Ochudzawa v Lepagier; Lepagier v Ochudzawa

NCAT Consumer and Commercial|2021-09-14

Introduction

These reasons for decision are in relation to three separate applications arising from the construction of a pool at Mr and Ms Ochudzawa's premises (the construction work). It is Joanna Ochudzawa's case that the pool has significant structural defects and needs to be replaced. Ms Joanna Ochudzawa (the owner builder) proceeds against Mr Lepagier who holds a supervisor's certificate. Mr Ochudzawa, was at all relevant times an owner of the premises and an architect (the architect).
The contractual arrangements were as follows.

HB 21/09594 Joanna Ochudzawa v Mirco Lepagier

Ms Joanna Ochudzawa is the owner of a property at Clark Street, Wakehurst (the property). Mr Simon Ochudzawa is an architect and is the spouse of the owner and had the authority to manage the construction works of a residence and pool taking place at the property. Ms Joanna Ochudzawa was the owner builder for the construction work and held an owner builder permit (the owner builder).
In the "statement of cross claim" filed on Ms Joanna Ochudzawa's behalf, it is pleaded that Mr Simon Ochudzawa in in his capacity as owner and architect of the property, engaged Mr Mirco Lepagier to "subcontract and manage" the construction of a swimming pool. It was Mr Ochudzawa, the architect, who had a "conversation" with Mr Lepagier which formed the particulars of the contract (see paragraph 5a of the cross application).

The issues to be determined

Is the work carried out by Mr Lepagier residential building work as defined by the Home Building Act 1989?
If the answer to question (1) above is in the affirmative, the Tribunal will proceed to determine the following issues. 1. Did Mr Lepagier breach an implied term to carry out the work to 'subcontract and manage' with due care and skill? 2. If the answer to (1) above is in the affirmative the Tribunal will consider the issues of loss and damage: 1. What caused the defects in the pool? 2. What is the appropriate method of rectification?

Evidence and submissions

In making a decision, I have considered the material in Volumes 1 to 4 of the Joint Bundle, a written transcript and the written submissions filed on behalf of the parties.

Jurisdiction

A building claim is defined in section 48A of the Act 48A Definitions (1) In this Part - building claim means a claim for - (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim. building dispute means a dispute that has been notified as referred to in section 48C. building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services - (a) supplied by the person who contracts to do, or otherwise does, that work, or (b) supplied in any circumstances prescribed by the regulations to the person who contracts to do that work. goods, services and supply have the same meanings as in Part 6A of the Fair Trading Act 1987.
The definition of a building claim specifically states that residential building work includes supervisory work, see Schedule 1 clause 2: "residential building work" means any work involved in, or involved in co-ordinating or supervising any work involved in-- … the construction of a dwelling".
Supervisory work is therefore by definition residential building work, and therefore a claim by an owner against a supervisor is by definition a building claim under section 48A of the Act UNLESS the residential building work performed by the supervisor is excluded from the definition of residential building work. (3) Each of the following is excluded from the definition of "residential building work" - … (i) the supervision only of residential building work-- (i) by a person registered as an architect under the Architects Act 2003 , or (ii) by a person supervising owner-builder work for no reward or other consideration, or (iii) by any other person, if all the residential building work is being done or supervised by the holder of a contractor licence authorising its holder to contract to do that work,
Whether or not the exclusion applies is a finding of fact.
The exclusion was embraced by Mr Lepagier in pleadings and submissions filed by legal representatives on his behalf in September 2021 submitting that "the cross respondent did not undertake residential building works pursuant to the HBA".
The intention of the Act is to exclude a claim against a supervisor if all the residential building work is being done by the holder of a contractor licence authorising its holder to contract to do that work.
In this instance the relevant enquiry concerned not whether the claim against Mr Lepagier is a building claim, which clearly it is, but whether GMB Contractors was the holder of the relevant contractor license authorising its holder to contract to do that work, "that work" being the formwork and installation of steel components.
The Tribunal directed the parties to provide evidence establishing whether or not GMB Contractors was the holder of a contractor license authorising its holder to do "that work", being the formwork and installation of steel components.
Contrary to a written direction of the Tribunal to provide evidence concerning GMB Contractor's license status Mr Lepagier did not provide evidence in support of the exclusion defence, and the defence was abandoned.
As there is no evidence before me that the GMB Contractors Pty Ltd was the holder of a contractor license authorising its holder to do "that work", being the formwork and installation of steel components I cannot be satisfied that the exclusion applies.
I therefore reiterate my finding, insofar it is required at all, that Mr Lepagier by definition carried out residential building work and the claim brought by the owner is a building claim within the meaning of s48A of the Act.

The owner's case

The owner claims damages for breach of an implied term in the sum of $240,263.44.
The owner has withdrawn her claim for damages for breach of implied statutory warranties under section 18B of the Act.
It is the owner's case that in breach of the agreement the works "subcontracted and managed" by Mr Lepagier were defective in significant respects.
It is alleged there was insufficient bottom reinforcement to the pool base and the adjacent spa leading to concrete cracking; the concrete walls had not been reinforced correctly to prevent concrete shrinkage; the top reinforcement to the pool base was missing; and the concrete piers supporting the spa were not tied into the pool base in accordance with engineer's documentation.
The owner's evidence is supported by the engineering report of Mr Thanopoulos. It is the owner's expert's opinion that the pool cannot be rectified but must be replaced.
The owner's pleadings were amended (TP 18). What remains of the pleadings is contained at p20 of the courtbook. The amendment was confirmed by counsel during opening, when an application for leave to amend the pleadings was granted: 5. On or about 28 September 2017 the cross applicant (Joanna Ochudzawa) entered into an agreement with the first cross respondent (Mirco Lepagier) whereby the first cross respondent would project manage the construction and design of a swimming pool at the Property in exchange for payment of his services on a cost plus 12% basis (the Agreement). Particulars a. Conversations between Simon Ochudzawa and Mirco Lepagier on or about 28 September 2017. 6. It was a term of the Agreement that the first cross respondent would subcontract and manage all necessary trades required to complete the works. Particulars a. Conversations between Simon Ochudzawa and Mirco Lepagier on or about 28 September 2017. 7. Withdrawn 8. Withdrawn 9. Pursuant to the Agreement, the cross applicant made the following payments to the first cross respondent. 25,000 on 13 August 2018; and $70,000 on 16 May 2019. Breaches of the Agreement 10. In breach of the Agreement the works supervised by the first cross respondents were defective. 11. The first cross respondent has breached the implied term pleaded at paragraph 7 as amended: It was an implied term of the Agreement that the first cross-respondent would exercise reasonable care and skill in the performance of his services under the Agreement.
In closing submissions it is stated that the owner entered into a verbal agreement whereby Mr Lepagier would "organise and oversee" the construction of the swimming pool and spa.
In submissions it was stated that Mr Lepagier was obliged to: 1. select the trades; 2. oversee the trades; 3. manage the sequencing of the build; 4. manage the cost of the build; and 5. receive a fee of 12.5% of the build cost for his management services.
The submissions attempt to significantly widen the case as pleaded. Insofar the agreement is pleaded and particularised, the agreement was that Mr Lepagier would subcontract and manage trades.
It is submitted that the contract contained an implied term that the supervisor would exercise reasonable care and skill in the performance of the project management services: Astley v Austrust Limited (1999) 197 CLR 1 at 22.
It is submitted that Mr Lepagier "admits the contract" because his own evidence accepts that 1. he attended the site with the owner and the owner builder to discuss formwork and steel work with the installer, GMB Contractors Pty Ltd (CB 735); 2. paid trades; 3. offered guidance; 4. provided design advice on the pool; 5. attended site on multiple occasions to take a look at the construction of the pool; 6. liaised with the engineer to return to site to inspect prior to concrete placement; was cognisant that other trades plumbing and concreting had finished their work; 7. arranged for the installation of steel gutters; prepared multiple budgets and cost estimate; 8. and prepared and issued a log of the contract as it performed the work on the swimming pool.
Submissions as to breach of the implied term are contained at paragraph 37 of the written submissions.
It is submitted that the evidence establishes that Mr Lepagier had been advised on 23 August 2018 by a structural engineer, (Mr Xu of Engineering Studio Pty Ltd) that reinforcement of the concrete pool was yet to be installed. In particular Engineering Studio sent an email to Mr Lepagier, pointing out that there were insufficient N16 horizontal bars and insufficient vertical bars installed in the pool.
In those circumstances it is submitted that Mr Lepagier failed to exercise reasonable care and skill by either not notifying GMB Contractors of the defects and directing the rectification by GMB Contractors of those defects; or, if notification had been given, not checking that such direction had been followed before the concrete pour on 28 August 2018.
On the issue of causation it is submitted that had Mr Lepagier exercised reasonable care and skill the missing reinforcement would have been installed by GMB Contractors before the concrete pour.
It is submitted that the Tribunal ought to make one of two findings.
First, that the supervisor never told GMB Contractors to "rectify the defects" that the pool was built with insufficient N 16 horizontal bars and insufficient vertical bars despite those submissions being identified in the Engineering Studio Inspection report.
Secondly, that Mr Lepagier never checked that GMB Contractors had rectified the defects identified in the Engineering Studio Inspection report and that but for the breach the swimming pool would not have been built without the required structural enforcement.

Mr Lepagier's defence and cross application

It is Mr Lepagier's defence that the pleadings prepared by the owner do not refer to a "failure to supervise"; the evidence does not support the position that Mr Lepagier breached the terms of the agreement causing loss and damage to the owner; or in the alternative, if the Tribunal is minded to find that Mr Lepagier did breach the terms of the agreement causing loss and damage, the complete removal and replacement of the pool is not reasonable or necessary, and the defects in the pool can be remediated satisfactorily.
It is submitted that there is nothing in the owner's pleadings or the application form that refers to a failure to supervise properly.
In his cross application Mr Lepagier seeks payment of moneys outstanding under the agreement in the sum of $45,583.24. Mr Lepagier proceeds against both Mr and Ms Ochudzawa as parties to the agreement. Mr Lepagier states in the cross application that he entered into an agreement with both Mr and Ms Ochudzawa and that it was a term of the agreement that Mr Lepagier would 1. pay contractors engaged by the owners on their behalf, 2. purchase materials at the times directed by the owners on their behalf, and 3. the owners would pay Mr Lepagier for expenses he incurred plus an agreed margin of 12.5 percent.
The terms of the agreement as pleaded by Mr Lepagier are admitted by the owners in their amended points of defence filed on 17 August 2021.
It is not controversial that the owner builder, Ms Ochudzawa, paid a total of $105,000 to Mr Lepagier pursuant to the terms of the agreement.
It is submitted that Mr Lepagier was engaged to perform project management services and that it was Ms Ochudzawa, as the holder of an owner builder license, who performed the residential building work at the property and that the works for which she had obtained an owner builder license expressly included swimming pool construction works.
It is submitted by Mr Lepagier that the owner builder was responsible to ensure that GMB Contractors installed the formwork and the steel components correctly and in accordance with the contract entered into between the owner builder, the architect and GMB Contractors.
It is further submitted that the owner builder and the architect directly engaged other contractors, including GMB Contractors, to undertake the works on the pool including the formwork and the installation of the steel components.
Mr Lepagier was cross examined and I have set out part of the transcript provided by the parties: I was not supervising the installation (TP 18) 848. That is not my question. Okay. A person must be careful to only permit the concrete pour to occur when that person is sure that the structural elements are in accordance with the plans? Agreed. You attended the site on 28 August 2018? Yes You were aware the pour was being carried out on that day and that's why you attended the site correct? Correct … And you attended that day because you're the project manager who was there to supervise the pour, correct? I facilitated the supply of the concrete pump and concrete. You were also there to direct the pour, weren't you? No. I supplied the concrete pump and concrete. If you supplied the concrete pump and the concrete there was no need for you to be there on 28 August though, was there? To ensure that they did arrive, and that the concrete arrived. To ensure that they did it right? Why would… To ensure that they did the pour correctly? No no to ensure that they arrive and the concrete pump had arrived. [TP19] … Now, the purpose of inviting Engineering Studio to carry out an inspection on the 23rd of August was to determine whether the formwork and steel work undertaken by GMB was in accordance with the structural drawings, correct? Correct. You invited them to carry out that inspection on the basis that you would receive a report as to the results of the inspection, correct? Correct. You wanted to know from Engineering Studio that the formwork and steel were complied with the plan, didn't you? Yes … Is it your evidence today that you acted with due care despite not checking whether GMB had remedied the problems identified in the report before the pour occurred? I facilitated the service that I was contracted to provide. And did so. That's your answer? Yes [TP26]

Consideration

The owner's cause of action is narrow. It is pleaded and particularised that Mr Lepagier breached an implied term of the agreement to carry out his duties to "subcontract and manage" with due care and skill. What remains of the points of claim is set out at [30] above. The agreement is not an agreement to supervise.
The terms of the agreement as pleaded by Mr Lepagier are admitted by the owners in their amended points of defence filed on 17 August 2021 and in accordance with the admissions I find that the agreement included terms that Mr Lepagier would pay contractors, purchase materials and be reimbursed from time to time. These terms of the agreement are added to the requirement that Mr Lepagier subcontract and manage the construction of the pool.
Mr Lepagier's points of defence deny the breach of the implied term.
No submission was made by the legal representatives for Mr Lepagier that the term to act with due care and skill cannot be implied into the agreement and I have therefore not considered whether the implied term, as a matter of efficacy, should be implied into the agreement. This was not a point taken by Mr Lepagier.
Insofar necessary I find that an obligation to act with due care and skill can be implied into the agreement.
The issue to be decided is whether it was it was Mr Lepagier's obligation under the agreement to supervise GMB Contractors that the formwork and steel components would be installed in accordance with the contract specifications.
I understand Mr Lepagier's defence to be twofold 1. It was not a term of the agreement that he would supervise the installation of the formwork and steel, and 2. It was Ms Ochudzawa's function as the owner builder to ensure that the subcontractor GMB Contractors performed its duty in accordance with its contract.

What where the terms of the agreement between Mr Lepagier and Ms Ochudzawa?

The question to be determined is 'what is the scope of the agreement and was there a breach of the agreement?'
Firstly, I am not satisfied that the applicant has provided sufficient evidence to establish a breach of the agreement to "subcontract and manage" and secondly I am not satisfied that the applicant has established that it was a term of the agreement he would supervise the subcontractors.
During opening it was made very clear that the Tribunal should only concern itself with a breach of the implied term. No other cause of action was being pursued. Although the Tribunal is not a forum of strict pleadings, it is trite to say that a party should be bound by points of claim and points of defence so that the parties know the case they must meet. The owner had particularised its points of claim in a very narrow way, and points of defence were filed by the owner in respect of the claim by Mr Lepagier. Mr Lepagier and the Tribunal were entitled to proceed on the basis that the pleadings identified the issues which the owner intended to raise and admit (Maygood Australia Pty Ltd v The Owners - Strata Plan No 85338 [2020] NSWCATAP 237). Had the owner not withdrawn any claim for breach of implied warranties the Tribunal would have considered the duties available under s18B of the HB Act, which are considerably wider than those of the oral agreement.
Having placed its reliance entirely on the oral agreement, it was in my view a matter of expert evidence to inform the Tribunal whether the reasonable project manager in Mr Lepagier's position was expected to supervise the installation of formwork and steel reinforcement beams; and whether it was within the scope of the agreement that the project manager who was contracted to "manage" was obliged to make a qualitative assessment of GMB Contractor's work.
There is no evidence before me to suggest that it was a term of Mr Lepagier's agreement to ensure that GMB Contractor's Pty Ltd installed the N16 beams correctly. There is no evidence before me setting out what the terms of the agreement to manage a building site entails, nor was I provided with evidence what an agreement to manage the construction of a pool entails. The pleadings do not assist, as they merely assert Mr Lepagier was to "subcontract and manage", not supervise. The meaning of supervision I am satisfied may be given its ordinary dictionary meaning of overseeing or superintending something (see Alexander & Anor v Gregoriou and Ors [2010] NSWDC 15 at [82]to [83]).
I have not been provided with an opinion from a holder of a supervisor license, a building specialist or other expert that explains the scope of the duty of a project manager or whether the reasonably competent project manager ought to have assessed and stopped the progression of the concrete pour on the day in question.
There is certainly no evidence to suggest that Mr Lepagier had the requisite expertise to supervise the installation of the N16 beams or that he should have been in a position to qualitatively evaluate whether the work performed by GMB Contractors complied with the engineering plans and specifications. There is no evidence that Mr Lepagier was provided with a copy of the engineering plans and specifications. Mr Lepagier states that he held engineering qualifications but is not a structural engineer and would not have been able to assess whether the steel beams were compliantly inserted or not.
The mere finding of a defect does not establish a breach of the agreement or a failure to act with due care. It is not in dispute that the pool reinforcement does not comply with the plans and specifications. However something more is required, other than to state Mr Lepagier was required to "subcontract and manage" as pleaded. The nature of the evidence required to establish a breach was considered by the Appeal Panel in Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 (Deacon).
The Appeal Panel considered that although objective standards such as Australian Standards, the Building Code of Australia and the Guide to Tolerances are of significant relevance in establishing whether work has been performed in a proper and workmanlike manner (Wheeler v Ecroplot Pty Ltd [2010] NSWCA 61 at [10]), the absence of such evidence does not automatically mean a homeowner has failed to establish a breach of statutory warranty. The reverse applies also. The mere presence of evidence of a defect, as there is in this case, does not of itself establish a breach by a contractor to carry out work with due care and skill particularly if the scope of the work is not defined.
In the Appeal Panel's view, the relevant principle was succinctly stated by Senior Member Goldstein in G MacFayden and Anor v G Tadrosse [2014] NSWCATCD 194 at [46] as follows: …[E]vidence that work does not comply with the Building Code of Australia would establish a basis for a finding that sub section 18B(c) of the Act has been breached. Evidence of the details in which work does not comply with the contractual plans and specifications would form the basis for a finding that sub section 18B(a) of the Act has been breached. Evidence of work not being carried out in a proper and workmanlike manner would in my view involve identification of the work in question, a statement of how the expert would expect it to be carried out in in a proper and workmanlike manner and then identification of the factors which establish that the way in which the work has been carried out falls short of it being carried out in a proper and workmanlike manner. Evidence of this nature, if accepted, would form the basis for a finding that sub section 18B(a) of the Act has been breached.
The authorities are analogous but for the fact that the decision at first instance (McFayden) and the Appeal Panel decision (Deacon) concern claims for damages for breach of statutory warranties under s18B of the Act. In this case the pleadings are limited to a breach of an implied term to act with due care and skill while "subcontracting and managing". There is only scant lay evidence from the architect that purports to identify the scope of Mr Lepagier's duty under the agreement. The owner builder, Ms Ochudzawa, gave no evidence concerning the duty of Mr Lepagier. As already stated there is no expert evidence from a qualified building professional as to what was expected of a reasonable project manager in Mr Lepagier's position. This is not a case where the facts speak for themselves and in my view the applicant has not discharged her onus of proof.
As was expressed in McFayden and cited with approval by the Appeal Panel, evidence of a duty not being carried out with due care and skill would in my view involve identification of the scope of the duty to "subcontract and manage" in the context of this particular site, a statement of how a reasonably competent project manager would expect the duty to be carried out and the identification of the factors which establish that the way in which the project management has been carried out falls short of being carried out with due care and skill.
The role of expert evidence was also discussed in Bannister & Hunter v Transition Resort Holdings (No.3) [2013] NSWSC 1943 (20 December 2013). What a reasonable project manager should have done to satisfy a supervisory obligation was a matter for expert evidence, particularly in the absence of a contract that specified the scope of supervision [to test fill]. In that case the parties produced a joint expert report identifying the scope of the project manager's duty. In the absence of a clearly articulated agreement, I consider reliance on experts to express an opinion whether it was Mr Lepagier's duty to recognise that the steel components were defective and that the reasonable project manager would have stopped GMB Contractors during the pour was essential in this case.
For these reasons I am not satisfied that Mr Lepagier has breached the terms of the oral agreement to subcontract and manage and I cannot be satisfied he breached the implied term of due care and skill.
There is no evidence that the course taken by Mr Lepagier was unreasonable under the circumstances. I accept and prefer Mr Lepagier's submission that the case against him must be dismissed.
Having come to the conclusion that the owner has failed to establish her case that Mr Lepagier had a duty to ensure that the steel beams were correctly installed, it is not necessary for me to determine whether it was the duty of the owner builder to ensure GMB Contractors installed the reinforcement in accordance with plans and specifications.
I have been provided with a mere assertion in submissions that Ms Ochudzawa as owner builder had a duty to ensure the subcontractor GMB fulfilled its oblation. I make no findings in that respect. I merely note that that an owner builder who obtains the services of a subcontractor to install steel beams, in my view cannot escape from the responsibility attaching on her of seeing that duty performed by delegating it to a project manager such as Mr Lepagier, whether by contract or not . "He may bargain with the contractor that he shall perform the duty, and stipulate for an indemnity from him if it is not performed but he cannot thereby relieve himself from liability to those injured by the failure to perform it" see Voli v Inglewood Shire Council (1963) 110 CLR 7429.
Lastly I should address the submissions by counsel that Mr Lepagier failed to exercise reasonable care and skill by either not notifying GMB Contractors of the defects and directing the rectification by GMB Contractors of those defects; or, if notification had been given, not checking that such direction had been followed before the concrete pour on 28 August 2018.
I find that this issue is no longer relevant in light of my finding that there was no breach of the agreement to subcontract and manage. Be that as it may, I have considered the submissions and evidence. The architect Mr Ochudzawa attended the site daily and was "intimately" involved in the construction of pool. Mr Lepagier only attended on about a weekly basis and otherwise from time to time as required by Mr Ochudzawa (see affidavit of Mr Lepagier dated 13 September 2021). Mr Ochudzawa attended a site inspection with Adam McFarlane of Hills Shire Council on 23 August 2018, at which GMB Contractors was also present. Mr Lepagier was not present and was not privy to that discussion.
Mr Lepagier was present later on the same day on 23 August 2018 when Mr Robert Xu of Engineering Studio attended, again with GMB Contractors and Mr Ochudzawa present. The purpose of the meeting was, as described by Mr Ochudzawa "to obtain a structural engineer certify that the structural components of the pool, for example the steel reinforcement, was suitable. This would then allow Mirco [Lepagier] to complete the concrete pour" (see affidavit of Mr Ochudzawa at [29]).
A report was forwarded to Mr Lepagier by Mr Xu of Engineering Studio and on 25 August 2018 Mr Lepagier had a conversation with "George" of GMB Contractors "in which I relayed to him the work which was required prior to pouring concrete".
Details of the council inspection were forwarded to Mr Lepagier on 27 August 2018. The council report stated "the pool reinforcement, including the reinforcement for the spa seating and the wall separating the spa and the pool [which] are yet to be installed" consistent with the report of Mr Xu of Engineering Design. Mr Lepagier was not party to the meeting or discussions between Mr Ochudzawa, GMB Contractors and Engineering Studio. He was emailed a copy of the report, but with no instructions. Clearly Mr Ochudzawa was content with the outcome of the inspection report by Engineering Studio because he received a compliance certificate from Engineering Studio and nothing further was communicated to Mr Lepagier about reinforcement steel.
I note that the proceedings brought by Ms Joanna Ochudzawa against Engineering Studio Pty Ltd were withdrawn.
While Mr Lepagier conceded in cross examination that the Engineering Studio report of 23 August 2018 suggested further work was required to be performed by GMB he was not informed by either Mr Ochudzawa or Mr Xu of Engineering Studio that they had any concern that GMB Contractors would not undertake the very work it was obliged to perform in accordance with the plans and specifications, and as they were reminded to do. It is trite to say that the owner builder was entitled to assume that GMB Contractors would perform the scope of their contract in a proper and workmanlike manner.
Five days later, on 28 August 2018, GMB Contractors attended the site to complete the pour. Mr Lepagier maintains that it was not his duty to "supervise the installation" but to ensure that the concrete pump was present. I am not of the view that the mere fact that Mr Lepagier was copied in on an email report of Mr Xu of Engineering Design, establishes a scope of duty that is otherwise not established. I am not satisfied that it was a part of the agreement that Mr Lepagier would anticipate and prevent subcontractors from performing defective work.
In my view it was clearly the responsibility of GMB Contractors to perform their obligations in a proper and workmanlike manner and in accordance with their statutory obligations.
I note that GMB Contractors Pty Ltd are deregistered.
As I have found that the breach of the implied term by Mr Lepagier is not established it is not necessary for me to determine loss and or damage.
The owner's claim HB 21/ 09549 is dismissed.

Mr Lepagier's case - HB 20/3301

It is conceded by the owners that there is money outstanding to Mr Lepagier pursuant to the agreement.
Mr Lepagier seeks an order that the owners pay the sum $45,583.24 by way of 'damages'. It is alleged that a component is owed for project management services and a significant component arises from disbursements ($32450) paid to a third party contractor by Mr Lepagier on behalf of the owners. I understand that the debt is no longer disputed.
Mr Lepagier seeks an order that interest be payable under the Civil Procedure Act 2015. I note that as the Tribunal is not a court and the provisions of the Civil Procedure Act 2015 do not apply and as there is no contractual obligation by the owners to pay interest to Mr Lepagier, the claim for interest is dismissed.
At the hearing counsel indicated that the owners no longer press the defence to the application brought by Mr Lepagier in proceedings HB 20/3301. It was submitted that the owners brought proceedings by way of defence and set off only. However as the claim for breach of an implied term against Mr Lepagier was dismissed there is no set off to be accounted for.
I make an order that the respondents pay Mr Lepagier the amount of $45,583.24 immediately.

Tectonic Pools Pty Ltd v Joanna Ochudzawa and Simon Ochudzawa - HB 20/38644

In or about May 2019 Mr Ochudzawa contacted Tectonic Pools Pty Ltd and entered into a contract for residential building work, namely to "finish the pool, which at that stage required internal rendering, waterproofing, tiling, pool fencing, external pool plumbing and commissioning".
Mr and Mrs Ochudzawa (the owners) entered into a contract with Tectonic Pools Pty Ltd on 28 December 2019 for a contract price of $99700.
The applicant (Tectonic) seeks payment in the amount of $36,523.36 outstanding under the contract, plus interest in accordance with the contract and the amount of $4985 in damages for loss of profit. The owners' submissions did not challenge the arithmetic and it was conceded by counsel for the owners in opening that the only issue to be determined in this application is whether the owners are entitled to a set off for defective and or incomplete work, in particular defects numbered 1a, 3a and 3d as set out in the expert report of Tyrrells Property Inspections Pty Limited dated 16 December 2020 contained at Volume 4, tab 10 of the court bundle. The report was prepared by Mr Craig Redfern.

Defect Item 1a - the waterproofing membrane

The owners seek an order for $44,932 for damages for defective work to the waterproofing membrane and flashings to the pool shell. It is the opinion of Mr Redfern that the membrane needs to be replaced. The nature of the defective work is set out on 219 of the court book. Mr Redfern opines that the "defective works to the waterproofing membrane includes: failed membrane to pool shell with staining, high moisture reading and water observed is leaking in multiple locations to the pool undercroft. Missing flashing detailing to pool guttering with observed staining and high moisture content to soffit area below."
I have had regard to the Redfern report. There is no evidence/opinion expressed in the Redfern report that the contractor Tectonic Pools Pty Ltd carried out defective building work that was causative of the failure of the waterproofing membrane.
Although Mr Redfern states at 9.1.1 of his report that "the applicant's work contained defects that arose as a result of the applicant's failure to conduct the works properly" the body of the Redfern report does not state or set out the nature of the defective work.
There is simply no opinion expressed that leads to a finding that Tectonic Pools Pty Ltd breached the statutory warranties under s18B of the HB Act, or breached a term of the written contract. Evidence of work not being carried out in a proper and workmanlike manner would in my view involve identification of the work in question, a statement of how the expert would expect it to be carried out in in a proper and workmanlike manner and then identification of the factors which establish that the way in which the work has been carried out falls short of it being carried out in a proper and workmanlike manner. Evidence of this nature, if accepted, would form the basis for a finding that sub section 18B(a) of the Act has been breached (McFayden supra).
I have had regard to the expert opinion of Mr Rickard, engineer who was retained on behalf of Tectonic Pools Pty Ltd (CB volume 4 p1487). Mr Rickard opines that the failed waterproofing is caused by the failure of other contractors who built the pool (prior to Tectonic Pty Ltd taking over) to properly enforce the pool, which in turn caused significant cracking, leaking and stalactites forming in the undercroft.
Mr Rickard states:
"I refer to the report prepared by Mr Con Thanopoulos [structural engineer] … a copy of which is enclosed. I also refer to the Executive Summary contained in clause 2.0 of that report. The engineer has used AS3735-2001 as his Standard of reference. In clause 2.1 to 2.9 he provides a highly critical report of the structural design of the pool. I have used AS2783-1992 as my Standard of reference. Both design assessments have independently reached the conclusion that the reinforced concrete design does not comply with good design practice and relevant Australian Standards. I do not agree that the pool needs to be totally demolished, but it is certainly in need of significant modification.
It is not my role to comment on the structural design of the pool other than to assess the impact of the design may have on the effectiveness of the membrane provided by [Tectonic]."…
"it is clear to me that the reinforced concrete design of the pool is not in accordance with either AS2783 - 1992 or AS 3735 - 2001. The problems of leakage through the pool are considered due to that oversight as apparent when one examines the bottom surface of the concrete slab. The product supplied by Laticrete [waterproofing membrane] are of the highest standard. At this time, I have no evidence to suggest that [Tectonic] did not apply the membrane to the appropriate standard. I have no hard evidence that the membrane actually leaked since the stalactites may have formed prior to application of the membrane".
The parties in these and related proceedings arranged a conclave of experts. In the joint report it is the expert opinion of Messrs Fitzsimmons, Rickard, Thanopoulos and Wilcox that the "slab scan report" identifies that not all the top reinforcement documented on the structural drawings has been installed and that the stresses in the pool top reinforcement exceeds the limits specified in the Australian Standards. The experts further agreed that a further "slab scan report" was required to locate all reinforcement in the pool structure especially the presence or otherwise of additional 12mm bottom bars at 300mm centres noted on the structural drawings.
The further slab scan report was obtained and Simon Williams of Geoscope Utility Detection Services Pty Ltd confirmed on 11 September 2021 that "there was no visible S12-300 bottom rebar found at 300mm centres".
I am satisfied on the balance of probabilities that the cracking of the pool and the resultant leak is caused by a failure of contractors other than Tectonic to install top and bottom reinforcement steel in accordance with the plans and specifications. There is no evidence of membrane failure and I am not satisfied that the application of the membrane by Tectonic has failed. If I have erred and there is evidence of membrane failure then I find that it is more likely than not that the membrane failure is caused by defective construction of the pool resultant in leaking joints, cracking through the pool floor and cracking as observed by the engineering experts on site and reported in the joint report.
I dismiss the claim for the replacement costs of the membrane. First the expert report of Mr Redfern does not establish Tectonic breached the statutory warranties under s18B of the Act and secondly, I am satisfied that the evidence of the experts in conclave has established, on the balance of probabilities, that the defective installation of reinforced steel is the cause of the leaks, not a defective membrane.

Defect Item 1b - Efflorescence

The owners seek damages in the sum of $6875 for defective installation of the waterproofing membrane, particularly as it is alleged that the failed membrane in the terrace area, adjacent to the laundry, has caused efflorescence as observed to both the south and east walls below. (See Redfern report page 220 of the joint tender bundle). Mr Redfern and Mr Rickard were cross-examined. Where Mr Redfern and Mr Rickard differ I prefer the opinion of Mr Rickard for the reasons set out above.
It is the opinion of Mr Rickard that there is no issue with the membrane but that there is a problem with the reinforced concrete. During the conclave of four engineers it was agreed by the parties that the reinforced concrete had not been installed in accordance with the plans and specifications (the joint report).
As I set out above, I am satisfied that the cause of the cracking of pool concrete and resultant efflorescence is that the reinforcement stresses are too high and that a waterproofing membrane under these circumstances cannot insure against the cracking caused by the failure to design and build the concrete in accordance with the plans and specifications. I am satisfied that the penetration of water is not caused by the defective application of the membrane but by the failure of contractors [other than Tectonic] to design and build the concrete reinforcement in accordance with appropriate engineering standards.
Mr Rickard stated at TP 36 L 1741: "the membrane is provided in a concrete pool as an insurance policy. It is not the membrane that keeps the concrete waterproof, you cannot design a concrete structure [apply] a membrane on it and expect it to be watertight". …"the reinforced concrete must be designed in accordance with Australian Standards , it must have the correct reinforcement in it. If the builder leaves out the reinforcement, it will leak".
On balance I am not satisfied that the applicants have discharged their onus of proof and established that the membrane was defectively installed or that the defective workmanship is causative of efflorescence and I decline to make an award for this head of damage.

Defect item 3d terrace floor tiling

The owners originally sought damages in the sum of $1298 for defective floor tiling. At a conclave the parties agreed that the appropriate method of repair would result in a cost of $3300 (see conclave report between Mr Rickard and Mr Redfern exhibit E). It is the experts' joint opinion that the fall of 1 mm is not sufficient and contrary to Australian standards and that there is water ponding or pooling. Mr Rickard for Tectonic stated that the drain is elevated and this would be the cause of the waterponding. He therefore states that the method of rectification is the removal and repositioning of the dishdrain. This in his view would cost $300. Mr Redfern for the owners states that estimated cost to remove the tiles adjacent to the drain and the resetting of the lineal drain involves the removal of tiles and waterproofing and demolition, reinstatement, labour and material and would incur a cost of $3302.
I find the defect established as it was not disputed by Mr Rickard that there is a lack in fall. I find that the cost and method of repair proposed by Mr Redfern is reasonable under the circumstances and I make an award of $3302 in this respect. This will be accounted for by way of set off.
I award $41,508.36. From this I must deduct an award of $3302 as accepted by the experts in their joint report.
To ensure that the owners have the benefit of the offset amount in respect of item 3d, I have deducted $3302 from $41508.36
Accordingly I order the owners to pay $38,206.36 to Tectonic Pools Pty Ltd immediately
The pleadings seek an order for interest pursuant to the contract. I am not provided with a calculation. The parties are to provide consent orders in respect of the correct calculation for interest within seven days and the order will be adjusted accordingly.
The parties submissions on costs shall be provided in accordance with the directions and orders as published above. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 June 2022

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Judgment (14 paragraphs)

Legislation Cited (1)

Cases Cited (8)

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