The proceeding is listed for further hearing before Senior Member Lothian at 10.00 a.m. on 9 June 2010 at 55 King Street, Melbourne with an estimated hearing time of one day to enable the parties to make further submissions regarding the effect of Part IVAA of the Wrongs Act 1958 and regarding orders to give effect to the following reasons. Any application for costs and interest should also be made on that day.

Mr S.R. Grahame of Counsel (First hour of 1 December 2009 only)

1. The First Respondent Builder contracted to build a four storey timber framed home to just beyond lock up stage for the Applicant Owners, Mr and Mrs Newlands, on land fronting a canal at Patterson Lakes. The additions to lock up stage were to get the home to a point where it would be water-tight. Mr Newlands is an electrician who was aware of the wisdom of having the Builder undertake all the external work that might necessitate the use of scaffolding, so the work included tiling balconies and the terrace at fourth level, and installing external balustrades.
2. The Owners claim that the home is not completed to lock up stage and that the Builder is liable to them for $347,953 for structural defects and $70,495 for other defects. In the alternative they claim $710,897 to remedy defects or $759,956 to demolish and rebuild in accordance with the evidence of Ducon Pty Ltd. They also claim delay damages.
3. The expert witness engineers for both the Builder and the Owners (Mr Dunn and Mr Gibney respectively) agree that the house is at risk of collapse and should be demolished. The Second Respondent Engineer was joined to the proceeding on the application of the Builder on 22 October 2008. On 22 May 2009 the Owners amended their points of claim to include an alternate claim against the Engineer for any amount for which the Engineer is found responsible.
4. The proceeding between the Engineer and the Owners has settled, but the Engineer remains a party for the purpose of the Builder's claim for apportionment under Part IVAA of the Wrongs Act 1958 ("Wrongs Act"). On the first day of the hearing all three parties appeared before me and the following orders were made by consent of the Owners and Engineer, to which the Builder did not object:
   1. The [Owners'] claims in the proceedings against the [the Engineer] are amended by striking out all allegations of material fact and claims for relief or remedy.
   2. The [Engineer] remains a party to the proceeding solely for the purpose of s24AI(3) of the Wrongs Act 1958.
5. The Owners and Builder agree that if all the work to be done by the Builder were completed on time and in accordance with standards of reasonable workmanship, the Builder would be entitled to the last payment under the contract of $120,000. It is this sum the Builder seeks by counterclaim.
6. Mr Dunn and Mr Gibney gave engineering evidence concurrently and later in the hearing Mr Croucher for the Owners and Mr Atchieson for the Builder gave building consultant evidence concurrently. I was greatly assisted by the evidence of all four experts, whose intelligent co-operation made their evidence more readily intelligible and, I am sure, shortened the hearing.
7. In these reasons I speak of the home in the present tense, although by the time they are published it might have been demolished, as indicated by the Owners on the last day of the hearing, 11 December 2009.

1. The parties asked on the first day of the hearing, 1 December 2009, that I provide reasons then conduct a further hearing to enable the parties to make submissions regarding the orders necessary to give effect to these reasons, which I now do.

1. On 19 January 2010 solicitors for the Owners wrote to the Tribunal requesting a directions hearing to consider whether further closing submissions, in addition to the further hearing, could be made on behalf of their clients. After further correspondence I made the following orders in chambers on 22 January 2010 including:
   1. At the request of the [Owners] the proceeding is listed for directions before Senior Member Lothian at 12 noon on 6 April 2010 at 55 King Street, Melbourne with an estimated hearing time of one hour. The directions hearing is to enable the parties to make submissions about whether the [Owners] (and therefore the other parties) should be entitled to make further closing submissions before the Tribunal's reasons are delivered.
   2. By 26 March 2010 the [Owners] must file and serve an outline of argument concerning their submissions.
   3. Should the Respondents consent to the [Owners] making further submissions, they must file and serve notices to that effect by 31 March 2010.

1. Somewhat surprisingly, the Owners filed an outline of further submissions on 30 March 2010, not an outline of argument as to why they should be entitled to make further submissions.
2. Mr Pumpa resisted the application of Mr Squirrelll of Counsel who appeared for the Owners on this occasion, to be heard on the question raised in order 1 as the Owners had failed to comply with order 2. I did hear Mr Squirrell and I offered to give Mr Pumpa the opportunity to make written submissions if necessary. Mr Pumpa did not take up the offer.
3. Mr Squirrelll submitted that the Owners should be entitled to re-open their final submissions as to do so would not involve the submission of further evidence and would not substantially delay the completion of the hearing. I dismissed the application based on the absence of exceptional circumstances that would warrant re-opening of the final submissions. Mr Squirrell had suggested from the bar table that Mr Lombardi had missed a number of important points in his submissions. However Mr Squirrell based his view on written submissions that had accompanied Mr Lombardi's oral submissions and Mr Squirrell had not read a transcript of the final submissions. The one example Mr Squirrell gave of alleged failure to properly submit by Mr Lombardi was unconvincing.
4. Nevertheless, the directions hearing gave me the opportunity to clarify with the parties that although apportionment under the Wrongs Act had been mentioned in the submissions made on 11 December 2009, I have reserved my decision concerning this aspect of the proceeding until after the further hearing.

1. The form of the contract is the "Build Safe New Home Contract" of March 2003, published by Buildsafe Independent Housing Group Pty Ltd. Many of the provisions of the contract are unusual and the contract contains some clear errors. An obvious one is reference to the Domestic Building Tribunal which ceased to exist in 1998.
2. The building contract is dated 3 August 2007. It was for $320,000 and required the Builder to build to lock-up with some additional items.

1. As mentioned above, the Engineer was joined to the proceeding on the application of the Builder in September 2008. I have neither seen nor been informed of the terms of settlement concerning the Engineer and have not had the benefit of the evidence of anyone from or on behalf of the engineer.
2. The Builder's points of claim against the Engineer of 7 November 2008 plead at paragraph 3:

In or about April 2007 the [Owners] engaged the [Engineer] to prepare engineering drawing and computations for a proposed new home for the [Owners] to be constructed at Lot 1186...

The Agreement was partly in writing and partly to be implied. Insofar as it was in writing it was comprised of documents yet to be discovered passing between the [Owners] and the [Engineer]. Insofar as it was implied it was implied by law and by such other matters as were necessary to give to the agreement such business efficacy as the parties intended it to have.

It denies the allegations contained in paragraph 3 and says that:

3.1 In or about April 2007, it was engaged by the [Builder] to prepare engineering drawings and computations for a proposed new home to, to be constructed at Lot [1186] ... (Agreement).

(a) The agreement was party oral and partly to be implied.

(b) Insofar as it was oral, it was comprised of conversations between Carlos Balmaceda for the [Engineer] and David Ratcliffe of the [Builder] in an around April 2007.

(c) In so far as it was implied, it was implied by law and by such matters as were necessary to give to the Agreement such business efficacy which the parties intended it to have.

1. The Owners plead at paragraph 6 of their Further Amended Points of Claim of 18 August 2009 ("FAPoC"):
   1. ...[if] this Tribunal finds that the applicants have any contract with the [Engineer] (which the [Owners] deny) then the [Owners'] claim the above amounts against the [Engineer] on the grounds of breach [of] contract (or any other basis at law) for the reasons given in the expert report of Tim Gibney which has been filed and served, to the extent deemed just by this Tribunal.
2. Surprisingly, the Owners do not plead in their FAPoC that the Builder supplied the engineering design, that the engineering design is defective and that the Builder is liable for it. The closest approach to a pleading against the Builder for engineering faults is in the particulars to paragraph 4, which refers to the engineering reports. They plead at paragraph 4(a) that the work was not carried out in accordance with the plans and specifications. It seems to me that the most serious problems arose because the work was carried out in accordance with the engineering design. They also plead at 4(d) that the work was not carried out in accordance with, and did not comply with, all laws and legal requirements. This may well be so regarding the engineering design, but it has not been pleaded out in detail and the Builder's responsibility for it has not been made clear.
3. The Tribunal is not a court of pleadings, but as Deputy President Macnamara said in Lloyd L Watkins Pty Ltd v Vondrasek [2006] VCAT 2479:

Where pleadings are directed they define the issues. ... It would make nonsense of the process of directing pleadings in the Tribunal if ... I were now to give effect to a cause of action simply because I felt that the facts made it out even although it remained unpleaded ...

1. There is debate about who contracted with the Engineer because no-one has tendered written terms of engagement between the Engineer and another party and there is no indication that such a document exists. The Builder says the Owners contracted with the Engineer because the building contract states that engineering drawings have been provided by the Owners. It is agreed by the Owners and the Builder that the Engineer's fee was paid directly by the Owners. It is also agreed that Mr Ratcliffe approached Mr Balmaceda of the Engineer. The question is whether he did so on behalf of the Builder, and supplied the Engineer's services to the Owners, or whether he engaged the Engineer on behalf of the Owners. Mr Newlands said in re-examination that the Builder arranged for the engineering design and the Owners agreed to pay - he said Mr Ratcliffe contacted the engineer and had all dealings with Mr Balmaceda.

1. In Mr Ratcliffe's witness statement of 7 August 2009 he stated:
   1. In approximately January 2007 another builder commenced construction (Hometech Industries) on a dwelling adjacent to Kevin and Dianne Newlands' property. Once the frame work was complete it was apparent to me that the method of construction would be far cheaper to construct than that shown on the drawings that Kevin Newlands had submitted to me for quotation for his home. In late January to early February 2007 I made some enquiries through the owner of this partially constructed home and obtained the name and contact details of the relevant engineer who was Carlos Balmaceda of [the Engineer].
   2. I telephoned Carlos Balmaceda in or about early February 2007 and introduced myself and had a conversation with him regarding the structural design and details and told him I was interested in his design principles. His designs were different from the other projects I was involved in ... utilising precast concrete panels and structural steel portal framing... After considering his comments I contacted Kevin Newlands and suggested to him that he contact [the Engineer] to see if his project could be structurally re-designed so that it could be constructed for a far cheaper cost than was estimated by me a few months earlier. ... After this discussion with Kevin I offered to send his house plans to [the Engineer]. I also sent to Carlos the plans for another project I was constructing at 1164 ...
   3. About a week afterwards I spoke to Carlos Balmaceda and he advised me that the costs to structurally design the two projects that I sent him would be approximately $1,200.00 each ... I then spoke to Kevin Newlands and advised him of the engineering cost estimate and he agreed to proceed.
   4. On 21 April 2007 Carlos Balmaceda contacted me again and advised that he had completed the structural design for 1186 ... for the Newlands. I advised him that the owner would be in touch with him to arrange the pick up of the documents and to make payment for his services. Kevin Newlands then contacted me to advise that he was in possession of the structural designs and arranged to drop them off to me.

Mr Ratcliffe was not cross-examined on any of these paragraphs_._

1. Mr Newlands said in his witness statement that he had first contemplated using tilt slab construction and that the architectural drawings were prepared for the Owners by Mr Lavin, draftsman. He then said:
   1. In early 2007 Ratcliffe approached me to see if I wanted to obtain an engineer's report to have our home constructed, not from tilt slab, but from a lightweight construction as [a] house in the estate had been built using this method. I gave Ratcliffe Robert Lavin's drawings and I understand he provided those drawings to an engineer, Carlos Balmaceda of CGB Consulting Engineers Pty Ltd (the second respondent in this proceeding).

1. Robert Lavin included Balmaceda's drawings into his drawings which formed part of the contract and this was the first time that I saw Balmaceda's drawings.
2. I stress that at no time prior to signing the contract did I speak to Balmaceda or anyone else at CGB Consulting Engineers Pty Ltd.
3. Mr Newlands was not cross-examined on this evidence and in his witness statement in reply Mr Ratcliffe said:

I doubt that Mr or Mrs Newlands have never spoken to Balmaceda or had contact with anyone else at CGB Engineering, as they appear to have:

(a) Visited the office of CGB Engineering on 27 April 2007.

(b) Written a cheque for the engineering documents (owners discovered document 119).

(d) Kevin Newlands then notified me that he was in possession of the engineering documents and delivered them to me.

1. Mr Lavin said in his witness statement, filed on behalf of the Owners, that he completed the design then recommended Chris Rozycki of E-Struct Pty Ltd who completed the structural engineering and was paid in full by Mr Newlands.
   1. David Ratcliffe then appointed CBG Consulting Engineers Pty Ltd to re-engineer the residence.
   2. I clearly remember David Ratcliffe recommending Carlos Balmaceda of CBG Consulting Engineers Pty Ltd and mentioning that he had used him before.
2. Mr Ratcliffe said in his witness statement in reply:

I did not appoint CGB Engineering. I simply liaised with them on behalf of the owners and their draftsman.

I had never had contact with CGB Engineering or Carlos Balmaceda prior to this project. I only became aware of him through the owners of the partially completed house being constructed on the adjacent Lot 1189. I enquired through the owners of this project as to who the engineer was in January 2007.

1. Mr Lavin's evidence does not assist in demonstrating who engaged the engineer. If it was the Builder, it is unlikely that a recommendation would have to be made to the Owners, because the engagement of the Engineer would not have been their business.

1. In his witness statement at paragraph 10 M Ratcliffe said

[The Owners] have discovered their cheque butt by which they made payment of [the Engineer's] fees of $880.00 on 27 April 2007.

Mr Newlands agreed under cross-examination that he had paid for the engineering design, but added that he neither collected the drawings and calculations, nor had them delivered to the Builder. On the evidence before me there is no certainty how these documents reached the Builder.

1. Somewhat surprisingly, no-one drew my attention to the Engineer's tax invoice no 7502 to the Builder, appearing at page 1898 of the Owners' Tribunal Book ("OTB"). I note in his "Witness Statement in Reply" of 13 November 2009, Mr Ratcliffe said in reply to Mr Balmaceda's witness statement of 13 October 2009 at paragraph 21:

We did receive an invoice from him which I then directed to the owners and I believe they paid it.

1. Mr Newlands made no mention of the payment of the Engineer in his witness statement.
2. Even the fact of payment is not conclusive. Payment by the Owners tends to indicate that the Engineer contracted with them, but it is also possible that the Owners could have paid an amount otherwise payable by the Builder. Addressing the invoice to the Builder indicates that the Engineer appears to have considered the Builder their client.

1. As mentioned above, the building contract between the Owners and Builder stated that the engineering drawings were provided by the Owners. Mr Ratcliffe admitted under cross-examination that he wrote this into the contract and said he did not recall bringing this aspect of the contract to the Owners' attention, although he added that they had the contract for a month before they signed it.
2. In the application filed by the Owners on 12 May 2008 the first order sought was:

That part C of the contract signed by the Owners and the Builder on 3 August 2007 and titled "Engineering Computations & Drawings or Other Documents to be supplied by the Owner" is varied to state "supplied by the Builder".

1. Mr Newlands said at paragraph 12 of his witness statement:

[The] contract was signed by my wife and I and Ratcliffe at my home, and my wife and I signed Robert Lavin's plans at Ratcliffe's office. At this stage I had no solicitors acting for me and I perused the contract myself.

1. As mentioned above, under cross-examination Mr Ratcliffe said that the Owners had the contract to read and consider for about a month before they signed it. I accept Mr Ratcliffe's evidence on this point.
2. Mr Newlands' demeanour is not that of a person whose will is readily overborne by others. I therefore conclude that he was either satisfied that he and Mrs Newlands were engaging the Engineer or it was not an issue of sufficient concern to him to cause him to protest.

1. It appears that as between the Owners and the Builder, the Builder intended that the Owners would engage the Engineer and the Owners either agreed or did not protest.

1. The Engineer and Builder agree that the contract for engineering was in April 2007. The Owners acknowledge that they paid for engineering services on 27 April 2007. The building contract is dated 3 August 2007, more than three months later. This also supports the Builder's evidence that the contract was between the Engineer and the Owners and that his role was to introduce them and to assist, rather than to be a party to the engineering contract.

Conclusion regarding who contracted with the Engineer

1. On the balance of probabilities I find that the Owners contracted with the Engineer, with the assistance of the Builder and that the Builder was not a party to the engineering contract.

1. The Owners' claim for alleged defects is set out in paragraph 5 of the FAPoC. 5(a) claims $347,953 for structural defects and $70,495 for "other defects" which I discuss below as structural defects and building defects respectively.
2. The financial reconciliation annexed to the Owners' final submission did not follow the pleadings in paragraph 5 but in the second, third and fourth pages, grouped them under the suppliers of various items, the relevance of which is not always clear.

Structural defects- FAPoC 5(a), 5(ab), 5(ac) and 5(c)

1. I accept the evidence of Mr Newlands given in answer to my question, that he became aware of defects in January 2008, but it was not until many months later that he became aware of serious engineering deficiencies. He said it was brought to his attention by the expert for another party who recommended that the home be barricaded for public safety.
2. I accept the evidence of Mr Gibney and Mr Dunn, given concurrently, that the home must be demolished. I note their evidence that there are multiple aspects of the design which are inadequate and, particularly, that a relatively minor collision between a car and one of the columns inside the garage could lead to the collapse of the whole structure. They both agreed that no matter how faithful the Builder was to the design, it was never going to work.
3. I note that the Builder has admitted the cost of demolition (although not liability for demolition) being $33,330 quoted by Demoworks at OTB570_._ The Builder would only be liable for the cost of demolition if it were responsible for the structural defects. I note the Builder's submission that no evidence was led about demolition, but if the Builder is liable for the cost of rebuilding it would follow that it is also be liable for the cost of demolition.
4. The Owners' claim for structural defects is $347,953, based on the amount assessed in the Building Consultant Experts' Scott Schedule concerning structural matters, which commences at page 566 of the OTB. The Owner and Builder have treated the structural defects as the responsibility of the Engineer and they have not taken me through the Scott Schedule relating to rectification of the engineering works. I note that this Scott Schedule contemplated rectification of the home; not demolition and rebuilding.
5. In the alternative the Owners claim either $710,897 to remedy defects or $759,956 to demolish and rebuild relying on the evidence of Ducon, a builder. The claims based on the Ducon evidence are not convincing. Given that the price to build to lock-up, struck a little more than two years ago, was for $320,000 it is hardly credible that the additional costs of demolition and re-compacting the site for building plus increase in prices over two years could more than double a fair contract sum. As Mr Pumpa remarked, rebuilding is not even quoted by Ducon based on the work that was done by the Builder for the Owners, but is priced on a contract for a tilt-slab construction. The re-build evidence or quote is therefore irrelevant as it is for a different scope of works and method of construction.
6. Mr Peter Mason of Ducon gave evidence for the Owners. His evidence was of limited value because the estimation sheet upon which his evidence was based was prepared by an employee of Ducon, and even the "quotation" was signed not by him, but by his co-director, Mr Roger Gribble, who did not attend and give eivdence.
7. At the commencement of his evidence Mr Mason corrected his witness statement to exclude amounts for plaster as all parties agree that plastering was not part of the work to be undertaken by the Builder. He did not correct his estimates to exclude timber stairs that were not part of lock up and although the document supporting the witness statement is, on its face, a quotation open for 30 days from 31 July 2009, Mr Mason said that it is a "budget quotation". He added that his company is not a tendering service; he would not sign a contract for that figure, that the document was not intended to be a court document and that he does not know what his price is now.
   1. Under cross-examination, Mr Mason admitted that Ducon provided the "quotes" in response to an oral request, did not answer an advertisement to tender and was not provided with a written invitation to tender.
8. I am not satisfied that I can rely on the Ducon documents or Mr Mason's witness statement for any purpose at all.

Does the Builder share any of the responsibility for structural defects?

1. Both the engineering experts, Mr Gibney and Mr Dunn, expressed the view that a reasonably competent builder would be likely to detect and notify an owner of such obvious defects in the engineering design. When asked by Mr Lomabardi what proportion of responsibility the Builder might bear for the engineering failure, Mr Gibney said possibly 10% and Mr Dunn said, under cross-examination, between 5 and 10%. On this basis, in the financial reconciliation included in the Owners' closing submissions, they claimed 10% of the total assessed in the Building Experts' Scott Schedule for structural defects, being $34,795.
2. Mr Pumpa objected to Mr Lombardi's question on the basis that Mr Gibney is an expert engineer, not an expert builder. I suggested that Mr Lombardi ask the same question of Mr Croucher, which he did not do.
3. During submissions Mr Lombardi referred me to Edward Lindenberg v Joe Canning [1992] 62 BLR 152 and Plant Construction Plc v Clive Adams Associates [2000] BLR137, both of which are English decisions that impose an obligation upon a builder to warn an owner of an obvious danger, or a matter about which the builder should have grave doubts.
4. I am not satisfied that a reasonably competent builder in Mr Ratcliffe's position (because he is the person who thinks for the Builder) would realise that the engineering design is flawed and I accept his evidence, given under cross examination, that the only aspect of the engineering design that caused him alarm was the inconsistency between it and the architectural drawings.
5. There are two reasons why I am not satisfied that a reasonably competent builder could be expected to discover the flaws in the engineer designs. First, as submitted by Mr Pumpa, the Owners' own building expert did not give that evidence and did not report that the design might be dangerous when he attended the property in March and July 2008.
6. Second, the design is novel and has been used in a neighbouring property. A builder would be foolish to ignore an obvious design fault, but the novelty and apparent successful expression of such a design would be likely to combine to convince a reasonably competent builder to ignore any alarm bells, even if they were to ring.

1. As mentioned above, the Engineer only remains a party for the purpose of Wrongs Act apportionment and I have heard no evidence about the Scott Schedule relating to structural defects. As I have found that I cannot rely on the evidence of Mr Mason and the Ducon documents, I quantify the structural defects as the amount allowed in the Scott Schedule of $347,953, albeit for repair rather than demolition, because the sum is a little higher than the contract sum of $320,000. I also attribute to structural defects the agreed sum for demolition of $33,330; being a total of $381,283.

1. Mr Croucher and Mr Atchison gave their evidence regarding non-structural defects based on the Scott schedule commencing at page 629 of the OTB. They headed it "Defects/Incompletion Schedule - including window leaks".
2. Although I have found that the whole home should be demolished, I treat these alleged defects as if they were defects in an otherwise sound building, to enable me to assess any value the Builder should have provided to the Owners under the building contract, but failed to provide.
3. The item numbers provided are as they appear in the Scott Schedule. Items have not been included where the experts have agreed that no work is necessary and the Owners have not sought an amount.
4. The "agreed cost" shown in the headings do not always indicate that the experts agreed that the work was necessary. Similarly, there were some items where the experts agreed that no work was required, even where the work did not match the design. For example, the work to rectify might have been out of all proportion to the value of completing the building in accordance with the design. In such circumstances, regardless of the recommendation of the experts, it is still possible that the Owners might be entitled to an amount to compensate them in accordance with the rule in Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613.
5. At the further hearing, I specifically invite the parties to address me on the question of how loss should be apportioned where the building must be demolished and the Builder has also failed to do all it should have done under the building contract.

1. The interim allowances below are not findings of the Builder's liability for these items. The eventual findings will depend upon the parties' submissions under the Wrongs Act. The interim allowances are the amounts I would have allowed the Owners against the Builder had they been the only parties to this proceeding.

1. The experts costed and agreed upon the installation of eaves lining if it were found to be an item for which the Builder is liable. The question of whether installation of eaves is necessary to bring the home to lock up stage is discussed in detail below under "Time" and I have come to the conclusion that it is not. There is therefore no allowance for this item.

1. This is an item where the experts agree on the method and cost of rectification but their instructions as to liability differed. Some drawings indicate eaves to the gable ends at third floor level on the north and south elevations; others do not. The eaves are clearly visible in both the signed elevations and the signed axonometric drawings in the contractual set, although the plans are equivocal. Eaves are usually shown as a dotted line and they are absent from the relevant plans.
2. There is only one written variation in this contract and it is not for the eaves. Clause 14.5 of the contract imposes the following obligation on the Builder, when seeking a variation:

In the event that the Builder wishes to vary the Plans or Specifications then the following subclauses take effect:

14.5.1 The Builder shall issue to the Owner a notice describing the variation that the Builder wishes to make, providing reasons why the Builder wishes to make the variation and stating the effect the variation will have on the construction of the Works as a whole and whether a variation to any permit will be required, stating the reasonable estimate of the Builder of any delays which will be caused by the variation and specifying the cost of the variation and the effect it will have on the Contract Price;

14.5.2 The Builder may proceed to carry out the variation if the Owner signs a written consent to the variation which must have incorporated into it or attached to it the matters referred to in subclause 14.5.1.

This provision reflects the Builder's obligations under s37 of the Domestic Building Contracts Act 1995 ("DBC Act").

1. At paragraph 25 of his witness statement Mr Ratcliffe said that on or about 15 December 2007 he attended a meeting on site with the Owners and the carpenter, Jeremy Wearne. Mr Ratcliffe said he was concerned that the gables would necessitate having exposed spouting, (or downpipes - both are mentioned) which would contravene the owners corporation design guidelines relevant to the site.
2. The Owners did not give written evidence concerning these eaves, but under cross examination Mr Newlands denied the alleged conversation. Mr Ratcliffe's witness statement goes on to say that Mr Wearne held up a stick to show "the same height at the same profile as what we intended to build". Mr Newlands said he recalled Mr Wearne holding up a stick, but that it was to show the height of the trusses. I prefer Mr Newlands' evidence on this point to that of Mr Ratcliffe, particularly as there would have been no controversy if the Builder had done what it was obliged to do and provided a written variation.
3. With respect to the apparent inconsistencies between the plans, elevations and axonometric drawings, as Mr Croucher said under cross-examination, a builder must ask when there are inconsistencies. The interim allowance for this item is $8,000 in accordance with sum agreed by the experts.

1. The design called for profiled roof sheeting and box gutters to the cantilevered projections to the west side of the building. Instead, flat metal sheeting has been installed with no gutters. Again the experts agree on the method and cost of rectification if the change was not the subject of an agreed variation between the Owners and Builder.
2. Mr Ratcliffe said at paragraph 26 of his witness statement that the design would create difficulties for drainage as there was no provision for storm water in the working drawings. He said he sought a meeting with the Owners and their plumber. He said he suggested the flat colour bond over-flashing and that Mr Newlands and the plumber agreed.
3. Mr Newlands denied the conversation under cross examination and again the Builder failed to obtain a written variation. I accept Mr Newlands' evidence under cross-examination that these roofs were constructed from a layer of painted zincalum, with Colorbond pop-riveted on top. It is most unlikely that a person with Mr Newlands' knowledge of building would accept such a solution. The interim allowance for this item is $6,384.

5.2.4 Western Wall Projection and 5.3.4 Step in building- agreed, no work required

1. The ground floor follows the boundary line, which is out of square. It is 8030mm wide at the north end of the home and 8260 at the south. The first, second and third floors have been squared up by the Builder without seeking a variation in writing and in consequence there is a slight overhang along the western wall, ranging between about 30mm at the north end to about 150mm at the south end. There is also a column in the south elevation that is out of place - it straddles the edge of the balcony rather than being within the balcony line. Before the Scott Schedule was prepared Mr Croucher for the Owners had costed 5.2.4 at $5,031 to extend the column to ground level. As indicated in the heading, in preparing the Scott Schedule the experts agreed that no work is required.
2. The parties agree that the Builder built in accordance with revised drawings provided by the Owners' designer, Mr Lavin. These drawings were provided at the request of the Builder and were not signed by or on behalf of the Owners.
3. The only way to give the Owners what they originally bargained for would be to remove the west wall from the first floor up and rebuild - a task of enormous expense without much reward. The step and the column are not unsightly and do not look like the result of poor workmanship. It is even possible that had the Builder suggested this variation to the Owners they would have agreed - it would have made finishing the home (such as tiling wet areas) much easier and less expensive. But the Builder did not seek a variation and it is foolish for any builder to undertake unilateral variations. In accordance with the principles in Bellgrove v Eldridge the interim allowance for this item is $2,500.

1. The Owners claim that some of the windows are the wrong size and that an allowance of $7,041 should be made because the windows should have been custom made. Note 8 on Mr Lavin's drawing at OTB1275 is:

Window sizes nominated are nominal only. Actual sizes may vary according to manufacturer. Windows to be flashed all around.

1. Under cross-examination Mr Newlands said that the greatest difference between specified and actual sizes of windows is 300 mm and that he would accept a difference of 5 mm. The greatest difference in size between the designed size and the actual size pointed out to me on site is window W14 which should have been 2400 high by 3400 wide, but was actually 2370 high by 3570 wide - I am not satisfied that the windows are sufficiently different in size to that specified as to exceed the tolerances contemplated by note 8 quoted above.
2. The drawings do not state that the windows are to be custom made and I am not satisfied that they were to be. I find that this item is not defective and make no allowance for it.

"Handedness" of windows - reversal of fixed panels and opening doors

1. Mr Croucher reported on 28 April 2008 that a number of doors have been installed the wrong way around. Mr Newlands said there are three doors like this. The Owners claim $1,000 for this item. The item was not dealt with in the Scott Schedule, possibly because it would be made redundant if all the windows were to be replaced because they were not custom made. Mr Atchison said that there would be no cost for materials - the doors and windows can be swapped - and that each door would take two workers one to one and a half hours. Under cross-examination he estimated $600 inclusive of profit and margins. Mr Croucher said in evidence in chief that each window would need around 2 hours by 2 workers - approximately $300 per window so the total sum would be about $1,000. I choose a figure between that of the experts. The interim allowance for this item is $800.

1. The parties agree that the architectural and structural drawings do not match. The structural drawings called for posts - the architectural drawings do not - and one of the staircase openings was in the wrong position. The parties agree that the posts were installed and then removed by the Owners' carpenter and the position of the opening rectified. The experts agreed that if the posts were to be removed, the cost would be $2,682.
2. The Owners' solicitors, Hassall & Byrne, sent a letter to the Builder dated 27 February 2008 reciting clause 1.2 of the contract which provides that if there is a discrepancy in the contract drawings, the "plans" (defined to mean Mr Lavin's drawings) take precedence over the engineering computations and drawings.
3. I accept the evidence of Mr Newlands at paragraph 18 of his witness statement that he noticed the discrepancy between the architectural drawings and the construction around the staircase opening in early November 2007, pointed it out to Mr Ratcliffe and that Mr Ratcliffe either refused to attend a meeting with Mr Newlands, the draftsman and Mr Balmaceda of the Engineer (as Mr Newlands asserts) or said the meeting was not yet necessary (as Mr Ratcliffe asserts). In either case, the inconsistent work had already been constructed and there is no indication of how the delay of the meeting contributed to the loss eventually suffered by the Owners.
4. I note that at paragraph 30 of his witness statement Mr Ratcliffe said Mr Newlands "made me aware of the discrepancy to the design of the first and second floor staircase" and that Mr Ratcliffe considered Mr Newlands "was not aware that the engineering drawings included supporting posts". I conclude that it was Mr Ratcliffe rather than Mr Newlands who was unaware that the architectural drawings took precedence over the engineering design.
5. I find that the Builder failed to construct the stair opening in accordance with the contract documents. The interim allowance for this item is $2,682.

1. The experts agree that the north and south balconies have not been drained in accordance with the design and that the appropriate means of completing the work is to install grates. I accept their evidence. I also accept the evidence of Mr Newlands that he did not agree to these variations to the design. The interim allowance for this item is $3,142.

5.3.1 Articulation joints to eastern brick wall and 5.3.2 Articulation joints between Harditex and masonry - agreed no work required

1. I accept the evidence of Mr Atchison that although there is some silicone smearing around the articulation joints in the brick wall on the east side, the wall is on the boundary of the land and is designed to be concealed by the wall of the neighbouring property. The Owners continue to claim $500 originally estimated by Mr Croucher as the cost of removing and replacing the silicon. I find this item does not merit rectification.
2. I accept the evidence of the experts in the Scott Schedule that no work is necessary to the articulation joints between the Harditex and the masonry. I therefore make no allowance for these items.

1. I accept the evidence of the experts that further work is required raking out the weep holes. The interim allowance for this item is $143.

1. At the site inspection on 2 December 2009 the experts reported that the clearly visible patch of defective render to the western wall had not been visible at their last inspection. It was not clear whether the render had de-laminated because of a failure of the Builder or because of movement of the building caused by the defective engineering design. In concurrent evidence the building consultants agreed that the defect is likely to be due to poor rectification of a previous defect and agreed $697 is a fair price for rectification.
2. The interim allowance for this item is $697_._

1. In his report of 28 April 2008 Mr Croucher said that the storm water pipe running down the north-west corner of the ground floor (installed by the Owner's plumber) had not been concealed internally and that the walls would need to be packed out to cover it. Mr Atchison's response was that there was no requirement for a down pipe in that position and that the Builder had provided a false wall. I accept the evidence of the experts in the Scott Schedule that no work is required and make no allowance for it.

1. Mr Croucher said in his report of 28 April 2008 that the north and south balconies had an excessive slope and he estimated the cost to rectify at $5,849. In the course of preparing the Scott Schedule, Mr Croucher deferred to the Owner's tiling expert, David Graham, who is reported in the Scott Schedule as agreeing that no action is required, although he also said that he "feels the slope will make it difficult to use tables and chairs".
2. My own observation of the south balcony particularly is that it is unusually steep although no-one was able to tell me what the angle of fall is. The interim allowance of Bellgrove v Eldridge damages for this item is $1,000.

1. In his report of 28 April 2008 Mr Croucher said that the sliding door sills were poorly supported and allowed $392. Mr Atchison reported that the Builder had undertaken further work and the experts agreed in the Scott Schedule that no work was necessary. I make no allowance for it.

1. In his report of 28 April 2008 Mr Croucher said the door frame to the bathroom on the third floor observation deck needed to be straightened and packed, at the cost of $66. The experts agreed in the Scott Schedule that no work is necessary and I make no allowance for it.

1. The parties and experts agree that two or three tiles are to be replaced at the cost of $192. The interim allowance for this item is $192.

5.3.12 Sliding door frame - agreed work and cost of $232

1. The parties and experts agree that the sliding door frame be rectified at the cost of $232. The interim allowance for this item is $232.

1. The experts had agreed that no work was required, but as Mr Pumpa said, some of the frame packers had fallen out, possibly, as he suggests, because of movement in the building, but also as suggested by the experts, possibly due to use of gun-driven nails that would allow them to fall. Mr Atchison said in re-examination that a reasonable sum for refixing packers is $150. The interim allowance for this item is $150.

3.2 First floor J1 beam installation - agreed no work required

1. The Owners continue to claim $1,539 for "incorrectly installed" beams, however I make no allowance in reliance on the Scott Schedule that no work is required. I note Mr Atchison's remark that the beams were installed correctly but the design is defective.

1. The parties and experts agree on this item. The interim allowance for this item is $701.

1. The experts agree that the wall is out of plumb and have allowed $1,322. Mr Pumpa submitted that as Mr Croucher did not identify this as a defect in March and May whereas the Owner's carpenter identified it as "obvious", it is likely that the defect occurred later due to racking of the building and thus was probably caused by the design defect. Mr Pumpa cross-examined Mr Croucher on this point. His response was that if this wall being out of plumb was caused by the racking of the building, he would expect to see other walls out of plumb as well.
2. I rely on the finding of the experts. The interim allowance for this item is $1,322.

1. The second floor is out of level - probably caused by deflections in the first floor joists and lintels, and also has a dip. The experts agreed with Mr Croucher's recommendation to leave the floor out of level but to remove the dip and I note that in concurrent evidence they agreed that the floor is likely to be out of level because of the poor engineering design. The experts did not agree on a sum for the dip alone, but as the agreed work is that recommended by Mr Croucher in his supplementary report of 31 July 2008, I adopt the sum he allowed. The interim allowanced for the dip is $1,278. I make no allowance for the floor being out of level.

1. The Owners claim $7,917 for this item and the Scott Schedule indicates that at an inspection after significant rain the windows were not leaking. There followed a further report by Mr Croucher of 19 June 2009 and Mr Atchison also reported that the windows were leaking, which he believed was due to a manufacturing defect. The experts also gave evidence concurrently about the difficulty of flashing windows where the material below them is rendered polystyrene. Mr Atchison costed rectification at $3,575 for the windows to the west and $94 to seal around a north window, a total of $3,669.
2. Mr Marcus New of A & L Group gave evidence that as the window manufacturer A &L is willing to rectify the windows under warranty. As to the cause of leaking he said that there is an 80% chance that the windows leak because of their inadequacy, but there is a 20% chance that it is caused or contributed to by the method of installation.
3. The question of whether it is reasonable for the Builder or one of its subcontractors to return to site to rectify defective works was not agitated before me as, in reality, it will not happen. The home will be demolished, if this has not already occurred. Further, the Owners were not made aware of the window manufacturer's offer to rectify the windows until the first morning of the hearing. As Mr Newlands said in cross examination, making the offer 20 months after the problem first arose is a bit late in the context of this proceeding. I am not satisfied that it is now reasonable for the Builder to be able to rely on an offer to do work rather than to compensate financially.
4. In accordance with Mr Atchison's estimate, the interim allowance for this item is $3,669.

3.7 Leaks from the roof top observation deck - agreed work and sum $27,063

1. The experts agree that there are substantial leaks from the observation deck into the second floor. Mr Atchison first considered that they were leaks from the penetrated tanking upturn behind the wooden skirting, which has not been painted and has warped. In the Scott Schedule the experts agreed on the scope of works and the cost. The scope includes removal and reinstallation of the balustrade. As demonstrated on site, the balustrade - supplied by the Builder - is insufficiently fixed and dangerous. During the hearing on 3 December 2009 Mr Gibney said that the top rail of each balustrade should be fixed as the way they moved when touched during the inspection showed they would be unable to withstand a point load of 60kg.
2. Under re-examination Mr Dunn agreed that the Engineer should bear most or all of the responsibility for the failure of the observation deck balustrade, but he also said that he was not sure exactly how it was fixed.
3. I also draw the inference that the agreed sum includes retiling, as it was mentioned by Mr Croucher and where it is referred to in the Scott Schedule (under "CTS report") the conclave agreement is "Refer 3.7".
4. The Builder's final submission is "Caused by deflection in joists. A structural issue and the liability of the engineer". Under cross-examination Mr Croucher agreed that most of the leaking was caused by excess deflection of the structure and that $1,557 is a reasonable sum to rectify the nail holes in the wooden skirtings and tanking.
5. The interim allowance for leaking is $1,557 and for removal and replacement of the balustrade is $5,000[1], a total of $5,557.

3.8 Cantilever roof leaks - agreed scope and cost $174

1. This sum is agreed, but as the Builder's submission suggested, if I had allowed for replacement of the roofs under item 5.2.2, it would be unnecessary. As I have, there is no allowance for this item.

3.9 Compressed sheet upstands - agreed scope and cost $862

1. Unlike most of the items in the Scott Schedule, this work has been rectified by the Owners. I accept the Builder's final submission that the actual cost of this work is approximately $440. The interim allowance for this item is $440.

3.10 Balcony upstands - agreed scope and cost $12,146

1. The Builder submitted in its final submission that at least 25% of the cracking to balcony upstands was due to structural movement, but there was no evidence to this effect. I accept the evidence of the experts in the Scott Schedule that the balcony upstand defect was due to the Builder's defective work. The interim allowance for this item is $12,146.

3.11 External wall cracks - agreed scope and cost $2,646

The cracking ought to be accepted to be the result of movement in the structure and liability be found against the engineer.

1. Under cross-examination Mr Croucher agreed that the damage might possibly be due to movement, but under re-examination, when asked what was the most likely cause, he said it was the fixing of external angles beneath the render, which appear to letting go and therefore causing delamination.
2. I accept the evidence of the experts in the Scott Schedule. The interim allowance for this item is $2,646.

2 on OTB 634 - Balcony tiles - Atchison cost $1,414

1. At the end of the Scott Schedule, Mr Atchison added another three items that were not discussed with Mr Croucher, but were derived from Mr Croucher's report of 19 June 2009. The first has already been considered under 3.6 above. The second, this item, concerns loose balcony tiles and Mr Atchison considered them in two alternatives, 2 or 2A if the adhesive to the tiles were found to be defective. Mr Atchison costs the alternatives at $1,414 and $3,090 respectively.
2. As the Builder's final submission said, there is insufficient evidence of tile failure. In accordance with that submission, the interim allowance for this item is $1,414.

3 on OTB634 - Water Leaks costed by Mr Atchison at $1,158

1. Mr Croucher's report of 19 June 2009 identified leaking balconies due to defective membranes. Mr Atchison identified leaking on the first floor northern balcony and recommended exposing the membrane at the end of the box gutter and re-detailing and making good the finishes at a cost of $1,158. The Builder's final submission acknowledges this amount.
2. The interim allowance for this item is $1,158.

1. As the Builder submitted, no evidence was led by the Owners regarding this item and there is no allowance for it.

FAPoC 5(d) - $21,000 regrading pricing in David Graham's report of 28 July 2008

1. The report relates to matters taken into account in the Scott Schedule prepared by Mr Croucher and Mr Atchison and no further allowance is made.

1. This item has also been allowed for and no further allowance is made.

FAPoC 5(f), (g) and (h) - legal costs and disbursements

1. These items are reserved for consideration at a later date.

FAPoC 5(i) 70% of the Statutory warranty policy costs - $880.32

1. As the Builder submitted, no evidence was led concerning this claim and no submissions were made to indicate why the Owners might be entitled to this sum. No amount is allowed.

FAPoC 5(k) - refund of Builder's margin and 20% of construction costs - $120,000

1. In the financial reconciliation annexed to the Owners' final submission they sought $60,000. As the Builder submitted, no evidence was led concerning this claim and no submissions were made to indicate why the Owners might be entitled to this sum. Further, if there is a claim for completion and rectification of defects and also a claim for refund of builder's margin, the Owners appear to be claiming double compensation. No amount is allowed.

1. As found under "lock up stage", it was not necessary for the Builder to supply a conventional lock for the front door. There is no reference to door furniture in the two page specification and I was not directed to any other contractual document between the Owners and Builders that mentioned the front door lock. This sum is not allowed.

FAPoC 5(m) - rent of $1,304 per month since 1 September 2008

FAPoC 5(n) - Increase in costs since project's intended completion $20,000

1. The Owners led no evidence concerning this claim and it is not allowed.

FAPoC 5(0) - Disconnection and re-installation of solar system $5,000

1. The Owners have failed to demonstrate how this claim relates to any defective work by the Builder as distinct from a defect in the engineering design. There is no allowance for it.

FAPoC 5(p) - Electrical wiring by the Owners - $5,000

1. It is obvious that someone has undertaken wiring at the home, but Mr Newlands gave no evidence as to the cost of the wiring. Further, the wiring is only a wasted expenditure because the home must be demolished, which I have found is not the responsibility of the Builder.

FAPoC 5(q) - Rectification costs and "portal frames" - $46,702

1. It was acknowledged that the "portal frames" referred to are the panel props and Acrow adjustable props used to make the structure safe, which I find is attributable to the engineering design rather than to any work for which the Builder is responsible.
2. The rectification costs appear to be costs that have been incurred by the Owners, either due to allegedly poor workmanship by the Builder, or which have been wasted ("thrown away") because the home must be demolished.

1. This is a quotation rather than an invoice for removal and replacement of tiling and installation of waterproof membrane. The only tiling items relevant to the Builder have been considered under the Scott Schedule. I make no further allowance.

Calco Timbers (Geelong) Pty Ltd OTB1709 - $2,600.43

1. This invoice was also claimed as part of an invoice by Barton & Sons and is taken into consideration below.

1. I am not satisfied that this account was for items that should have been supplied by the Builder. I therefore make no allowance.

1. Mr Barton gave evidence that $13,510.12 had been invoiced by his company, Barton & Sons Pty Ltd, to the Owners. He was not a particularly confident witness and some of his evidence appeared to be unlikely. Early in cross-examination he asked what the word "rectification" meant because he did not know. When asked why he had used the same word in his witness statement, and who had suggested the word, he said that his wife had assisted him.
2. Barton & Sons actually invoiced Mr Newlands for $18,757.12. The invoice which has not been included in the sum claimed is number 525 of 11 August 2008 for $5,247 which commences:

Hours spent ascertaining rectification work (includes obtaining levels to all floors using laser level as shown on attached copies of plans).

When asked about this invoice, Mr Barton said that his partner (his brother) would also be unlikely to use such language and that it must have been his sister-in-law who used the expression. The invoice appears to be one made with this proceeding in mind. It does not make me confident that I can rely on it and I would not take it into account even if it were included in the amounts claimed by the Owners.

1. The other Barton & Sons invoices were invoices 520 and 523 of 21 July 2008, invoice 526 of 11 August 2008 (which was for labour from 24 July 2008 to 6 August 2008) and 571 of 3 December 2008. The parts of the invoices that might relate to deficiencies in the Builder's work concern straightening of internal frames. Mr Croucher's first report was of 11 March 2008 and if this were a defect, I assume he would have reported on it. He did not.
2. I am unable to rely on Mr Barton's evidence that some of the work undertaken relates to failures by the Builder. I therefore find the Owners have failed to discharge their onus of proof that the Builder is liable for any part of the amount paid to Barton & Sons other than sums allowed in any other items. I make no allowance for this item.

1. I am not satisfied that the work described in the tax invoice at OTB1726 was work that should have been done by the Builder and I do not allow this sum.

1. OTB 1704 is a tax invoice of 24 July 2008 from Mitre 10 to "Colston Electrical" for $794.28 for kiln dried hardwood. There are seven further tax invoices in the form of charge account slips to be signed by the purchaser. They are at OTB1063 to 1069 and total the remainder of the amount claimed for this item. It is not clear what they are for or how they relate to any alleged failure by the Builder. They also, are all on the account of Colston Electrical. I do not allow this item.

1. This is a "service order" rather than a tax invoice. It is for work that might need to be done, rather than for work that has been done. I do not allow this item.

1. OTB1693 is an invoice of 8 July 2010 for $450 to hire a site toilet. OTB of 1 September 2008 is $275 for Acrow props. OTB1725 of 31 October is $261.80 for panel props. OTB1727 of 30 November 2008 is $319.45, also for panel props. OTB1729 to 1732 are respective 4 December 2008, 30 December 2008 and two on 31 January 2009. The first is for toilet hire and each of the rest is for prop hire. They total $1,866.45. Each invoice is to Colston Electrical, although they also mention Mr Newlands.
2. As indicated above, I do not allow the prop hire and as no evidence was given about how a failure by the Builder might have caused the Owners to incur toilet hire, I make no allowance for this item.

1. OTB1723 and 1724 show that Colston Electrical has paid $3,250 for a panel garage door which has not yet been installed. The question is whether this sum should be deducted from the amount otherwise payable to the Builder. I note that the signed set of contract drawings includes a garage door at OTB52. I find that the Builder was obliged to provide the garage door and therefore the Builder must allow the Owners $3,250 for this item.

1. This invoice of 11 January 2008 is at OTB1621 and appears to be the cost of the tiles the Builder installed. Under the specification it was the Owners' obligation to supply the tiles. If their removal and replacement had been due to the fault of the Builder, he would also have been obliged to provide replacement tiles. As I have found it was not, I allow nothing for this item.

1. The contract obliged the Builder to complete its work within 117 calendar days of the commencement date. Under clause 8.1, in the absence of a nominated commencement date, the Builder was obliged to commence within 28 days of the contract becoming unconditional. The Owners are entitled to delay damages of $250.00 per week and have claimed 23 weeks being $5,750. They did not give a commencement date for the damages claimed.
2. The Owners have also claimed general damages for the cost of renting alternative accommodation from 1 September 2008 to 1 June 2009 at $1,257 per month ($11,313) and from 2 June 2009 to 31 December 2009 at $1,304 per month ($10,432).
3. On 3 October 2007 the Builder gave the Owners written notice that building works had commenced on 22 September 2007. 117 days from that date is 18 January 2008, as Mr Lombardi said in the Owners' opening and Mr Newlands said in his witness statement 23 weeks from 18 January 2008 is 27 June 2008. The following Monday was 30 June 2008 - the date upon which the Owners' solicitors sent the Builder the notice of determination.

1. Clause 9.2 of the contract provides that the Builder can claim a time extension for any of the reasons described in 9.1 if the Builder notifies "the Owner within 7 days in writing of the nature and extent of the delay and the new date for completion of the works". The contract does not say what the triggering factor is - whether it is the commencement or the end of the delay. The contract purports to give the Builder the right to a time extension without the Owner having the right to object. Clause 9.3 only allows the Owner the right to object to a claim for delay costs, not for a time extension.
2. The Builder made two claims that appear to be for time extensions. The first was a written note dated 30 January 2008 but said, among other things that the failure to finish by 8 February 2008 "...is due to a delay with our balustrade supplier" [emphasis added], claimed 21 days, apologised for late completion and:

As per clause 24.3 (agreed damages for late completion of works) $250.00 per calendar week will be deducted from your last 40% claim.

As clause 24.3 requires the Builder to pay the Owners agreed damages for delay, I do not regard this note as a claim for a time extension.

1. The second was a letter dated 18 April 2008 stating, excluding the formal parts:

Due to factors beyond our control, our anticipated 117 construction days being from placement of foundations on 6th October 2007 to 8th February 2008 will not be achieved.

This is due to a delay in receiving Revised Engineering Plans from your Engaged Engineer as requested.

We therefore claim an extension of time being 78 days.

Extension of Time Claim 21 Days Balustrade Supplier Delay

Extension of Time Claim 78 Days Owner to Supply Revised

1. The letter is surprising. First, it refers to the start date being 6 October 2007 whereas the notice of 3 October 2007 had given the start date as 22 September 2007. The Builder has been, at best, careless in misstating the commencement date. It is equally careless in misstating the alleged original date for completion. If commencement were 6 October, 117 calendar days later is 31 January 2008, not 8 February 2008.
2. Second, there is no indication of the date of occurrence of either of the events for which an extension of time has been claimed. There is no indication of when the triggering events might have occurred. OTB1625 is a "building variation" dated 28 January 2008 but neither signed nor dated by either the Builder or the Owner. It gives a cost of $1,980 but does not give a time allowance. The claim foreshadows an issue with time as the description of the work is:

To complete works to 2nd floor framing plan as per revised engineer's drawing from CGB Engineering, once they are received by this office.

However there is no indication of a delay claim until the letter of 18 April 2008.

1. Third, there is only a right to claim time extension regarding materials under 9.1.8 for "unforeseeable delays by suppliers of labour or materials in Prime Cost or Provision Sum Items or otherwise". The provision is strange, but is in a contract that has been proffered by the Builder and I note that the contract is in the same uncommon type face as the Builder's letters to the Owners. I interpret the provision contra proferentum[2], to mean that the delay in provision of the materials must be for a prime cost or provisional sum, or something similar. The contract did not include any prime cost items or provisional sum items.
2. Mr Newlands did not object to the claim because, as he admitted under cross-examination, he did not believe that an extension of time could be valid after the date for completion. In any event, as mentioned, objection under this contract would appear to be fruitless.
3. I find that the letter of 18 April 2008 was ineffective to gain an extension of time for the Builder. Although I have some misgivings about the date of commencement, the best evidence is the notice sent to the Owners by the Builder on 3 October 2007, being 22 September 2007. I find that the day for completion was 117 calendar days later - 18 January 2008. The Builder has not satisfied me that time has been extended in accordance with the contract.

1. As mentioned above, the contract was to lock up with some additional items; mainly those that might prevent the home from being water-tight (such as laying tiles on the balcony and roof terrace) and anything that would call for the use of scaffolding, such as installation of the balcony balustrades.
2. The Owners plead at paragraph 4(f) of their FAPoC that :

The [Builder] did not complete the lock up stage in that it did not install the locks and eaves and did not complete to watertight state as stipulated in the contract.

1. The definition of "lock up stage" at paragraph 1.1.15 of the contract is:

... the stage of works when the external wall cladding and roof covering is [sic] the flooring is laid and external doors and external windows are fixed (even if those doors and windows are only temporary).

"Lock up" is also defined in s40 of the DBC Act as:

lock-up stage means the stage when a home's external wall cladding and roof covering is fixed, the flooring is laid and external doors and external windows are fixed (even if those doors or windows are only temporary)

1. The parties agree that the front door did not have a conventional lock, although Mr Ratcliffe gave evidence that a block of wood was installed on the back of the door that acted as a "spin lock". I accept his evidence on that point.
2. I note that there is a lockable sliding glass door to the north of the ground floor that was installed by the Builder. I accept the Builder's submission that in accordance with Brown v Cardona & Ors [2009] VCAT 910, a structure can have reached lock up if secured by a bent nail. The Owners have failed to establish that the locks were inadequate for the home to have reached lock up.

1. On 4 April 2008 Mr Croucher wrote to the Owners' solicitors. He said that lock up had not been reached as verandah ceilings and eave linings had not been installed. He confirmed this advice in his report of 28 April 2008, adding:

The definition of Lock-up as defined by the Building Act does not specify that external ceilings, soffits or eaves should be lined at Lock-Up Stage but it is accepted practice within the building industry to line the areas in question.

1. Mr Atchison said during concurrent evidence that eaves are normally installed before external wall cladding and are therefore in by lock-up.
2. There is no mention of the eaves or soffits in the contract documents - they are neither included in, nor excluded from, the definition of completion stage. The contract contains a very brief, two page specification provided by the Builder and amended by hand by Mr Newlands. It is clear that the Owners and Builders did not contemplate that "external cladding" would include the eaves as the material for external cladding is listed in the specification as "Harditex baseboard or 75mm polystyrene 3 coat [acrylic] render Colour TBA".
3. I adopt the reasoning of DP Macnamara at paragraphs 82 and 83 of Brown v Cardona ; a home need not be an impregnable structure to reach lock up and I am not satisfied that under this contract the Owners had imposed on the Builder the obligation to install eaves as a precondition for lock-up.

1. I am satisfied that the home was theoretically watertight, although structural defects led to it leaking. Although I asked whether there was any wind driven rain entering the eaves, the answer did not satisfy me that there has been, rather than that it might be possible. I am satisfied that for the purpose of the contract the home was "watertight".

1. The Owners do not plead a breach of contract concerning the frame stage claim and it is also apparent that by the commencement of the proceeding, frame stage had been certified. I make mention of frame stage because Mr Newlands referred to it at paragraph 21 of his witness statement and was cross-examined on it. I accept his evidence that he sought the building surveyor's frame stage certificate when the Builder sought payment for frame stage. I am satisfied that the Builder claimed for frame stage on 6 December 2007 (OTB1611) and that the frame was not approved on a number of occasions and was certified on 16 April 2008.
2. I note that the definition of frame stage at clause 1.1.13 of the building contract is "when the frame for the Works is completed and approved by the Relevant Building Surveyor". I also note that under s40(2) of the DBCA:

A builder must not demand or recover or retain ... more than the percentage of the contract price listed in column 2 [of the table to s40] at the completion of a stage referred to in column 3.

1. I accept Mr Newlands' evidence that the Owners paid the Builder for the frame stage regardless of the certificate prior to Christmas, as Mr Ratcliffe said he needed the money to pay wages. Had the Owners chosen to determine the contract at that stage, there would have been some merit in their claim. There was an apparent repudiation of the contract by the Builder then. However, they did not, so the issue concerning the frame stage claim ceased to be relevant to the relationship between the parties, except that the home could not reach lock-up before frame stage had been certified.

1. On 10 April 2008 the Builder sent the Owners a notice of completion stating that the work was complete. On 15 April the Builder sent the Owners another letter, asking them to disregard the notice of 10 April. On 18 April the Builder sent the Owners another notice of completion, stating that the works had been completed "to a satisfactory and workmanlike manner".
2. Mr Newlands said under cross-examination that no work was done between the first and second notices. A change of significance is that the building surveyor had finally issued a document headed "Building Inspection Work Direction" ("BIWD") on 18 April 2008, which indicated that the frame had been approved.
3. In order to be entitled to make the final claim, the Builder had to comply with clause 4.6 of the building contract:

The Owner and the Builder have agreed that the scope of work which the Builder is to perform under the Agreement will require an occupancy permit or a certificate of final inspection. Where there are Works which the Owner is to perform or other Works which the Builder is not to perform which would ordinarily be required to ensure the Issue of an occupancy permit for the Works, then the Builder shall obtain a certificate of final inspection from the Relevant Building Surveyor in relation to the Works in respect of that work which the Builder has completed before demanding final payment. [Emphasis added]

1. However the BIWD may be characterised, it cannot be characterised as a certificate of final inspection. The result of the "final" inspection of 15 April 2008 was "not known" and the inspection of 16 April 2008 was not a final inspection but a "ReFrame" inspection, as described on page one and page three.

1. I find that the home reached physical completion, being lock-up and further works, sometime before 18 April 2008 and that for practical purposes completion was achieved when the frame was approved. I find contract completion was reached on 18 April 2008 as claimed by the Builder. The Owners are therefore entitled to agreed damages from 18 January 2008 to 18 April 2008 (13 weeks) at $250 per week, a total of $3,250.

1. As I have found that the contract was completed by the Builder before the Owners attempted to terminate it, it follows that there is no supportable claim for general damages for delay.

1. Interest and costs are reserved and will be considered at or after the next hearing.
2. In considering legal costs I express concern regarding the OTB. It is ten volumes, comprising almost 2,000 pages, and only a very small proportion of those pages were either referred to in witness statements or in the course of cross-examination. Many documents were included multiple times. In the course of writing this decision I have relied on some documents that were not referred to, but including documents in the hope that they might be relevant is a hit or miss way of presenting a case, which does not serve the parties well. Some of the documents had no apparent relevance to the proceeding, including an agreement under s173 of the Planning and Environment Act 1987, a commercial marina agreement and a long term boat pen licence.
3. I remind the parties of paragraph 14 of VCAT Practice Note PNDB1:2007:

14.3 Tribunal Books must not simply include copies of all discovered documents.

14.5 Tribunal Books should not contain duplicate or multiple copies of the same document - any unnecessary duplication of documents may be taken into account in the exercise of the Tribunal's discretion under s109 of the Act.

I also remind them of Deputy President Aird's remarks in MX Projects Pty Ltd v Hyber Pty Ltd [3]:

I pause to mention here my concerns about the significant costs incurred by MX Projects in preparing the Tribunal Book, which now amounts to twelve volumes. The Tribunal Book, as initially filed, comprised nine volumes. It seems that all of MX Projects' discovered documents have simply been photocopied, without any consideration as to their relevance. Many of the documents are not in chronological order. In many instances, multiple copies of the same documents have been included particularly where a document has been forwarded to others by facsimile. Not only does this mean that excessive photocopy costs have been incurred but I expect the preparation costs for the parties were significant. I noted that Counsel for both parties had extracted (and referred me to) a small proportion of the documents contained in the Tribunal Book for the purpose of cross-examination.

1. My concern regarding the OTB is that it must have been expensive to produce and it created difficulties for me and the witnesses. The difficulty was exacerbated by a lack of page numbers on the spines of folders. Having extracted the relevant documents, the OTB could have been contained in two folders at most.

[1] In the absence of evidence from both experts about this sum, it is estimated in accordance with Mr Croucher's report of 31 July 2008 to remove and set aside the balustrade then reinstall it, plus contingency of 10%, margin of 20%, GST of 10% to reach a figure for July 2008, and approximately 10% for increase in prices to date.

[2] Against the interests of the person who provides the contract, therefore against the Builder's interests.

[3] [2007] VCAT 271 at [13]