(a) found water damage to the living room plaster ceiling and wall;

(b) using thermal imaging, found moisture within the living room ceiling;

(c) found that the second storey timber cladding had deteriorated severely and, using spray testing along the cladding and thermal imaging, found that the timber cladding was no longer watertight and water leaked into the ceiling; and

(d) found water leaks at windows, with spray tests and thermal imaging.

1. Stanley Plumbing concluded that water damage was caused by water leaking through the second storey timber cladding and around the second storey windows. It recommended the timber cladding and windows be sealed to prevent further ingress.
2. Efficiency Building Group Pty Ltd ('Efficiency Building') provided a written quotation dated 15 July 2023 for $15,994 to repair the leaking windows, remove and replace rotten architraves and cladding and reseal cladding.

1. The owner commenced this proceeding on 19 July 2023 seeking compensation of $22,692.80 comprising:

(a) $19,192.80, calculated as:

(i) $15,994 as quoted by Efficiency Building for rectification; and

(ii) 20% inflation on the Efficiency Building quotation; and

(b) $3,500 for 'consequential losses'. This figure included the $523.10 Tribunal application fee and loss of rent.

1. The owner subsequently arranged for Efficiency Building to undertake what the owner refers to as 'temporary' works. Efficiency Building issued a tax invoice dated 27 September 2024 for $1,980 for applying silicone to seal water entry points.
2. At the hearing, the owner claimed $1,980, in addition to the $22,692.80.

1. The issues I must determine on the evidence are:

(a) has the builder breached its obligations under section 8 of the Domestic Building Contracts Act 1995 (Vic) ('DBCA'), i.e. was the leaking caused by defective workmanship by the builder and; if so

(b) what (if any) loss has the owner incurred as a result.

HAS THE BUILDER BREACHED SECTION 8 WARRANTIES

1. The effect of section 8 of the DBCA is to imply warranties on the part of the builder into all domestic building contracts. These warranties run with the building (section 9 of the DBCA). This means that any person who is the owner for the time being of the subject building/land (in this case the applicant) may issue a proceeding against the builder for a breach of the warranties.
2. The owner is not legally represented in this proceeding. He has prepared a document headed 'Points of Claim' dated 4 July 2024. In the Points of Claim, the owner alleges (in summary) that the builder:

(a) failed to perform the construction work in a workmanlike manner (paragraph 3.2 of the Points of Claim); and

(b) failed to comply with relevant building standards (paragraphs 3.2 and 4 of the Points of Claim).

1. I understand from these paragraphs that the owner alleges the builder has breached the following warranties in section 8 of the DBCA:
   • 8(a) - 'the builder warrants that the work will be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract'; and
   • 8(c) - 'the builder warrants that the work will be carried out in accordance with, and will comply with, all laws and legal requirements including, without limiting the generality of this warranty, the Building Act 1993 and the regulations made under that Act'.
2. The owner bears the burden of proof to satisfy the Tribunal, on the balance of probabilities, of the facts necessary to establish his claims.
3. The owner alleges that the builder's workmanship is defective because the builder failed to:

(a) install window flashings; and

(b) properly seal windows and cladding.

1. In support of his allegations of defective workmanship, the owner relies on:

(a) the invoice from Plumbsmart dated 9 November 2022; and

(b) the report from Stanley Plumbing dated 7 February 2023,

1. I am not satisfied on the evidence that the builder failed to install flashing. In oral evidence the owner said he was told by rectifying contractor, Efficiency Plumbing, that there is no flashing. Efficiency Plumbing did not attend the hearing to give any oral evidence, and the owner's oral evidence is not supported by documents. Efficiency Plumbing does not state on its quotation dated 15 July 2023 (for proposed rectification works) or on its invoice dated 27 September 2024 (for works undertaken) that there is no flashing. It has not included the installation of flashing in the scope of rectification works set out in its quotation.
2. The owner submitted that photographs in the Stanley Plumbing report show there is no flashing. This is not so. The owner admitted during the hearing that one can only see if there is flashing by removing cladding. No cladding has been removed in the photographs.
3. The owner's oral evidence that the builder did not install flashing is inconsistent with the Plumbsmart invoice dated 9 November 2022 where Plumbsmart records that it found flashing with poor sealing. It is evident from this invoice that flashing was installed.
4. Whilst the evidence does not establish an absence of flashing, it is clear from the reports that the flashing and sealing, particularly around windows, are inadequate. I am satisfied on the evidence that the builder has not adequately sealed the windows and cladding, and this has caused water ingress. In this regard:

(a) Plumbsmart recorded on 9 November 2022 that flashing required resealing;

(b) Stanley Plumbing reported on 7 February 2023 that cladding and windows needed to be sealed; and

(c) Efficiency Building recorded on its invoice dated 27 September 2024 that it applied silicone to seal water entry points and, when it subsequently water tested the cladding, there were no longer leaks.

1. Although the builder admitted in oral evidence that the initial water leaks in 2017 (which persisted into 2018 and 2019) were a construction issue, the builder denies liability for leaking which occurred in and after 2022. The builder undertook repairs in 2019 and denies that leaks occurring after this time are due to defective workmanship. It cites other causes, which I address below.
2. However, I am satisfied on the evidence that the leaking in 2022 (and beyond) was a recurrence of the same issue that existed prior to 2022. In 2023, Stanley Plumbing reports that there is water ingress to the living room ceiling and, having inspected the roof above, found that timber cladding and windows were not watertight. Plumbsmart identified this same issue in 2022. Water ingress at the living room ceiling is the same concern that was raised by the owner in November 2018 (when he applied to DBDRV), before the builder undertook repair works in 2019, and was the same concern raised by the owner in August 2017.
3. The documentary evidence of Plumbsmart, Stanley Plumbing and Efficiency Building is that the persistent leaking in 2022, 2023 and 2024 is due to inadequate sealing of windows and cladding by the builder. I am satisfied on this evidence that the cause of the leaks in and after 2022 is defective workmanship, namely inadequate sealing, by the builder.
4. I address below the builder's submissions on other causes of leaks in and after 2022.

Builder's submission that high pressure water was applied

1. In defence of the claim, the builder submits that timber cladding is water resistant, not waterproof. It says there was water penetration during testing because Stanley Plumbing used a high-pressure hose, and water at high pressure will penetrate.
2. According to its report, Stanley Plumbing undertook spray testing. This type of testing is commonly used to locate water leaks in buildings. If the building is properly sealed, water should not penetrate the cladding or windows under spray testing. Stanley Plumbing found that water penetrated through windowsills and where the cladding abuts other materials. This should not occur if properly sealed. I am therefore not persuaded by this defence.

Builder's submission that leaks were caused by failure to maintain

1. In defence of the claim, the builder says the leaks are due to significant deterioration of the timber cladding. The builder says the cladding deteriorated due to lack of maintenance by the owner.
2. The builder highlights that the Stanley Plumbing report (which is dated 7 February 2023 and includes photographs of severely deteriorated cladding) was prepared more than five years after the townhouse was built. Whilst this is true, the leaks were first identified in 2017, shortly after the townhouse was built. I am satisfied that the leaking in 2018, 2019 and 2022 were recurrences of the same issue.
3. Whilst timber cladding may require maintenance, the evidence does not support the builder's submission that the leaks are caused by lack of maintenance. Plumbsmart, Stanley Plumbing and Efficiency Building all find the cause of the leaks to be inadequate flashing and sealing.
4. Further, not all of the cladding has deteriorated. There is deterioration and rotting where sealing was found to be inadequate. If the deterioration was caused by general lack of maintenance, one would expect the deterioration to be widespread or general rather than being concentrated damage in certain parts of the cladding. In this regard:

(a) The Plumbsmart invoice dated 9 November 2022 records 'water damage on the right and left front corners of the townhouse' and that the flashing above these two areas was poorly sealed.

(b) Photographs in the Stanley Plumbing report show that the timber cladding has deteriorated significantly (and has turned black) at the corners of the townhouse and around windows which were found not to be watertight. The timber façade is not wholly affected. The deterioration and blackening is confined to the corners and around windows.

(c) Efficiency Building does not quote to remove and replace all of the timber cladding. Efficiency Building quotes to remove and replace only water damaged parts of the cladding and to seal the new cladding to match existing. The quotation provides (relevantly) for removal of 'required wall cladding above & around windows, remove rotten architraves and any other rotten cladding round(sic) windows caused by leaking windows' and 're seal cladding to match existing sealer'.

Builder's submission that leaks were caused by heavy rain

1. Whilst the builder admitted in oral evidence that the initial water leaks in 2017 (which persisted into 2018 and 2019) were a construction issue, the builder submitted that the leaking in 2022 was due to heavy rain and flash flooding and not due to defective workmanship.
2. The builder says there is no evidence the leaks continued after rectification works were undertaken in 2019 and the Plumbsmart invoice (9 November 2022), Stanley Plumbing report (7 February 2023) and Efficiency Building quotation (15 July 2023) post-date significant rainfall events.
3. The builder has provided a copy of a news.com.au article published on 14 October 2022 that Maribyrnong residents were told to evacuate their homes and the Anglers Tavern was submerged in floodwaters following heavy rainfall in Maribyrnong overnight.
4. The builder has provided Bureau of Meteorology tables of rainfall at the Preston Reservoir in October 2022 and November 2022. The tables show high rainfall (around 20 mm to 30 mm in a 24 hour period) on 7 October 2022, 13 and 14 October 2022, 28 October 2022 and (around 14 mm to 16 mm in a 24 hour period) on 15 and 20 November 2022. The builder submits that the owner's 'troubles started after 2022', because of significant rain events.
5. I am not persuaded that the water leaks and water damage at the owner's property were caused by rainfall events, and not by defective workmanship, for the following reasons:

(a) The leaking pre-dated the 2022 heavy rain/flooding events. The leaking started in 2017, shortly after construction was completed, and recurred in 2018 and 2019. The evidence shows that the recurrent leaking (including in 2022) was at the same or a similar location in the building.

(b) The observations of Plumbsmart and Stanley Plumbing are that the leaking is caused by inadequate flashings and sealing. Plumbsmart investigated the leaks on 7 November 2022, shortly after recorded heavy rainfall, and did not find heavy rainfall to be a cause or contributing factor. Stanley Plumbing, in its 2023 report, also does not suggest heavy rainfall to be a cause or contributing factor.

1. On the evidence, I find that the cause of the leaks is inadequate sealing of flashing, windows and cladding by the builder.

Builder's submission that Efficiency Building should have fixed the leaks properly

1. The builder does not dispute that the property currently has leaks. However, it says Efficiency Building invoiced the owner on 27 September 2024 for sealing works and recorded on their invoice that the leaking had stopped. It says Efficiency Building is therefore liable for any persistent leaking.
2. The owner says the works undertaken by Efficiency Building in 2024 were temporary, or interim, works only. I accept this evidence. Whilst applying sealant may have had the effect of stopping leaks, it is clear from the Stanley report and Efficiency Building quotation that there are further works required to repair water damage and to prevent leaks recurring, including removing water damaged/rotten timber and rectifying inadequate flashing.
3. Efficiency Building provided a detailed rectification quotation in July 2023. I accept the owner's evidence that he arranged for Efficiency Building to undertake interim works in September 2024 to seal entry points and try to prevent further damage, pending the outcome of the parties' dispute. Plumbsmart undertook similar work in 2022, sealing water entry points. The underlying building defect, however, remains and leaking recurs.
4. Whilst Efficiency Building and Plumbsmart have been engaged by the owner to seal water entry points, the underlying cause of the recurrent leaking is defective workmanship by the builder. The builder is responsible for its workmanship and is liable for the cost of rectifying the defect.
5. I am satisfied on the evidence that further works, as quoted by Efficiency Building on 15 July 2023, are required to rectify the building defect.

1. I find on the evidence that the builder has breached the warranties as to workmanship in sections 8(a) and 8(c) of the DBCA.

1. In his Points of Claim, the owner initially claimed losses totalling $22,692.80. At hearing, the owner claimed an additional $1,980.
2. The additional $1,980 is the amount invoiced by Efficiency Building on 27 September 2024 for (temporary) rectification works.
3. At hearing, the owner said the $22,692.80 included:

(a) $15,994 for rectification works quoted by Efficiency Building on 15 July 2023;

(b) 20% inflation on the Efficiency Building quotation;

(c) $900 paid to a painter (no documentary evidence);

(d) $290 paid to Plumbsmart as invoiced;

(e) $523.10 for VCAT application fee; and

(f) 'consequential losses', being loss of rental income while rectification works were being undertaken in September 2024.

1. The owner has provided documents which show he paid Plumbsmart $290 to investigate leaks and undertake repair works in November 2022 and he paid Efficiency Building $1,980 for repair works in September 2024. The quantum of these costs is not disputed by the builder.
2. This is a total of $2,270 paid to seal water entry points and prevent further damage. Having found the builder liable for the leaks, I am satisfied that the builder is liable for this amount.
3. The owner claims $900 for painting. The owner has no documents to support this claim. There is no written quotation, contract/agreement, scope of works, invoice, receipt or evidence of payment. As the owner has no evidence that he paid a painter to rectify relevant water damage, I make no allowance for this claim.
4. The owner claims $15,994 as quoted by Efficiency Building on 15 July 2023 to repair leaking windows, remove wall cladding above and around windows as required, remove rotten architraves and cladding, install window flashing, seal all window and supply, install wall cladding and architraves as required and reseal and cladding. The quotation includes the cost of scaffolding, which is required due to the townhouse being double storey.
5. For reasons outlined above, I am satisfied on the evidence that this work needs to be done and the builder is liable for this amount. The builder did not provide any alternative costing. It made no submission on the reasonableness of the quotation, although it did dispute the owner's submission that an additional 20% should be allowed for inflation.

1. The owner claims an additional 20% on the Efficiency Building quotation for 'inflation'.
2. The claimed 20% is a substantial increase. No evidence has been provided to support the owner's submission that the quoted price for rectification works will increase by 20%, or at all.
3. Efficiency Building attended the property as recently as September 2024. It could have updated its costing at that time if this was required, and did not do so.
4. On the evidence before the Tribunal, I am not persuaded to allow an additional 20%, or any additional amount, on the quoted price.

1. The owner claims loss of rent whilst rectification works were undertaken in September 2024.
2. No documents have been provided in support of the rent loss claim. The Efficiency Building invoice does not state that the property had to be vacated for its repair works to be undertaken. There is no evidence that the property had to be vacated or was in fact vacated. There is no evidence of a rental agreement or of lost rental income. On this basis, I make no allowance for loss of rent.

1. In summary, I find that the builder is liable to reimburse the owner's costs to date of $2,270, incurred to prevent further damage, and pay the costs of required rectification works in the amount of $15,994. This is a total of $18,264.

1. The owner seeks an order that the builder reimburse the Tribunal fee he has paid of $523.10.
2. There is a presumption under section 115C(2) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) that, in certain types of proceedings, a party who has substantially succeeded in a proceeding is entitled to an order that the other party reimburse the fee the successful party paid in the proceeding. This is unless the Tribunal orders otherwise, having regard to the factors in section 115C(3), namely:

(a) the nature of, and issues involved in, the proceeding; and

(b) the conduct of the parties (whether occurring before or during the proceeding), including whether the successful party has caused unreasonable delay in the proceeding or has failed to comply with an order or direction of the Tribunal without reasonable excuse.

1. This proceeding relates to a breach of warranties under section 8 of the DBCA and is a type of proceeding to which section 115C(2) applies.
2. The owner claimed damages totalling $24,672.80. I have found the builder liable to pay the owner $18,264. This represents 74% of the claimed sum. This constitutes a substantial success in my view.
3. I am not satisfied that the considerations in section 115C(3) in the current case upset the presumption that the builder should reimburse the fee paid by the owner.
4. Accordingly, under section 115C, the builder must reimburse the owner the filing fee.

1. For the reasons set out above, the builder must pay the owner damages of $18,264 and the Tribunal fee of $523.10.