data, my assessment is we haven't completed a cycle because we haven't went through a period of dry, you know, dry."
5. It is difficult to identify from this response: 1. the basis on which Mr Camenzuli distinguishes between "little cycles" and "major cycles", and his definition of each type of cycle; 2. the reason why Mr Camenzuli considers that, in the context of the shrinking and swelling of soil, it is appropriate to consider yearly or multi-year cycles, rather than seasonal cycles (particularly given the opinion which he previously expressed that there had been a number of cycles, which must have been based on seasonal cycles rather than yearly cycles, and the CSIRO publication quoted above in relation to "seasonal swelling", which focuses on "rainy or dry periods, usually of weeks or months"); and 3. whether or not Mr Camenzuli's opinions on these matters are based on specialised knowledge and, in particular, the extent to which Mr Camenzuli's views on "cycles" and changes in moisture over time are based on his own observations of the weather, or BOM data, or a mixture of both.
6. Secondly, Mr Camenzuli had a tendency to use disparaging and dismissive language when responding to the opinions and reasoning of other experts. The use of such language detracted from, rather than strengthened, the opinions which Mr Camenzuli expressed. For example, he accused other experts of being "misleading"; of writing "fluff"; of behaving in a manner that was "very disappointing for an expert of his purported calibre"; of taking an approach which would be expected of "a novice … not a seasoned expert"; of being "non-sensical"; of being prone to "rant about irrelevant matters that obfuscate the underlying design flaws"; of being "unprofessional"; and of expressing views that are "blatantly incorrect, unfounded and embarrassing". He even hinted at dishonesty, suggesting of one expert that it reflected "poorly on someone as experienced as [the expert] to err in such a simple task if it was unintentional" (emphasis added).
7. Mr Camenzuli was taken to a passage in one report where he had commented on the evidence of another expert, who had purported to express an opinion regarding a measurement based on a photograph. In that passage, Mr Camenzuli stated that to "claim to be able to determine the distance in the photograph is preposterous", pointing to matters such as the "skew angle the picture was taken from" and "the distortion of the lens". However, at a later point in the same report, Mr Camenzuli himself expressed a "strongly held view" regarding the measurement of a crack, which was based solely on a photograph, claiming that this involved "a well proven process". He did not, in doing so, make any qualification about skew angles or lens distortion. It is difficult to see how a measurement based on a photograph is, when undertaken by another expert, "preposterous", but when undertaken by Mr Camenzuli, a "well proven process" that can ground a "strongly held view".
8. Thirdly, Mr Camenzuli referred in his evidence to other projects (often unspecified) in which he had encountered instances of defects in the work of Zanuttini and Metricon. He claimed to be aware of "a number of other cases currently going to Court" involving slabs engineered by Zanuttini, and of "many more jobs" where Metricon's work was defective. For example, he claimed that he had "undertaken dozens of house inspections of Metricon homes" and had "found less than 10 to 15% of the roofs to be correctly secured". It was not clear whether these matters were advanced to bolster his opinions, or matters which he took into account in forming his opinions, or were simply irrelevant asides.
9. I do not, however, accept Zanuttini's submission that Mr Camenzuli is not a witness of credit. I formed the view that Mr Camenzuli sought to provide the Court with his honestly held opinions regarding the matters at issue in the proceedings, and sought to act as an expert assisting the Court on matters within his expertise rather than as an advocate. However, the manner in which he expressed his views, including his discursive answers and his tendency to dismiss opposing views, did make it difficult at times to determine the basis for his opinions and the basis on which he disagreed with the opinions expressed by the other experts.
10. Accordingly, I have taken Mr Camenzuli's opinions into account when considering each of the defects in the slab as well as the consequences of those defects and have considered, when addressing those matters below, the substance of his opinions, the basis of those opinions and the weight to be afforded to those opinions in the light of the other expert and documentary evidence.

Specific instances of non-compliance with AS 2870?

1. The concurrent evidence of the experts proceeded by reference to a list of eleven alleged defects in the concrete slab. The list was as follows: 1. Drainage and waterproofing behind the central step; 2. Edge beam cover to bottom reinforcement; 3. Slab Mesh for Class H1; 4. Trimmer bars to re-entrant corners; 5. Piering to internal areas of the slab; 6. Lack of full continuity at the step; 7. Internal beams not being edge to edge; 8. Edge beam reinforcement not continuing 1m at re-entrant corners; 9. Step stem thickness; 10. Beam bottom reinforcement; and 11. Garage Edge Beam Depths.
2. It should be noted that two of these items (numbered 3 and 11) are respects in which the slab is alleged not to have met the requirements of an "H1" slab under AS 2870. In contrast, the remaining nine items are respects in which the slab is alleged not to have met the requirements common to all slabs under AS 2870.
3. Metricon and Zanuttini admitted the non-compliances raised by items 4, 8 and 11 above. That is, they accepted the following matters: 1. Item 4: Trimmer bars to re-entrant corners - that the design did not provide for three N-12 bars of 2 metres but instead for two N-12 bars of 1.5 metres, and therefore that the slab did not comply with clause 5.3.7 of AS 2870. 2. Item 8: Edge beam reinforcement not continuing 1m at re-entrant corners - that the design did not comply with the requirement in clause 5.3.8 of AS 2870 that "at a re-entrant corner where an external beam continues as an internal beam, the external beam details shall be continued for a length of 1m into the internal beam". 3. Item 11: Garage Edge Beam Depths - that, in accordance with Figure 3.4 of AS 2870, beam depth should be 385 mm for an H1 site with articulated masonry veneer, but that the beam depth on the site was only 310 mm in some areas of the garage.
4. The remaining eight items, which were not agreed, are addressed in turn below.

Item 1: Drainage and waterproofing behind the central step

1. The concrete slab included a step. Mr Camenzuli expressed the opinion that it was necessary for the step in the slab to comply with the requirements set out in subparagraphs 6.4.4(c)(i) to (iv) of AS 2870, and that it failed to comply with the requirements of subparagraph (i) because there was no drainage or waterproofing behind the central step.
2. Mr Hartcher and Mr Keighran disputed the need for compliance with the requirements set out in clause 6.4.4(c) and disputed, in any case, that any non-compliance had been established.
3. Clause 6.4.4 of AS 2870 is in the following terms: "6.4.4 Treatment of sloping sites The treatment of slabs on cut-and-fill sloping sites shall comply with one of the following methods: (a) The site shall be cut and filled and the fill [see Figures 6.1(a) and 6.1(b)] shall continue past the edge of the building by at least 1 m and shall be retained or battered beyond this point by a slope protected from erosion and not steeper than 1:2. The interior of the slab shall be founded on compacted material satisfying the requirements of Clause 6.4.3(c). The edge beams shall be founded on natural soil or on controlled fill or may be supported by piers designed in accordance with engineering principles. (b) The site shall be cut and filled with fill material that satisfies the requirements of Clause 6.4.3(c) and the fill shall be retained at the edge in accordance with Clause 6.4.5 as shown in Figure 6.1(c). (c) The slab and beams may be stepped in combination with methods in Item (a) or (b) above and with Figure 6.1(c) to reduce the extent of excavation or fill. At a change in elevation, the step shall comply with the following: (i) The ground behind the step shall be drained to prevent moisture build-up and the face of the slab step against the soil shall be waterproofed. (ii) The edge rebate requirements of Clause 5.3.4 shall be incorporated in the construction. (iii) Steps in stiffened rafts, including waffle rafts, shall be designed to preserve the structural continuity of the footing system. (iv) Steps in slabs for Class A and Class S sites shall comply with Figure 6.2 where the height of the step is less than 1.2 m. The masonry retaining wall shown in Figure 6.2 shall comply with Clause 6.4.5(b). Steps in beams shall comply with the principles of Clause 5.4.3. (d) The site shall be cut and filled and, where the fill does not satisfy Clause 6.4.2, the slab shall be designed as pier-and-slab in accordance with the following: (i) The suspended slab shall be designed in accordance with AS 3600. (ii) On Class M, Class H1 or Class H2 sites, the strength and stiffness of the suspended slab shall be not less than required by Section 3. Where the fill consists of reactive clay, the fill shall be placed in a moist condition to minimize subsequent reactive soil movements. NOTE: On natural slopes greater than 1:8, benching and consideration of slope stability may be required."
4. Each of the experts agreed that the site was a "cut-and-fill sloping site" and therefore clause 6.4.4 applied.
5. Mr Camenzuli focused on the language of cl 6.4.4(c), and in particular the words "The slab … may be stepped … . At a change in elevation, the step shall comply with the following [namely, subparagraphs (i)-(iv)]" (emphasis added). It was Mr Camenzuli's opinion that where the option of a step was adopted ("may be stepped"), the requirements of subparagraph (i) had to be met ("the step shall comply").
6. In contrast, Mr Hartcher and Mr Keighran focussed on the language of the chapeau to clause 6.4.4, which stated that the treatment of the slab "shall comply with one of the following methods", that is, one of the methods set out in paragraphs (a), (b), (c) (d). They expressed the opinion that, in this case, the treatment of the slab in fact complied with each of paragraphs (a) and (d), and therefore the requirement specified in the chapeau of cl 6.4.4 was satisfied, and compliance with paragraph (c) was not required.
7. I consider that the better interpretation of clause 6.4.4 is the one advanced by Mr Hartcher and Mr Keighran. The opening words of clause 6.4.4 convey in clear terms that the treatment of slabs on cut-and-fill sloping sites must comply with "one of" the methods specified in paragraphs (a), (b), (c) and (d). Accordingly, if the treatment of a slab complies with the method specified in paragraph (a) or paragraph (d), it complies with the requirements of clause 6.4.4 irrespective of whether it also complies with the requirements of method specified in paragraph (c).
8. Mr Camenzuli suggested in his oral evidence that the requirements of the method specified in clause 6.4.4(a) had not been met because his "experience, and I like to be proven wrong, is that this site has what they call rolled fill, which is the use of the excavating material tracking the material into site". However, I place little weight on this opinion. Mr Camenzuli had no personal knowledge of how the site was filled and did not point to any evidence to support his opinion that "rolled fill" rather than "controlled fill" was used on the site, other than generalised anecdotal evidence which could not be tested: "Now, my experience and I am happy for anyone to - from Metricon to correct me, but they do not control fill their sites, they roll fill their sites". In fact, the "Field Investigation" report prepared by Zanuttini in respect of the Property in 2017 shows "controlled and compacted fill" at the site.
9. Further, neither Mr Hartcher nor Mr Keighran was challenged in cross-examination on the opinion, which each expressed, that the treatment of the slab did comply with clause 6.4.4(d). Instead, it was put to them that, even if this was the case, it was necessary for the treatment of the slab also to comply with cl 6.4.4(c): "O'CONNOR: Mr Hartcher and Mr Keighran, you say, I think, that this site complies with A and D, that's correct, in 6.4.4? That's correct? WITNESS HARTCHER: Yes, yes. WITNESS KEIGHRAN: Yes, that's correct. O'CONNOR: Given that there's a step in the slab, why wouldn't the site have to comply with C? WITNESS KEIGHRAN: Two things, first of all. On the structural drawings, it says that the, all the site filling beneath the slab should be treated in accordance with clause 6.4 of AS 2870, which means that it is compacted fill in accordance with those drawings. And, secondly, I think the intent of that aid, if, if the slab stepped further on, I still think the purpose of that is still met, sort of-- O'CONNOR: But I'm asking you to read the words of C. It says 'the slab and beams may be stepped'-- WITNESS KEIGHRAN: Yes. O'CONNOR: 'In combination with items A or B above, and with figure 6.1C-- WITNESS KEIGHRAN: Yep. O'CONNOR: 'To reduce the extent of excavation or fill. At a change in elevation, the steps shall comply with the following.' WITNESS KEIGHRAN: Yep. O'CONNOR: So don't you agree that if there's a step, the code requires that it complies with this section C of 6.4.4? WITNESS KEIGHRAN: No, I think that's an option. But I think there's also options A, B, C and D. O'CONNOR: Do you agree the word 'shall' in the code indicates the code must be complied with? WITNESS KEIGHRAN: 'It shall comply with one of the following methods.' O'CONNOR: No, where it says 'C', if you accept that there's a step in this slab, which there is, where at C it says 'a change in elevation, the steps shall comply', do you agree that means 'shall' should be interpreted as 'must comply'? WITNESS KEIGHRAN: If you adopt that option, yes."
10. The proposition put to Mr Keighran in this passage is to the effect that clause 6.4.4(c) requires that where either of the options in cl 6.4.4(a) or (b) is used, and in addition the slab is stepped, then the treatment of the slab must comply with the requirements of cl 6.4.4(a) (or (b)) and additionally, with the requirements of cl 6.4.4(c).
11. There are two problems with this proposition.
12. First, I consider that this interpretation is at odds with the opening words of clause 6.4.4. That clause requires compliance with only one of the options specified in paragraphs (a) to (d), rather than compliance with every one of those options which is applicable to a particular site.
13. Secondly, the opening words of clause 6.4.4(c) do not refer to the option in clause 6.4.4(d), but only to the options in paragraphs (a) and (b): "The slab and beams may be stepped in combination with methods in Item (a) or (b) above …". It follows that, even if the interpretation for which Mrs Lipari contends is correct and there is a need to comply with the requirements of paragraph (c) whenever the option in paragraph (a) or (b) is adopted and the slab is stepped, there is no need to comply with the requirements of where the option in paragraph (d) is adopted and the slab is stepped (which, on the evidence of Mr Hartcher and Mr Keighran, was the case here).
14. In any case, I am not satisfied that it has been established that the slab failed to comply with the requirement in subparagraph 6.4.4(c)(i): "The Ground behind the step shall be drained to prevent moisture build-up and the face of the slab step against the soil shall be waterproofed". Mr Keighran and Mr Hartcher pointed out that Zanuttini's design provided for waterproofing, via a membrane, and there was no evidence that the slab, as installed, did not include the required drainage.
15. Ultimately, Mr Camenzuli's opinion that the slab did not in fact comply with the requirement in subparagraph 6.4.4(c)(i) appeared to be based upon unspecified anecdotal evidence: "From my experience with Metricon houses in construction over several years, I have not found the drainage in this location to be specified or installed in the specified location". I place little weight on that evidence.
16. For the reasons given above, this alleged defect has not been established.

Item 2: Edge Beam Cover to Bottom Reinforcement

1. Mr Camenzuli expressed the opinion that there was insufficient concrete cover for the reinforcement beams in the slab. His reasoning was as follows: 1. the engineering drawings prepared by Zanuttini indicated that the minimum concrete cover for the reinforcement beams was 65 mm where "poured on ground"; 2. the width of the 3L11TM reinforcement beams was 211 mm; 3. it followed that the concrete beams had to be a minimum width of 341 mm in order to provide the required cover (that is, the 211 mm width of the reinforcement beam, plus 65 mm on either side); 4. however, the width of the concrete beams specified on the engineering drawings was only 300 mm, resulting in a reduction in cover of around 20 mm on either side (that is, for a 211 mm reinforcement beam, there was approximately 45 mm of cover on either side).
2. Mr Camenzuli stated that: "Lack of concrete cover results in corrosion of the reinforcement and spalling (concrete cancer) issues, particularly in acid sulphate affected soils of this site".
3. Mr Camenzuli did not suggest that this alleged defect led to non-compliance with any requirement set out in AS 2870, whether for an "H1" class slab or any other class of slab.
4. Mr Keighran and Mr Hartcher gave unchallenged evidence that where the concrete is in contact with a waffle pod, as was the case here, the exposure classification is "A1" (in accordance with Table 4.3 of AS 3600) and accordingly a 20 mm cover is specified to be used. That is, the design of the slab "allowed for greater than the required cover to each side".
5. Mr Keighran and Mr Hartcher pointed out that, although the Zanuttini drawings referred to 65 mm cover, AS 2870 provided that, where (as here) the exposure classification for the shale soil is B1, the maximum required cover where the concrete is against the soil is 50 mm. That is, the figure in the Zanuttini drawings on which Mr Camenzuli relied "exceeds actual code requirements".
6. Having regard to those matters, this alleged defect has not been established.

Item 3: Slab Mesh for Class H1

1. It is common ground that SL 82 mesh was used for the slab.
2. Clause 3.4.1 of AS 2870 states that: "Waffle rafts shall be specified in accordance with Figure 3.4. Modifications to the details given in Figure 3.4 shall not be undertaken without engineering design in accordance with Section 4."
3. Figure 3.4 of AS 2870 indicates that, for an "H1" class slab, where the type of construction is "Articulated masonry veneer" (which was the case here), SL82 is to be used for a slab less than 20 metres in length, and SL92 mesh is to be used for a slab between 20 metres and 30 metres. The same figure shows that, in the case of an "M" class slab, SL82 is to be used for a slab between 20 metres and 30 metres in length.
4. Mr Camenzuli expressed the view that there was non-compliance with the requirements of AS 2870 because the length of the slab was 27.59 metres, and therefore SL92 mesh was required for an "H1" class slab and was not used.
5. Mr Hartcher disagreed. His view was that there were in fact two separate slabs, which were joined by a 688 mm step. The basis of this view was as follows: "8.11. Camenzuli states that the overall dimensions of the slab are 27.59 by 18.33 metres. I do not agree that this assessment is correct. The structural designs show that there is an Internal/External deep beam running through the centre of the slab. The detail of this is provided on Sheet 2 on the structural drawings. In my opinion this sub-divides the slab into two sections. The larger of these sections is approximately 18 metres in length. Therefore, my engineering interpretation of the structure is that it is two slab sections with the larger being approximately 18.83 x 16.00 metres. 8.12. I note that AS2870-2011 allows for engineering judgement when the specific structure does not comply exactly with the standard design. Therefore, my opinion is that the slab should be treated as having a longer dimension of 18.83 metres. 8.13 I agree that Figure 3.4 of AS2870-2011 is used to select reinforcement for the slabs. I note Camenzuli bases his selection of reinforcement on a slab length exceeding 20 metres and states that SL92 mesh is required for a Site Class H1 slab supporting an Articulated Masonry Veneer dwelling. As stated above, it is my opinion that effective slab length is 18.83 metres. For a slab length less than 20 metres, the slab reinforcement is required to be SL82. Refer to Appendix C for extracts from the standard. 8.14 For the above reason, it is my opinion that the slab reinforcement specified on the structural drawings is adequate and complies with the requirements of AS2870-2011."
6. It should be noted that the above passage is a quotation from a report of Mr Wilcox, an engineering expert. Mr Wilcox was a member of the same firm as Mr Hartcher, and was engaged by Zanuttini to provide expert evidence in these proceedings. After preparing his report, he became unavailable to give evidence. Mr Hartcher put on a short report in which he confirmed that he had reviewed all of the material with which Mr Wilcox had been briefed, and agreed with the opinions expressed by him.
7. Mr Hartcher explained in his oral evidence that mesh in a slab is important for reducing shrinkage and providing strength. It was his opinion that, having regard to the requirements of AS 2870, where a waffle pod slab was less than 20 metres in length and had SL 82 mesh, it had sufficient capacity to cope with shrinkage and sufficient strength for a pod of that length. He also gave evidence that: 1. irrespective of whether the site classification was "M" or "H1", a waffle pod slab which was less than 20 metres in length and which had SL 92 mesh would be over-engineered, because it is not necessary to use SL 92 mesh to cope with shrinkage and to give sufficient strength for a waffle pod slab of that length; and 2. if two 10 metre waffle pod slabs, each with SL 82 mesh, were laid on an H1 site, each of those slabs would be stronger than a single 20 metre waffle pod slab constructed with SL92 mesh.
8. Mr Hartcher expressed the opinion that the addition of the step which joined the two slabs, each of less than 20 metres, did not reduce the strength of either or impair the capacity of each to cope with shrinkage: "LE PLASTRIER: Does the addition of the step reduce the strength of either of the waffle pod slabs or impair the ability of either of the waffle pod slabs to cope with shrinkage? WITNESS HARTCHER: This step, no. LE PLASTRIER: Is it the case that neither of the waffle pod slabs installed in this house relies upon the other in the scenario that you've spoken about? WITNESS HARTCHER: That's correct. LE PLASTRIER: What impact on strength and shrinkage on each of the waffle pod slabs built at Ms Lipari's home would there be if one of the waffle pod slabs was removed? WITNESS HARTCHER: None. They could both work, you could remove either and they would still function. LE PLASTRIER: Because there are two slabs and not one, is there any meaningful structural continuity between those two slabs at Mrs Lipari's home? WITNESS HARTCHER: No. LE PLASTRIER: I want you to assume that Mr Camenzuli is correct and there is rather than two waffle pod slabs, only a single waffle pod slab. Are there any consequences of the use of SL82 mesh on that hypothetical slab? WITNESS HARTCHER: In, in this project, there's none that we've seen. There's no cracking in the tiles, there's no cracking in the masonry. There's damage category zero."
9. When asked for his view on Mr Hartcher's opinion, Mr Camenzuli gave the following response (although the transcript records the following evidence as given by Mr Hartcher, that is plainly incorrect, as shown by the questions asked, and this has been corrected below): "O'CONNOR: … Before I take you to the document, Mr Camenzuli, just very briefly, you've heard Mr Hartcher's opinion in respect of one slab? WITNESS [CAMENZULI]: Yes. … O'CONNOR: What do you say about that? WITNESS [CAMENZULI]: I believe that's a very simplistic view, and the code, 2870, in no place in the whole code does it give dispensation to omit the strength and stiffness continuity because they are at different levels. The code specifically says that where the slab and beams change level because of steps, you shall maintain the strength and stiffness across the step. Now, the code in several places, 3 or 4, accentuates the need to maintain strength and stiffness, you know. Continuity is expressed in multiple places. To infer that, 'Well, no, we can change that,' is, is unfounded. Now, if for instance, and I'll give you a very simplistic aspect of it. This is in the modelling because engineers from first principles model the, the failures, the failure modes and sort of base it all on that. Now the engineers, my colleagues here, are trying to stress shrinkage as an issue, and say that each individual slab will shrink independently of each other because there is this flexible stem in the middle that flexes and allows the two slabs to move without any undue strains occurring in the concrete. That's great, but the problem with modelling is that you have to model the right model. You know, reality, it has to match the slab. Now if we - can I have that drawing please, the piers. Thank you. Okay, okay. This is, I'm referring to this diagram everyone. Okay. Now something of interest, if, if the step was straight through the centre of the slab, and it had a very clear hinge line where the two can flex and everything, just like a door, if the hinges are in line, the door can swing. But if you put that hinge, if you put one hinge sort of even 5 millimetres out of alignment, the door becomes stiff. If you put it 2 or 3 metres out of alignment, you don't swing that door. Now the slab has a protrusion in it of the butler's pantry. Now that's an area of about 3 metres in length protruding in, and that's acting like a key. Often we call those things, we put them in driveways or whatever, we talk about dowels, and that prevents movement between the two surfaces of the driveway. We have a dowel in here which is 3 metres by 3 metres approximately extending, overlapping the slabs with a 688 high wall that's acting as a sheer wall and preventing any relative movement between the two slabs. And so even if we talk about, ignore the strengths and stiffness requirement of the codes, and I stand by that, the fact that you just got a crooked hinge - and sorry, I correct myself, you've got one, two, three, four, five, you've got five times five, two - 6 metre, you've got a length of 6 metres, if I can show everyone there, along the top wall of the butler's pantry, and extends into the bedroom area, 6 metres of interconnecting 680 high millimetre sheer wall that bonds the two slabs together. Those slabs do not act independently, they are, they are locked in, and your model has to reflect that. You know, it's very easy to make a simplistic diagram of two slabs and then a little bit of concrete in between. That isn't the case. We've got a three dimensional model here, and that, you know, I would question whether anyone would doubt that those slabs are locked in."
10. The views expressed by Mr Camenzuli in this passage regarding the "hinge line" had not been put forward in any of the four reports prepared by him for the purposes of these proceedings over the course of the past three years, and were only advanced for the first time towards the conclusion of the concurrent expert evidence. That was despite the "two slabs" issue having been raised by Mr Wilcox's report in March 2022, and despite Mr Keighran having agreed with Mr Hartcher that "the slab could be considered to be two separate slabs with regards to shrinkage" and "with regards to strength" in their joint report of July 2023. Further, Mr Camenzuli's opinions regarding the "hinge line" were not put to Mr Hartcher in cross-examination.
11. It is difficult to identify, from the long and discursive passage quoted above, Mr Camenzuli's precise response to the propositions advanced in Mr Hartcher's evidence, or the basis for Mr Camenzuli's opinion. In particular, Mr Camenzuli: 1. makes reference to "multiple" statements in AS 2870, without engaging with their specific terms; 2. claims that there were various ways of "modelling" the slab, without providing details of what those models are, what their relative merits are, how those models might be applied, or what they might reveal; 3. gives generalised evidence about how door hinges work and why doors can become stiff, without explaining why those matters relating to a metal hinge connecting to a door to a doorframe are applicable to a concrete step connecting two slabs (or located in the middle of one slab); 4. states that in this case "you just got a crooked hinge", without specifying the basis for that opinion or its implications, and in particular, in what respect(s) and to what degree the "hinge" is "crooked"; and 5. asserts that the slabs are "locked in" without reference to the engineering drawings and without explaining the significance of that description for the issues arising in this case (while at the same time doubting that anyone could disagree with his view).
12. I do not consider that this evidence provided a clear and cogent basis to reject the simple propositions advanced in Mr Hartcher's evidence, namely, that neither slab relies on the other; that either could be removed without affecting the other; that there is not any meaningful structural continuity between them; and that the addition of the step which joins the two slabs does not impair the capacity of each to cope with shrinkage and does not impair the strength of each.
13. In his first report, Mr Keighran had expressed the view that the slab did not comply with AS 2870 because it did not have SL92 mesh. This implicitly involved Mr Keighran coming to view that there was a single slab over 20m. However, following the expert conclave, Mr Keighran modified this view. He stated in the joint report of April 2024 that: "it is a complex issue to determine if the slab can be deemed to be one slab or two slabs with regard to strength and no evidence has been provided to suggest that the slab has been analysed to determine this". He was not challenged on these views in cross-examination and, in particular, it was not put to him that any analysis had been conducted which was relevant to this issue.
14. Further, Mr Keighran pointed out in the joint report and in his oral evidence that, even if there is assumed to be only one slab, the type of mesh required under AS 2870 is determined by the site classification; and that, for a site which was classified as "M" (as was the case here), the use of SL82 mesh for a slab up to 30m long complied with AS 2870. Mr Keighran was not challenged on this view.
15. Having regard to those matters, I am not satisfied that Mrs Lipari has established a non-compliance with AS 2870 by reason of the use of SL82 mesh. In any case, Mr Hartcher's evidence that there had been no adverse consequences from the use of SL82 mesh was not challenged.

Item 5: Piering to internal areas of the slab

1. Mr Camenzuli expressed the view that the slab does not comply with clause 3.4.5(a) of AS 2870, which provides as follows: "3.4.5 Piers The waffle raft for a one-storey building for clad frame or masonry veneer on moderately or highly reactive sites may be supported on piers as follows without structural design of the waffle raft: (a) Piers to be located on the intersection of every third internal beam. …"
2. Metricon and Zanuttini accepted that the design did not include piers located on the intersection of every third internal beam.
3. However, this does not establish non-compliance with AS 2870. Clause 3.4.5 specifies that in the circumstances described, a waffle raft "may be supported on piers" in the manner set out in that clause (emphasis added). AS 2870 regularly uses the mandatory verbs "shall" and "must" when identifying a requirement with which it is necessary to comply. In that context, the use of the verb "may" is naturally read as indicating a step which is optional.
4. Mr Hartcher and Mr Keighran expressed the view that, in any case, the structure which was adopted was adequate in the circumstances: "If the earthworks were completed as indicated on the drawings, then in most areas piers would not have been required. Even at the front of the building in the areas where the depths of the fill exceeds 300mm the slab is not spanning any more than 3,600mm x 3,600mm and accordingly a waffle raft slab is satisfactory as a suspended slab 'without structural design'. Based on the above, there is no requirement for additional piers under AS 2870."
5. For those reasons, I am not satisfied that this alleged non-compliance with AS 2870 has been established.

Item 6: Lack of full continuity at the step and Item 7: Internal beams not being edge to edge

1. Items 6 and 7 are related and can be addressed together.
2. Mr Camenzuli expressed the view that the slab did not comply with the requirements of clause 6.4.4(c)(iii) of AS 2870 which states as follows: "6.4.4 Treatment of sloping sites The treatment of slabs on cut-and-fill sloping sites shall comply with one of the following methods: … (c) The slab and beams may be stepped in combination with methods in Item (a) or (b) above and with Figure 6.1(c) to reduce the extent of excavation or fill. At a change in elevation, the step shall comply with the following: … (iii) Steps in stiffened rafts, including waffle rafts, shall be designed to preserve the structural continuity of the footing system."
3. In addition, Mr Camenzuli was of the view that the slab did not comply with clause 5.3.8 of AS 2870 which states, relevantly, as follows: "5.3.8 Beam continuity in rafts Where the raft design includes internal beams, the structural continuity of internal and external beams in stiffened rafts, including waffle rafts, shall be maintained in accordance with the following criteria. Internal beams shall be continuous from edge to edge of the slab. Where beams are at different levels, as may occur in two-pour systems, special detailing is required to provide continuity."
4. Mr Camenzuli stated that the engineering drawings prepared by Zanuttini showed that the beams are not continuous. In particular, at the step in the slab, in the area of the "butler's pantry", the beams in the higher part of the slab do not align with the beams in the lower part of the slab. Mr Camenzuli concluded that, as a result, the internal beams were not "continuous from edge to edge of the slab" as required by clause 5.3.8 (Item 7), and there was not "structural continuity" at the step as required by cl 6.4.4(c)(iii) (Item 6).
5. These alleged non-compliances are largely addressed by findings I have already made.
6. I do not consider that there was a need to comply with clause 6.4.4(c), for the reasons given in paragraphs 77-85 above.
7. Further, I have referred at paragraphs 99-106 above to Mr Hartcher's evidence that there were two slabs joined by a step. Mr Hartcher expressed the view that the internal beams were "continuous from edge to edge" of each of the two slabs (as required by clause 5.3.8), and that there was no need for the beams to be continuous across both slabs.
8. Even if the slab in this case were treated as a single stepped slab, that would not mean that non-compliance with AS 2870 was established, for the following reasons.
9. First, in their joint report, Mr Hartcher and Mr Keighran expressed the opinion that AS 2870 is "ambiguous with regard to any requirement for continuity through a stepped slab". In particular, although clause 5.3.8 states that a raft slab should be continuous (without any reference to site classification), Figure 6.2 shows that a step may be created using a masonry wall (for a class A or S site), which plainly could not provide continuity.
10. Secondly, clause 5.3.8 provides as follows: "Where beams are at different levels, as may occur in two-pour systems, special detailing is required to provide continuity". Mr Keighran expressed the opinion that: "the step in the slab provides some sort of continuity, but no one has done any calculations to determine if that provides for continuity or not". Further, Mr Hartcher and Mr Keighran stated in their joint report that: "The capacity of the step detail with regard to continuity could only be confirmed by a full structural analysis of the slab and there is no evidence that has been done".
11. Thirdly, Mr Hartcher and Mr Keighran expressed the view in their joint report that the offsets in the beams on either side of the step were "minimal". Again, the effect of this minimal offset "could only be determined by a detailed structure analysis of the slab and there is no evidence that this analysis has been completed".
12. In the course of their cross-examination, neither Mr Hartcher nor Mr Keighran was challenged on those views regarding the continuity provided by the step, or regarding the need for analysis to determine this issue. In particular, it was not put to either of them that any such analysis had been done, let alone that there was any analysis which supported the conclusion that the step did not provide structural continuity.
13. For those reasons, I am not satisfied that any non-compliance has been established in respect of either Item 6 or Item 7.

Item 9: Step stem thickness

1. "Step stem thickness" refers to the thickness of the vertical wall of a step. According to the design prepared by Zanuttini, the thickness of the vertical wall of the slab's step is 150 mm.
2. A step stem of this thickness complies with clause 3.4.2 of AS 2870, which provides as follows: "The minimum stem width shall be 110 mm for clad frame and 150 mm for masonry construction."
3. The build in this case was a "masonry construction".
4. Mr Camenzuli did not dispute that there was compliance with clause 3.4.2 of AS 2870. Instead, he expressed the view that there was non-compliance with AS 2870 in three other respects.
5. First, he referred to Figure 6.2 in AS 2870. It is entitled "Slab Step Options on Class A or Class S Sites", and shows a step stem thickness of 200 mm.
6. However, it is common ground that the Property was not a Class A or Class S site. Therefore, Figure 6.2 can have no application.
7. Secondly, Mr Camenzuli referred to clause 6.4.5(a) of AS 2870, which states as follows: "6.4.5 Retention of fill under slabs for Classes A, S and M sites At the edge of a slab (or at a step) where more than 0.45 m of fill is retained, one of the following edge treatments shall be used: (a) The fill up to a height of 750 mm shall be retained by a deepened edge beam structurally continuous with the slab and of not less than 200 mm width. If the fill is greater than 0.75 m but not more than 1.2 m in depth, vertical reinforcement of centrally placed SL82 mesh shall be provided. Where the height exceeds 1.2 m, the edge beam shall be designed by engineering principles."
8. This clause only applies "where more than 0.45 m of fill is retained" at the edge of a step. Mr Hartcher explained, by reference to a diagram that he prepared, that the amount of retained fill in this case was in fact 0.303 metres, and therefore that clause 6.4.5(a) did not apply.
9. When asked to comment on this evidence, Mr Camenzuli referred to Figure 6.2: "O'CONNOR: I'm sorry, Mr Camenzuli, what's your opinion on this discussion? WITNESS CAMENZULI: The retained fill is the amount of filling that would not be retained, if you removed the slab. Now, if you look at dot figure 6.2, and I have to stress, and I should put backgrounds to this, that is, this is only on a class A or class S site. A class M or a class H would have more stringent requirements. So we're talking about the minimum here. If you look at that diagram, 6.2, and if you, we're looking at the left hand side one, it has a shaded area and it talks about fill. Because that is the area of fill, level to the bottom of the slab, where if the slab was removed, that fill is no longer retained. So I propose that where, and following AS 2870, figure 6.2, that the retained fill is the area or that shaded, of the shaded section of the diagram, and that is the height of the, the height of the fill works out, coincidentally, to the height of the step and that'll be the 688. Now, something, well, no, that's answering your question." As already noted, Figure 6.2 was not applicable. Mr Camenzuli asserted, in the above passage, that the requirements for a class M or class H site would have been "more stringent" than the "minimum" requirements in Figure 6.2, but did not refer to any clause of AS 2870 which applied to class M or H sites as being the source of these "more stringent" requirements, let alone explain, by reference to the terms of any such clause, in what way the slab failed to comply with such requirements.
10. Thirdly, Mr Camenzuli referred to clause 5.3.4(f) of AS 2870, which states as follows: "5.3.4 Edge rebates Edge rebates for slab on ground, stiffened raft or waffle raft with masonry cavity or veneer construction shall comply with the following: … (f) Where the edge rebate depth is greater than 400 mm, the minimum stem width shall be 200 mm. The effect of the rebate shall be assessed in accordance with engineering principles."
11. This clause applies only to edge rebates. Mr Hartcher gave unchallenged evidence that an edge rebate is the part of a slab, located at its edge, which is lower than the rest of the slab and upon which bricks are laid (as shown in Figure 5.2 of AS 2870). The step in the middle of the slab in this case is not an edge rebate and therefore this clause is inapplicable.
12. It follows that this non-compliance has also not been established.

Item 10: Beam bottom reinforcement

1. This item may be dealt with briefly.
2. The structural drawings specified two options for edge beam reinforcement, one of which was 3-L11TM. Mr Camenzuli accepted in his report that if the 3-L11TM option was used, then the requirements of Figure 3.34 in AS 2870 were satisfied.
3. Mr Rafeletos, who is a director of Zanuttini and a qualified engineer, gave unchallenged evidence that 3-L11TM was installed at external edge beams.
4. Therefore, compliance with AS 2870 has been established in respect of this item.

Conclusion on non-compliances

1. For the reasons given above, the only non-compliances which have been established are those which were conceded by Metricon and Zanuttini, namely: 1. that the design did not provide for three N-12 bars of 2 metres but instead for two N-12 bars of 1.5 metres, and therefore that clause 5.3.7 of AS 2870 was not met (Item 4); 2. that the design did not comply with the requirement in clause 5.3.8 of AS 2870 that "at a re-entrant corner where an external beam continues as an internal beam, the external beam details shall be continued for a length of 1m into the internal beam" (Item 8); and 3. that the design did not comply with Figure 3.4 in AS 2870 which required a beam depth of 385 mm for an H1 site with articulated masonry veneer, because the beam depth is only 310 mm in the garage (Item 11).

Consequences of non-compliance with AS 2870?

1. Mrs Lipari identified the following issue in her "Statement of Issues for Determination": "What is the nature and extent of the risk of any damage to be caused to the slab and house as a result of the found defects in, and/or contractual/ AS 2870 non-compliance of, the slab?"
2. Three preliminary points should be made.
3. First, although there was some evidence of cracking in the slab, this was not significant. Mr Keighran expressed the opinion, which was not challenged in cross-examination, that the cracks which had been observed in the slab were shrinkage cracks. Such shrinkage cracks commonly develop in the three to six hours during the plastic setting stage for concrete. AS 2870 recognises that shrinkage cracking "can be expected in concrete floors" (Appendix B). Although Mr Camenzuli suggested that the cracks were not plastic shrinkage cracks, this was based on an assumption that the cracks did not appear until a year after the slab was laid (which is when they were photographed by Mrs Lipari). However, the fact that they were photographed at this time does not mean that they were only became manifest at this time. In any case, the experts agreed that the cracks that had been observed fell into the "very slight" or "slight" category in AS 2870. Further, Mr Camenzuli acknowledged that the slab does not have "major structural cracking" and that "the currently observable level of cracking in the slab does not require rectification".
4. Secondly, there is no evidence of any physical damage to Mrs Lipari's house. Mr Camenzuli conceded in his reports that there "are no currently observable symptoms or consequences on site" of any reduction in the slab's structural capacity. There was no challenge to Mr Keighran's evidence that: 1. the tiles are level; 2. there are no cracks in the brickwork of the external walls; 3. there are no cracks in the cornices, the ceilings or the bulkhead (which is at the entrance); 4. there is one hairline crack in the wall on the southern side of the top of the opening to the pantry; 5. there is one hairline crack in the eastern wall of the pantry; and 6. there are hairline cracks in a single tile. As regards the last item, there was no evidence as to whether the hairline cracks in the tile were caused by an issue with the slab, or by some force being applied from above (given that the only cracked tile was found on the garage floor). Mr Keighran was not challenged on his evidence that the hairline cracks which he observed fell within Category 0 (zero) in AS 2870, that is, within the category of "negligible" damage.
5. Thirdly, AS 2870 recognises that cracks are expected. Clause 1.3.1 states that where buildings are supported by footings designed and constructed in accordance with AS 2870 those buildings "are expected to experience usually no damage, a low incidence of damage category 1 and an occasional incident of damage category 2". That is, buildings are expected to have a low incidence of "noticeable cracks" less than 1 mm in width (category 1), and an occasional incidence of "distinct cracks" less than 2 mm in width (category 2). Appendix B to AS 2870, which is headed "Foundation Performance and Maintenance", recognises that some "minor cracking and movement will occur in a significant proportion of buildings". It also acknowledges "that minor foundation movements occur on nearly all sites" and that "it is impracticable to design a footing system that will protect the building from movement under all circumstances". Crack width "is used as the major criterion for damage assessment" and damage is only defined as "significant" where it is category 3 or worse. There is no evidence of any category 3 damage at the Property.
6. Mr Camenzuli used the term "damage" in a manner that was different to how it is defined in AS 2870. Instead of referring to "damage" as something which is physically manifested, he referred to "damage" in the sense of a deficiency in design or a reduction in capacity.
7. In his July 2023 report, Mr Camenzuli disagreed with the statement by Mr Keighran and Mr Hartcher that "there is no damage currently in the residence that would warrant structural repairs" on the basis that he disagreed with their interpretation of the word "damage". He stated as follows: "In this context the 'damage' is to the lost capacity and performance limits of the slab, as measured against the required compliance provisions of AS 2870. I contend that there is significant damage to the house's durability and serviceability capacity (that is the capacity specifically requested in the building contract - for the higher capacity H1 slab which was ordered). Such damage is directly related to the design and construction of the house."
8. That is, it was Mr Camenzuli's opinion that the existence of non-compliances with AS 2870 establishes the fact of damage, even if there is not shown to be any observable consequence of such non-compliance.
9. As shown in the following exchange, Mr Camenzuli considered that there was "damage" in the present case by reason of "damage to the design and lack of capacity" of the slab, despite accepting that there were no signs or symptoms of any reduction in the slab's capacity: "LE PLASTRIER: But there are no current observable symptoms or consequences of the reduced structural capacity of the slab, are there? WITNESS CAMENZULI: You said "symptoms", thank you. LE PLASTRIER: Well, you said symptoms actually. This is a quote from you. WITNESS CAMENZULI: Yes, yes, thank you. So you agree with me, great. The issue is that there are no symptoms, and I've said there are no symptoms of the damage. There is damage to the design and the lack of capacity, but I, I was not, except for a couple of cracks in the plasterboard and what have you that's been acknowledged, the house is, sort of, not, showing no signs."
10. Mr Camenzuli's opinion was, in substance, that it can be assumed that the requirements of AS 2870 have been specified for a reason, and the number and combination of non-compliances in this case must mean that there is "damage" in the form of a reduction in the slab's strength, capacity or performance. He considered that this reduction would lead to the "failure" of the slab, even if there was currently no sign or symptom to indicate that such failure would or might occur. He gave the following evidence (emphasis added): "WITNESS CAMENZULI: Well, the - you, you can play around with words like 'performance'. It definitely doesn't have the capacity of a properly designed H1 slab. It doesn't. And I don't think it's questioned. There are defects in it. [He summarised here various non-compliances which he had identified] So these items - and we're not talking about one defect in a slab. We're talking about multiple defects that compound. And if the compounding effect ‑ look, no plane falls out of the sky for one defect. No major catastrophe occurs for one defect. But when you start having multiples, surely they have some effect, otherwise the people that designed 2870 didn't know what they were doing. O'CONNOR: So those factors you just mentioned, the noncompliance factors, they're the noncompliance factors with AS 2870 you were talking about? WITNESS CAMENZULI: Yes, correct. O'CONNOR: That's the key to your argument, that the noncompliance, the combination of the numerous factors will lead to failure? WITNESS CAMENZULI: That's right. If, if all those factors were corrected the slab will perform significantly better than what it will be now with this - with the issues that I raise."
11. There are a number of difficulties with this line of reasoning.
12. First, the opinions set out above are based on the coexistence and combination of the "multiple" instances of non-compliance with AS 2870 that were identified by Mr Camenzuli. However, I have found that only three or the eleven non-compliances with AS 2870 which were raised by Mr Camenzuli have been established.
13. Secondly, there is no evidence that any of the three established instances of non-compliance with AS 2870 has had any effect on the strength, capacity or performance of the slab. In particular: 1. Item 4: Trimmer bars to re-entrant corners - Mr Hartcher gave unchallenged evidence that the purpose of including trimmer bars at re-entrant corners is "to deal with cracks with aesthetic consequences at the edges at the slab", and not "to enhance the strength or stiffness of a slab"; 2. Item 8: Edge beam reinforcement not continuing 1m at re-entrant corners - Mr Hartcher gave unchallenged evidence that there have been "none" of the consequences that one would "expect to see … if this was a problem": "there's no cracking in the masonry walls which are brittle, there's no cracking in the tiles". 3. Item 11: Garage Edge Beam Depths - the beams in the garage are at a depth of 310 mm, rather than 385 mm (as required for an H1 slab). However, the beams are at the appropriate depth for an H1 site in all internal areas of the house; and a depth of 310 mm is adequate for a class M site (and there is no dispute that the Property is in fact an M class site). Mr Camenzuli acknowledged in cross-examination that, in terms of beam depth, the existing slab is stronger than required for a correctly designed slab for an "M" class site. As noted at paragraph 148 above, the only evidence of any damage in the area of the garage is the presence of hairline cracks in a single tile, and it is not known whether such cracks were caused by force from above.
14. Thirdly, AS 2870 contains a large number of requirements for the design of a slab which are common to an M site and an H1 site. Those include requirements regarding the following matters: 1. All edge beam widths (300 mm) (Figure 3.4); 2. All edge beam concrete below rebate (150 mm or greater) (clause 5.3.4); 3. All rib/internal beam widths (110 mm) (Figure 3.4); 4. All rib/internal beam reinforcement (1N12) (Figure 3.4); 5. Slab thickness (85 mm) (Figure 3.4); 6. Slab mesh cover (20 mm) (Figure 3.4); and 7. Damp prof membrane provided (Clause 5.3.3).
15. There is no allegation of any non-compliance with those items. In order to assess any reduction in capacity or performance by reason of non-compliance with some requirements of AS 2870, it would be necessary to take account of the extent to which all other requirements have been met, and to assess the significance of the three established instances of non-compliance, having regard to the level of compliance that has otherwise been achieved. No such analysis has been undertaken.
16. Significantly, Mr Camenzuli acknowledged that "some aspects of the existing slab, in isolation, are stronger than required by AS 2870 for a correctly designed Class M slab". This acknowledgement is consistent with Mr Hartcher's evidence that, in some respects, the slab has been over engineered for an M class site (such as the Property).
17. Fourthly, even if (contrary to the findings I have made) additional instances of non-compliance had been established, it would still not follow that a lack of performance or capacity had been established. For example: 1. As regards Item 1, assuming there was a lack of drainage and waterproofing and that this was a non-compliance with AS 2870 (which was not established), Mr Hartcher explained that, because the step is supported by piers which go down to shale, water could not build up behind the step. That was because the "piers are just at certain centres so there's space underneath", with the result that "the water can drain through the piers". 2. As regards Item 2, the unchallenged evidence of Mr Hartcher and Mr Keighran was that the design of the slab "allowed for greater than the required cover to each side" of the reinforcement beams (paragraph 92 above); 3. As regards Item 3, it was common ground that the use of SL82 mesh met all requirements for an "M" site (such as the Property); 4. As regards Item 5, Mr Hartcher and Mr Keighran gave evidence that "there is no area where the slab is not supported by either compacted earthworks, cut or piers over an area of more than 3,600 mm x 3,600 mm (which as agreed is capable of supporting a suspended slab)" (see paragraph 113 above); and 5. As regards Items 6 and 7, Mr Hartcher and Mr Keighran gave evidence that the lack of continuity across the higher and lower part of the slab (assuming there is one slab) is "minimal", and "the capacity of the step detail with regard to continuity could only be confirmed by a full structural analysis of the slab and there is no evidence that has been done the step provided continuity".
18. Fifthly, in assessing the slab's capacity to perform, it is necessary to have regard to its actual performance over the past six years. Mr Hartcher and Mr Keighran stated in the joint report that: 1. The initial heave of the ground would have occurred shortly after the construction of the slab, and the seasonal weather patterns and ground moisture fluctuations and cycles would, under usual circumstances, have been completed within the six years since practical completion. Therefore, "any expected damage that may occur to the slab and resulting damage in elements supported by the slab are expected to have already occurred"; 2. Further, the BOM data shows that Greater Sydney has experienced periods of dry weather along with periods of extremely wet weather over the past six years, including the wettest year on record for many areas in 2022. This "means that all expected soil swelling and shrinkage extremes that can be allowed for and are considered under AS 2870-2011 have already occurred"; and 3. Despite those matters, there is no currently observable cracking in the floors and only some minor localised hairline cracks in some walls, all of which are defined under AS 2870 as "Damage Category 0" ("Negligible").
19. Mr Hartcher summarised the position as follows in his oral evidence: "LE PLASTRIER: … I want you to assume that all of the alleged non‑compliances with AS 2870 in relation to this slab are proven. WITNESS HARTCHER: Okay. LE PLASTRIER: Based on that assumption, what do you say will be the consequences of the non-compliance for the performance of the slab in the future? WITNESS HARTCHER: Based on what we've seen to date, and the amount of time period that's gone, I don't see any consequences. LE PLASTRIER: When you say the amount of time that's passed, what do you point to that's happened in that time that supports the view-- WITNESS HARTCHER: Well, over that-- LE PLASTRIER: --that you've just expressed? WITNESS HARTCHER: --six years, it's the cycles, the, the, the extremes of those cycles. The main thing with the waffle pod slab is the ground movement. We've gone through all those with very wet years and dry periods, and those in between each year. Any movement you would expect to have seen by now. There's no evidence, we're damage category zero. LE PLASTRIER: When you say damage would have been seen by now, you're saying that there would have been visible manifestations? WITNESS HARTCHER: Absolutely. Especially with the finishes we have. The tiled floor finishes, which I've mentioned before, are brittle. So as any movement, they would - you'd get cracking in those and masonry walls as well, because a brittle element supported by all the surrounding beams, any movement of those leads to cracking in the brickwork."
20. In his report of July 2023, Mr Camenzuli accepted that "it is accurate to conclude that we have undergone a number of shrink and swell cycles over the last 5 years". As already noted, in his oral evidence, Mr Camenzuli backed away from the opinion expressed in his report that there had been a number of shrink and swell cycles since the slab was laid, and expressed the view that there had not yet been a single cycle. He drew a distinction between "little cycles" and "major cycles" and suggested that regard should be had to cycles in terms of years or multiples of years, rather than in terms of seasons (see paragraph 62 above). Mr Camenzuli did not explain why it was appropriate to look at cycles on this extended timeframe, particularly in circumstances where his previously expressed view that "a number of shrink and swell cycles" has occurred in the past five years must have been a reference to seasonal cycles.
21. Mr Camenzuli also expressed the view that the performance of the slab might be impacted by "long term soil profile movements due to development in the area". However, Mrs Lipari's house is part of a residential subdivision, with neighbours on either side, and there was no evidence of any development plan in the area that might impact on soil movements. When this matter was raised with Mr Camenzuli, he responded as follows: "I didn't say any developments were planned. However, and I haven't finished, that, that is not to exclude that the neighbours are not going to put in a granny flat at the back, or that the council, whoever owns the parklands at the back, don't put a pathway through, or provide drainage, or anything that could affect the property, and it's very, very possible that that could occur within the 95% of expectations."
22. Mr Camenzuli did not provide any explain as to how, for example, a path through nearby parklands or a granny flat on a property somewhere in the vicinity might impact ground moisture conditions in a manner more significant that any impact from the extreme weather conditions over the past six years as disclosed by the BOM data. Further, the statement that it was "very, very possible" that such matters might occur "within the 95% of expectations" did not appear to be an opinion based on any specialised knowledge.
23. Ultimately, when asked to give his own view regarding the significance of the various non-compliances which he had raised (being the matter to which Mr Hartcher responded in the evidence I have set out above), Mr Camenzuli responded as follows: "O'CONNOR: Mr Camenzuli, what do you say about if his Honour accepts from the starting point all of the non-compliance factors that you identified, which your colleagues with, to the extent that they agree with them, if his Honour accepts that they are all non-compliance factors, what do you say is going to be the effect on the structure of this house? WITNESS CAMENZULI: Okay, as my colleague said, it is a complicated issue. But, and, and as I said yesterday, a plane doesn't fall out of the sky for one defect, because there's redundancies. And I admit that, you know, there is factors of safety in here and it allows for a defect. But I list multiple direct breaches of the code. Now, I haven't done a structural analysis, as neither of us have, but I'm working on the basis that the writers of AS 2870 actually did that. And they determined what were the minimum requirements to achieve category 2 damage over a ten year period. Now, we haven't, we haven't got to ten years, and we designed a slab that isn't in accordance with the requirements, isn't even in accordance with a class M site in some respects, and you're asking me whether there's going to be damage. Well, I think there's going to be damage because the piers aren't there. I think there's going to be damage because the garage is centre. I think there's going to be damage because we don't have SL92. I think there's going to be damage because you don't have cracking bars. You know, and, you know, we haven't got onto corrosion or anything else. So I could use engineering judgment to say that it's going to be reasonably okay if, if you got away with one defect. But multiple defects cause catastrophes. What is a catastrophe in this case? I'm not going to, I'm not going to go down into an argument; we're limited. But all I can say is multiple breaches, you know, 21.7% less reinforcement in the slab. Other, you know, other defects, I'll leave it at that."
24. This evidence is, in my view, of limited weight, and does not provide a persuasive basis for preferring the opinion of Mr Camenzuli over that of Mr Hartcher or Mr Keighran. Mr Camenzuli's anecdotal comment about aviation disasters does not advance matters; his opinions are premised on multiple instances of non-compliance being present, when only three have been established; he accepts that there is no structural analysis to support his opinions (and never explains why he has not performed any such analysis); he "thinks" there will be damage in the future, without articulating why the passage of time will make it more likely that problems will occur, and without specifying what the predicted "damage" may be; and he concludes by asserting that all of this may lead to a "catastrophe" of an unspecified type, arising in an unspecified way, without providing any assessment of (or basis for assessing) the extent of the risk that this might occur.
25. For the reasons given above, I am not satisfied that Mrs Lipari has established that there is any existing significant damage, or any real risk of future significant damage, to the slab or house as a result of the non-compliance with AS 2870.

Proper measure of damage

1. It was common ground that Mrs Lipari was entitled to damages as a result of the slab's failure to comply with the requirements of AS 2870. The issue was the appropriate measure of damage.
2. Mrs Lipari contended that she was entitled to the cost of demolishing and rebuilding the house. The agreed cost of doing so would be $815,000 (including costs associated with relocation, alternative accommodation and storage of goods).
3. Metricon and Zanuttini contended that this was not reasonable, and that Mrs Lipari was instead entitled to her reliance loss, measured as either the additional amount paid under the Contract in order to obtain an "H1" class slab (being $5,850) or alternatively the amount paid for the slab (being $55,020.40).

Relevant Principles

1. In Bellgrove v Eldridge (1954) 90 CLR 613 at 617; [1954] HCA 36, the High Court held that 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". The Court continued as follows (at 617-618): "This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract. ... Subject to a qualification to which we shall refer presently the rule is, we think, correctly stated in Hudson on Building Contracts, 7th ed. (1946), p 343. 'The measure of the damages recoverable by the building owner for the breach of a building contract is, it is submitted, the difference between the contract price of the work or building contracted for and the cost of making the work or building conform to the contract, with the addition, in most cases, of the amount of profits or earnings lost by the breach'. … there may well be cases where the only practicable method of producing conformity with plans and specifications is by demolishing the whole of the building and erecting another in its place. In none of these cases is anything more done than that work which is required to achieve conformity and the cost of the work, whether it be necessary to replace only 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. The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt."
2. The qualification that the work undertaken "must be a reasonable course to adopt" was considered by the High Court in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8. The Court referred (at [17]) to the qualification as to reasonableness in Bellgrove v Eldridge, and the example given in that case of the situation in which that qualification might apply, namely: "No one would doubt that where pursuant to a building contract calling for the erection of a house with cement rendered external walls of second-hand bricks, the builder has constructed the walls of new bricks of first quality the owner would not be entitled to the cost of demolishing the walls and re-erecting them in second-hand bricks."
3. The High Court observed (at [17]) that: "That tends to indicate that the test of 'unreasonableness' is only to be satisfied by fairly exceptional circumstances. The example given by the Court aligns closely with what Oliver J said in Radford v De Froberville, that is, that the diminution in value measure of damages will only apply where the innocent party is 'merely using a technical breach to secure an uncovenanted profit.' It is also important to note that the 'reasonableness' exception was not found to exist in Bellgrove v Eldridge. Nothing in the reasoning in that case suggested that where the reasoning is applied to the present circumstances, the course which the Landlord proposed is unnecessary or unreasonable."
4. In The Owners of Strata Plan No 97315 v Icon Co (NSW) Pty Ltd [2023] NSWCA 303 at [12], Bell CJ (with whom Meagher and Adamson JJA agreed) observed that the qualification as to reasonableness is not confined to the situation described in Tabcorp v Bowen Investments, stating that: "While it is accepted that the qualification will only apply in 'fairly exceptional circumstances', it is not confined to where a plaintiff is seeking to rely upon a technical breach to secure an uncovenanted profit."
5. In that regard, his Honour quoted a passage from the decision of Gleeson JA (with whom White JA and Basten AJA agreed) in Owners SP 92450 v JKN Para 1 Pty Ltd [2023] NSWCA 114 at [67]-[70], which included, relevantly, the following observations at [70]: "Tabcorp at [16] referred by way of an example of unreasonableness to the situation where the innocent party was 'merely using a technical breach to secure an uncovenanted profit', citing Oliver J in Radford v De Froberville [1977] 1 WLR 1262. Other examples include where the cost of the 'proposed rectification is out of all proportion to the benefit to be obtained': Brewarrina Shire Council v Beckhouse Civil Pty Ltd [2006] NSWCA 361 at [87]-[88], citing South Parklands Hockey & Tennis Centre Inc v Brown Falconer Group Pty Ltd [2004] SASC 81 at 90 (Debelle J); and Scott Carver Pty Ltd v SAS Trustee Corporation [2005] NSWCA 462 at [120] (Ipp JA); see also Wheeler v Ecroplot Pty Ltd [2010] NSWCA 61 at [81] (Macfarlan JA, McColl and Basten JJA agreeing). For a recent application of this principle in this Court, see Renown Corporation Pty Ltd v SEMF Pty Ltd [2022] NSWCA 233."
6. In Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2006] NSWCA 361 at [89], Tobias JA (with whom Giles and McColl JJA agreed) observed that: "In summary, the authorities to which I have referred stand for the proposition that whether the rectification work is a reasonable course to adopt is dependant upon a finding of fact that the proposed work was reasonable in order to achieve the contractual objective. The rectification work would be unreasonable if it was out of all proportion to the achievement of that objective or to the benefit to be obtained therefrom."
7. In Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5 at [119], Kirk JA and Griffiths AJA summarised the principles which emerge from the case law as follows: "(1) A claimant suing for damage to real property - caused by a breach of contract or a tort - has some choice as to how their claim for damages is quantified. The two leading possibilities, at least when a property owner has possession or shortly is to resume possession of the land, are seeking the costs of rectification of the consequences of breach or seeking the diminution in value of the property. There may be other possibilities, reflecting the fact that it is the compensatory principle which ultimately governs, and that adjusts to all the circumstances of the case. (2) Rectification/ reinstatement damages are not merely a proxy for loss of capital value of the property. Being awarded the cost of rectification is prima facie reasonable. It is not generally necessary for the claimant to put on evidence that the cost of rectification is not disproportionate to any diminution in value, in the absence of the issue having been raised with evidentiary support by the defendant. Nor is it generally necessary for the claimant positively to establish an intent to reinstate. Such an intention is implicit in the making of the claim. (3) Because there is an overall limitation that the damages awarded must be reasonable in all the circumstances, it is open for a defendant to seek to persuade the court that the costs of reinstatement should not be awarded. In the context outlined there is at least an evidentiary onus on the defendant to make out that such costs are unreasonable. The costs might be unreasonable because there is no actual intent to reinstate, or in some cases it may be that there is such a disproportionality to the diminution of capital value that to award rectification costs would be unreasonable."
8. In Owners SP 92450 v JKN at [71]-[72], Gleeson JA said that the "party in breach of contract has the onus of displacing the prima facie rule for assessing damages as the cost of reinstatement" and that the "onus is at least an evidentiary onus in the sense referred to by Barwick CJ, Kitto and Taylor JJ in Purkess v Crittenden (1965) 114 CLR 164 at 168; [1965] HCA 34 when speaking of the 'burden of proof in the secondary sense' of introducing evidence". However, the legal onus remains with the plaintiff: Roberts v Goodwin Street Developments at [115].
9. In assessing whether rectification is necessary and reasonable, it is relevant to have regard to whether the plaintiff intends or does not intend to carry out the rectification work. In Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253 at [61], Giles JA (with whom McColl and Campbell JJA agreed) observed that: "An intention not to carry out the rectification work will not of itself make carrying out the work unreasonable, but it may be evidentiary of unreasonableness; if the reason for the intention is that the property is perfectly functional and aesthetically pleasing despite the non-complying work, for example, it may well be found that rectification is out of all proportion to achievement of the contractual objective or to the benefit to be thereby obtained."
10. For example, in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 at [230], Bathurst CJ (with whom Macfarlan and Meagher JJA agreed) referred, among other matters, to the "lack of intention to carry out the rectification work" as well as the "absence of any evidence that the defects were affecting the use and occupation" of the property in concluding "that it would be unreasonable to carry out the work and that damages for the cost of rectification should therefore not be awarded".
11. Mrs Lipari placed significant emphasis on the decision of the Queensland Court of Appeal in Kirkby v Coote [2006] QCA 61. In that case, Keane JA (with whom Williams JA agreed) held that the respondents (the owners) were entitled to the costs of demolishing and rebuilding their house, commenting (at [52]) that this was not a case where "the expenditure imposed on the defendant is disproportionate to any benefit to the plaintiff in terms of the vindication of the plaintiff's right to recover its actual loss from the defendant". His Honour continued as follows: "In this case, the damages recovered by the respondents are not disproportionate to the benefit to the respondents in terms of respondents' entitlement to have a house structure which will be, as it should have been, free from risk to its stability so far as its foundations are concerned. It is only by this level of expenditure that the respondents can now achieve a structure which is as stable as it would have been had it not been for the negligence of the first appellant. It is only by this expenditure that the respondents can be freed of a real risk of catastrophic failure with serious consequences for life, limb and property. His Honour found that the risk identified by the respondents' witnesses was a real risk to the stability of the structure which could only be obviated, and the respondents' right to a stable house thereby vindicated, by the demolition and reconstruction of the house."
12. His Honour said at [54] that: "… The task before the learned primary judge was not to determine whether it was more probable than not that a landslip would occur in the future. His Honour did not cast the burden of disproof in that regard on the appellants. Equally, the respondents' case was not that it was more probable than not that their house would fall in the future. The respondents' case was that the negligence of the appellants had left their house affected by a degree of instability which, though not likely to be disastrous, was real. If the risk did 'come home', its consequences would be disastrous. The task for his Honour was to assess an amount of money reflecting what was necessary to enable the respondents to have the stable house, free of risk of collapse, which they would have owned had the appellants not failed in their duty to them. In this regard, even if one accepts at face value Mr Murdoch's quantitative assessment of a 1:20 chance of future failure, the respondents are entitled to be compensated by an award that obviates that risk."

What damages should be awarded in this case?

1. Given that the slab does not comply with AS 2870, the critical issue is whether it is reasonable for damages to be awarded on a rectification basis in the circumstances of this case. In that regard, the two main reasons raised by Metricon and Zanuttini as to why this outcome would be unreasonable were that Mrs Lipari does not have an intention to carry out the rectification works, and that the cost of such works is out of all proportion to the benefit to be obtained from them.
2. As to the first matter, I accept that Mrs Lipari intends to demolish and rebuild her house, if she is awarded a sum to cover her costs of such works.
3. In submitting that Mrs Lipari did not have such an intention, Metricon and Zanuttini placed particular reliance on a comment made by her in cross-examination that she "would never build again". This comment was volunteered in response to a question whether "this process has somewhat shaken your faith in builders". Mrs Lipari clarified her response by saying that she would "build again if I have to". In that regard, I accept Mrs Lipari's evidence in re-examination that this is her family home which she wants to hand on to her children; that she trusts her expert, Mr Camenzuli; that, in particular, she believes, in reliance on his reports, that her house has suffered significant damage; and that this is why she intends to undertake the rectification works.
4. As to the second matter, it is necessary to identify the benefit said to be obtained from performing the rectification works, in order to determine the question of proportionality. Mrs Lipari argued that the rectification works were necessary in order to address the risk that the slab would fail. The submission was put as follows in an exchange in closing address (emphasis added): "HIS HONOUR: The breach is acknowledged in the other parties' submissions. It's really the extent of the defects and the-- O'CONNOR: It's the extent of the defects-- HIS HONOUR: --and whether the-- … HIS HONOUR: --rebuild's reasonable given the extent and their impact. O'CONNOR: We say the key to that is that Mr Camenzuli says - and he said it again today and he says it in his evidence - because of the number of defects in this slab, it's not just an isolated defect, the slab will fail and it will fail in a way that will case structural defects to the property. That's his evidence. He just can't predict when it's going to happen. But he says it will happen, and the fact that it hasn't happened in our submission isn't, shouldn't be of a concern for your Honour in the-- HIS HONOUR: You wouldn't even, presumably on your case, you wouldn't have to prove that it will happen. It's-- O'CONNOR: It's just the risk. Exactly. That is our case."
5. However, for the reasons I have given above, I have largely rejected Mr Camenzuli's evidence regarding the extent of non-compliance with AS 2870 and the consequences of such non-compliance. I do not therefore consider that the opinions expressed by Mr Camenzuli, based on the number of defects which he identified, provide a sound basis to conclude that the proposed rectification works are reasonable.
6. As I have summarised above when dealing with the alleged defects, the expert evidence does not establish that the house has suffered any damage, other than damage of a type considered "negligible" or expected under the criteria in AS 2870. Nor does it establish that any of the proven instances of non-compliance with AS 2870 have affected the capacity, strength or performance of the concrete slab. I do not consider there is any adequate basis to conclude that there is a real risk of any significant damage to Mrs Lipari's house in the future, particularly since the slab has performed well over the past six years, through a number of shrink and swell cycles, which have included some of the wettest years on record. The slab is in various respects stronger than an "M" class slab and is in that sense over-engineered for the Property, which is an "M" class site.
7. Despite practical completion having occurred over six years ago, there is not a single instance of damage at Mrs Lipari's house which meets the definition of "significant" damage in AS 2870. Further, AS 2870 recognises that, if there was "significant" damage to the walls of the house as a result of movement of the slab, there are various steps which could be taken short of demolition. Appendix B of AS 2870 states as follows: "Even significant masonry cracking with crack widths over 5 mm often has no influence on the function of the wall and only presents an aesthetic problem. Generally, the remedial action for such damage should start with an investigation to establish the cause of the damage. In many cases the treatment should consist of stabilizing moisture conditions by physical barriers or paths, or replenishing moisture in dry foundations. This may be followed by repair of the masonry and, wherever possible, added articulation should be included while repairs are being effected. Structural repairs to the footing system, such as deep underpinning, should only be considered as the last resort."
8. The "last resort" option described in AS 2870 in cases of "significant" damage (of a type which is not present here) is not demolition and reconstruction, but instead structural repairs to the footing system, such as deep underpinning.
9. Ultimately, the submission made by Mrs Lipari is that a house which has not suffered any visible damage, which is only six years old and which is in good condition should be demolished and rebuilt at a cost of some $815,000, on the basis of Mr Camenzuli's opinion that there is a risk (which has not been the subject of any analysis or quantification) that the combination of instances of non-compliances with AS 2870 will result, at some uncertain time in the future, in an unspecified "catastrophe". I have addressed this opinion at paragraphs 154-168 above.
10. I do not consider that Mrs Lipari's reliance on the decision in Kirkby v Coote takes matters very far. Ultimately, the assessment of damages "always depends on the particular facts of the case": Roberts v Goodwin Street Developments at [120]. In Kirkby v Coote, it was established by expert evidence that there was a real risk (1 in 20) of the catastrophic failure of the house if a landslip occurred, with serious consequences for life, limb and property: see [5], [11], [54]. There is no such evidence here. Instead, there is an unquantified risk of an unspecified catastrophe arising in unspecified circumstances (see paragraph 167 above).
11. Mrs Lipari relied on the decision in Building Insurers' Guarantee Corporation v The Owners - Strata Plan No 57504 [2010] NSWCA 23. In that case, the contract obliged the builder to construct concrete or brick hobs at the junction between a residential unit and its balcony, in order to prevent storm water entering the unit. The builder had installed inferior hobs, and the Owners claimed the costs of demolition and replacement. McDougall J awarded damages on this basis, and this was upheld on appeal. Handley JA (with whom Tobias and Campbell JJA agreed) held as follows (at [84]): "As Campbell JA said during argument, proof of loss, given causation, involves a comparison between the plaintiff's situation as it should have been and his situation as it is. The owners' corporation did not have what it was entitled to have, a waterproofing system that was risk free, and that was proof of loss."
12. Mrs Lipari relied on the statements in this paragraph, arguing that they were directly applicable to her claim. However, the reference to the Owners being entitled to have a waterproofing system that was "risk free" must be read in the context where (a) the relevant issue is whether the evidence establishes a "real risk" of damage as a result of the defect (Owners SP 92450 v JKN at [109]); and (b) the evidence in Building Insurers' Guarantee Corporation v Owners SP 57504 established that the timber hobs which had been installed were starting to rot, that water penetration into a unit had occurred, and that there was uncertainty about the hobs' effectiveness and a risk that they would fail.
13. In the present case, the evidence does not establish that the limited defects which have been established present a real risk of damage, or a real risk that the slab will fail, particularly given the nature of those defects and the lack of any sign or symptom to indicate that those defects have compromised the performance, strength or capacity of the slab.
14. For those reasons, I consider that it would not be reasonable to demolish and rebuild the house, and that an award of damages on that basis would be disproportionate to any benefit to be obtained from such work.
15. A more appropriate measure of damages is Mrs Lipari's reliance loss. The award of reliance damages is a manifestation of the general rule at common law that where a party sustains a loss by reason of a breach of contract, he or she is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80-82; [1991] HCA 54. Mrs Lipari bargained for, and did not receive, a slab of a particular type. The amount that she paid for the bargained-for slab reflects the loss suffered by the failure to provide a slab of that type.
16. Zanuttini and Metricon accepted that damages should be awarded on the basis of Mrs Lipari's reliance loss, but submitted that this should be measured by the additional amount which was paid to secure an "H1" class slab, on top of the cost of the "M" class slab which was included in the Contract price. This would have resulted in an award of $5,850. I do not consider this is an appropriate measure of Mrs Lipari's loss. That is because it assumes, in effect, that Mrs Lipari did obtain an "M" class slab. However, the evidence establishes that there are respects in which the slab provided did not comply with the requirements for an "M" class slab (namely, the non-compliances identified as Items 4 and 8 above).
17. In those circumstances, I consider that Mrs Lipari's loss should be measured by as the total amount which she paid for the slab, namely, $55,020.40, since the slab did not meet all of the requirements for either an "M" or "H1" class slab under AS 2870.

Metricon's Cross-Claim

1. In its cross-claim against Zanuttini, Metricon pleaded that, if Mrs Lipari established defects in the concrete slab, then: 1. Zanuttini breached the terms of its retainer with Metricon requiring it to perform the engineering works with due care and diligence, and is liable to Metricon for damages; and 2. Zanuttini breached its duty of care to Mrs Lipari, and Zanuttini's liability to Mrs Lipari is coordinate with any liability of Metricon to her, such that Zanuttini is liable to contribute to Metricon in respect of any such liability.
2. In closing submissions, Zanuttini accepted that, if Mrs Lipari is successful in respect of her claims concerning the concrete slab (as has occurred), then Zanuttini is liable for 100% of that loss.
3. It follows that Metricon is entitled to be indemnified by Zanuttini for any amount paid by Metricon to Mrs Lipari in respect of the joint liability of Metricon and Zanuttini in relation to the concrete slab.

Scope of Dispute

1. Because I have determined that Mrs Lipari is not entitled to the costs of demolishing and rebuilding her house, it is necessary to consider her claim for the costs of rectifying general defects in her house.
2. There is agreement as to the existence and quantum of a number of defects. These are as follows: No. Defect Quantum

3.  Internal Lining              $11,015
   

4.  Air Con Pipe Insulation      $710
   

5.  Air Con recommissioning      $360
   

6.  Electrical Wiring            $720
   

7.  Eaves Trim                   $1,530
   

8.  Alfresco Brickwork           $800
   

9.  Laundry Door                 $475
   

10.  Front Column                 $100
    

11.  Garage Door Lintel           $250
    

12. Rangehood Ducting            $400
    

13. Perimeter ceiling trimming   $330
    

14. Roof bracing                 $2,630
    

15. Ceiling Trimming             $1,095
    

16. Wall Blocking Pieces         $290
    

17. Laundry Manhole              $400
    

18. Ceiling insulation coverage  $810
    

Total: $21,915

1. As shown above, the total agreed amount for defects is $21,915.
2. There are only 8 defects in dispute. They are, in descending order of quantum, as follows: No. Defect Liability Lipari Quantum Metricon Quantum

3. Securing roof tiles    Admitted   $16,020         $3,463
   

4. Wall bracing           Admitted   $8,750          $0
   

5. Strengthening of wall  Disputed   $8,000          If found, $2,500
   

6. Roof frame anchors     Admitted   $4,860          $0
   

7. Stormwater repair      Disputed   $4,400          $0
   

8. Water supply repair    Disputed   $4,400          $0
   

9. Bathroom plumbing      Admitted   $3,300          $575
   

10. Kitchen tap repair     Disputed   $770            $0
    

Total $50,500 $4,038

Securing Roof Tiles

1. Metricon accepts that the tiles on the roof of Mrs Lipari's house were not nailed (or secured) on every second tile in accordance with AS 2050. The only dispute is quantum.
2. Mrs Lipari relied on the evidence of Mr Camenzuli, who estimated the costs of the rectification works to be $16,020. Metricon relied on the expert evidence of a building consultant, Mr Winton, whose estimate for those works was considerably lower ($3,463).
3. There were three main respects in which Metricon contended that Mr Camenzuli's estimate was excessive.
4. First, Metricon submitted that various components of Mr Camenzuli's estimate do not relate to rectifying inadequately secured roof tiles, but relate to other matters, including the cost to "remove, clear or replace ridge and hip tiles" ($540); "repair sarking" ($810); reinstall hips and ridges ($1,620); and "allow for all damaged items and materials" ($500). Metricon contended that there was no evidence that any damage to ridge and hip tiles, or sarking, was caused by a defect for which Metricon is responsible. However, Mr Camenzuli (unlike Mr Winton) went onto and inspected the roof, and took photographs in the course of doing so. He gave unchallenged evidence concerning the link between the failure to secure the roof tiles, which is admitted to be a defect, and the matters raised regarding the ridge and hip tiles. In particular, he explained that the roof tiles, to which the ridge and hip tiles are secured, are themselves not secured, thereby leaving the ridge and hip tiles effectively unsecured; and that the photographs annexed to the joint report showed that widespread movement of the ridge and hips has developed, with a total of 77 pictures showing unique cracks to the hips and ridge tiles. He also gave unchallenged evidence that the "lower run of sarking" had been "damaged by carpenters undertaking bracing, anchor, eaves trimmers, repairs".
5. Secondly, Metricon submitted that the cost of $7,000 for hiring a roof guard was excessive, on two bases: first, that the hire was for a period of 6 weeks, when Mr Camenzuli estimated the total amount of work, across all trades, as being 6.5 days; and secondly, that the estimate was based on a single quote.
6. As regards the period of the hire, I accept Mr Camenzuli's evidence that, where a number of trades are involved, it would be very difficult to organise those trades such that one attended the Property immediately after the other: "O'CONNOR: Can you explain what the trades are? WITNESS CAMENZULI: Yeah, yep. You have to establish a safe working area. You put the, you put the roof railing, then you have to organise to get the solar panel people to come on and strip the roof. You might get them to come the same day as they install the roof rail, not likely. The way the industry works is if they come within the first week, you'll be lucky. Then you've got to get the TV antenna fellow and, to come and disconnect and remove items. Then you've got to get the roof tile people to come and strip the roof. O'CONNOR: So-- WITNESS CAMENZULI: But-- O'CONNOR: What you're saying is there's a number of - sorry. WITNESS CAMENZULI: Yeah, but before you even get the roof tile people, you have to get the carpenters up there to fix the, the roof bracing, and you have to fix all the roof anchors at the toe of the trusses that are not accessible from inside the roof, and then you've got to get them to fix the eaves which will be done from above, because you lift the tiles off and put the timbers that are missing. And if you can coordinate all those trades within the week or two, you'll be, you'll be doing miracles. I mean-- O'CONNOR: So you-- WITNESS CAMENZULI: --if it takes six weeks, it'll be the most likely period."
7. Having regard to this evidence, I am satisfied that there should be an allowance for a roof guard to be hired for a period of 6 weeks.
8. As regards the cost of the hire, although only one quote was obtained, Metricon did not lead evidence to establish that the amount quoted was excessive for a 6-week hire.
9. Thirdly, Metricon submitted that there is no evidence that there is a need to remove the TV antenna or the solar panels in order to secure the tiles. However, as I have noted, Mr Camenzuli prepared his estimate in circumstances where he went onto and inspected the roof. Mr Winton did not. Mr Camenzuli was not, in cross-examination, challenged on his opinion regarding the need to remove the TV antenna. Further, he explained why he disagreed with Mr Winton's view that it was not necessary to fix the tiles under the solar panels. In particular, Mr Camenzuli found, in the course of his inspection of the roof, that alongside the solar panels at the rear of the roof, "the tiles are not secured at all let alone the required 50% of the tiles". He explained that: "…The solar panels are elevated above the roof tiles of upright legs that do not provide the secure fixings of the roof tiles, as required under AS 2050. The solar panels provide a scooping action that creates a wind tunnel effect that could result in an increased wind velocities and disrupt the tiles further rather than securing the tiles down to the roof."
10. Given the matters outlined above, I accept Mr Camenzuli's estimate for the costs of rectifying this item, and therefore an amount of $16,020 will be allowed for this defect.

Wall bracing

1. Metricon accepts that the wall bracing does not comply with the requirements of Australian Standard 1684.2-2010 "Residential Timber Framed Construction, Part 2: Non-cyclonic areas" (AS 1684).
2. However, Metricon submits that no compensation should be awarded for this item, because it has not been established that the installed bracing is not fit for purpose. In this regard, Metricon noted that Mr Camenzuli expressed the view that there is insufficient bracing capacity to withstanding the raking force that would be exerted by winds, but acknowledged that he had not conducted any analysis of local wind conditions.
3. Mr Camenzuli, unlike Mr Winton, inspected the wall bracings and provided evidence of the extent of the defects. In particular, he identified that the wall bracings were incorrectly and inadequately secured, with fasteners exceeding the 20 mm maximum spacings specified in AS 1684. Mr Winton did not dispute the proposition that such defects would likely lead to some reduction in capacity, but rather said that the extent of such reduction had not been established: "… I've said here that the calculation hasn't been done as to the capacity of the existing bracing. In, in other words, where nails are at I think 80 millimetre centres in places and not 60 millimetre centres, they do have some strength, and whether that strength calculates out to be 90% of what they were designed for or whether it's 60% of what they're designed for, that hasn't been done and hasn't been provided."
4. I do not consider that it is necessary to establish the precise extent of the reduction in capacity in order to justify the repair costs.
5. There is no dispute about the cost of the rectification works identified by Mr Camenzuli.
6. Accordingly, the amount of $8,750 will be allowed for rectifying this defect.

Straightening of wall

1. Metricon accepts that there is a misalignment of a wall in the bathroom hallway. However, Metricon disputes that this is a defect and, if the defect is found, disputes Mr Camenzuli's estimate of $8,000 for the repair works, submitting that Mr Winton's estimate of $2,500 for those works should be accepted.
2. In their joint report, Mr Winton and Mr Camenzuli agreed that: "The wall outside the powder room is out of alignment 10mm over 850mm of wall on the north side (RHS) of the door and 8mm over 300mm on the south side (LHS) of the door. These are outside the NSW Guide to Acceptable Standards and tolerances."
3. Metricon submitted that there are three problems with Mrs Lipari's claim for rectification costs in respect of this item.
4. First, Mr Winton points out, and Mr Camenzuli does not dispute, that the NSW Guide to Acceptable Standards and Tolerances is a guide, not a standard. Mrs Lipari has not identified any provision of the Contract which would have been breached by reason of any non-compliance with this guide.
5. Secondly, Mr Winton's evidence is that any misalignment in the wall arose from plastering when the corner was set. He explained that the corner of the wall has an angle placed over the joint, which is raised to protect the point of the external corner from being damaged; that this angle is set with a three-coat system, causing it to be "built up"; and that this means that the external corner is not flush, and gives it the appearance of being out of parallel. Mr Winton explained that this is common industry practice and is visually obvious on externally set corners. Mr Winton set out in the joint report an extract from the CSR Gyprock Residential Installation Guide to support these views.
6. Mr Camenzuli agreed in the course of cross-examination that the corners were conventionally set in the manner indicated by Mr Winton. He asserted that this would only account for some 4 mm of the misalignment, but did not explain how he calculated that figure.
7. Thirdly, Mr Camenzuli did not provide any independent estimate for the rectification costs. He stated that his figure is derived from costings provided by Mrs Lipari, but such material is not in evidence.
8. Given the matters outlined above, I am not satisfied that any amount should be allowed for this item.

Roof Frame Anchors

1. Metricon accepts that some of the roof frame anchors have not been properly installed and need securing. However, there is a dispute about the extent of the defects, and therefore about quantum.
2. Mr Camenzuli has assessed the quantum of repair costs on the basis that all of the roof frame anchors need to be rectified.
3. Metricon accepts that the anchors on the saddle trusses have not been correctly fitted, but contends that no defect has been established in respect of the remaining roof anchors. Further, in respect of the anchors on the saddle trusses, Metricon says that these are limited in number and readily accessible; that no figure has been proposed for rectifying only the anchors on the saddle trusses; and that, in those circumstances, no amount should be allowed for the costs of rectifying this item.
4. I do not accept Metricon's submissions. Mr Camenzuli, unlike Mr Winton, went into the roof cavity and inspected around 30-35 roof frame anchors. He found, contrary to manufacturer's instructions, that the anchors were not flat on the trusses; that the nails on the anchor were too close together; that the correct number of nails had not been used; that the nails had not been correctly spaced in installing the anchors; and that the nails are too close to the edge of the plate.
5. Metricon contended that the roof frame anchors were installed in accordance with common practice. However, Mr Camenzuli said that the fact that nail guns were commonly used, and that care was commonly not taken in nailing anchors, did not excuse poor workmanship. He referred to various photographs which he had taken in the course of his inspection which showed nails missing the plate altogether, or plates secured by only one or two nails instead of four nails. In cross-examination, Mr Winton agreed that the nailing of the trusses should comply with the manufacturer's instructions, and that a failure to nail them correctly does not meet those specifications.
6. For those reasons, I will allow Mr Camenzuli's estimate for the cost of rectifying the roof frame anchors in the amount of $4,860.

Stormwater Repair and Water Supply Repair

1. These two items can be addressed together.
2. Mr Lipari gave evidence that repairs were undertaken to address damage to the stormwater pipe and to the main water supply pipe. He exhibited to his affidavits photographs of the damage and of the repairs being undertaken. Although he did not exhibit any invoices for the work, his evidence that the cost of the repairs was "about $4,400" in each case was not challenged, and Mr Camenzuli gave evidence that the costs were reasonable for the extent of work undertaken.
3. However, there is a dispute about whether the damage was due to any defect in Metricon's works.
4. Mr Camenzuli stated, in his oral evidence, that there was an Australian Standard which says "you can't backfill pipes with rocks and rubble in contact with the pipe". He did not refer to this Standard in any of his reports dealing with this issue, and this Standard was not tendered. In any case, the evidence did not establish that rocks and rubble had in fact been placed around the pipes by Metricon.
5. Further, the leak in each of the stormwater pipe and the water supply pipe was noticed and repaired only after Metricon had completed construction and handed over the Property. By that time, another contractor, Mr Halabi, had come onto the Property to conduct substantial works. Those works included excavation and the construction of a driveway at the front of the Property, and excavation and the construction of retaining walls at the side and rear of the Property. Mr Winton expressed the view that the damage to the pipes was likely caused by Mr Halabi's works. He pointed out that, if the water supply pipe had been damaged by Metricon's works, it would have leaked instantly, but in fact did not leak until some time afterwards. In cross-examination, Mr Camenzuli accepted that the damage to the main water supply pipe was likely caused after Metricon handed the works over.
6. For those reasons, I do not consider that Mrs Lipari has established that the repairs to the pipes were due to any deficiency in Metricon's works, and therefore no amount will be allowed for these repairs.

Bathroom plumbing

1. Metricon accepts that, in the main bathroom, the hot and cold water outlets were installed the wrong way around and that, as a result, repairs were undertaken by a plumber which involved a section of the downstairs shower cubicle wall being removed from the gyprock, the pipes being correctly attached, and a reinstatement of the plasterboard. The only dispute is regarding quantum.
2. Mr Lipari gave evidence that the repair cost "about $3,300". Mr Winton expressed the view that this was "grossly excessive" and estimated a lower amount of around $575 for the repairs.
3. However, this is not an instance where there is a dispute about an estimate for future repair works. It is a case where there is a dispute about the cost of works which have in fact been conducted. Mr Lipari was not challenged on his evidence as to the actual cost of the works.
4. Accordingly, I will allow the amount of $3,300 as the cost of these repairs.

Kitchen Tap repair

1. This item has some similarities with the previous item. Mr Lipari gave evidence that the hot and cold water taps in the kitchen were installed the wrong way round, and that he engaged a licensed plumber to perform repairs, which cost "about $770".
2. However, in this instance, there is evidence that the issue with the kitchen tap was identified, and was rectified by Metricon, prior to practical completion. On 4 May 2018, Mrs Lipari signed a "Completion of Works" form that was prepared by Metricon. One of the items on that list, which was identified as a "defect", was as follows: "Replace tap to kitchen sink". The "Completion of Works" form indicated that this had been "actioned" by "Reece / M&k". The form stated: "It is now agreed that the defects or incomplete works listed above have been completed".
3. Having regard to those matters, it has not been established that any amount should be allowed for this item.

Conclusion: General Defects

1. The items which have been agreed, together with the items which I have found to be established, come to a total of $54,845.00.
2. Metricon relied, in its response to Mrs Lipari's cross-claim, on clause 48.1 of the Contract. It provides as follows: "To the fullest extent permitted by law, without excluding, restricting or removing the rights of the owner with respect to the statutory warranties implied under Part 2C of the Home Building Act notwithstanding any other provision of this contract, the total liability, in the aggregate, of Metricon to the owner and anyone claiming by or through the owner, for any and all claims, losses, costs or damages, including legal fees and costs and expert witness fees and costs of any nature whatsoever or claims and expenses resulting from or in any way related to the building works or the contract shall not exceed the contract price."
3. Metricon accepted that clause 48.1 does not limit an award of damages in the event that Metricon is found to have breached the statutory warranties in section 18B of the Home Building Act 1989 (NSW), having regard to the terms of cl 48.1 and the terms of s 18G of that Act. However, Metricon relied on cl 48.1 to limit its liability for any breach of Contract to the amount of the Contract price.
4. I do not need to determine the applicability of clause 48.1, since Metricon's liability for the defects in the slab and for the general defects which have been established falls significantly below the Contract price.

Pre-contractual communications

1. In early 2016, Mrs Lipari paid a holding deposit for the Property, which was an empty lot at the time.
2. In about mid-2016, Mr and Mrs Lipari met a Metricon employee, Frank Mezzagosto, to discuss having a house designed and constructed on the Property.
3. In late 2016, Mrs Lipari met with representatives of a pool business called Local Pools & Spas (Local Pools). On 19 November 2016, Mr and Mrs Lipari entered into a contract with Local Pools for the construction of a swimming pool on the Property for a total price of $44,000. Relevantly: 1. clause 2 stated that there were "No" "Easements or services affecting [the] pool"; 2. the pool was to be 7.15m by 3.6m; 3. a section entitled "Sketch of Pool and Site" was left blank and labelled with the letters "T.B.A.", reflecting that the precise location of the pool on the Property was yet to be determined; and 4. various costs, including the costs of excavating the site, were excluded from the contract price.
4. In around December 2016, Metricon provided Mrs Lipari with draft building plans marked "Preliminary Siting Only" (the Original Building Plans). These plans did not show a swimming pool. The Original Building Plans showed that: 1. the set-back of the house from the southern boundary of the Property would be 2.59 metres; and 2. the set-back of the house from the northern boundary of the Property would be 3.58 metres from the boundary.
5. There are two further points to note about the Original Building Plans: first, they showed contours which had been provided by the subdivision developer (and which were later found to be inaccurate, see paragraphs 279-281 below); and secondly, they did not show any easement on the northern boundary. These matters were corrected in later versions of the Plans.
6. After the Original Building Plans were provided to Mrs Lipari, she attended another meeting with Mr Mezzagosto of Metricon, at which she informed him that she had entered a contract with Local Pools for the construction of a swimming pool on the Property. Mrs Lipari gave unchallenged evidence that Mr Mezzagosto said words to the following effect: "The pool should go on the northern side of the house as that's where all the entertaining will be, and it will give you direct access from the house to the pool. It will be good for entertaining. Also, you will have the morning sun and afternoon sun on the northern side of the house. … But there's one issue. Where the house is currently sitting, there's not enough room on the northern side. To build the pool on the northern side, the house will need to be moved closer to the southern boundary. This is because there needs to be about a metre on either side of the pool, and we need to allow space for the existing ramp to the rear. We also need to allow for the existing easement on the side of the pool. So we will need to amend the plans to shift the house more to the south by about a metre. The southern side will be dead space, and we can shift the house to the south to create more space on the north. As it is a single storey house, we can build up to 900 mm to the southern boundary. We will allow 1.5 metres from the southern boundary as we have plenty of room."
7. Mrs Lipari deposed that the conversation continued to the following effect: "[Mrs Lipari]: I understand. We need to have enough room around the pool so we can walk, and we also need to setback from the northern boundary to allow for the ramp as we don't want any steps. We also need to allow for the easement. [Mr Mezzagosto]: So we will amend the plans to move the house closer to the southern boundary to allow for the pool to be built on the northern side. I will arrange for the plans to be amended. [Mrs Lipari]: Ok. Thank you."
8. On 29 March 2017, Metricon emailed to Mrs Lipari an amended form of the building plans for the house, still labelled "Preliminary Siting Only" (the Amended Building Plans). The Amended Building Plans changed the planned positioning of the house on the Property, showing that: 1. the set-back of the house from the southern boundary of the Property would be 1.50 metres (instead of 2.59 metres under the Original Building Plans); and 2. the set-back of the house from the northern boundary of the Property would be 4.67 metres (instead of 3.58 metres under the Original Building Plans).
9. The increase in the set-back from the northern boundary, and the consequential decrease in the set-back from the southern boundary, was effected in order to create sufficient space for the proposed pool between the house and the northern boundary of the Property.
10. On 30 March 2017, Local Pools emailed Mrs Lipari a "Pool Plan". This plan showed the pool being placed "level with Alfresco": that is, the pool was located on this plan in the space between the northern boundary of the Property and the covered outdoor space which was at the eastern end of the house and which was described in the evidence as the "al fresco" area. The plans showed the edge of the pool being 1 metre away from the northern boundary, 1.85 metres from the al fresco area, and surrounded by a glass pool fence. The plan referred to a "Filter & Pump Location in a Shed" but did not show where this shed would be situated on the Property.

Contract

1. The Contract was entered on 4 April 2017. It did not refer to any proposed swimming pool.
2. Item 10 of the Contract relevantly states as follows: "Provide amended siting as per the following: * Provide a 1500mm RHS setback to Bed 3 in lieu of 2590mm setback. * Provide a 4670mm LHS setback to Garage in lieu of 3580mm setback."
3. The "amended siting" refers to the amendment to the siting of the house that was effected by the Amended Building Plans. The set-backs specified in Item 10 of the Contract are those shown on the Amended Building Plans, with the "4670mm LHS setback" being the set-back of the house 4.67 metres from the northern boundary, which is shown on the left of those Plans, and the "1500mm RHS setback" being the set-back of 1.50 metres from the southern boundary, which is shown on the right of those Plans.
4. These set-backs are specified to be "in lieu of" the set-backs which had been shown on the Original Building Plans, namely, a set-back of 3.58m from the northern boundary and 2.59m from the southern boundary (see paragraph 260 above).
5. Item 12 of the Contract stated that Metricon had provided a "Preliminary Siting Only", and that this was "Subject to receiving a contour survey (not available at time of Preliminary Tender/ Contract preparation)." In addition, Item 12 provided that: "Retaining walls (if required) are to be the responsibility of the owner".

Variation 2 and subsequent correspondence

1. On 12 April 2017, Ms Lipari and Metricon entered into a variation to the Contract (Variation 2). Relevantly, Variation 2 contained the following "Note" in relation to the proposed swimming pool: "Metricon Homes acknowledges owners proposed location of future swimming pool and advise the following: *Owner to provide Professional site specific details for proposed swimming pool to Metricon Homes upon receipt of Council or CDC approval to determine if additional concrete piering and/or additional depth of standard concrete piering is required. *Additional costs to be determined upon receipt of pool details and Engineers details, and if required this will be addressed by way of variation"
2. This "Note" confirms that, as at the date of this Variation, Metricon had been told the "proposed location" of the pool by Mrs Lipari, namely, between the side of the house and the northern boundary of the Property. However, Metricon was seeking that "Professional site specific details" for the proposed pool be provided in due course, and indicated that this was in order to determine whether, and to what depth, additional works would be required in order to accommodate the pool in that location, and the cost of such works.
3. On 12 April 2017, Jenny Tsai of Metricon sent an email to Local Pools, requesting as follows: "Could you please provide pool details to mutual client Antonia & Vince Lipari. We have received only the pool plan showing volume of 25kL Further we would require the pool to be constructed after piering (being 1.85m from the Alfresco). Please provide a copy of pool approval at your convenience."
4. On 13 April 2017, Renee Magro responded to Ms Tsai, attaching the "Pool Specifications", and stating as follows: "I have spoken to Antonia [Lipari] this morning and advised that we won't submit the Pool Plans until the house is approved as if the Pool & house is submitted together it could have an impact on our House approval & Basix. Can you please advise who is doing the House Approval Council or Private Certifier? We will require the House & boundaries to be pegged out & off set out of the Pool area so that we do not have to remove pegs to Excavate the Swimming Pool. We will also require a Finished Height Peg for the Alfresco area."
5. On the same day, Ms Tsai replied to Ms Magro, stating that because the proposed location of the pool was within 3 metres of the house, it would need to be constructed "after piering or after handover", and that if it was to be installed after piering, Metricon would require pool approval before it commenced on site. Ms Tsai also confirmed that Mrs Lipari's home would be "going through a private certifier".

Communications between 8 and 10 June 2017

1. On 8 June 2017, Mr Potter, who worked in the "NSW Drafting" section of Metricon, sent an email to Ms Tsai, which relevantly stated as follows: "I've been advised by Chris and Joy that the swimming pool cannot be built adjacent to the outdoor room due to the large amount of excavation on the side boundary and back of the house. Pool will need to be relocat[ed] to the rear, I'll [put] amendments on hold until we have a revised pool plan. It's technically possible to build on the side however a large retaining wall will need to be constructed and if the rear of the house it's a much more cost effective option. Let me know how you go, please include the contour report attached for the amended pool plans."
2. By this email, Mr Potter was indicating that although it was "technically possible" to build the pool at the side of the house, between the "outdoor room" (that is, the "al fresco" area) and the northern boundary of the Property, it would be necessary to carry out a "large amount of excavation on the side boundary" and to construct a "large retaining wall" in order for this to occur, and it was "much more cost effective" to locate the pool at the rear of the Property.
3. The attached "contour report", which was subsequently provided to Mrs Lipari, relevantly identified: 1. a drop from the northern property (being lot 1388) to Mrs Lipari's Property (being lot 1387); 2. a significant drop from the rear to the front of the Property; and 3. an easement for support along the northern boundary of Mrs Lipari's Property, which burdened her Property.
4. The contours shown on the plan provided to Mrs Lipari in June 2017 were entirely different from those shown on the Original Building Plans and the Amended Building Plans, each of which had been marked "Preliminary Siting Only". According to later internal emails of Metricon in February 2018, the levels on the Preliminary Siting, which had been "given by the developer", showed that "the degree would be 119 at the back and 115 at the front", such that there was a "400 mm fall from back to front". However, the contour plan that Metricon subsequently received (and provided to Mrs Lipari) "showed the block being steeper than originally advised", indicating "the back to be 27.29 degrees and 20.6 at the front", such that there was a "6690 mm fall" from back to front.
5. The contour plan also showed that the drop from the northern property to Mrs Lipari's Property in the proposed location of the pool (next to the "al fresco" area) was from a level of 25.73 to 25.00, or 730 mm. No such drop had been shown on the Original Building Plans or the Amended Building Plans.
6. In addition, the easement running along the northern boundary which was shown on the contour plan had not been included on those earlier plans. It was labelled "(K): PROPOSED EASEMENT FOR SUPPORT 0.3 WIDE". Metricon tendered a copy of the terms of this easement. Clause 2.2 provided that: "The Owner of the Land Burdened must not do, or suffer to be done, any of the following: 2.2.1 anything [that] does, or may, affect the stability of the Retaining Wall; or 2.2.2 interfere with the Retaining Wall in any way."
7. On the same day as Ms Tsai received this email from Mr Potter, she emailed both Mrs Lipari and Ms Magro of Local Pools, essentially repeating the information which she had been given by Mr Potter: "As per provided pool plans, our design team has confirmed after seeing information provided by the contour survey, that this location is not really feasible. This is due to the build cut & fill requires large amount of excavation on the side boundary. Please see below image to where we suggest the relocation of the swimming pool noted as 'area to be kept clear of services'. It is technically possible to build the pool on the site however this will mean large retaining wall will need to be constructed. Rear side of the home would be much cost effective. Please let me know if changes to design of the pool will be considered."
8. This email was said to convey the "8 June Representation" which I address below.
9. Ms Tsai's email attached two documents. The first was a copy of the contour plan. The second was a copy of the house plans, which had been amended to include the information shown on the contour plan (including the easement). This plan identified the "area to be kept clear of services" at the rear of the house, which had been proposed in Ms Tsai's email as the location for the pool. This area was parallel to, and several metres to the east of, the "al fresco" area.
10. The amended plan identified (as had the earlier Plans) that the development was a "complying development" subject to the "NSW Housing Code SEPP 2008". Under the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (NSW) (SEPP), excavation within one metre of a boundary must not exceed more than one metre from existing ground level: clause 3.29(1). The amended plan set out the limitations contained in cl 3.29(1) as follows: "MAXIMUM 1000MM CUT WITHIN 1000MM FROM BOUNDARY MAXIMUM 2000MM CUT 1000MM-1500MM FROM BOUNDARY MAXIMUM 3000MM CUT MORE THAN 1500MM FROM BOUNDARY"
11. The amended plan which was attached to Ms Tsai's email also showed amended set-backs for the house, being 3.671 metres from the northern boundary and 2.500 metres from the southern boundary. Those were different from the set-backs which had been agreed by Variation 2 (which attached the Amended Building Plans), and were closer to those in the Original Building Plans. That is, having proposed in the Amended Building Plans that the location of the house on the Property be moved in order to accommodate a swimming pool on the northern boundary (and having noted that those Plans were prepared on a "Preliminary Siting Only" basis, subject to receipt of a contour plan), Metricon was now proposing, after having received and reviewed the contour plan, that the pool be built at the rear, as this was a much more cost effective option, and therefore proposed that the house be moved back to its original intended location.
12. On the evening of 8 June 2017, at 7.30pm, Mrs Lipari forwarded a copy of Ms Tsai's email to Mr Mezzagosto of Metricon.
13. On 9 June 2017, Mrs Lipari spoke to Mr Mezzagosto regarding Ms Tsai's email. Mrs Lipari deposed that their conversation was to the following effect: "[Mrs Lipari] said: 'I got an email from Jenny [Tsai] saying we can't build the pool at the northern side of the house where the sun is. We discussed and agreed that the pool is going on that side. Why can't it be built there now?' Mr Mezzagosto said: 'The pool won't fit on the northern side of the house. The width is too small. It has to be built at the back of the house.'"
14. Metricon disputes Mrs Lipari's evidence of this conversation.
15. On the next day, 10 June 2017, Mr Mezzagosto sent an email to Ms Tsai, copying in Mrs Lipari. It read as follows: "I have had Antonia [Lipari] in with regards to your email regarding the repositioning of the pool and have explained reasoning behind this. She has agreed to relocate the pool to where you have suggested (area to be kept clear for services) but would like it positioned to the left side boundary to align with the existing out door area. [Mr Mezzagosto inserted the house drawing plans that Ms Tsai provided to Mrs Lipari in the 8 June email] Please note that the additional piering to the home based on the previous positioning of the pool will need to be looked and adjusted to suit. Please attend to required variation to accommodate."
16. I infer that Mrs Lipari's request that the pool be "positioned to the left side boundary to align with the existing outdoor area" was a request that it be positioned to the left (or northern) side of the boxed area at the rear of the Property which was marked "area to be kept clear of services", in order that the pool be aligned with the "al fresco" area.
17. On 13 June 2017, Ms Tsai sent an Mr Potter at the "NSW Drafting" email address, confirming that Mrs Lipari had "agreed to relocate the pool" to the "area to be kept clear of services" at the rear of the Property, seeking confirmation that this was "alright", and asking "whether orders can commence".

Variation 9 and amended plans

1. On 19 June 2017, Mrs Lipari signed Variation 9 to the Contract. It relevantly provided as follows: "2. Delete item 12 from New Home Contract re: Preliminary Sitting Only. … 13. Provide amended siting as per the following: *Provide a 2500mm RHS setback to Bed 3 in lieu of 2590mm setback [from the southern boundary]. *Provide a 3671mm LHS setback to Garage in lieu of 3580mm setback [from the northern boundary]"
2. Item 12 of the Contract (which was deleted by Item 2 of Variation 9) had stated that Metricon had provided a "Preliminary Siting Only", which was subject to "receiving a contour survey". As noted above, that contour survey had now been received and reviewed. The set-backs set out in Item 13 of Variation 9 were said to be "in lieu of" the set-backs which had been specified in the Original Building Plans. However, the set-backs shown in the Original Building Plans were not the existing set-backs at the time of the amendment, since the set-backs in the Original Building Plans (prepared prior to entry into the Contract) had been altered by the Amended Building Plans which had been attached to the Contract. The change made by Variation 9 to the set-back from the northern boundary was not (as indicated by Item 13) an increase from 3.580 metres to 3.671 metres, but in fact a decrease from 4.670 metres to 3.671 metres.
3. When Ms Tsai emailed the proposed Variation 9 to Mrs Lipari, she stated that: "Once I have received the signed variation from you, I will have the plans updated to reflect the variation". In fact, amended drawings were prepared in advance of Mrs Lipari agreeing to Variation 9, since drawings showing the amended siting of the house (in accordance with the proposed Variation 9) were sent to Mrs Lipari on 8 June 2017, when Ms Tsai raised with her the issue about the proposed location of the swimming pool (see paragraphs 283-287 above).
4. On 27 June 2017, Local Pools sent an email to Ms Tsai, copied to Mrs Lipari. Ms Magro of Local Pools stated that "now that we are looking at moving the Pool to the back of the house", Local Pools would "build the Pool after the House is built". She "attached a Plan to show where the pool will be roughly located so this can be a service free area". The attached plan was dated, like the original Local Pools plan, "31/03/17". This plan stated "Pool Level with Alfresco". It showed the pool being located at the rear of the Property, parallel to, and set back 3 metres to the east of, the "al fresco" area.
5. On 31 July 2017, Ms Butcher of Metricon emailed Ms Lipari, among other things, a "Full set of stamped plans" (the Stamped Plans). The set-backs shown on the Stamped Plans were in accordance with Variation 9. In addition, the Stamped Plans showed the "area to be kept clear of services" where it had been agreed that the pool would be located.
6. On 10 August 2017, Mrs Lipari signed a document entitled "ACCEPTANCE OF FINAL CONSTRUCTION DOCUMENTS" to certify that she had "thoroughly checked all stamped 'final construction drawings'" and to "confirm that the plans … are correct in all facets".

Pool plan dated "8 September 2017"

1. Local Pools appears to have created another plan for the pool bearing the date "08/09/2017" (the "September 2017" plan). This plan showed the pool being located on the northern side of the house, despite there having been agreement, several months before September 2017, that the pool would be at the rear of the house. Further, the location of the pool in the "September 2017" plan is different to the location of the pool in the original plan created by Local Pools in March 2017. In particular, in the "September 2017" plan, the pool was not (as had been the case in the original March 2017 plan) to be located between with the "al fresco" area at the back of the house and the northern boundary, but instead was to be located between the side of the house and the northern boundary.
2. The "September 2017" plan identified a "Structural Ret[aining] Wall by Owner - to be Engineered Designed" at the rear of the house. This wall was to be located 3 metres from the rear of the house, on the eastern side (that is, 3 metres from the al fresco area, towards the eastern boundary), and to run almost the full width of the Property from south to north, before turning at 90 degrees and running parallel to the existing retaining wall on the northern boundary, from the back of the house to the garage.
3. The "September 2017" plan also stated that there would be "Special Panels Over Ret[aining] Wall" on the northern boundary of the Property, but provided no further information in relation to these panels. It also stated: "Pool To be 40 mm Below Breather Hole Brick".
4. In her affidavit of 1 March 2020, Mrs Lipari referred to the "September 2017" plan and deposed that: "This plan is dated 8 September 2017 and was prepared in circumstances where the pool was going to be built after the house was constructed". That statement provides no information on why a plan would be prepared in September 2017 which was entirely inconsistent with the location for the pool which had been agreed in June 2017, and which had been taken into account in the preparation of the Stamped Plans in August 2017. Further, excavations commenced at the Property in around mid-August 2017, and the slab had been laid in the location shown on the Stamped Plans by around 5 September 2017 (see paragraph 52 above). Metricon sought relevant communications from Local Pools regarding the "September 2017" plan, but nothing was produced.

Events following laying of slab

1. Mrs Lipari gave evidence that after the construction of the slab was completed, she and her husband visited the building site, and her husband said words to the effect that "something is wrong here". Mr Lipari and their son, Gaetano Lipari, measured the distance between the slab and the northern boundary, and Mr Lipari said words to the effect of "The distance from the house to the boundary is not correct. It is too narrow."
2. Mrs Lipari telephoned Jeremy Robertson of Metricon and informed him of the issue. During September 2017, Mr and Mrs Lipari met Mr Robertson on the site, and Mr Robertson measured the distance from the northern side of the slab to the northern boundary. Mrs Lipari says that she provided Mr Robertson with the Amended Building Plans stamped 4 June 2016, (which, as noted above, showed set-backs of the house different to those specified in Variation 9 and in the Stamped Plans). Mrs Lipari says that she had a conversation with Mr Robertson to the following effect: "[Mr Robertson]: There's a mistake in the location of the slab. The distance doesn't comply with these plans. [Mrs Lipari]: This is where the pool was supposed to be going, and it's too narrow. [Mr Robertson]: It is too narrow. What do you want me to do? [Mrs Lipari]: We should be compensated in some way. [Mr Robertson]: I will talk to my supervisor…"
3. Mr and Mrs Lipari had a meeting with Mr Tom Lesar of Metricon in or around November 2017, where they aired the same concerns. On 7 December 2017, Mrs Lipari sent an email that read as follows: "…I am disappointed with Metricon 1. They move the slab. According to our contract, it was supposed to be 1.5 metres on one side and 4.6 metres on the other. When in reality it is now 2.5m and 3.6m. Tom came out on site, and we discussed the issue 4 weeks ago, and he still has not gotten back to me … 3. Because of Metricon stuff up of slab location, it has now affected the placement of our pool, having to relocat[e] incurring additional costs that could have been avoided had the slab been placed in the correct position."

Installation of the pool

1. The works to install the pool were undertaken from around September 2018.
2. Mrs Lipari gave the following evidence in relation to the installation of the pool: "The area at the rear where the pool was eventually constructed was significantly higher than the level of the ground upon which the house is located, such that we had to have many retaining walls and stairs, the pool is not visible from the house or the alfresco entertainment area, and there are many steps to climb to reach the pool. As such, to construct the pool, we needed to excavate the site at the rear of the property. This involved cutting out rock over a large area. To build the pool at the rear of the property required the construction of many retaining walls across the entire width of the property at different levels. The pool also required the construction of stairs to access the pool from the house."
3. In an affidavit dated 4 April 2024, Mrs Lipari deposed that she paid the contractor who performed these works at the rear of the property, Mr Chris Halabi, an amount of $149,400. There was no written quotation from, or contract with, Mr Halabi for these works, and no evidence of any emails or text messages with him in relation to them. According to Mrs Lipari, all communications were face-to-face. Despite the amounts being said to include GST, there were no tax invoices rendered by Mr Halabi.

Issues Raised Regarding Variation 9

1. Prior to the hearing, Mrs Lipari identified the following issues for determination in respect of Variation 9: 1. Is Variation 9 (Item 13) a valid variation to the contract? 2. Did Metricon position the location of the foundation slab to accord with proposed Variation 9 (Item 13) before the variation was agreed by Mrs Lipari? 3. Did Metricon breach the contract by amending the building plans to accord with proposed Variation 9 (Item 13) before the variation was agreed by Mrs Lipari? 4. Did the location of the foundation slab by Metricon in accordance with proposed Variation 9 (Item 13) cause Mrs Lipari to suffer the following loss: 1. the additional cost of $148,500 to build the swimming pool at the rear of the Property as opposed to the agreed position on the northern side of the Property; and/or 2. the diminution in the value of the house in the amount of $100,000?
2. These issues may be dealt with briefly.
3. In closing submissions, Counsel for Mrs Lipari confirmed that there was no dispute that Variation 9 was signed by Mrs Lipari.
4. However, having made that concession, Counsel for Mrs Lipari later submitted as follows: "O'CONNOR: I'm instructed to indicate that we don't accept that variation 9, item 13 changes the contract plans because it does not reference them. There's that issue about where a variation - we say that the left and right setbacks in item 13 were, reference the plans that were draft plans prepared in December 16, not the contract plans. So they were deficient in that regard, so in that sense, we say the side of the slab was incorrectly sited. Even though Mrs Lipari signed the variation. Because it was a variation-- HIS HONOUR: Even though it was sited in accordance with the intention expressed in that item? O'CONNOR: Yes, they were. But I'm just making that submission."
5. This submission refers to the fact that, as noted above, Item 13 of Variation 9 set out proposed set-backs from the northern and southern boundaries which were stated to be "in lieu of" the set-backs shown in the Original Building Plans when, in fact, at the time of Variation 9, the existing set-backs were those shown in the Amended Building Plans.
6. There is no pleaded case that Metricon misled Mrs Lipari by proffering Item 13 in this form. It is tolerably clear why Item 13 was prepared in this form. Essentially, Item 13 was drafted as an amendment to the text of the corresponding item in the original form of the Contract (Item 10). That is, whereas Item 10 of the Contract relevantly stated as follows (emphasis added): "Provide amended siting as per the following: * Provide a 1500mm RHS setback to Bed 3 in lieu of 2590mm setback. * Provide a 4670mm LHS setback to Garage in lieu of 3580mm setback." Item 13 of Variation 9 stated (emphasis added): "Provide amended siting as per the following: *Provide a 2500mm RHS setback to Bed 3 in lieu of 2590mm setback. *Provide a 3671mm LHS setback to Garage in lieu of 3580mm setback."
7. That is, all that was changed was the first figure in each bullet point (shown in bold above), with the other text left the same.
8. Significantly, it is an essential element of the claim for misleading or deceptive conduct, which is considered below, that Mrs Lipari did, in fact, agree to the location of the house specified in Variation 9. Mrs Lipari pleads that, in reliance on the alleged representations by Metricon, she "agreed to the construction of the swimming pool at the rear of the house, as opposed to the northern side of the house, … and thereby entered Variation 9 which, inter alia, provided for the same" (Second Further Amended Cross-Claim List Statement (SFACCS), [21]).
9. The first issue set out above - "Is Variation 9 (Item 13) a valid variation to the contract?" - must therefore be answered "yes".
10. As regards the second, third and fourth issues set out above, it is the case that the plans for the Property were amended to accord with the set-backs specified in Item 13 of Variation 9 before Variation 9 was in fact signed by Mrs Lipari.
11. However, Counsel for Mrs Lipari accepted that this was of "no consequence". That is because Mrs Lipari did in fact agree to the set-backs shown in Variation 9; the Stamped Plans, which showed the same set-backs, were reviewed and approved by Mrs Lipari prior to construction being commenced; and the house was constructed on the Property in accordance with the set-backs that had been agreed in Variation 9 and had been shown the Stamped Plans.
12. Counsel for Mrs Lipari ultimately said in closing submissions that the dealings regarding Variation 9 essentially provided "context for the misleading and deceptive conduct" claim. I turn now to address that claim.

Claim for Misleading or Deceptive Conduct

1. Mrs Lipari identified the following issues for determination arising in respect of her claim against Metricon for misleading or deceptive conduct: 1. Were the original draft building plans amended to provide enough room for the swimming pool to be built on the northern side of the house? 2. Did the building plans that formed part of the contract provide enough room for the swimming pool to be built on the northern side of the house? 3. Did Metricon mislead or deceive Mrs Lipari on 8 June 2017 and 9 June 2017, or otherwise breach the contract, by representing to her that: 1. the cost of building the swimming pool at the rear of the Property would be more cost effective than on the northern side of the house; and/or 2. there was not enough room to build the pool on the northern side of the house? 1. Did Mrs Lipari rely on the 8 June 2017 representation and the 9 June 2017 representation in agreeing to have the swimming pool built at the rear of the house as opposed to on the northern side of the house? 2. Did the 8 June 2017 representation and the 9 June 2017 representation cause Mrs Lipari to suffer the following loss: 1. the additional cost of $148,500 to build the swimming pool at the rear of the Property as opposed to the agreed position on the northern side of the Property; and/or 2. the diminution in the value of the house in the amount of $100,000?
2. The first two issues can be briefly addressed. The evidence summarised at paragraphs 260-270 above establishes that: 1. the Original Building Plans were amended so as to increase the set-back of the house from the northern boundary of the Property, in order to provide enough room for the swimming pool to be built between that boundary and the side of the house; and 2. the Amended Building Plans, with the increased set-back on the northern side, formed part of the Contract signed on 4 April 2017.
3. The third to fifth issues concern representations allegedly made to Mrs Lipari in relation to the swimming pool by Ms Tsai on 8 June 2017 and by Mr Mezzagosto on 9 June 2017.
4. Although the claim was put in various ways in the pleading, Mrs Lipari put her claim in her written submissions as follows: "Mrs Lipari seeks damages from Metricon under s 236 of the Australian Consumer Law (ACL) for its contravention of s 18 of the ACL, by it engaging in misleading or deceptive conduct in trade or commerce."
5. Metricon accepted that, if the pleaded representations were made, were misleading and caused loss (which Metricon disputed), then Mrs Lipari would have a remedy under the Australian Consumer Law. It is therefore unnecessary to consider any of the other alternative legal labels put on Metricon's conduct.

Did Metricon make misleading representations to Mrs Lipari on 8 and 9 June 2017?

8 June Representation

1. The 8 June Representation is pleaded as follows (SFACCS, [18A]): "18A. Ms Tsai's email of 8 June 2017 conveyed to Lipari that it would be more cost effective to install the pool at the rear of the property rather than on the northern boundary (the 8 June representation)."
2. I am satisfied that the pleaded representation was conveyed by Ms Tsai's email of 8 June 2017, which relevantly stated as follows: "It is technically possible to build the pool on the site however this will mean large retaining wall will need to be constructed. Rear side of the home would be much cost effective. Please let me know if changes to design of the pool will be considered."
3. The basis on which the 8 June Representation is pleaded to have been misleading or deceptive, or likely to mislead or deceive, is as follows: "18D. The 8 June representation was false, misleading and/or deceptive, or likely to be so, in that it was not more cost effective to install the pool at the rear of the property rather than on the northern boundary."
4. Ms Tsai's statement that it would be "much [more] cost effective" to build the pool at the rear of the Property, as opposed to between the house and the northern boundary, was a statement of opinion, not of fact.
5. In Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307 at [23]-[24], Bell ACJ (with Barrett AJA agreeing) quoted with approval the following oft-cited observations regarding the circumstances in which a statement of opinion will be regarded as misleading or deceptive: "In Bateman v Slatyer (1987) 71 ALR 553 at 559, Burchett J said: It is of course clear law that a statement of opinion cannot be regarded as false or misleading, or as misleading or deceptive, simply because it turns out to be incorrect: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88; 55 ALR 25 . But such an opinion may convey that there is a basis for it, that it is honestly held upon rational grounds involving an application of the relevant expertise: see James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 372; Geale v Glenhoun Holdings Pty Ltd (1985) 7 ATPR 46,970 at 46,978-9. In Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88; [1984] FCA 167 (Global Sportsman), the Full Court of the Federal Court had said that: The applicants argued that, nevertheless, the statement of an incorrect opinion is misleading or deceptive or likely to mislead or deceive merely because it misinforms or is likely to misinform. An expression of opinion which is identifiable as such conveys no more than that the opinion expressed is held and perhaps that there is basis for the opinion. At least if those conditions are met, an expression of opinion, however erroneous, misrepresents nothing. As to the significance of the word 'perhaps' in this passage, see Forrest at [102]−[104] per Heydon J."
6. The final sentence of the above quotation refers to the following remarks of Heydon J in Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 at [102]-[103] (citations omitted): "… It is often said that to state an opinion one does not hold misleads the audience about one's state of mind. That is understandable. It is also often said that to state an opinion which one does hold implies that one has reasonable grounds for holding it. In some circumstances that may be so, but why should it be so in all? Assume that two people are asked: 'In your opinion, is that document a contract?', one answers 'Yes', and the other answers 'Yes, and I have reasonable grounds for that view.' The two answers are different. The first answer does not imply the second, unless there are special circumstances indicating that it should. … the case which originated the fact/opinion distinction in this field offered no support for the requirement that there be grounds, let alone reasonable grounds, for an opinion if it were not to be misleading. … The matter calls for examination on some future occasion. …"
7. In Ireland v WG Riverview at [34], Bell ACJ said (at [34]) that: "Where … it is established that a statement or representation is or must have been understood by its target audience as one of opinion or belief, … liability will not be strict; rather, it will generally depend upon an assessment as to whether or not the belief or the opinion was honestly held and 'perhaps' (see [24] above [referring to Heydon J's observations]) whether or not the maker had a reasonable basis for the belief or opinion. Other than in cases of statements as to future matters (where the statutory presumption is engaged: see, for example, Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law, s 4), it will be for a plaintiff to establish the lack of reasonable basis for belief if misleading or deceptive conduct is to be established."
8. In the present case, Mrs Lipari relied on section 4 of the Australian Consumer Law, contending that the 8 June Representation was a representation as to a future matter which was made by Ms Tsai without reasonable grounds.
9. In Lin v Zheng [2023] NSWCA 174 at [34], Payne JA (Bell CJ and White JA agreeing) said that: "A representation will only be with respect to a future matter if it is in the nature of a promise, forecast, prediction or other like statement about something that will only transpire in the future" (see also Australian Competition and Consumer Commission v Woolworths Group Ltd (2020) 281 FCR 108; [2020] FCAFC 162 at [132]).
10. I do not consider Ms Tsai's 8 June Representation to be a promise, forecast or prediction about something that would transpire in the future. It was never going to transpire that the pool was built in two locations. It follows that the cost of one of the two options which were being compared would never be incurred, such that it would never transpire that the cost of one option proved to exceed the other.
11. I consider that, in substance, Ms Tsai was conveying an opinion, based on information available as 8 June 2017, regarding the relative cost of two mutually exclusive options for the location of the pool. Having regard to the authorities set out above, in order to show that the opinion expressed by Ms Tsai was misleading or deceptive, it would be necessary to show that it was not honestly held by her (which was not alleged) or that she did not have a reasonable basis for the opinion.
12. Mrs Lipari suggested that a Jones v Dunkel inference arose by reason of Metricon's failure to call Ms Tsai to give evidence regarding her representation. However, the documentary evidence clearly establishes that Ms Tsai had a basis for the opinion which she expressed, and establishes what that basis was. In particular, Ms Tsai made the statements in her email to Mrs Lipari shortly after receiving the following advice from a member of Metricon's drafting team, Mr Potter: "… the swimming pool cannot be adjacent to the outdoor room [the al fresco area] due to the large amount of excavation on the side boundary. … It's technically possible to build on the side of the house however a large retaining wall will need to be constructed and if the rear of the house it's a much more cost effective option. Let me know how you go, please include the contour report attached for the amended pool plans."
13. Ms Tsai expressly stated in her 8 June email that the matters which she was conveying to Mrs Lipari were matters which she had been told by "our design team". It is difficult to see that, if Ms Tsai had been called to give evidence about this email sent almost seven years ago, she could have said anything other than, as is obviously the case, that Mr Potter's email was the source of her statements to Mrs Lipari.
14. In that regard, although it was not put this way by Mrs Lipari, the email from Ms Tsai is more naturally read not as conveying any opinion which she held, but rather as conveying (accurately) an opinion held by Metricon's "design team". The email commences as follows: "our design team has confirmed after seeing information provide[d] by the contour survey, that this location [on the northern boundary] is not really feasible." The statements which follow in Ms Tsai's email are, in this context, read as statements of the reasons which the "design team" hold for this view. That the design team in fact based its views on those matters is confirmed by Mr Potter's email.
15. When made by an expert, a statement of opinion "may convey that there is a basis for it, that it is honestly held … upon rational grounds involving an application of the relevant expertise": Bateman v Slatyer (1987) 71 ALR 553 at 559, quoted with approval in Ireland v WG Riverview at [23]. Having regard to the matters I have outlined above, the issue that arises is not whether Ms Tsai had a rational basis for the statements in her email (which she plainly did, given the views of the Metricon design team), but whether the Metricon design team, as persons with specialised knowledge and expertise in the design of homes, had reasonable grounds for the opinions which were, through Ms Tsai, conveyed to Mrs Lipari.
16. There could be no Jones v Dunkel inference by reason of a failure to call any member of Metricon's design team in circumstances where there was no allegation that the design team did not have reasonable grounds for the statements made to Ms Tsai, which were subsequently conveyed by Ms Tsai to Mrs Lipari.
17. In any case, the basis for the opinions expressed by the "design team" is set out in the email from Mr Potter to Ms Tsai.
18. In particular, Mr Potter's email identifies that the opinion regarding cost is based on the fact that there will need to be "a large amount of excavation on the side boundary" and the construction of "a large retaining wall" if the pool were to be located between the side of the house and the northern boundary. Those views are apparently based on the contour plan, since Mr Potter suggests that Ms Tsai should provide the contour plan to the client when explaining the position. Ms Tsai did so, and explained (accurately) that Metricon's design team had reached the views which she was reporting to Mrs Lipari after viewing this contour plan.
19. Where section 4(1) of the Australian Consumer Law applies, there is an evidential burden, but not a legal burden, on the representor to adduce "some evidence … of reasonable grounds for making the representation": North East Equity Pty Ltd v Proud Nominees Pty Ltd [2012] FCAFC 1 at [30]. What must be adduced is "evidence that tends to establish, or that admits of the inference that there were, reasonable grounds for making the representation": Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200 at [34] per Allsop P (Macfarlan JA and Sackville AJA agreeing). Once evidence is adduced by a representor in discharge of the evidential burden, the claimant "must satisfy the dispositive burden" of showing that the representor did not have reasonable grounds for making the representation: North East Equity v Proud Nominees at [30].
20. Even if, despite the views I have expressed above, the statements conveyed by Ms Tsai's email were representations as to future matters within the meaning of section 4 of the Australian Consumer Law, I consider that, by reason of the matters in Mr Potter's email, Metricon discharged the evidential burden of adducing "some evidence" of reasonable grounds for the representation, and in those circumstances Mrs Lipari had to "satisfy the dispositive burden" of establishing the absence of reasonable grounds.
21. That dispositive burden was not discharged by Mrs Lipari. Instead, the views expressed in Mr Potter's email were supported by the expert evidence.
22. Mr Winton gave evidence, based on the contour levels shown in the Metricon plans, that in order for the pool to be placed next to the northern boundary, it would have been necessary to construct a retaining wall of around 2.3 metres in height. He stated that retaining walls of such a height would require a substantial footing, and that the engineering required to construct a retaining wall of this height in this location was "substantial" and "would involve the demolition of the existing retaining wall and taking into consideration impacts on the zone of influence from the adjoining property footings".
23. Mr Camenzuli confirmed in cross-examination that it would have been necessary to construct a retaining wall built on the side of the house before a pool could be located there; that the excavation to get to the bottom of the pool cavity could have been more "more than a number of metres"; and that around 3.6 metres of excavation would have been needed to construct the pool on the side of the house.
24. Further, as I discuss below, when dealing with the issue of damage, there was no evidence to establish that the cost of locating the pool on the side of the house would have been lower than the cost of locating the pool at the rear.
25. Having regard to those matters, no claim for misleading or deceptive conduct is established in respect of the 8 June Representation.

9 June Representation

1. The 9 June Representation is pleaded in the following terms (SFACCS, [19A]): "Mr Mezzagosto's conversation with Lipari conveyed that it would not be possible to install the pool on the northern boundary of the property (the 9 June representation)."
2. The basis for this representation is Mrs Lipari's evidence of her conversation with Mr Mezzagosto, which was in the following terms: "[Mrs Lipari]: I got an email from Jenny saying we can't build the pool at the northern side of the house where the sun is. We discussed and agreed that the pool is going on that side. Why can't it be built there now? [Mr Mezzagosto]: The pool won't fit on the northern side of the house. The width is too small. It has to be built at the back of the house."
3. The conversation in question occurred almost seven years ago. Mrs Lipari repeatedly stated in her evidence that she could not recall various details of her dealings with Metricon, by reason of the passage of time. She stated in response to various questions: "I can't remember. It's gone too far back"; "It's been eight years and in that eight years there's been a lot happening"; and "I can't remember. It's going back six [years] - this is back in 2017".
4. It is not surprising that, as Mrs Lipari frankly acknowledged, she would struggle to recall specific events after a period of so many years.
5. In those circumstances, it is necessary to assess Mrs Lipari's evidence of the 9 June representation in the context of the email communications which immediately preceded and succeeded the conversation, and other documentary evidence.
6. The conversation set out in Mrs Lipari's affidavit commences with her referring to Ms Tsai's email of 8 June 2017. Mrs Lipari indicated to Mr Mezzagosto that she understood Ms Tsai's email to convey that "we can't build the pool at the northern side", asking Mr Mezzagosto "why can't it be built there", to which Mr Mezzagosto responded that it "won't fit" (emphasis added).
7. That is, in Mrs Lipari's recollection, Mr Mezzagosto essentially confirmed what she had already been told by Ms Tsai, namely, that the pool "can't" be built on the northern boundary. However, the problem with this evidence is that Ms Tsai said no such thing. Ms Tsai had not told Mrs Lipari it was not possible to build the pool on the northern boundary. Instead, she had stated that it was "technically possible", but not "cost effective" to put the pool in that location.
8. As noted above, Mrs Lipari forwarded Ms Tsai's email to Mr Mezzagosto on the evening before she met him. It is likely that he would have read it before he met Mrs Lipari to discuss its contents. Further, it is likely that when they met on 9 June 2017, Mr Mezzagosto made comments to Mrs Lipari which were consistent with the comments that had been made by his colleague, Ms Tsai. That conclusion is consistent with the thrust of Mrs Lipari's evidence, namely, that she asked him a question about the information contained in Ms Tsai's email, and he responded by confirming and explaining what Ms Tsai had said.
9. That conclusion is also consistent with Mr Mezzagosto's email of the following day, which was sent to Ms Tsai and copied to Mrs Lipari, in which he stated as follows (emphasis added): "I have had Antonia [Lipari] in with regards to your email regarding the repositioning of the pool and have explained reasoning behind this. She has agreed to relocate the pool to where you have suggested ( area to be kept clear for services) but would like it positioned to the left side boundary to align with the existing out door area."
10. This email, which is the closest contemporaneous record to the disputed conversation, establishes that the discussion with Mrs Lipari was "with regards to [Ms Tsai's] email regarding the repositioning of the pool", which Mrs Lipari had forwarded to Mr Mezzagosto. It also establishes that Mr Mezzagosto, during that conversation, "explained the reasoning behind this". That is, he explained the reasoning behind the recommendation in the email, which had nothing to do with the width of the set-back from the northern boundary, but which was instead solely based on the significant works and costs required to place the pool on the northern boundary.
11. It follows that I consider it unlikely that Mr Mezzagosto said that the pool would not "fit" between the house and the northern boundary, or would have otherwise conveyed that it was not possible to put the pool in that location. It is inherently unlikely that he would have said something inconsistent with Ms Tsai's email of the previous day. It is more likely that he said, consistently with Ms Tsai's email, that it was not cost effective or feasible to put the pool there, even though it was "technically possible" to do so.
12. Further, as Metricon pointed out, Mr Mezzagosto's comment that Mrs Lipari "has agreed to relocate the pool to where you have suggested" would not have made any sense if Mr Mezzagosto had said, and Mrs Lipari had believed, that it was impossible to place the pool on the northern boundary, because, in that situation, the question of whether or not Mrs Lipari agreed to move it would have been irrelevant. Instead, Mr Mezzagosto's statement is consistent with a scenario in which Mrs Lipari had a choice - whether to proceed with the pool on the northern boundary as planned or, instead, to locate it in what had been described as a more cost-effective location - and agreeing to move the pool when this was explained to her (as subsequently confirmed by entry into Variation 9).
13. Mrs Lipari submitted that, in circumstances where Mr Mezzagosto was not called to give evidence, a Jones v Dunkel inference arises and the Court should more readily accept Mrs Lipari's evidence of her conversation with him.
14. In response to this submission, Metricon pointed to evidence that attempts had been made to contact Mr Mezzagosto, and that he had stated in August 2020 that "he could not recall much about the project or the matters raised in Ms Lipari's points of claim". Further, as Metricon pointed out, Mrs Lipari's Cross-Claim was only amended to add an allegation that Mr Mezzagosto had said it was impossible to place the pool on the northern boundary on the first day of the hearing. I have set out this amendment below in the form shown in the SFACCS (including mark-up), in order to expose the significant change made from the previous form of allegation: "19 On or about 109 June 2017, in breach of clause 39.1(a) of the Contract and s18B(1)(a) HBA, Mr Frank Mezzagosto relied on the Original Building Plans (as amended by Item 13 in proposed Variation 9) to inform Lipari that the pool could not be constructed at the northern side of the house adjacent to the alfresco entertainment area as had been agreed unless Lipari incurred additional costs and, instead, had to be built at the elevated rear of the house (the 10 June representations): Particulars Conversation between Mr Mezzagosto and Lipari on or about 109 June 2017 and email sent by Mr Mezzagosto to Lipari and to Jenny Tsai of Metricon at 2:21pm on 10 June 2017). 19A Mr Mezzagosto's conversation with Lipari conveyed that it would not be possible to install the pool on the northern boundary of the property (the 9 June representation)."
15. That is, up until the first day of the hearing, it had been alleged, relying on the terms of Ms Tsai's email of 8 June 2017 and Mr Mezzagosto's email of 10 June 2017 (and without any reference to the conversation of 9 June 2017 set out in Mrs Lipari's affidavit) that Mr Mezzagosto had represented, consistently with Ms Tsai's email, that the pool could only be constructed between the side of the house and the northern boundary if Mrs Lipari "incurred additional costs" (described as the "10 June Representation").
16. This "10 June representation", which was subsequently abandoned, was not a representation to the effect that it was impossible to build the pool between the side of the house and the northern boundary of the Property. Instead, having regard to the form in which it was pleaded, this representation implicitly conveyed that it was possible to build the pool in this location, so long as additional costs were incurred. In that regard, it was consistent with the terms of Mr Mezzagosto's email of 10 June 2017, and in particular his statement that he had explained the reasoning in Ms Tsai's email of 8 June 2017 (which had stated that it was "technically possible" to build on the northern boundary but that this would require significant works and that it was more "cost effective" to locate the pool at the rear of the Property).
17. In circumstances where the "10 June Representation" was the only form of representation pleaded in respect of Mr Mezzagosto, where that form of representation was consistent with his email of 10 June 2017, and where the 10 June Representation was not said to arise from any conversation (disputed or otherwise), it is not surprising that Mr Mezzagosto was not called to give evidence. No adverse inference arises from Metricon's failure to call Mr Mezzagosto to address a different case in respect of a "9 June Representation", which was not pleaded until the first day of the trial, which was based on a conversation that had not previously been referred to in the pleading, and which was inconsistent with both the previously pleaded "10 June Representation" and with the contemporaneous emails.
18. For the reasons set out above, I find that the pleaded 9 June Representation was not made. Instead, it is likely that, when Mr Mezzagosto met with Mrs Lipari on 10 June 2017, he repeated and explained the statements made in Ms Tsai's email.
19. It follows that I do not need to address the question of whether the 9 June Representation was misleading or deceptive. Accordingly, I make only some brief remarks on this issue.
20. According to Mr Camenzuli, it would have been necessary, in order for the pool to be installed between the side of the house and the northern boundary, for there to have been some two metres of excavation in the one metre adjacent to the northern boundary. Having regard to that evidence, Mrs Lipari did not, in her closing submissions in chief, explain how the pool could have been built on the northern boundary given that clause 3.29(1) of the SEPP provides that excavation within one metre of a boundary must not exceed more than one metre from existing ground level: cl 3.29(1).
21. After this issue was raised by Metricon in its closing submissions, Mrs Lipari, in reply, referred to an email from an officer of Camden Council to Local Pools dated 19 March 2018, which was not copied to Metricon, and which stated as follows: "The retaining wall identified on the site plan is not existing or considered to be exempt development under the Exempt and Complying Code SEPP. As such the proposed retaining wall will need to be included on the current development application."
22. Mrs Lipari suggested that this showed that the SEPP did not apply to "the building of the pool at the side of the house". Instead, there was to be a "development application to the council, which would mean the SEPP wouldn't apply". However, the statements in the email concern the plan to construct the pool at the rear of the house, and the "retaining wall" which is referred to as not being "considered to be exempt development under the Exempt and Complying Code SEPP" was not the existing retaining wall which ran along the northern boundary, but rather was a different proposed retaining wall, which was intended to be constructed at the rear of the Property (and not on the boundary) as part of the works undertaken prior to installation of the pool. In any case, it is apparent, as shown on the face of the building plans, that Metricon understood, in first half of 2017, that the provisions of clause 3.29(1) of the SEPP would or might apply, and Mrs Lipari did not explore, or explain, why it was not reasonable for Metricon to be proceeding on that basis.
23. Mrs Lipari sought to side-step these "technical arguments" about whether the pool could be constructed between the side of the house and the northern boundary by relying on the Amended Building Plans to establish that this could have been done. As I have noted above, the Amended Building Plans had been prepared by Metricon in early 2017, and had moved the proposed location of the house in order to increase the space on the northern boundary so as to accommodate the proposed pool. The following submission was made: "The plans are a technical document. You can see that they've clearly done a bit of work to amend those plans and to increase the left hand side setback so that the pool could be built there. Now, we've had a lot of technical arguments in this case about whether or not the pool could be built there. My submission is that those complex technical arguments ignore the fact that Metricon, which is an experienced builder, a large Australian builder, went through the process of being told by Mrs Lipari she wanted the pool on the side of the house, then went to the effort to change the plans."
24. However, when the Amended Building Plans were prepared, a contour survey was not available. The original form of the Contract, as signed in April 2017, noted that the Amended Building Plans, which were attached, provided a preliminary siting only, which was subject to receiving a contour survey. The contour survey which was available in June 2017 showed that the contours which had been provided by the developer (and which had been shown on the Amended Building Plans) were inaccurate, and that the slope of the block was much steeper than had previously been understood. It was this information which led the Metricon design team to conclude that the location of the pool on the northern boundary was not feasible.
25. Given that is so, any views reached by the design team regarding the feasibility of a pool being built on the northern boundary, which were held at the time of preparing the Amended Building Plans in March 2017, cannot be used to prove that the views reached by the design team in June 2017 (following receipt and review of the contour plan) were not soundly based.
26. For those reasons, even if (contrary to my findings) the 9 June Representation had been made, I would not have been satisfied that Mrs Lipari had established the 9 June Representation was misleading or deceptive.
27. It follows that Mrs Lipari has not established that Metricon engaged in any of the pleaded misleading or deceptive conduct, and therefore has not established any contravention of section 18 of the Australian Consumer Law.

Did Mrs Lipari suffer loss and damage?

1. Because no contravention has been established, the question of causation and damage does not arise. Nonetheless, I have considered below whether, if misleading or deceptive conduct had been established, I would have been satisfied that Mrs Lipari had suffered "loss or damage because of the conduct" within the meaning of section 236 of the Australian Consumer Law.
2. Mrs Lipari pleaded that she relied "upon the 8 June representation and/or the 9 June representation" (SFACCS, [21]). However, there was plainly a tension in that position. In circumstances where Ms Tsai was said to have represented that it was technically possible, but not cost effective, to put the pool on the northern boundary, and Mr Mezzagosto was said to have represented that it was not possible to install the pool in that location, it is difficult to see how Mrs Lipari could have relied on both representations at the same time.
3. Mrs Lipari pleaded her case on reliance as follows (SFACCS, [21], with mark-up included to show the amendments to the pleading which were made on the opening day of the hearing): "In reliance upon the 8 June 2017 representations and/or the 109 June 2017 representations, Lipari: … b. reluctantly agreed to the construction of the swimming pool at the rear of the house, as opposed to the northern side of the house, to avoid incurring the significantly greater building costs she believed she would incur if the pool was constructed on the northern side of the house because she understood that the swimming pool could not be installed on the northern boundary of the property, and thereby entered into Variation 9 which, inter alia, provided for the same."
4. Significantly, Mrs Lipari did not claim that she was misled into believing that (as conveyed by the 8 June Representation) it was more cost effective to build the pool at the rear rather than at the side of the house, or that any such belief led her to agree to locate the pool at the rear of the Property. Such an allegation had been made in a previous version of the pleading, but was deleted in the SFACCS. Instead, Mrs Lipari claimed, in the version of the pleading which she took to trial, that she agreed to move the pool "because she understood that [it] could not be installed on the northern boundary of the property" (emphasis added). The source of this understanding was alleged to be the 9 June Representation, which has been addressed above.
5. It follows that irrespective of whether the 8 June Representation was misleading or deceptive, it could not have had any causative effect.
6. Counsel for Mrs Lipari confirmed in closing submissions that the essence of the misleading or deceptive conduct claim was that the 9 June Representation was misleading, and that Mrs Lipari relied on that representation in agreeing to move the pool and to accept Variation 9.
7. I have found that the pleaded 9 June Representation was not made. It follows that it could not have been relied upon. In any case, Mrs Lipari's own (unchallenged) evidence that she was surprised to learn in September 2017 that the space at the side of the house was "too narrow" for a pool is inconsistent with her pleaded claim that she was told and believed in June 2017 that the pool "won't fit" in that location because the "width is too small" (see paragraphs 304-306 above).
8. Further, if the issue of loss and damage had arisen for consideration, I would have concluded that loss had not been established, for the reasons set out below.
9. First, there was no clearly articulated counterfactual for assessing loss. There were two alternative plans prepared by Local Pools regarding the proposed location of the pool on the northern boundary, one dated March 2017 showing the pool level between the "al fresco" area and the northern boundary, and the other dated "September 2017" showing the pool between the side of the house (to the west of the "al fresco" area) and the northern boundary. The genesis of the "September 2017" plan was unclear, particularly since it is not attached to, or referred to in, any contemporaneous documents and it was (on its face) brought into existence after Mrs Lipari had agreed to locate the pool at the rear of the Property and had agreed to Variation 9, and after the concrete slab had been laid in the location specified in Variation 9. There was no evidence to support a conclusion that the "September 2017" plan represented the intentions of Mrs Lipari either as at September 2017 or as at any other date. Nonetheless, it was not clear whether Mrs Lipari's case was that loss should be assessed on the basis that the pool was located in the position shown on the March 2017 plan or the "September 2017" plan.
10. Secondly, as regards Mrs Lipari's claim for the difference between the (actual) costs of building the pool at the rear of the Property and the (counterfactual) costs of building the pool between the side of the house and the northern boundary of the Property, the evidence did not establish that those costs differed or by how much.
11. As regards the actual costs of building the pool at the rear of the Property, the only evidence of those costs was Mrs Lipari's evidence that she had paid an amount of $149,400 in cash to Mr Halabi. There are no documents, such as a scope of work or an invoice, to support a conclusion that this amount represented the costs of the works which were necessary in order to install the pool. The relevant works were performed almost six years ago and, as already noted, Mrs Lipari has limited recollection of the events of this period. Mrs Lipari was able to produce bank statements showing that she made cash withdrawals totalling the amount of $149,400, but there is no documentary evidence (such as any email, text or receipt) showing to whom those amounts were paid and Mrs Lipari acknowledged in cross-examination that, during the relevant period, she was withdrawing cash "for a number of purposes". Further, Mrs Lipari gave evidence in re-examination that Mr Halabi performed significant works besides the works required for the pool. For example, at the front of the house, Mr Halabi carried out excavation, and constructed a driveway and a retaining wall. He also performed excavation and constructed walls at the side of the house, as well as at the rear. There is no apportionment of, and no basis in the evidence to apportion, the total amount of cash paid to Mr Halabi between the works required for the installation of the pool at the rear of the Property and the other works which he performed. In those circumstances, the actual costs of the works required for the pool are unknown and are likely to have been considerably less than the amount of $149,400.
12. As regards the counterfactual costs of building the pool between the side of the house and the northern boundary of the Property, there is (as noted above) doubt about the location of the pool in the counterfactual, and Mrs Lipari did not lead any expert evidence regarding the costs that would have been incurred in installing the pool in any particular location on the northern boundary.
13. In order to determine the counterfactual costs, it would have been necessary to consider, in addition to a precise location for the pool, matters such as the relative level of the top of the pool and the amount of excavation required; and whether retaining walls would have been built, in what locations, how deep they would have been and how wide the footings would have been.
14. In addition, it would have been necessary to consider what would have happened at the rear of the Property in a counterfactual where the pool was not located there.
15. Mrs Lipari stated in her 4 April 2024 affidavit that "the backyard would have been a hill with grass and some shrubs and landscaping". However, there was no explanation by Mrs Lipari as to what the "landscaping" would have been, which might provide a basis for costing the works that would have been performed at the rear of the Property in the counterfactual. Insofar as the "September 2017" plan is regarded as providing any evidence of Mrs Lipari's intentions, it suggests that, in the event that a pool was placed at the side of the house on the northern boundary, there was an intention to build a substantial retaining wall at the rear of the Property. The "September 2017" plan shows a "Structural Ret[aining] Wall by Owner - to be Engineered Designed" running along, and parallel to, the rear of the house. The costs of building the retaining wall shown on the "September 2017" plan were not the subject of any evidence and are therefore unknown.
16. Mr Camenzuli purported to give some evidence of the net difference between the cost of building the pool on the northern boundary and the cost of building it to the rear of the Property, but his estimate did not have regard either to actual costs or counterfactual costs. An orthodox way to give such evidence would be to provide an opinion regarding the cost of building the pool in the counterfactual location, and the reasoning supporting this estimate; to compare this estimate with evidence (or assumptions) regarding the actual cost of building the pool at the rear of the Property; and thereby to determine the difference between the counterfactual cost and the actual cost, which represented Mrs Lipari's loss. Mr Camenzuli did not proceed in that way. Instead, he made an estimate of the actual costs of building the pool at the rear of the Property, and disregarded altogether the counterfactual costs of the building the pool at the side of the house, on the basis that he considered it "irrelevant to know what the cost to construct the pool on the side of the house would have been". He acknowledged in cross-examination that he had not worked out what retaining walls would need to be built if the pool had been built on the side of the house, or the costs of constructing those walls.
17. For those reasons, Mrs Lipari has not established that the costs which were incurred by her as a result of the pool being installed at the rear of the Property exceed the costs which would have been incurred if the pool had instead been installed between the side of the house and the northern boundary. This head of loss has therefore not been established.
18. Thirdly, there were likewise substantial difficulties with Mrs Lipari's claim for the loss of value suffered by reason of the location of the pool at the rear of the Property. In support of this claim, Mrs Lipari relied on the opinion of a valuer, Mr Staltari, that the location of the pool to the rear had caused a decrease of $100,000 in the value of the Property. However, I consider that limited weight can be attached to that opinion by reason of the following matters: 1. Mr Staltari's opinion regarding the current value of the Property was based on an assumption (which is incorrect) that the house had not been built in accordance with the approved plans, because the house was not correctly located on the Property; 2. Mr Staltari did not identify any specific location for the pool in the counterfactual (or address matters such as how many steps would be required to access the pool in the counterfactual); 3. Mr Staltari's opinion as to the loss in value was based on a counterfactual where the rear of the Property would have consisted of terraces with stairs going up between them, and retaining walls. Mrs Lipari's evidence is inconsistent with that counterfactual; and 4. Mr Staltari stated that his opinion as to value was formed having regard to sales within the surrounding area. However, none of the "comparable" sales to which Mr Staltari referred in his report was a sale of a property with a swimming pool (in any location).
19. In any case, any claim for loss based on a loss of value could only be established if Mrs Lipari established the costs in the counterfactual of placing the pool in a different location. It may be, for example, that the counterfactual which Mr Staltari appears to have had in mind (involving substantial works at the rear of the Property to construct terracing and stairs, as well as works at the side of the Property to construct a pool with "resort style landscaping") would have required the incurring of costs which were in excess of those in fact incurred and which were greater than the posited increase in value. Because those counterfactual costs were unknown, it follows that, even if Mr Staltari's opinion of the counterfactual value were accepted, loss would not have been established.

Conclusion

1. For those reasons, I reject Mrs Lipari's claim for misleading or deceptive conduct against Metricon and her other claims regarding the location of the swimming pool.

Conclusion and Orders

1. For the reasons set out above: 1. Metricon has established its claim that Mrs Lipari has not paid the outstanding balance of the Contract price (namely, $93,257.10); 2. Mrs Lipari has established her claim against Metricon and Zanuttini regarding the concrete slab's non-compliance with AS 2870, and is entitled to damages in the amount of $55,020.40, representing the sum paid by her in respect of the slab; 3. Mrs Lipari has established her claim against Metricon in respect of a number of general defects, and is entitled to damages in the amount of $54,845.00; 4. Mrs Lipari is entitled to set off, against her liability to Metricon in respect of the unpaid balance of the Contract price (paragraph (1) above), Metricon's liability to her in respect of defects (paragraphs (2) and (3) above); 5. Metricon has established its cross-claim against Zanuttini, and is entitled to be indemnified by Zanuttini for any amount paid by Metricon to Mrs Lipari in respect of the liability in paragraph (2) above (including by way of the set-off referred to in paragraph (4) above); and 6. Mrs Lipari has failed to establish her claim for misleading or deceptive conduct against Metricon or her other claims regarding the location of the swimming pool.
2. The parties should confer regarding the appropriate form of orders to give effect to these reasons for judgment, including orders dealing with the quantification of interest and costs, insofar as those matters can be agreed. If those matters cannot be agreed, each party should provide its proposed form of orders, with a short submission limited to three pages, and should indicate whether they are content for the outstanding issues to be determined on the papers.
3. Accordingly, I make the following orders: 1. Direct that the parties provide to my Associate, by 5pm on 30 May 2024, short minutes of order to finalise these proceedings, including dealing with costs and the calculation of interest in the event those matters can be agreed; and 2. Direct that, in the event that the parties are unable to agree on such orders, each party: 1. serve and provide to my Associate, by 5pm on 30 May 2024, the form of orders which that party proposes, together with a written submission limited to three pages and any supporting evidence regarding issues of costs or interest; and 2. indicate whether that party seeks an oral hearing in respect of any outstanding issues and, if so, the reasons for doing so.

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: 16 May 2024