Owners Corporation PS801173C and Ors as per Schedule

Owners Corporation PS801173C v Devakon Pty Ltd (Building and Property) [2025] VCAT 830

1. The Tribunal declares that the respondent must pay to the applicants damages in the sum of $119,562.39.
2. The applicants have leave to seek orders apportioning those damages between the applicants. If they seek such an apportionment, they will need to make an application supported by submissions and affidavit material within 30 days.
3. The applicants have leave to make an application for interest supported by submissions and affidavit material within 30 days.
4. The applicants have leave to make applications for costs and for reimbursement of fees supported by submissions and affidavit material within 30 days.
5. The respondent has leave to make applications for costs and for reimbursement of fees supported by submissions and affidavit material within 30 days.
6. Any application for apportionment of damages amongst the applicants, for interest, for costs or for reimbursement of fees must be referred by the principal registrar to Senior Member Edquist who will make orders regarding the disposition of those applications. It is likely a further hearing will be scheduled at which all applications can be heard and, if time allows, determined and final orders made

Ms G Nip of Counsel, instructed by Ms L Moseby, solicitor

Mr A Blunt of Counsel, instructed by Mr D Ivers, solicitor

Shaun Koob (Owner of Lot 1 on Plan of Subdivision PS801173C)

Rana Brogan (Owner on Lot 2 on Plan of Subdivision PS801173C)

Kathryn Hines (Owner of Lot 3 on Plan of Subdivision PS801173C)

Annette Newton (Owner of Lot 4 on Plan of Subdivision PS801173C)

Quang Trung Ly and Yazmin Binti Johari Halim Shah (Owners of Lot 5 on Plan of Subdivision PS801173C)

Liam Riordan (Owner of Lot 6 on Plan of Subdivision PS801173C)

Lucy Tissot (Owner of Lot 7 on Plan of Subdivision PS801173C)

Aaron Robins and Paula Robins (Owners of Lot 8 on Plan of Subdivision PS801173C)

Jemima Doris Isaac (Owner of Lot 9 on Plan of Subdivision PS801173C)

Peter Paul Stricker (Owner of Lot 10 on Plan of Subdivision PS801173C)

1. This is a case which has arisen out of unfortunate circumstances. The applicants-an Owners Corporation and a number of individual lot owners- have come to the Tribunal seeking damages for breaches of some of the warranties created by s 8 of the Domestic Building Contracts Act 1995 (Vic) ('the DBC Act') in an apartment building which was constructed by the respondent-Devakon Pty Ltd ('the builder')-for a developer.
2. Prior to the completion of the works, a substantial dispute arose between the builder and the developer and the contract was terminated. The developer then engaged other contractors to complete the works.
3. The applicants, through expert building consultants, identified what they perceived to be substantial defects throughout the development, including water ingress into the basement level car park, and issues with the fire doors, fire service equipment, the roof, and paint and plaster work.
4. The applicants pursued a claim in the Tribunal against the builder seeking damages of just under $1 million inclusive of GST against the builder, but the claim has been prosecuted with limited success. Prior to the hearing some defects had been rectified and accordingly not pressed. Others were conceded not to be defects. However, of the defects that were pressed at the hearing, the most major alleged defect was found not to exist. A secondary issue was that at the hearing the applicant acknowledged that in respect of a number of defects they were pursuing the wrong party, and a number of their claims against the builder for this reason fell away.

1. The builder, Devakon Pty Ltd, is a builder registered under the provisions of the Building Act 1993 (Vic). Under a major domestic building contract dated 7 May 2018, the builder agreed to design and construct the development, which is a four storey apartment building (including a basement carpark) must containing 26 residential units in Malvern Road, Malvern East, Victoria. The developer which entered into the major domestic building contract with the builder was Malvern Developments (Vic) Pty Ltd.
2. A plan of subdivision for the development, Plan of Subdivision PS80117C ('the plan of subdivision') was registered on 25 March 2020. An occupancy permit was issued on 30 June 2020.
3. The first applicant, OWNERS CORPORATION PS801173C, is the Owners Corporation which is the registered proprietor of the common property at the development, described in the plan of subdivision.
4. The second to eleventh applicants are the owners of individual units or lots in the development ('the lot owners'). The lots owned respectively by the lot owners are as follows:
   • second applicant: Shaun Koob (Owner of Lot 1 on Plan of Subdivision PS801173C)
   • third applicant: Rana Brogan (Owner on Lot 2 on Plan of Subdivision PS801173C)
   • fourth applicant: Kathryn Hines: (Owner of Lot 3 on Plan of Subdivision PS801173C)
   • fifth applicant: Annette Newton: (Owner of Lot 4 on Plan of Subdivision PS801173C)
   • sixth applicant: Quang Trung Ly and Yazmin Binti Johari Halim Shah (Owners of Lot 5 on Plan of Subdivision PS801173C)
   • seventh applicant: Liam Riordan (Owner of Lot 6 on Plan of Subdivision PS801173C
   • eighth applicant: Lucy Tissot (Owner of Lot 7 on Plan of Subdivision PS801173C)
   • ninth applicant: Aaron Robins and Paula Robins (Owners of Lot 8 on Plan of Subdivision PS801173C)
   • tenth applicant: Jemima Doris Isaac (Owner of Lot 9 on Plan of Subdivision PS801173C)
   • eleventh applicant: Peter Paul Stricker (Owner of Lot 10 on Plan of Subdivision PS801173C)

1. The hearing began before me on 7 May 2025. The Owners Corporation and the lot owners (collectively 'the owners') were represented by Ms Giselle Nip of Counsel, instructed by Ms L Moseby, solicitor. The owners called only one lay witness, Mr Peter Stricker, the eleventh applicant. The owners called as their expert witnesses, John Coghlan and Robert Coghlan.
2. The builder was represented by Mr Andrew Blunt of Counsel, instructed by Mr D Ivers, solicitor. The builder's director, Mr Rasheed Rustom gave lay evidence. The builder called as its expert to both liability and quantum, Mr Anton Molnar, a registered builder.
3. The hearing moved quickly. After openings, Mr Stricker gave his evidence. He was followed by Mr Rustom. As the witnesses had provided written witness statements, the lay evidence was completed by lunchtime on the first day. In the afternoon of the first day, the parties attended a view at the development. Although the parties were not insistent that a view should take place, I found, as I usually do, that the view was very useful. Expert evidence came on the second day. Although the parties had at the start of the hearing proposed that there should be written submissions, the parties through counsel presented oral submissions on the afternoon of the second day, and the need for written submissions was obviated. The hearing finished at the end of the second day.

1. The owners rely heavily on the expert opinion of Mr John Coghlan, a registered domestic builder who now specialises in forensic work. They also rely on a plumbing expert, Mr Robert Coghlan, who is no relation. Without intending any disrespect to John Coghlan and Robert Coghlan is convenient to refer to them by their first names.
2. In their points of claim the owners, relying on John Coghlan's assessment, assert that the cost to rectify all the defects of which they complain stood at $882,347.27 excluding GST.[1] They reserved the right to claim a lot of rent arising from the defects. However, they did not make any claim for loss of amenity.
3. John Coghlan adjusted his costing in a supplementary report of 31 May 2024, which he prepared after a further inspection on 24 April 2025. He took into account, increased costs due to inflation and added GST. John Coghlan's new assessment was $996,790.11.[2]
4. In their amended points of claim, the owners articulated a claim based on common law negligence. This was abandoned at the start of the hearing in recognition of the reality that, on the facts of this case, no duty of care could be established as having been owed by the builder to the owners. The owners' counsel, Ms Nip, conceded that this followed the common law as reflected in the High Court decision in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61228.[3]
5. In his first report, dated 10 October 2022, John Coghlan identified 24 separate issues. Of these, he indicated that defect 7 - Foxtel wiring - had been rectified by the developer and was not defective work of the builder. Defect 8 - car stackers in the basement, could not be pressed as the builder had constructed what was on the approved plans. Defect 11 was characterised as a maintenance item.
6. In the owners' opening submissions, a fourth defect - paint and plaster work - was abandoned.[4] On the other side of the ledger, the number of defects claimed had expanded.
7. Just days before the hearing, the case was still unsatisfactorily articulated because, although the owners were making a global claim for damages of $996,790.11, they could not identify precisely what damages were being claimed by the Owners Corporation and what amounts were being claimed by the individual lot owners. The problem was only addressed on 1 May 2025, when John Coghlan submitted a supplementary report in which he allocated damages for defects which he had previously globally assessed to the Owners Corporation and to the lot owners on an individual basis.

THE UNDERLYING DISPUTE BETWEEN THE BUILDER AND THE DEVELOPER

1. The owners, in their amended points of claim referred to the major domestic contract dated 7 May 2018 made between the builder and the developer and to the inclusion in the contract of the warranties created by s8 of the DBC Act. Some of the alleged breaches of warranty ultimately relied on by the owners were referred to.
2. It was left to the builder, in its points of defence, to refer to the disputes which arose between the builder and the developer during the construction period. The builder alleged that it had ceased undertaking building works at the site on about 29 April 2020. In its opening, the builder acknowledged that on or around 19 May 2020 it had been locked out of the site by the developer and the developer engaged other contractors to complete the works. This facilitated the issuing of an occupancy permit on 30 June 2020.
3. Further information about the dispute between the builder and the developer can be gleaned from Mr Rustom's amended witness statement of 14 March 2025. The builder had carried out work at the site pursuant to the building contract between June 2018 in May 2020. Disputes regarding payment arose including allegations that the developer persistently underpaid the builder or did not pay in accordance with the terms of the contract. There are also disputes about delays and variations. The builder issued a suspension notice under the contract to enforce its rights. Mr Rustom deposed, at [60], that the builder suspended the works on 2 May 2020. He also deposed, at [84], that on 8 May 2020 the developer commenced proceedings against the builder in the Supreme Court of Victoria. That action was discontinued, and fresh proceedings were commenced in this Tribunal on 15 May 2020.[5] Mr Ruskom deposed that the builder was locked out of the site on 19 May 2020. By 29 May 2022 private security companies have been deployed at the site by the developer to secure it.[6] On 1 June 2020, the Tribunal dismissed the owners' proceeding. The presiding member (Member Kincaid) confirmed in an oral decision that the builder had lawfully suspended the work and was not required to provide documents which were being sought by the developer.[7] Mr Ruskom went on to depose that are the contract was terminated on 10 July 2023.[8] Mr Rustom also deposed that an adjudicator acting under the Building and Construction Industry Security of Payment Act 2002 (Vic) had determined on 31 August 2020, that the builder was owed $338,872.93 by the developer.[9] That determination was subsequently registered by the builder as a judgment of the District Court of New South Wales.
4. The builder referred to a number of these matters in its points of defence, and they were raised by me during the opening. Ms Nip, on behalf of the owners, submitted that they were not relevant to the question of the builder's liability to the owners. The builder's counsel, Mr Blunt, accepted this proposition, and I put these matters aside.
5. The agreement between the parties that the underlying dispute between the developer and the builder was not relevant to the case before me eliminated one of the issues arising on the pleadings. This was whether the builder could seek an apportionment of responsibility under s 24AI the Wrongs Act 1958 (Vic) and obtain an order that the relevant proportion of its liability should be directed towards the developer. This defence was not pressed by Mr Blunt at the hearing, and I proceed on the basis that it has been discarded.

1. The builder raised a series of defences. The builder queried the existence of a number of defects. In respect of some other defects, the existence of the defect was accepted, but it was argued in the light of the authorities the damages were not recoverable because the nature of the defect was technical, and a substantive award of damages was not warranted.

AUTHORITIES RELEVANT TO THE ASSESSMENT OF DAMAGES

1. It was common ground between the parties that the Tribunal should be guided in respect of the assessment of damages by a number of well-known authorities including Bellgrove v Eldridge[10] ('Bellgrove'), Tabcorp Holdings Limited v Bowen Investment Pty Ltd[11] ('Tabcorp') and Stone v Chappel[12] ('Stone'). It is convenient to summarise these principles before we look at individual defects.
2. The general rule for the recovery of damages for breach of contract is that the innocent party is entitled to be put in the same position as they would have been had their contract been fulfilled, as illustrated by the High Court in Bellgrove. In that case the owner, Ms Eldridge, brought an action for damages for breach of contract against a builder, asserting that the builder had substantially departed from the specifications, and that, by reason of such departure, the foundations were defective and the building was unstable. The High Court held that the owner 'was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her.' However, the High Court acknowledged that there was an exception to that rule, namely 'that, not only must the work undertaken be necessary to produce con-formity, but that also, it must be a reasonable course to adopt.'
3. The extent of that exception was examined by the High Court in Tabcorp in 2009. Tabcorp concerned a claim for damages by a landlord as a result of breach of a covenant in the lease by the tenant carrying out work, which resulted in the substantial remodelling of the foyer of the leased building without the approval of the landlord. The trial judge held that there had been a breach of covenant, but awarded damages in the sum of $34,820, being the difference between the value of the property with the old foyer, and the value of the property with the new foyer constructed by the tenant. On appeal, the Full Court of the Federal Court of Australia had increased the judgment sum to $1.38 million, made up of $580,000 to reflect the cost of restoring the foyer to its original condition, and $800,000 for loss of rent while the restoration work was taking place. The High Court upheld the decision of the Full Court.
4. In doing so, the High Court emphatically rejected the proposition that a party entering into a contract was at complete liberty to break the contract provided damages adequate to compensate the innocent party were paid. Rather, the High Court reaffirmed the 'ruling principle' at [13] that the measure of damage at common law for breach of contract was that stated by Parke B in Robinson v Harmon [1848] EngR 135; (1848) 1 Exch 850, 855; [1848] EngR 135; (1848) 154 ER 363, 365:

The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.

1. In Tabcorp, the High Court also elucidated the qualification of 'unreasonableness' established by its earlier decision in Bellgrove. It established that this qualification is only to apply in 'fairly exceptional circumstances ... only ... where the innocent party is "merely using a technical breach to secure an uncovenanted profit"...' (quoting from the judgment of Oliver J in the English case of Radford v De Froberville ('Radford').[13]
2. Stone is a decision of the Full Court of the Supreme Court of South Australia. Its relevance is that the Court explored when the test of 'unreasonableness' expounded in the High Court in Bellgrove will be enlivened. As was noted in that case by Doyle J, 'as the law currently stands, there had to that point been no express identification in the Australian case law of any principle or policy underpinning the notion of unreasonableness.'
3. In Stone, Kourakis CJ observed:

The Bellgrove qualification that rectification must be a 'reasonable course' to adopt is calculated to control the level of damages and to address those cases in which the prima facie rule produces a result which is manifestly unjust. It is not limited to the question of mitigation in the sense of awarding damages for that method of rectification which best mitigates the loss. It is a qualification which allows the selection, in special circumstances, of an alternative measure of damages. The qualification reflects two methods often employed by the common law. First, in recognition that a sound general rule may nonetheless still work an injustice in a particular case, it qualifies the general rule with a proviso. Secondly, it translates what is, at base, a determination of legal policy into a quasi-factual question by engaging the reasonableness standard. The reasonableness of rectification is not determined by an entirely factual enquiry. The test of reasonableness is only quasi-factual and imports a normative standard.[14]

Rectification damages are awarded for a breach of a building contract unless there is good reason to adopt another measure because the award of rectification damages would be manifestly disproportionate to the attaining of the contractual benefit. That rule entrenches rectification costs as the primary measure of damages and emphasises the exceptional nature of any lesser award. In determining whether good reason exists, the authorities suggest that the following are relevant considerations:

(1) the degree of departure from the contractual stipulation;

(2) the adverse effect of the departure on the functional utility, amenity and aesthetic appearance of the building;

(3) the reasons, objectively ascertained and commonly known, for which the innocent party made the stipulation which was breached;

(4) the practical feasibility of rectifying the work, including the effects on third parties of attempting to do so;

(5) whether or not the innocent party intends to carry out the rectification work;

(6) the absolute cost of the rectification work and the disproportion between that cost and

• the value of the building and contract price;
• the diminution in commercial value of the building;
• the effect of the departure on the functional utility, amenity and aesthetic appearance of the building;

(7) the nature of the wrongdoer's fault for the defect; and

(8) the public interest in reducing economic waste.

1. In his judgment in Stone, Doyle J stated, at [255]:

In determining what is reasonable, the issue is one to be determined objectively, there being no suggestion that the plaintiff should be the arbiter of his or her reasonableness. However, the determination must take place in the context of the relevant contract, and hence by reference to the plaintiff's needs and desires reflected in the bargain he or she struck.

1. Doyle J went on to identify from a survey of the authorities several matters relevant to determining the reasonableness of rectification costs claimed. These included:

(a) the proper identification of the claimant's performance interest, that is to say, the benefit bargained for;

(b) a consideration of the extent to which the defendant has, despite departure from the contractual standard, nevertheless achieved the contractual objective, and hence provided the plaintiff with the benefit he or she bargained for;

(c) any lack of proportionality between the proposed work and cost, and the benefit to be achieved by the plaintiff through this work;

(d) the plaintiff's intention and ability to carry out the rectification work, although he noted that these considerations are not usually decisively relevant in their own right;

(e) it may be that in cases where the defendant's breach is intentional, or profit driven, that the Court may be more reluctant to deprive the plaintiff of rectification damages designed to protect his or her performance interest.

1. I highlight that Doyle J, like Kourakis CJ, emphasised the importance of some proportionality between the cost of the proposed rectification work and the benefit to be achieved by the owner by the performance of this work. This consideration is particularly relevant to a number of the claims made by the owners, namely the entry of water into the basement car park and the failure to create a spoon drain and in accordance with the approved plans.

1. By the time the hearing started, the owners had limited their claims to 19 defective items as set out in Mr Coghlan's second expert report, which was dated 31 May 2024.[15] The items were:

(a) basement water ingress (Item 1);

(b) basement surface drainage (Item 2);

(c) fire service leak (Item 3);

(d) rendering (Item 6);

(e) fire doors (Item 10);

(f) fire pump (Item 11);

(g) entry/ground floor apartment tiled area (Item 12);

(h) omission of upturns (Item 13);

(i) omission of sealing to penetrations (Item 14);

(j) insufficient fall of tiling (Item 15);

(k) gaps to grout (Item 16);

(l) omission of nosing (Item 17);

(m) insufficient fall of flashing around penetrations (Item 18);

(n) box gutter change of directions (Item 19);

(o) insufficient fall of box gutter (Item 20);

(p) insufficient fall of capping flashing (Item 21);

(q) insufficient fixing of capping flashing (Item 22);

(r) insufficient fixing of flashing laps (Item 23); and

(s) water discharge point (Item 24)

1. The builder did not dispute that the DBC Act applied to the works. However, the builder complained that each alleged defect had not been linked to any particular warranty created by s 8 of the DBC Act.
2. Ms Nip responded on behalf of the owners in her opening, confirming that the warranty created by s 8(a) of the DBC Act, by which the builder warranted that the work would be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract, was alleged to be breached in respect of all 19 defects. Likewise, all 19 defects were linked to breaches of the warranty created by s 8(d) that the work would be carried out with reasonable care and skill. Defects 1, 2, 12, 17 and 24 were said to constitute breaches of a relevant law, therefore, enlivening the warranty created by s 8(c) of the DBC Act. Finally, breaches 1, 2 and 12 were said to make the work unfit for purpose, in breach of the warranty created by s 8(f). She confirmed that breaches of the warranty created by s 8(b) and the warranty created by s 8(e) were not alleged.

THE CLAIM THAT WATER WAS LEAKING INTO THE BASEMENT.

1. The rectification of this item was costed by John Coghlan initially at $753,730 inclusive of margins and GST.[16] This costing was updated in his second report of 31 May 2024 to $802,601.45. Given that the total re-costing of the rectification of all the defects was $996,790.11,[17] it can be seen that this defect constituted about 76% of the total claim.
2. John Coghlan's thesis was of the entry of water into basement level car park was due to the fact that the courtyards of the units above and the entry area to the ground floor either had no water proofing or the waterproofing had failed.[18]
3. Mr Blunt, on behalf of the builder, submitted that these propositions were speculation, as Mr Coghlan conceded under cross-examination that he had not carried out any destructive testing to determine whether there was a membrane in place and if so, whether it had failed.
4. Mr Blunt's submission that Mr Coghlan had been speculating about the existence of the membrane was borne out by two matters which arose during the course of the hearing. The first was that Mr Rustom produced a set of invoices from a water proofer which demonstrated conclusively that waterproofing had been used extensively in the courtyards. The second was that, after the view, Mr Coghlan and Mr Molnar lifted a tile in the Mr Stricker's courtyard and found that there was membrane underneath.
5. Mr Blunt's submission that John Coghlan was also speculating about there having been a systemic failure of the membrane was supported by the observations recorded by John Coghlan in his first report. John Coghlan noted, at [1.2], that he had been informed by Mr Stricker that the builder had carried out rectification works between February and April 2022. John Coghlan observed, at [1.4], 'a resin type product' be applied to concrete shrinkage cracks below the entry courtyard, below a private courtyard (in Mr Stricker's unit) and beneath the driveway in the storage cage area. John Coghlan went on to note that although water ingress to the basement had been reduced, it was still entering at the following points:
   • Pipe penetrations on the south basement ceiling (refer to Photograph 4 to Photograph 9).
   • Ring beam and shotcrete to south basement wall (refer to Photograph 10)
   • Shrinkage crack below the east apartment rear courtyards (refer to Photograph 11 to Photograph 12)
   • Pipe penetration from the north facing apartment courtyard (Photograph 13 to Photograph 14)
   • North wall below the driveway ramp of the domestic pump room (refer to Photograph 15 to Photograph 16)
   • Penetrations and ring beam ceiling junction of the storage cage area (Photograph 17 to Photograph 18)
   • Resin injection to the storage cage ceiling (refer to Photograph 19)
   • At the junction of the floor and wall panels next to the sink in the bin room (refer to Photograph 20)
   • Efflorescence is still evident on the new grate to the front entry (refer to Photograph 21 to Photograph 22).[19]
6. At the site inspection, John Coghlan's observations that there were a limited number of entry points for water through the slab were verified. At the next session of the hearing, I confirmed my own observations of the view as follows:
   • On the eastern side of the basement at the southern end, in the storage cage room, only one cage (namely, 104) appeared to be potentially affected by water penetration from above. This was suggested by the presence of a waterproof tarpaulin having been placed over the goods inside the storage cage. In no other storage cages were the goods covered by any waterproof material, although, a couple of storage cages were shielded visually at the front. All the other cages, but one, contained goods and none of the stored goods appeared to be water damaged.
   • The water above the affected storage cage appeared to be coming from an imperfectly sealed crack in the concrete above. To the east of this crack, there was evidence of other leakage through what appeared to be a cold joint crack in the driveway which may have been formed when the driveway was being poured.
   • In the bin room, there was no evidence of current water entry, although, there were water damaged skirting boards. Except in one place, at the eastern end of the room, there was no sign of water having come down from the ceiling into the room. The damage to the skirting boards other than in this area may have been as a result of a flood which occurred at the time the basement was being commissioned, for which the owners accept the builder was not responsible.
   • At the south end of the basement, under the entry area, there was evidence of water penetration through a crack in the concrete above.
   • At the other end of the car park, there appeared to be water entry through an unsealed penetration in the slab around a sewage pipe.
   • At another point, water was clearly penetrating the slab and was dripping between insulation batts into the basement below.
7. The overall conclusion to be drawn from these observations, which are consistent with some of Mr Coghlan's observations recorded above, is that there has been no widespread failure of the waterproofing across the slab covering the car park. Rather there are a very limited number of points where water has been penetrating either through cold cracks formed when the slab was being created, through shrinkage cracks which have later developed, or through pipe penetrations in the slab which have not been properly waterproofed.
8. As noted, John Coghlan did not carry out any tests on the membrane covering the slab. Indeed, he was not even sure before the hearing whether there was a membrane. Notwithstanding, he opined that the appropriate method of rectification of the car park would involve not only retiling the entry area of the development (which had already been done) but also lifting and replacing the tiles in the courtyard to each of the units. He also recommended replacing the cladding on the walls of the courtyards of units above the basement. This alone would be an expensive process -costed by John Coghlan at more than $18,400[20]- due to the great area of tiles to be removed and replaced. Because of the size of the rectification project, there would be a need for protection works and the need for on-site amenities. These are some of the factors which accounted for his calculation in his second report that the base rectification cost (without loadings) was $510,286.78. With an allowance of 10% for contingency, builder's margin of 30%, and GST of 10%, he calculated a total cost of $802,659.45 for rectification of the basement water ingress.[21]
9. Mr Molnar initially disputed that there is a defect in the basement given that it had been designed as a wet basement. On this basis, he opined that water in the walls was to be expected, and was not considered a defect.[22]
10. The builder pressed this contention in its written opening submissions, arguing that because John Coghlan had not explained why the amount of water entering the basement from the ground floor of the building was greater than what would ordinarily be expected in to a wet basement, there could be no claim.[23] This defence can be dismissed summarily, because the experts of the hearing agreed that where a basement had been designed as a wet basement, entry of some water through the walls was permissible. However, the concept of a wet basement did not embrace the situation where water was dripping from the ceiling of the basement.
11. Mr Molnar, in a supplementary report dated 18 April 2025 adopted a pragmatic position and provided an alternative costing for the rectification of the basement leaks. He allowed $89,180.39 (including margin and GST) for this defect.[24] His figure was much lower than John Coghlan's because he opined that a takeoff from the architectural drawings indicated that only 62 m² of the basement footprint required rectification.[25]

1. My observations at the site view broadly confirmed John Coghlan's own observations, I find that there has been no systemic failure of the membrane. There are, instead, a series of specific penetrations of the membrane.
2. Notwithstanding a valiant effort by Mr Blunt to persuade me that in the absence of any evidence of specific workmanship which had failed, I could not conclude that there had been a breach of the warranties created by s 8 of the DBC Act.
3. As noted above, at [34], the owners say that the leaks into the basement car park establish breaches of the respective warranties contained in by s 8(a) of the DBC Act (work to be carried out in a proper and workmanlike manner), s 8(d) (work to be carried out with reasonable care and skill) and also s 8(f) (work to be reasonably fit for purpose). I am satisfied because there are leaks into the basement through shrinkage cracks in the concrete and through service penetrations there has been a breach of the warranty created by s 8(a) and s 8(d) respectively. I also find that, in any event, a car park which leaks through the ceiling is not reasonably fit for purpose, with the result s 8(f) has also been breached).
4. Having regard to my findings regarding the limited number of places in which the ceiling of the car park was leaking, and my rejection of Mr Coghlan's view that there was either no membrane or the membrane installed had failed, I put to one side Mr Coghlan's costing of the necessary rectification work.
5. At the hearing, after the site inspection, Mr Molnar proposed a third method of qualification of the cost of rectification of the leaks to the car park. He proposed that it had been established that a very limited number of tiles would have to come up to rectify the problem of water penetration in different spots through the car park. He estimated the cost of rectification of the tiles above these particular locations by reference to a costing he had prepared in a different context for replacement of tiles in the development. Using this approach, he arrived during the hearing at a reduced cost of rectification $33,000.
6. The usual course is that expert evidence is reduced to writing in the form of a VCATPN2 compliant report and served well before hearing. Where this occurs, the other side can consider the report and, if necessary, obtain expert evidence in response. Moreover, the parties can prepare for cross examination. In Chiropractic Board of Australia v Hooper Garde J, sitting as the President of the Tribunal, observed:

In any hearing involving experts, it is essential for each expert to be cross-examined as to the opposing expert's opinions so that the Tribunal has the benefit of the opposing and tested opinions on which to make the decision. [26]

1. As Mr Molnar's new evidence regarding modification was given during the hearing, John Coghlan was not given notice of his revised calculations and accordingly had no proper opportunity to evaluate that evidence. I, therefore, consider that the owners would be placed at a significant procedural disadvantage if was I to place weight on that new evidence. Accordingly, I will put to one side.
2. Because Mr Molnar accepted at the hearing that it was appropriate for the owners to be compensated, to a degree, in respect of the cost of rectification to the car park ceiling, I also set aside his first opinion which was premised on the proposition that there was no defect.
3. I am constrained to accept Mr Molnar's intermediate costing of $89,180.39, which was fully articulated in his supplementary report of 18 April 2025. This report had been submitted in an appropriate way for consideration by the owners and their experts. I will make an award in this sum in respect of the leaking into the basement.

DEFECT 2 - THE FAILURE OF THE BUILDER TO CREATE A SPOON DRAIN IN THE BASIN

1. This defect was discussed by John Coghlan in his reports of October 2022 and May 2025. In his report of 1 May 2025 John Coghlan opined that a spoon drain should have been installed to the perimeter of the basement in accordance with the structural drawings. They should have been 300mm by 50 m with a maximum depth of 100 m, with a 1 in 100 mm fall towards the outlet. In the event, the builder constructed grated spoon drains at the southwest wall, the northwest wall and in part of the southeast wall of the basement, which measured 125 mm in width and ranged from approximately 0 mm to 40 mm in-depth with no even fall towards the outlets. Open spoon drains had been constructed along part of the northwest wall, along the northeast wall and along part of the southeast wall which measured approximately 300 mm in width and 30 mm in-depth. However, in those drains, the actual spoon shaped section was only 100 mm and the depth ranged from approximately 0 mm to 40 mm, and there was no even fall towards the outlet.
2. John Coghlan noted that the builder had installed an aluminium angle to the outer edge of the spoon drain and had applied a waterproof membrane to the angle and spoon drain. In his view, this rectification method did not constitute a long-term solution because the aluminium angle was not mechanically fixed into position. Furthermore, the waterproofing was wrinkled and irregular.
3. John Coghlan opined that the angle should be removed, and spoon drains created. The cost of this work, updated in May 2025, was $169,028.04 inclusive of GST. The high cost reflected the extent of the required work, which included a preliminary task of removing the car stackers to enable access. Then the angle had to be removed, and a saw cut created 400 out from the basement wall. The concrete inside the sawcut had to be demolished, any exposed reinforcement had to be treated, and a spoon drain had to be formed up and poured. Drainage grates had to be installed as required. Finally, the car stacker had to be replaced.
4. The builder submitted that the original defect was technical in nature and that the extensive rectification that would have been required to install a spoon drain as specified was not reasonable and necessary and the defect therefore fell within the Bellgrove exception.
5. I reject this submission. The non-compliance of the drains with the specification was not merely technical in nature, because the lack of fall in the drains meant that water would pond. The owners were entitled to a substantive remedy.
6. This segues into the next submission made by the builder, which was that after the completion of the works, the builder had returned and, without an admission of liability, had retrofitted the aluminium angle to the perimeter of the basement in a number of areas including areas where a spoon drain had not been specified. The function of the aluminium angle was to direct surface water to the legal point of discharge. The builder argued that the owners' agreement to this limited form of rectification was binding on the owners, and the complaint now must be limited to whether the alternative solution was working satisfactorily.
7. I accept this submission. The fact that representatives of the builder met with two members of the OC committee, including Mr Stricker, at a meeting on 16 February 2022 and, amongst other things, agreed to arrange to have a contractor install the aluminium angle along the perimeter of the lower basement to prevent any water from travelling outside the spoon drain, is established by Mr Stricker's own witness statement.[27]
8. The agreement was made by the builder at a time when it was disputing liability in respect to some defects, as the contract works had been suspended and the developer had come onto site and done some work. I find that the builder became obligated to perform the installation of the aluminium angle around the perimeter of the spoon drain, including in places where the spoon drain was not specified initially. However, the corollary was that the builder's obligation to rectify the spoon drain was limited to that work. It is conceded by the owners that the aluminium angle is working as intended to keep surface water draining into the spoon drain within the spoon drain. I find that it is not now open to the owners to seek further rectification work to the spoon drain.
9. Furthermore, I note that as the aluminium angle has made the spoon drain work effectively, and that it was clearly operating effectively at the site inspection more than three years after its installation, I find that it is an adequate long term solution. It follows that even if the owners were not bound by their agreement to accept the aluminium angle as a solution, they cannot now say that further rectification work is reasonable and necessary.
10. For these reasons, this claim fails.

1. As Mr Coghlan explains in his report of 10 October 2022, this defect relates to damage caused to the wall lining and carpet in an area under the north skylight on the second level hallway which was caused as a result of a leak in the fire service. The fire service leak was resolved some time ago, and the wall lining damage on the carpet in the hallway have been rectified since Mr Condon first inspected the property. However, he considers that the plaster patching to the wall under the skylight can be seen from a normal viewing position and, as the patch does not meet a level 4, is defective
2. Mr Molnar opined that there was no defect because the corridor in which the rectified plaster work was located was not 1.5 m in width and accordingly the defect could not be inspected from a normal viewing position as defined in the Victorian Building Authority Guide to Standards and Tolerances 2015.
3. Mr Molnar may be right in saying that the corridor is not 1.5 m in width, but this was not established by measurement. However, I put Mr Molnar's objection to the defect to one side because the VBA Guide to Standards and Tolerances is just that, a guide. It is a very useful reference document, but it does not bind the Tribunal. I was satisfied from the view that a slight unevenness in the plaster patch was visible. Accordingly, I am satisfied that in the technical sense there is a defect.
4. However, I consider this is a classic example of a technical defect which would not result in an award of damages. The defect is a common area in a corridor which will be accessed in normal circumstances only by residents of and visitors to units opening off the corridor. The defect in the plasterwork is accordingly not a defect which anyone has to look at day in day out. Furthermore, the defect is detectable, but only the viewer looks for it. It does not stand out.
5. If I were to allow an award of damages in relation to rectification of this defect, it would be enabling the owners to use 'a technical breach to secure an uncovenanted profit', to adopt the words of Oliver J in Radford,[28] discussed at [25], above. This claim is dismissed.

DEFECTS 4 (DEFECT IN PAINTING AND PLASTERING) AND 5 (BUILDER'S CLEAN)

1. These defects identified by Mr Coghlan were not pursued at the hearing.

1. This alleged defect is located on a section of land adjacent to the access lift in the entry area of the building. Mr Coghlan opines that the render has been patched, and the colour and texture match is imperfect. According to the VBA Guide to Standards and Tolerances 2015, [9.05] this is a defect. Rectification was costed by Mr Coghlan at $3,840. With the addition of 10% for contingencies, and 30% margin, and a further 10% GST, the grossed up cost is $6,040.32.
2. Mr Molnar in his report of January 2023 acknowledges the defect but observes, on the basis of Mr Rustom's witness statement, that the works were carried out after the suspension of the works by the builder. Reference to Mr Rustom's witness statement, at [132]-[133], confirms this.[29] The evidence is not contradicted by Mr Stricker. I accept that the defective rendering work complained of was performed by persons other than the builder after the works were suspended. This claim against the builder is dismissed.

DEFECT 7 (FOXTEL WIRING), 8 (CAR STACKERS), AND 9 (ROOF WALKWAY)

1. These defects identified by John Coghlan were not pursued at the hearing.

1. John Coghlan identified a defect on the basis of a report which had been provided to him, prepared by Fire and Wire Essential Fire Protection Services, dated 8 June 2021 ('Fire and Wire report'). This report identified that a number of doors had defects as a result of the builder's workmanship. John Coghlan set these out in Attachment F to his report dated 10 October 2022. In this way he adopted the findings of a consultant who was not available for cross-examination. His recommendation was that the doors should be rectified. He costed the rectification at $4,600, but with the addition of a margin for contingency of 10%, builder's margin 30% and GST of 10%, the gross subtotal came to $7,235.80. This costing was upgraded in his report of May 2025 to $7,690.78.
2. When Mr Molnar inspected the property on 23 January 2024, he found that the defective items nominated by John Coghlan did exist. This finding overcame the problem facing the owners of a lack of expert evidence from an expert who was available for cross examination. However, Mr Molnar drew attention to Mr Rustom's witness statement, at [136], in which Mr Rustom deposed that the fire doors were not defective prior to the suspension of the works and had been certified as compliant.
3. Mr Rustom also highlighted, at [138], that several of the items complained about were maintenance items, such as doors not fully returning or latching.
4. As the doors had been certified as compliant prior to the suspension of the works, I would have found in favour of the builder in respect of this alleged defect had it been necessary to do so. However, following the site inspection, the owners agreed to withdraw this claim. Their decision to withdraw the claim was confirmed by Ms Nip in her final submissions on behalf of the owners.

1. In respect of this defect, John Coghlan again relied on a report prepared by Fire and Wire, this time dated 21 June 2021 in which rectification to the fire pump exhaust system was recommended. Again, he adopted the findings of another consultant as his own, as he set out comments in relation to the fire pump at Attachment G to his report of October 2022.
2. The pump, like the fire doors, had been certified as being compliant by the time the works were suspended. Mr Rustom confirmed that the fire pump was affected by works carried out by the developer and its contractors following suspension. For this reason, had it been necessary, I would have found that the builder is not liable for the fire pump rectification.
3. However, at the hearing, John Coghlan accepted that rectification of the pump was not the responsibility of the builder. Ms Nip, on behalf of the owners, confirmed that this claim was withdrawn.

DEFECT 12 - ENTRY/GROUND FLOOR APARTMENT TILED AREA

1. In his report of October 2022 John Coghlan noted that there had been retiling works in this area by the builder since he last inspected in October 2021. He noted there had been a reduction of water ingress into the fire pump room, storage cages, bin storage room, and the perimeter of the basement since this retiling. However, he noted that there was still water ingress visible from the ceiling. Even so, he did not set out a costing in his October 2022 report for this item. John Coghlan maintained this position in his May 2024 report.
2. In her final submissions on behalf of the owners, Ms Nip conceded that this item was not pressed.

1. This defect, together with defects 14, 15 and 17, was not the subject of separate costings as the rectification had been allowed for as part of the ratification of defect 1. The substantive claim made by John Coghlan in relation to defect 1 has been disallowed. Accordingly, it is necessary to consider each of these defects separately.
2. Defect 13 concerns an alleged absence of evidence of an upturn to the waterproofing membrane installed to the surrounding walls or under windows/doorframes to the entrance and ground floor apartments. When John Coghlan inspected the property on 18 July 2022, he noted that although new tiling works have been completed by the builder, the windows and doors and clarity had not been removed. As he considered there should be an upturn to the waterproofing membrane to the walls, doors windows and a good standard, he maintained that there was a defect.
3. Reference to John Coghlan's updated rectification costings set out in the May 2024 report shows that the cost of rectification would be substantial as it would include items such as protection works, site setup, shed and construction amenities, waste management including supply of bins, demolition of tiling, removal of air-conditioning units, removal of wall cladding to walls adjacent to the entry area and in the courtyards of units above the basement, removal of doors and windows, installation of temporary protection to exposed doors and windows, removing of substrate in the affected areas, reinstalling doors and windows, waterproofing, application of screed, application of membrane over screed, supply and installation of flashings installing flashings, retiling, supply and reinstallation of cladding and caulking, A scan of the costings indicates that the costs involved exceed $300,000.
4. Mr Molnar strongly disputed the need for this work. He highlighted that the lack of waterproofing was suspected by John Coghlan but had not been established by destructive testing. Moreover, he highlighted that no water ingress into the basement had been established as having come from a failure of the upturned flashings. For this reason, the defect had not been established.
5. Furthermore, Mr Molnar pointed out that if the defect had been established, the cost of rectification was greatly overstated, because it was permissible to overlap waterproofing under AS 4654 Part 2.
6. I accept Mr Molnar's argument that the defect has not been established. The danger of assuming that there is no flashing in place when no destructive testing had been done is highlighted by the fact that John Coghlan had opined that no membrane had been placed in the courtyards above the basement carpark. This opinion was demonstrated to be incorrect.
7. The fact that there has been no ingress of water from the areas where there are alleged to be no upturned flashings is supportive of the view that there is no defect. However, this is not conclusive of the matter.
8. The key point is that the defect must be established on the balance of probabilities. In the absence of destructive testing demonstrating there is no upturned flashing as alleged, the claim must fail. It is dismissed.

DEFECT 14 - OMISSION OF CEILING TO PENETRATIONS IN UNIT G 10

1. The complaint here was that when new tiling work had been completed around the air-conditioning unit in the G 10 apartment, there was no evidence of sealing around the balustrade post penetrations through the waterproofing in accordance with AS 4654.2:2012, 2.8.4. Mr Coghlan recommended rectification by removing the tiling to the entry area and the courtyards above the basement, preparing waterproof substrate and creating installing new tiles fall to the screed drainage points, installing waterproofing membrane, play screed, waterproofing over the screed, and then installing new tiles and installing cladding to the walls. Mr Molnar deposed in his report of January 2024 that as the basement was a garage it was not subject to the requirements of BCA 2016 F P1 .4 which required penetrations to the roof to be waterproofed to prevent unhealthy or dangerous conditions for loss of amenity for occupants or undue dampness or deterioration of building elements.
2. John Coghlan costed rectification as part of the rectification of defect 1. At the hearing he identified the total of a number of items relevant to this issue as $33,507.81.
3. Mr Molnar did not cost the rectification as he disputed the BCA applied. However, at the hearing he opined that if it did, the relevant rectification involved removing 4 or 6 tiles only.
4. Mr Molnar went on to depose that he and John Coghlan had looked at the issue at the site view and considered that the penetration had been sealed. Mr Coghlan confirmed that he had not established that there was no sealing using a dyed water test.
5. On balance I am satisfied that the defect is not established.

1. John Coghlan deposed in his October 2022 report that water was pooling within the light fixture of the tiled entry staircase. The absence of fall to ensure water drained to the drainage outlet was a breach of AS 4654.2:2012 2.5.2. His view was that the issue would be rectified when the defect 1 rectification works were carried out. John Coghlan did not provide an individual costing for this item.
2. Mr Molnar in his report of January 2024 disputed liability on the basis that he could not identify this defect on his inspection. However, on the basis of a photograph contained in Mr Coghlan's report was prepared to concede the defect existed in respect of the tile in front of the light fixture.
3. Mr Molnar had assessed rectification at $645 exclusive of margin comprising $170 for lifting and removing the offending tile, $275 for supplying and installing a replacement tile, and $200 for grouting and caulking. He allowed again in the contingency of 10%, builder's margin of 20%, and GST. The total was $922.35.
4. However, at the hearing John Coghlan and Mr Molnar agreed that tile had been covered and the issue no longer existed. This defect accordingly falls away.

1. John Coghlan in his October 2022 report noted that there were gaps in the grout in the tiles in the G 10 courtyard. Tiling spacers had also been left in the grout.
2. Mr Molnar confirmed that gaps in the grout existed when he inspected in January 2024 and agreed that the tiles had to be regrouted. However, he disputed that this is the builder's responsibility as grouting could be expected to fail after two years and this issue was one of maintenance. At the hearing, John Coghlan disputed this submission, on the basis of the tiling was new, having been completed between February and April 2022. I accept John Coghlan's opinion on this and find there was a defect.
3. John Coghlan did not provide an individual costing for this item as he was proposing global replacement of the tiling in the courtyards.
4. Accordingly, I turn to Mr Molnar's costing. He costed the work at $1430, comprising removing damaged caulking and cleaning, $440, renewing the grout, $570, re-caulking the tiles, $200 and cleaning the newly grouted tiles, $220. To this he added contingency of 10% and builder's margin of 20%, and then added GST. The total is $2,044.90, which I round to $2,050. This sum will be awarded to the relevant owner, Mr Stricker.

1. This defect concerned the absence of non-slip nosing on the staircase. The defect was conceded by Mr Molnar.
2. John Coghlan did not provide a costing as he was proposing replacement of the stairs as part of the rectification of defect 1.
3. Mr Molnar assessed the cost of cleaning down the stairs at $440, the supply and installation of non-slip nosing at $540, and clean up at $110, a total of $1,090. With the addition of contingency and builder's margin totalling 30% and GST of 10%, the total is $1,558.70, which I round down to $1,550.
4. John Coghlan, at the hearing, conceded that his allowance was excessive and that Mr Molnar's assessment was appropriate. I will allow $1,550 to the owners for this defect.

DEFECT 18 - INSUFFICIENT FALL AROUND SKYLIGHT PENETRATIONS

1. John Coghlan observed pooling of water on the high side of the skylight penetration flashing to the roof. The lack of fall established was a breach of the manufacturer Lysaght's flashing guide and was considered defective.
2. This defect was the first of several also investigated by the owners' roof plumbing expert Robert Coghlan. In his report of 13 May 2024,[30] Robert Coghlan opined about this defect, at [8.2], noting that 'Custom folded flashings positioned to the downstream end of both the skylights do not provide the minimum 150 mm coverage over the top end of the roof sheets.' This minimum was established by reference to the relevant Australian standard. He later noted that the coverage was 'in the order of 100 mm.'
3. Mr Molnar disputed that the builder had liability, noting that no water ingress or water damage was noted in the past four years. Accordingly, it was established that the skylight was waterproof.
4. Robert Coghlan did not provide a costing for rectification of this, or any other, defect. However, John Coghlan did. His final costing, provided, in May 2024 was $9,472.45.
5. Mr Molnar considered this costing excessive.
6. In my view, the fact of the builder provided flashing around the skylight which provided 100 mm cover over the top end of the roof sheets rather than the 150 mm required by the relevant Australian Standard amounts to a technical defect. As the skylight has been found to be waterproof, this is a defect which does not warrant a substantive award of damages. This claim is dismissed.

1. John Coghlan, in his report of October 2022, opined that there were two changes of direction of water flow in the box gutter on the east side of the roof. This is a defect, as the Plumbers Handbook provides that there should not be two changes of direction of water flow in a box gutter. The cost of the rectification work had, in his assessment, a base cost of $12,410, including the provision of fall protection and scaffolding to the roof edge. With loadings, which include contingency of 10%, margin of 30% and GST, the total $20,516.20.
2. Mr Molnar, at his inspection of 23 January 2012, found the defect was established. He agreed that a sump and overflow be installed to correct the problem. His costing for removing the relevant flashing and part of the box gutter, penetrating the building façade and supplying and installing the sump, modified box gutter and overflow and reinstating the capping, came to $2,540 exclusive of a margin. With a loading of 30% added for contingency and builder's margin, a subtotal of $3,302 is reached. With GST, the grand total comes to $3,632.20, which I round to $3,600. This sum will be awarded to the owners.

1. John Coghlan found that the box gutter on the east side of the roof had fall which was less than the 1 in 200 required by the Plumbers Handbook. Mr Coghlan priced rectification at $11,900 net of loadings. With contingency, builder's margin and GST, Mr Coghlan assessed the cost of rectification in May 2024 at $19,672.59.
2. Mr Molnar disputed that there was a defect and highlighted that an 'oil drum effect' had been created by heat in the gutter causing intermittent dips. Overall, the gutter had sufficient fall. For this reason, he did not cost this defect.
3. Robert Coghlan made many comments about the box gutter but these did not include any criticism of the fall of the box gutter.
4. I find that this defect is not established.

DEFECT 21 - INSUFFICIENT FALL OF CAPPING FLASHING

1. John Coghlan found that there was a defect in so far as the capping flashing did not have a minimum for 3° in accordance with the Plumbers Handbook. He found the fall was only 1.8° on the east side of the roof top.
2. Robert Coghlan confirmed the existence of this defect in his report clause, at [6.1].[31]
3. Mr Molnar agreed that this defect existed. The required rectification was that 40 lineal metres of capping has to be removed and replaced with the appropriate fall.
4. John Coghlan costed this work at $11,900 exclusive of loadings and GST. With loadings for contingency and margin and with GST then added, his total costing was $18,718.
5. Mr Molnar accepted that rectification might require one additional fastener per metre around the entire perimeter. This would involve 120 lineal metres of capping and, therefore, 120 additional fasteners. He costed the work at $2,470 exclusive of loadings and GST. With loadings of 10% for contingency and 20% for margin, the subtotal is $3,211. With GST, the total is $3,532.10.
6. At the hearing, John Coghlan maintained that the fall protection provided by scaffolding to the edge of the roof would be required. In respect of defect 19, he had assessed the base cost of this $3,500. With contingency and margin totalling 40%, his allowance was uplifted to $4,900. With GST, the allowance would be $5,390. I consider that a loading of 40% is too high. I will allow scaffolding at $3,500 with a loading of 30% for contingency and builder's margin, as these loadings were conceded to be appropriate by Mr Molnar. With GST of $455, the total allowance for fall protection is $5,005 which I will round out of $5,000.
7. The total allowance for fixing the insufficient fall in the capping is, accordingly, adjusted to $8,532.10 which I will round to $8,500.

DEFECT 22 - INSUFFICIENT FIXING OF CAPPING FLASHING

1. John Coghlan noted that fittings were spaced approximately 1 m apart on the capping flashings on the roof. Under the Plumbers Handbook, the capping fixings should have been at intervals not exceeding 500 mm.
2. John Coghlan costed rectification in May 2024 at $1,520.61 inclusive of loadings and GST.
3. The builder accepts liability for the defect. Mr Molnar costed the work, on the basis a roof plumber would have to be engaged, at $510 without loadings and GST. With loadings and GST added, the total is $729.30.
4. I find Mr Molnar's costing to be more reasonable than John Coghlan's and will award $730 to the owners in respect of this defect.
5. Fall protection has been allowed for in respect of defect 21 and need not be allowed for again here.

DEFECT 23 - INSUFFICIENT FIXING OF FLASHING LAPS

1. John Coghlan opined that there was insufficient fixing of flashing laps because the fishing had been spaced approximately 80 mm to the lap joints rather than 40 mm as required by the Plumbers Handbook.
2. Robert Coghlan confirmed this was a defect, at [7.1] of his report.
3. Liability was conceded by the builder, and the issue with this defect is the cost of rectification.
4. John Coghlan, in his May 2024 report, costed rectification at $1,520.61 inclusive of loadings and GST. Mr Molnar costed the defect at $970 exclusive of loadings and GST. With loadings and GST, Mr Molnar's total is $1,387.10. I will round Mr Molnar's assessment up to $1,400, and award this sum to the owners.

1. John Coghlan noted that overflow water discharges off the roof on to the top-level private lot balconies below. He observed that this should not occur as this would constitute a breach of s 16 of the Water Act 1989 (Vic) ('Water Act'). I note that Mr Coghlan is not a lawyer and is not qualified to provide an expert opinion about the operation of the Water Act. I accordingly put his opinion to one side.
2. Robert Coghlan confirmed the fact that overflow water discharge onto lower balconies at [2.3] of his report, but he did not refer to the Water Act.
3. Mr Molnar disputed that any breach of the Water Act was occurring because where water flowed from common property to a property below it was flowing from property owned proportionally by all owners. I note that Mr Molnar may not understand the importance of the Supreme Court decision in Body Corporate St James Apartments v Renaissance Assets Pty Ltd[32] which establishes that, for the purposes of the DBC Act, the Owners Corporation is the owner of the common property. This is understandable as Mr Molnar is not a lawyer and is not in a position to opine as an expert about the operation of the Water Act. As with John Coghlan's view, I disregard Mr Molnar's opinion about the operation of that Act.
4. I am left with uncontroverted evidence from three experts that water is flowing from roof overflow points and is not been discharged effectively through proper overflow systems. This inevitably will create a potential problem for any unit holder from where water escapes onto a lower unit. This is because s 16(1) of the Water Act provides as follows:

(a) there is a flow of water from the land of a person onto any other land; and

(ii) damage to the property (whether real or personal) of any other person; or

the person who caused the flow is liable to pay damages to that other person in respect of that injury, damage or loss.

1. In the context of this alleged defect, it is important to have regard also to s 16(5), which provides:

(5) If the causing of, or the interference with, the flow (as the case requires) was given rise to by works constructed or any other act done or omitted to be done on any land at a time before the current occupier became the occupier of the land, the current occupier is liable to pay damages in respect of the injury, damage or loss if the current occupier has failed to take any steps reasonably available to prevent the causing of, or the interference with, the flow (as the case requires) being so given rise to.

1. Section 16(5) has the effect of making a present owner of a unit potentially liable to any other lot owner for an unreasonable flow of water from the present owner's unit even if the flow was caused by the construction work carried out by the builder when the apartment building was being constructed. The present owner can only escape liability if they have taken all steps reasonably available to prevent the causing of the unreasonable flow of water.
2. Each present unit owner in the building is, accordingly, obligated to take steps to ensure that any discharge of water from their unit passes through a compliant drainage outlet connected to the stormwater system.
3. I find that the builder is liable to compensate the lot owners for the necessary work. This claim is allowed. I will allow the claim in the sum assessed by Mr John Coghlan of $12,552 inclusive of loadings and GST. I will leave it to counsel to prepare orders regarding the distribution of this sum between the owners.

1. In summary, I find that the owners are entitled to an award of damages for defects totalling $119,562.39, comprised as follows:

(g) entry/ground floor apartment tiled area (Item 12); $Nil-withdrawn

(i) omission of sealing to penetrations (Item 14); $Nil.

(m) insufficient fall of flashing (Item 18); $Nil.

(n) box gutter change of directions (Item 19); $3,600.

(o) insufficient fall of box gutter (Item 20); $Nil.

(p) insufficient fall of cap flashing (Item 21); $8,500.

(q) insufficient fixing of capping flashing (Item 22); $730.

(r) insufficient fixing of flashing laps (Item 23); $1,400.

1. The owners may seek orders apportioning those damages. If they seek such orders, they will need to make an application supported by submissions and affidavit material.
2. In their points of claim the owners seek 'interest pursuant to statute.' They will have leave to make an application for interest supported by submissions and affidavit material within 30 days from the date of this order.
3. The owners also seek costs. They will have leave to make applications for costs and for reimbursement of fees supported by submissions and affidavit material within 30 days from the date of this order.
4. It may be that the builder considers that by reason of an offer to settle the dispute made but not accepted by the owners that it has a claim for costs. It will have leave to make applications for costs and for reimbursement of fees supported by submissions and affidavit material within 30 days from the date of this order.

[1] Owners Amended Points of Claim dated 20 July 2023, [14].

[3] [2014] HCA 36 (2014) 254 CLR 185.

[5] Mr Rustom's amended witness statement of 14 March 2025, [85].

[10] [1954] HCA 36; (1954) 90 CLR 613

[11] (2009) 236 CLR 272

[12] [2017] SASCFC 72.

[13] [1978] 1 All ER 33; [1977] 1 WLR 1262.

[14] [2017] SASCFC 72, [54].

[16] Mr Coghlan's first report of 10 October 2022, p 88, TB 105.

[17] Mr Coghlan's second report of 31 May 2024, p 46, TB 230.

[18] Mr Coghlan's first report of 10 October 2022, 1.20, TB 25.

[19] Mr Coghlan's first report of 10 October 2022, p 6, TB 23.

[20] Mr Coghlan's second report 31 May 2024, TB 231.

[22] Mr Molnar's first report following his inspection on 23 January 2024, TB 127.

[23] Builder's written opening submissions dated 2 May 2025, [20].

[24] Mr Molnar's third report dated 18 April 2025, p 6, TB 380.

[26] [1978] 1 All ER 33; [1977] 1 WLR 1262.

[27] Mr Stricker's witness statement, [16], TB 385.

[28] [1978] 1 All ER 33; [1977] 1 WLR 1262.

[32] [2004] VSC 438; 11 VR 41