Owners Corporation - Strata Plan 73019 v Brodyn Pty Ltd, Titanium Group Pty Ltd, Auscore Constructions Pty Ltd

Background

1. These proceedings arise in connection with defective work to premises situate at *********Street Stanmore. The premises are part residential and part commercial. The greater part is residential. There are 16 residential lots and 1 commercial lot. All told there are 17 lots in the strata scheme.
2. The applicant is the registered proprietor of the common property, which is the subject of Strata Plan 73019.
3. The premises were constructed pursuant to a building contract entered between the first respondent and the Titanium Group Pty Ltd, which company went into administration, in or about June 2003. In these reasons I will refer to the Titanium Group Pty Ltd as the developer.
4. The applicant submits and there is no dispute about it, that upon registration of the strata plan it became the registered proprietor of the common property the subject of Strata Plan 73019 and became subject to absolute obligations to repair defects in the common property.
5. It further submits that it is entitled to the Statutory Warranties that were implied into the building contract referred to above, by Part 2C of the Home Building Act 1989 (the 'Act') and in particular section 18D of the Act. I take the reference to section 18D of the Act to be to 18 D (1).
6. In these reasons I will refer to the applicant as the owner and to the first respondent as the builder.
7. The amount claimed in these proceedings is $491,492.00.

Jurisdiction

1. The Consumer Trader and Tenancy Tribunal was abolished as of 1 January 2014 and the Consumer, Trader and Tenancy Tribunal Act 2001 and the Consumer, Trader and Tenancy Tribunal Regulation 2009 were repealed. As the application was not fully determined at that time, the proceedings were 'pending' as defined in clause 6 of Schedule 1 of the Civil and Administrative Tribunal Act 2013.
2. Transitional provisions in relation to pending proceedings are set out in clause 7 of Schedule 1 of the Civil and Administrative Tribunal Act 2013. Pursuant to section 7(3) of Schedule 1 to that Act, the current Tribunal has and may exercise all the functions that the Consumer, Trader and Tenancy Tribunal had immediately before its abolition, and the provisions of the Consumer, Trader and Tenancy Tribunal Act and Consumer, Trader and Tenancy Tribunal Regulation continue to apply to unheard proceedings which expression includes pending proceedings.
3. There is no dispute between the parties that the owner's claim is a building claim for the purposes of section 48A of the Act and that the Tribunal has the jurisdiction to hear and determine the claim under section 48I of the Act.
4. The owner and builder have filed and served detailed written submissions and have had the opportunity to address the Tribunal on the submissions in lieu of providing submissions in reply. I have had regard to the parties' submissions in the preparation of these Reasons for Decision. I have not dealt with each and every submission made by the parties.
5. The parties prepared a five volume bundle of documents for use at the hearing and also provided a bundle of additional documents.

The pleadings

1. The parties have filed pleadings which consist of, inter alia, the owner's amended points of claim dated 6 April 2010 and the builder's undated Defence to Application filed in the Tribunal on 25 January 2011.

The contract

1. It is desirable in my view that I make some brief findings of fact concerning the contract.
2. The contract between the builder and developer was executed by the parties on 23 June 2003. The builder submits that practical completion was achieved in July 2004.
3. The contract referred to drawings and specifications which are stated to be contract documents and which are identified in special condition 32.

The section 18D (2) defence

1. The builder raises a defence based on section 18D of the Act in paragraphs 7, 22 and 23 of its Defence to Application. The builder also deals with this issue in its written submissions. The builder relies upon paragraphs 1 -17 of the affidavit of Mr B. Matterson dated 15 November 2010 in support of this defence.
2. Section 18D(2) of the Act states: 'This section does not give a successor in title or non-contracting owner of land any right to enforce a statutory warranty in proceedings in relation to a deficiency in work or materials if the warranty has already been enforced in relation to that particular deficiency, except as provided by the regulations.'
3. The effect of this defence is set out in the particulars of paragraph 23 of the Defence to Application such that if the defence is successful, the owner will not be entitled to enforce the statutory warranties in these proceedings.
4. The factual background to this defence is that on 11 November 2005 a Deed of Release was entered into between the builder and the developer. The deed settled the builder's claims for money under the building contract. It is said that the developer's claims for defective work made under section 18B of the Act were also settled. The builder contends that the result of this settlement prevents the owner's action for defective work in these proceedings.
5. The deed provided that the developer would pay the builder $1, and that the parties would releases and settle the claims that they had against one another. It is alleged that the release given by the developer to the builder included claims by the developer against the builder for defects as described in a tax invoice issued by the developer to the builder.
6. In clause 5 of the Deed the parties mutually released each other from all claims and causes of action which they had including those 'arising under the provisions of any statute' which either or both of them then had or might have.
7. The parties also agreed in clause 6 that the only obligation with regards to defects in the work would be as defined under the Act and that they would maintain their own obligations under the Act, as amended.
8. The builder has addressed this defence in its final written submissions and in its closing oral submissions. The owner has dealt with paragraphs 7, 22 and 23 of the Defence to Application in its final written submissions and has addressed the Tribunal on the matter in its closing oral submissions.

Chronology

1. At this point of these reasons a short chronology would be helpful in the analysis of the parties' positions in connection with this defence. I make the following findings.
2. The building contract was signed in in or about June 2003.
3. Practical completion under the building contract occurred in July 2004.
4. Strata Plan 73019 was registered on 17 August 2004.
5. Pursuant to section 18 of the Strata Schemes (Freehold Development) Act 1973, the common property vested in the owner on 17 August 2004.
6. At 17 August 2004, pursuant to section 18 D (1) of the Act, the owner was entitled to the benefit of the same statutory warranties referred to in section 18B of the Act as was the developer.
7. On 11 November 2005 a Deed of Release was entered into between the builder and the developer.

Part 2C of the Act - Overview

1. Taking an overview of Part 2C of the Act, it is apparent that a builder faces the potential of owing, at the one point in time, obligations under the statutory warranties referred to in section 18B to: 1. a developer under section 18B of the Act, 2. an owners corporation in respect of common property under section 18D of the Act; and 3. lot owners, also under section 18D of the Act.

Allianz v Waterbrook

1. The owner in its submissions refers to Allianz v Waterbrook [2009] NSWCA 224 to assert that the statutory warranties conferred under section 18D(1) of the Act are not assignments of the warranties, but new warranties given to it as the successor in title.
2. Paragraph 65 of the decision in Allianz v Waterbrook was referred to and relied upon by the owner's counsel in closing submissions. The paragraph states: 'Section 18D conferred on a successor in title to a person entitled to the benefit of statutory warranties only the rights that that person had "in respect of" the statutory warranties. That is, it enabled the successor in title to claim whatever remedies might be available to it based on a breach of the statutory warranties by the builder. Those remedies included recovery of any loss incurred by the successor arising from the breach of the statutory warranties (and, arguably, the right to enforce the statutory warranties). It is not suggested that s 18D conferred the right on a successor to claim the losses its predecessor incurred arising out of a breach of the statutory warranties. That does not appear to be the intent of the legislation. Thus, s 18D did not have the same effect as an equitable assignment of a chose in action.'
3. The owner's counsel submits that the above passage establishes that what is created by section 18D of the Act is that the owner has the rights that the developer had in the statutory warranties contained in section 18B of the Act as at, in my view, the date the common property vested in the owner, namely on 17 August 2004. Insofar as Ipp JA states that 'Thus, s 18D did not have the same effect as an equitable assignment of a chose in action.' the meaning to be taken from that sentence is that the owner did not obtain the developer's rights under section 18B of the Act as it would have had there been an equitable assignment of a chose in action. It obtained equivalent rights.
4. On the basis of what was said in Allianz v Waterbrook as quoted above, I find that section 18D of the Act operated to confer on the owner the right to the statutory warranties contained in section 18B of the Act that the developer had as at 17 August 2004 and that these rights were independent of and separate to the developer's rights to the statutory warranties.
5. Although it was not expressly decided in Allianz v Waterbrook, it follows from my finding in the preceding paragraph that even though section 18D operates to confer a successor in title with rights under section 18B of the Act, that in itself will not strip a developer of its rights against a builder pursuant to section 18B of the Act. However, there is an issue of whether a developer who no longer has the ownership of the land and the building constructed upon it may sue the builder for damages for breach of the implied warranties in circumstances where it has no access to the common property to carry out rectification work. The developer may be unable to carry out rectification work. That issue and the effect of that factor in the question of whether a developer may recover damages for defective work was discussed in Cordon Investments Pty v Lesdor Properties Pty Ltd [2012] NSWCA and in Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253. However that issue is not directly in point in this case and does not fall to be considered or decided.
6. Given that a builder may have obligations under section 18B of the Act to different parties in connection with the one project, one can appreciate the necessity, from a builder's perspective, for a provision such as section 18 D (2) of the Act so that it not liable to different parties for the same defect. That section states: 'This section does not give a successor in title or non-contracting owner of land any right to enforce a statutory warranty in proceedings in relation to a deficiency in work or materials if the warranty has already been enforced in relation to that particular deficiency, except as provided by the regulations.'
7. The interpretation of section 18D (2) in context of the facts in these proceedings is of prime importance to the builder's defence based on the 11 November 2005 Deed of Release.
8. I have found that section 18D of the Act conferred on the owner the right to the statutory warranties contained in section 18B of the Act that the developer had as at 17 August 2004 independent of and separate to the developer's rights to the statutory warranties.

Issue to be resolved

1. The issue to be resolved by the builder's defence based on section 18 D (2) of the Act is whether the owner's claims under statutory warranties given to it by section 18 D (1) of the Act in connection with the deficiencies in work or materials the subject of its expert evidence in these proceedings, have already been enforced, in this case by the developer.
2. In resolving this issue I will have regard to the terms of the deed of release between the builder and the developer.

Deed of release

1. Before the signature of the deed of release on 11 November 2005, the evidence is that there were disputes and differences between the builder and the developer. The deed refers to terms of settlement. However, Mr Matterson states in his affidavit of 15 December 2010 that such a document was never prepared. I will find that in or about November 2005 there were no proceedings between the builder or the developer in relation to the disputes and differences referred to.
2. The deed of release refers to a claim for payment having been made by the builder in respect of the premises. The developer paid $1 to settle that claim, as recorded in clause 3 of the deed.
3. Clause 5 of the deed was a mutual release of all causes of actions that the parties to the deed had against each other. The clause was drafted in wide terms to catch all conceivable claims, including claims 'arising under the provision of any statute'.
4. Clause 6 of the deed stated: 'The Releasor & the Releasee each agree that the only obligation with regards to defects in the work shall be as defined under the Home Building Act and that the Releasee & Releasor shall maintain their own obligations under the Home Building Act 1989 and amendments'
5. In my view this clause is relevant in circumstances where the builder is taking the position that the deed referred to had the effect that rights under statutory warranties in connection with certain deficiencies in work and materials had been enforced, such that section 18D (2) of the Act prevents the owner in these proceedings from maintaining a claim against it in connection with those same deficiencies in work and materials.
6. In interpreting clause 6, I take it that the defects in work being referred to are defects in work carried out by the builder pursuant to the building contract between the developer and builder relating to the premises.
7. I also interpret clause 6 as being an exception to clause 5 which is a mutual release clause of very wide application. In my view clause 6 can have no other meaning or application other than as an exception to clause 5.
8. In addition I interpret clause 6 to be a recognition by the builder and developer that obligations regarding defects in work are as defined by the Act, and not disposed of by clause 5, and that they will retain their own obligations under the Act in connection with such defects.
9. In my view the effect of clause 6 of the Deed is that the parties agreed that the issue of defects in the work would be exempted from the general releases contained in clause 5 of the Deed. In particular and of importance, clause 6 is a recognition that the builder and developer would continue to be exposed to the obligations imposed on them by the Act in connection with defective work.
10. In its submissions the builder comments on clause 6. It states it is unclear what effect clause 6 has and that it may be referring to maintaining obligations in respect to defects not the subject of the architects notice. With respect, I disagree. There is no reason to cast such doubt on the meaning of clause 6. The clause is expressed in clear language. It relates to defects as understood in the way that I have referred to.
11. Secondly, the builder claims that the Act does not define specific obligations as to defects. That may be correct. However, the issue is not whether the Act defines specific obligations regarding defects. The issue in my view is how is clause 6 to be interpreted when it states that the obligation with regards to defects in the work shall be as defined under the Act.
12. The Act deals with a wide range of issues from licensing to Home Owner's Warranty Insurance. So far as defects are concerned, the Act provides for rectification orders in section 48E, as submitted by the builder. It is also deals with, and is commonly understood to deal with defective work by the implication of a term such as that found in section 18B (a) which requires a builder to perform work in a proper and workmanlike manner and in accordance with the plans and specifications. The other warranties implied by section 18B of the Act also deal with the issue of defective work in other contexts. It is clear that a breach of the implied statutory warranties will result in an order for damages or a work order as referred to in section 48O of the Act.
13. Clause 6 refers to two types of obligations. The first is the obligations with regard to defects under the Act. These words are not to be interpreted in a pedantic way, such as by reference only to those provisions of the Act that specifically refer to defects. The second type of obligation is that imposed by the Act on a builder and a developer.
14. As pointed out above, a builder is subject to obligations to different categories of persons. The developer is also subject to obligations to successors in title.
15. The builder's defence, as I understand it, does not (and could not) rely on the proposition that the statutory warranties relating to the defective work alleged in these proceedings were enforced by the developer before 17 August 2004. The builder asserts that by the time the owner instituted these proceedings, the developer had enforced the statutory warranties in relation to the defects the subject of these proceedings against the builder via the Deed of Release dated 11 November 2005. The builder submits that the result is that the owner as the successor in title to the developer is unable to enforce the statutory warranties in connection with those same defects.
16. The position outlined above reinforces what was said earlier in these reasons, namely that a builder will owe obligations under section 18B of the Act to different parties at the same time. Here as has been accepted, the owner became entitled to the statutory warranties via section 18D of the Act at 17 August 2004. The evidence indicates that around the same time there were differences between the developer and the builder about payments under the contract and the developer's rights under section 18B of the Act to damages for breach of the statutory warranties.
17. For the builder to be successful, it must establish that the developer had enforced the statutory warranties by virtue of the deed of release dated 11 November 2005.
18. The fact that the owner obtained the statutory warranties on 17 August 2004 and at that time the developer had not enforced the statutory warranties in connection with the defects the subject of these proceedings does not in my view dispose of the builder's section 18D(2) defence.
19. Section 18D(2) of the Act is clearly enacted to protect a builder in the position referred to above from being liable on more than one occasion to different parties in relation to the same 'deficiency in work or materials'.
20. I interpret clauses 5 and 6 of the Deed of Release to operate as a release by the developer of its rights against the builder based, among other things as the scope of the release is wide, on a breach of the contract or a breach of the warranties contained in section 18B of the Act and a release by the builder of its rights against the developer for money allegedly owning for work carried out in the construction of the premises.
21. However as regards other parties who may have rights against either the builder or developer, clause 6 of the deed is clear in that the builder and developer maintained their own obligations under the Act.
22. In that regard I note that the builder faced obligations under section 18B to the successors in title who came within section 18D of the Act and the developer faced obligations under section 18B to the immediate successor in title under section 18C of the Act. Those obligations were not released, and in context of section 18D (2) of the Act, were not enforced since the builder and developer acknowledged that their obligations under those sections remained intact.
23. The owner's case in these proceedings is under section 18D of the Act. Its rights to enforce the statutory warranties in relation to the alleged defects which form the basis of its case were not by reason of clause 6 released and have not been enforced.
24. For the reasons expressed above, I dismiss the builder's defence based on section 18D (2) of the Act

Claims under the Civil Liability Act 1989

1. It is common ground that the Civil Liability Act 1989 applies to these proceedings.
2. The builder submits that the defences under Part 4 of the Civil Liability Act are available to it in these proceedings and that the decision of the Supreme Court in Owners Corporation SP 72357 v Dasco Constructions Pty Limited & Ors [2010] NSWSC 819 binds the Tribunal. In particular the builder contends that the owners claim against it in these proceedings is an 'apportionable claim' under section 34 of the Civil Liability Act.
3. The builder also states that defences available under Part 4 of the Civil Liability Act relate to tiling defect claims and sliding aluminium door claims.
4. The builder submits that the decision in Owners Corporation SP 72357 v Dasco Constructions Pty Limited & Ors is to be preferred to the decision of the Court of Appeal in Owners Corporation Strata Plan 64757 v MJA Group Pty Ltd [2011] NSWCA 236. The owner submits that the decision in Owners Corporation Strata Plan 64757 v MJA Group Pty Ltd should be taken into account.
5. In Owners Corporation Strata Plan 64757 v MJA Group Pty Ltd Young JA considered the Civil Liability Act in paragraphs 49 - 52 of his decision, However as he stated at paragraph 49, the conclusion that he had reached on other issues meant that it was not necessary for him to 'consider in depth the other submission made by the respondent, that the present claim is a "apportionable claim" within the meaning of s 34 of the Civil Liability Act 2002 (NSW).'
6. At paragraphs 50, 51 and 52 of his decision, Young JA stated, without reference to Owners Corporation SP 72357 v Dasco Constructions Pty Limited & Ors: '50. The submission is that the only liability which should be placed on the developer's shoulders is that liability for which it was personally liable and not that vicariously liability (in the special sense used in this Act) for what the builder did. It is ordinarily the duty of an intermediate appellate court to deal with all the issues that arise in the appeal, notwithstanding that the appeal can be decided on one of those issues. However, the present point is an extremely significant one and it is not in the public interest that, without full argument on it, a definitive decision should be given. Accordingly, I will content myself by saying that there is much to be said for the view that a claim under s 18C of the Home Building Act is not an action for damages from a failure to take reasonable care within the meaning of s 34(1) of the Civil Liability Act 2002. One principal reason for taking this view is that to take any other view would completely negate the whole purpose of s 18C in the case where the builder has become insolvent.'
7. Although the above paragraphs of Young JA's decision were obiter dicta, I have had regard to them and in particular his Honour's observation that 'a claim under s 18C of the Home Building Act is not an action for damages from a failure to take reasonable care within the meaning of s 34(1) of the Civil Liability Act 2002'.
8. In Owners Corporation SP 72357 v Dasco Constructions Pty Limited & Ors Einstein J accepted that the plaintiff's claim which was made pursuant to section 18D of the Act and found that such claim was an action for damages in contract which arose from a failure to take reasonable care.
9. The owners have referred to the decision of the Court of Appeal in Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58. That case concerned the defendant's contention that other parties were concurrent wrongdoers and that its liability should be apportioned under Part 4 of the Civil Liability Act.
10. The document which gave rise to the defendant's liability was a Mortgage Origination Deed. The decision turned on whether section 3 A(2) of the Act applied to the Mortgage Origination Deed. Macfarlan JA also considered whether the plaintiff's action arose from a 'failure to take reasonable care'. His honour stated at paragraphs 22 and 23: 'For a successful action for damages to have arisen from a failure to take reasonable care, it is in my view necessary that the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeded. As observed by Professors McDonald and Carter in "The Lottery of Contractual Risk Allocation and Proportionate Liability" (2009) 26 Journal of Contract Law 1 at 18, the contrary view would produce the absurd result that a party to a contract who failed to perform a strict contractual obligation would benefit from being found to have acted negligently rather than "innocently". If claims could be apportioned where negligence is not an element of the successful cause of action, but merely arises from the facts, a plaintiff could lose his or her contractual right to full damages from a party whose breach of a contractual provision of strict liability happened to stem from a failure to take reasonable care. My view accords with that which I reached in relation to the similarly worded, and in my view relevantly indistinguishable, provision in s 5A of the Act which renders Part 1A applicable only to a "claim for damages for harm resulting from negligence (Perpetual Trustee v Milanex at [87]; see also Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 at [76] and [77]). It appears to differ from that expressed by Barrett J (as his Honour then was) in Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 at [20] - [30] and in other first instance decisions to which his Honour referred. Unless his Honour was simply saying that it is necessary to examine the court's findings to identify the cause, or causes, of action upon which the plaintiff succeeded, I cannot, with respect, agree with his Honour that the "nature of the claim, for the purposes of Pt 4, is to be judged in the light of the findings made and is not determined by the words in which it is framed" (at [30]). In my view the application of Part 4 turns not on the facts that happen to be found but on the essential character of the plaintiff's successful cause of action. Subject to cases that are conducted without regard to the pleadings, if negligence is an essential element of that cause of action, it will have been pleaded in the Statement of Claim. If it is not, it will not have been pleaded. It would be curious indeed if, to attract Part 4 of the Act, the defendant pleaded and proved his or her own negligence when that was not alleged by the plaintiff. The text of s 34(1) does not, in my view, contemplate that occurring. The natural meaning of the words used indicates that a failure to take reasonable care must be part of, and therefore an element of, the plaintiff's successful cause of action.'
11. The owner's counsel referred me to the case of The Owners - Strata Plan No 68372 v Allianz Australia Insurance Limited [2014] NSWSC 1807 in closing submissions. In that case Ball J. considered the authorities referred to above. The facts of that case were different to the facts in this case. The plaintiff was suing the developer since the builder had been placed in liquidation. It relied upon section 18C of the Act to obtain the benefit of the statutory warranties in section 18B of the Act against the developer. In connection with the question of whether the developer had been negligent, Ball J. upheld a referee's findings that it had not since a claim against the developer was a statutory claim that did not depend on or involve any fault on the part of the developer.
12. Since the owner's claim against the builder in these proceedings is pursuant to section 18D of the Act, the case does not assist. It should however be noted that the court appointed referee in The Owners - Strata Plan No 68372 v Allianz Australia Insurance Limited preferred the dicta of Young JA in Owners Corporation Strata Plan 64757 v MJA Group Pty Ltd to the decision of Einstein J. in Owners Corporation SP 72357 v Dasco Constructions Pty Limited & Ors on the basis that the court in Owners Corporation Strata Plan 64757 v MJA Group Pty Ltd had higher authority than the court in Owners Corporation SP 72357 v Dasco Constructions Pty Limited & Ors. Ball J. did not correct or overturn this aspect of the referee's decision.
13. The referee also took the view that the cases were distinguishable on the basis that they considered different sections of the Act, namely Dasco dealt with section 18D of the Act, as do these proceedings, and MJA Group Pty Ltd was concerned with a claim under section 18C of the Act.
14. Having regard to the passage cited above, I find that the owner's claim does not arise from a failure on the part of the builder to take reasonable care.
15. The reasons for reaching this conclusion are that the owner's claim against the builder as pleaded in its Amended Points of Claim is framed entirely as a breach of contract relying on the statutory warranties implied by section 18B of the Act. As Macfarlan JA stated in Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) ''For a successful action for damages to have arisen from a failure to take reasonable care, it is in my view necessary that the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeded' and later 'The text of s 34(1) does not, in my view, contemplate that occurring. The natural meaning of the words used indicates that a failure to take reasonable care must be part of, and therefore an element of, the plaintiff's successful cause of action.'
16. In these proceedings there is no part or element of the owner's case that there was a failure on the part of the builder to take reasonable care. It is on that basis and adopting the approach taken by Macfarlan JA that I find that the owner's case being entirely in contract and as pleaded not relying upon the failure of the builder to take care, is not an 'apportionable' claim under section 34 of the Civil Liability Act.

The owner's claims

1. I will now proceed to deal with the substance of the owners claims which are set out in the 'Joint Report on Alleged Building Defects at 175 - 183 Trafalgar Street, Stanmore' filed in the Tribunal on 9 September 2013, which will be referred to as either the 'Scott Schedule' or the 'joint report'. The experts for the parties have provided reports that deal with the defects that the owners have alleged to have arisen due to the builder's breach of the statutory warranties as contained in section 18B of the Act.
2. Those warranties are: '(a) a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.'
3. The builder has made submissions regarding the burden of proof.
4. The relevant principles in relation to discharging the burden of proof in civil cases were recently summarised by the New South Wales Court of Appeal in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55] as follows: '(1) A finding that a fact exists (or existed) requires that the evidence induce, in the mind of the fact-finder, an actual persuasion that the fact does (or at the relevant time did) exist; (2) where on the whole of the evidence such a feeling of actual persuasion is induced, so that the fact-finder finds that the probabilities of the fact's existence are greater than the possibilities of its non-existence, the burden of proof on the balance of probabilities may be satisfied; (3) where circumstantial evidence is relied upon, it is not in general necessary that all reasonable hypotheses consistent with the non-existence of a fact, or inconsistent with its existence, be excluded before the fact can be found; and (4) a rational choice between competing hypotheses, informed by a sense of actual persuasion in favour of the choice made, will support a finding, on the balance of probabilities, as to the existence of the fact in issue.'
5. The builder's final submissions under the heading Burden of Proof, raises the issue of the passage of time that has elapsed since practical completion. It is to be recalled that practical completion under the building contract occurred in July 2004.
6. The issue of maintenance was raised and a paragraph in the decision of Owners Strata Plan 62930 v Kell & Rigby [2010] NSWSC 612 was referred to and quoted by the builder (without a reference to the paragraph cited, which in a judgement of 449 paragraphs is not particularly helpful). I regard the quoted paragraph such that it is to be understood in the context of the evidence in those proceedings.
7. The issue of the inter-relationship between of the existence of a defect and the carrying out of building maintenance is not one which I am able to determine without expert evidence. However I will have regard to the experts' evidence, to the extent that this subject is raised. In other words I am of the view that it is impermissible for me to make findings based on my own views alone in connection with the lack of maintenance submission.

The experts

1. Mr Roberts of Cornerstone gave evidence on behalf of the owners. He provided a number of reports, prepared a Scott Schedule and contributed to the joint reports of August and September 2013. Mr Jakovljevic signed a letter from remedial Building Services dated 7 February 2013 which was attached to Mr Roberts 30 July 2013 report. This letter provided rates for remedial work.
2. Mr Taylor gave evidence on behalf of the builder. He also provided a number of reports, completed the Scott Schedule on behalf of the builder and contributed to the joint reports of August and 9 September 2013.
3. There was also an experts' conclave on 7 March 2013.
4. I accept that each of Mr Roberts and Mr Taylor is entitled to give expert opinion evidence in these proceedings. There was no challenge to their status as experts.
5. These proceedings were instituted in 2008. The first expert's report in these proceedings was prepared in June 2010. The parties to these proceedings have had a significant amount of time to instruct their experts to prepare reports, consider their evidence, conduct investigations as to the cause of defects, assess costs of rectification and to confer with each other in order to reduce the scope of disputed items.
6. In these circumstances I expect the expert evidence to be supported by an adequate reasoning process, relying on all necessary regulatory and other relevant references.
7. Defects were dealt with in categories. That is to say that there were many items in the Scott Schedule which are in dispute, helpfully referred to in groups of similar items in the owner's final submissions at paragraph 16(a). At the hearing the defects were dealt with in categories of like or identical items. I will deal with each category of defect in turn.
8. The parties have made submissions about which of the experts ought to be preferred. I will not prefer the evidence of one expert over the other as part of a 'blanket' approach to the experts' evidence. I will deal with each defect on the basis of the evidence before the Tribunal. However, my general impression of the experts is that the owner's expert's evidence suffers from a lack of specificity in some instances. In its generality, it sometimes fails to establish the specific matter that must be established, through a lack of concentrated analysis. The builder's expert's evidence tends toward advocacy in that it points out alleged deficiencies in the owner's expert's evidence rather than simply addressing the technical issues before the Tribunal. However, I think that it is fair to say that a number of the builder's expert's comments of this nature arise by reason of the generality of the owner's expert's evidence.
9. In these circumstances producing adequate evidence to discharge the onus of proof as referred to above, will of course be of vital importance. The evidence must address the alleged defect in a meaningful way and in so doing establish the breach of contract relied upon.

Defects

1. The first category of defects is cavity and sill flashing in relation to balcony doors. The defect items in the Scott Schedule are 2, 46, 49, 61, 67, 68, 74 and 75. The Scott Schedule refers to cavity flashings and moisture ingress in the description of these items. The owner's final written submissions clarify that it is the balcony doors that are the substance of the owner's complaint.
2. The amount in issue in connection with these items is $134,050.00.
3. The alleged defect is described as a lack of visible flashings in the walls of the premises at wall/floor junctions and at window and door openings.
4. The owner in final submissions states in connection with this category of defects that there has been a breach of the implied warranties set out in sections 18B (a) and (c) of the Act, namely a failure to carry out work in a proper and workmanlike manner and in accordance with the specifications and in accordance with the law.
5. Mr Roberts the expert for the owner states that there has been a failure to comply with the Building Code of Australia ('BCA) and Australian Standard 3700 -2001 section 4.7.3. The reference to the BCA is to a general provision regarding a building being constructed to provide resistance to moisture penetration from outside.
6. This category of defect is not agreed by Mr Taylor, the expert for the builder.
7. Mr Roberts deals with these items in his first report of 18 June 2010 and in his later report of 16 November 2012 which is a report in reply. Mr Roberts' evidence is that he observed a lack of visible flashings in the walls of the premises at wall/floor junctions and at window and door openings. Further he carried out destructive testing at the door sill/ wall junctions in areas he identified in units 4, 10 14, 15 and 16. His 18 June 2010 report sets out the results of these tests together with appropriate photographs.
8. Mr Roberts found that there was no visible sill flashing upturn on the internal face of the door sill or at the edge of the door opening. He found that the only barrier to moisture ingress was a sealant joint between the aluminium door frame or angle and the wall. Mr Roberts has set out the relevant sections of the Australian Standard that he states is relevant, AS 3700 -2001 section 4.7.3 which relates to the provision of flashings in masonry to prevent moisture ingress.
9. Mr Taylor responds to this evidence commencing at paragraph 78 of his 8 September 2011 report. He states that he is instructed that the door units incorporate self-draining sills and in that regard attaches an email from a supplier. He does not take any steps to ascertain for himself whether the basis of his instruction is correct.
10. Mr Taylor takes a different view about the applicability of AS 3700 -2001. He states that it does not apply because the external walls are not masonry walls. Mr Taylor explains his basis for stating this, namely that the wording of AS 3700 -2001 applies only to masonry which it describes.
11. Mr Taylor does state that he has observed the presence of moisture in the form of moisture staining to the carpet, underlay, smooth edge and wall finishes adjacent to the internal corners of the door framing. However he speculates about the causes for the presence of such moisture, giving 4 possible causes for the presence of such moisture.
12. Mr Taylor's evidence is not particularly helpful. He does acknowledge as referred to above that there is moisture in the units. I note that Mr Roberts does not specifically reply to Mr Taylor's evidence.
13. In its final submissions the owner refers to exhibit J which is the Ritek Installation Manual. Ritek is the walling system which Mr Taylor states was used in the construction of the external walls of the premises. Section 17 of the manual attaches 'the standard details associated with the RITEK' system. Drawings XF4 and XF7 which contain 'STANDARD DETAIL' show a range of flashings in connection with windows, panels laid on slabs, panel/slab edge flashing and panel/panel flashing. However there is no detail shown where a sliding door is to be installed within an opening in Ritek panels.
14. In his 16 November 2012 report at paragraph 7.4.3 Mr Roberts refers to Mr Matterson's affidavit of 24 June 2011 and specifically to the specification at annexure BM17. That specification is a window specification and requires the builder to install flashings and other items so 'that water is prevented from penetrating the building between the window frame and the building structure'.
15. That specification does not address the situation where a sliding door is to be installed within an opening in Ritek panels.
16. Mr Matterson has annexed to his affidavit the email from Wideline Pty Ltd as referred to by Mr Taylor. That email responds to his email which seeks details of the sliding doors which were installed in the construction of the contract works. The email states that the sliding door sill is designed to be self-draining. The email sets out the design details in connection with the self-draining aspects of the sill.
17. In connection with cavity and sill flashing in relation to balcony doors, the owner has on the evidence before the Tribunal failed to establish on the civil standard that there has been a failure to carry out the work relating to the sliding door units in accordance with the specifications.
18. The evidence before the Tribunal does not include the specifications relating to balcony doors. There are, as pointed out above, specifications in evidence regarding windows, and details regarding panels laid on slabs, panel/slab edge flashing and panel/panel flashing. Further, I can see no occasion for stating that window specifications or details regarding panels laid on slabs, panel/slab edge flashing and panel/panel flashing should apply to sliding doors being installed within an opening in Ritek panels. In any event Mr Roberts does not rely on those specifications.
19. There remains the owner's claim that the builder has failed to carry out this work in a proper and workmanlike manner. Mr Roberts does not go so far as to state that in his opinion a builder in proceeding in a proper and workmanlike manner would install cavity flashings in the openings in which the sliding doors were installed.
20. The basis for Mr Roberts' 'proper and workmanlike' opinion appears to be based on AS 3700 -2001, as referred to above. I have stated that Mr Taylor does not agree that AS 3700 -2001 is applicable because the external walls are constructed by the use of Ritek panels, not masonry walls. Mr Taylor explains his basis for stating this, namely the wording of AS 3700 -2001 in that it applies only to masonry which it describes.
21. The description of masonry in AS 3700 - 2001 does not in my view apply to Ritek panels.
22. In my view the builder had no obligation to comply with AS 3700 - 2001 in the installation of balcony doors in the units referred to. That standard had no application to openings in Ritek panels.
23. If the owner alleges that there has been a failure to comply with section 18B(c) of the Act based on a failure to comply with AS 3700 - 2001 in the installation of balcony doors in the units referred to, there is no basis for a finding in the owner's favour, since as I have found, AS 3700 - 2001 does not in my view apply to Ritek panels.
24. The only other basis advanced by the owner in connection with this defect item is that the builder breached the BCA, specifically as referred to in the Scott Schedule, as BCA FF1.2 and FP 1.4.
25. The relevant provisions of the BCA are set out in Mr Taylor's report at paragraph 88. Mr Taylor's evidence is that he admits that there is moisture ingress in connection with six door units. He states that in connection with the remaining 24 sliding door units in the premises that he inspected those and they were preforming satisfactorily in that there was no 'significant and ongoing water ingress'.
26. The owner has failed to adduce evidence to establish that there has been a breach of breach of the implied warranties set out in section 18B (a) of the Act, namely a failure to carry out work in a proper and workmanlike manner and in accordance with the specifications.
27. Insofar as the owner alleges that the builder is in breach of section 18B(c) of the Act based on a breach of the BCA, Mr Roberts concedes that there is moisture ingress in connection with six door units. Although he states that the reason for the water ingress is a failure of maintenance, I do not accept that as the sole cause of the failure.
28. Mr Roberts has referred to the costs associated with the rectification of the doors in question in paragraph 111 of his report.
29. I will find for the owners in that amount, namely the sum of $ 2,777.00.
30. In closing oral submissions the builder submitted that the decision of the Court of Appeal in Barrak Corporation Pty Ltd v The Kara Group of Companies Pty Ltd [2014] NSWCA] 395 is relevant to this issue. I am unable to ascertain the relevance of that decision.

Cracked and drummy render above the door frame, northern elevation

1. The next defect is cracked and drummy render above the door frame, northern elevation, item 5, amount in issue $675.00.
2. This defect relates to cracked and drummy render over a door head adjacent to the garage roller shutter. The owner's expert has stated what, in his opinion, is the cause of the cracked and drummy render in paragraph 9.5.3 of his 18 June 2010 report.
3. The builder's expert states that the door in question is not shown on the contractual plans and that he is instructed that the door was not installed by the builder.
4. The builder's final written submissions do not refer to any evidence from either Mr Brett Matterson or Mr Rodney Matterson to support the assertion made by the builder's expert that the work the subject to this item was not carried out by the builder. Otherwise the builder's expert states that the cause of the drummy render is not apparent to him. He states that if proved, the appropriate quantum is $270.00.
5. I accept Mr Roberts' evidence as to the cause of the cracked and drummy render. I also prefer the owner's written submissions on this item.
6. The builder's expert has broken down the amount of $270.00 being primarily four hour's work by a painter with materials. The owner's expert's estimate allows for eight hours labour with materials at $155.00.
7. The photograph at paragraph 9.5.1 of Mr Roberts report provides a clear impression of the defect. I do not accept Mr Taylor's evidence that the area of the defect is 150mm x 150mm. However, I am of the view that eight hours work would be excessive for the rectification of this defect. I prefer the builder's expert's estimate of four hours labour.
8. I will allow the sum of $270.00 for the rectification of this defect.

Corrosion to corner angles, items 6 and 10 Amount in issue - $5,070.00

1. The next category of defect is corrosion to corner angles, items 6 and 10.
2. This item relates to corner angles used in external render application. The owner's expert states that the angles should have been those fabricated in stainless steel as recommended by the manufacturer, rather than the angles used which were galvanised. The builder's expert states that the angles used were zinc coated galvanised, as required at the time and that any deterioration that has occurred is consistent with 'fair wear and tear'.
3. The owner in final submissions states that there has been a breach of section 18B of the Act because the materials are unsuitable. I assume a breach of clause 18B (b) of the Act is being referred to.
4. The contractual specification for external render is in evidence as DZ12 to Mr Taylor's report. That document which is dated November 2002 shows that for plastering and rendering, under paragraph 4.4 'TRIM' for edge trim 'Purpose -made zinc coated steel sections' was specified.
5. Further, Mr Taylor attaches a Rondo external angle publication which had been revised in 2008. I note that document refers to a Rondo stainless bead for exterior render applications, as well as Rondo 'E-Beads' for exterior use. These beads are galvanised.
6. Exhibit K is a document titled 'Rondo Exangle' which was first printed in April 2000 (Refer to P. 558 of Documents Bundle Volume 1 of 1). That document at page 17 (P.574 of Documents Bundle Volume 1 of 1) under the heading "Rondo 'E-Bead' Products for External Render Applications'' also refers to 'E-Beads' which are stainless steel. This page states under the heading 'Note', 'It is only these sections that are recommended for outdoor use.'
7. While Exhibit K states on P. 577 of Documents Bundle Volume 1 of 1 that it was first printed in April 2000, I am unable to ascertain whether the document states the positon as regards Rondo external angles before, or at the time when the contract was entered into, or at some later date. It is possible that Exhibit K contains information which is current at a date later than when the contract was signed, despite the fact that it was first printed in April 2000.
8. Exhibit 7 is a Rondo publication titled 'Exangle' Revised November 2003. At page 16 under the heading 'Rondo 'E - Bead' Products for External Render Applications' it is stated that all Rondo 'E- Beads' are made from Australian galvanised steel with a high zinc coating and then painted in a primer to provide superior corrosion resistance.
9. The issue here is, was the builder being contractually bound to provide zinc galvanised corner beads, obliged to provide a higher grade stainless corner bead. In complying with the specification the builder has complied with section 18 B (a) of the Act to the extent that the work has been performed in accordance with the contractual specification.
10. In my view the warranties contained in section 18B of the Act are to be read as mutually consistent, unless the contrary can be established. For example if materials or products are specified, it should follow that if a builder establishes that it has complied with the specification, the materials or products will be good and suitable. However, if an owner is able to establish, for example, that a material and product was clearly not good and suitable and known not to be good and suitable, then compliance with the specification will not serve as an answer to a claim for breach of section 18B (b) of the Act.
11. By approaching the issue in this way the application of the warranties in sections 18B(a) and (b) of the Act will be consistent, subject to the proviso that I have mentioned which would protect an owner from work being specified to a level which is known or established to be inadequate at the time of contract.
12. In connection with the items in dispute, the evidence has established that galvanised corner angles were used and also that galvanised corner angles were specified. Despite suggestions in submissions by the owner there is no evidence that the angles used were not galvanised.
13. The evidence is unclear about when the manufacturer of the product used was stating that only non -corrosive stainless steel E Beads were recommended for outdoor use. There are two Rondo publications in evidence. One, Exhibit 7, is a Rondo publication titled 'Exangle' Revised November 2003. The other, Exhibit K, is 'Rondo Exangle' which was first printed in April 2000. The contractual specification is dated November 2002.
14. I am not persuaded that Exhibit K stated the position as regards the use of Rondo corner angles for exterior use as at November 2002 or at June 2003 when the contract was signed. In my view it was more probable that the specification and the Rondo publication titled 'Exangle' Revised November 2003, exhibit 7, stated the current position at or about the time the contract was signed regarding the use of Rondo corner angles. I note that exhibit 7 calls for maintenance of rendered and painted finishes.
15. It follows that I find that the owner has not established, that at the time of contract the galvanised Rondo corner angle was clearly not good and suitable and known not to be good and suitable for use as an external angle.
16. For the reasons stated, I am of the view that the builder is not in breach of section 18B (a) or (b) in connection with this item of claim.
17. This item of the owner's claim is dismissed.

Cracking to the external wall, front block northern elevation. Amount in issue $5,500.00

1. The next defect is cracking to the external wall Front Block Northern Elevation, defect item 7. The issue is a lack of movement joints between the external walls and balustrade walls.
2. The owner's expert states that work which was required by section 4.3 of the specification to be carried out, namely that the builder provide movement joints in the finish which coincide with movement joint in the substrate, was not in fact carried out, with the result that the defect complained of is present. The owner's expert also relies upon AS 3700-2001 which relates to masonry walling.
3. The owner's final submissions state that the builder has breached section 18B(a) of the Act that is to carry out work in a proper and workmanlike manner and in accordance with the specifications.
4. The builder's expert states that as the Ritek structural walling system was used, AS 3700-2001 has no application.
5. Further in relation to the specification references, the builder's expert makes the point that the specification requires the identification of movement joints in the substrate for the correct positioning of the movement joint in the render finish. He points out that Mr Roberts has not identified that there is a requirement for a movement joints in the substrate in the locations that he has identified.
6. The parties' submissions make it clear that there is only one crack in the render which has been identified and which is said to be material. The crack is 900 mm long and is said by Mr Taylor to be a fine crack.
7. On the evidence which there is in relation to this item and having regard to the parties final written submissions, it is clear that one crack in the external wall exists.
8. Mr Taylor refers to a Ritek Manual which refers to structural movement joints installed at locations nominated by a structural engineer, Be that as it may, the contractual specification is the relevant specification for the purposes of section 18B(a) of the Act.
9. The fact that concrete is cracked does not lead to an inevitable conclusion that here has been a breach of contract. I have previously found that AS 3700-2001 does not apply to construction using Ritek panels.
10. However the specification is clear that movement joints in the finish which coincide with the movement joints in the substrate are required. Mr Taylor states that a movement joint is not specified in the substrate at the location in issue. In my view Mr Taylor's interpretation of the specification is incorrect. The specification requires the builder to provide movement joints in the finish at the locations stated, namely to coincide with the movement joints in the substrate.
11. I accept Mr Roberts' evidence that a lack of a movement joints between the external walls and balustrade walls are the cause of this defect.
12. The experts do not agree on the rectification costs. Mr Roberts has stated that the rectification cost of $5,500.00 is split as to labour $3,120.00 and materials $1,380.00. The labour component being 48 hours. Mr Taylor states that costs of $1,197.00 are required to carry out the rectification work. That cost is broken up in appendix E to his report. Essentially Mr Taylor assesses the work as taking two days. Mr Roberts does not state how long his rectification assessment will take, but assuming an 8 hour day, he allows for six working days to carry out and complete this work.
13. I prefer Mr Taylor's detailed assessment of the rectification costs in preference to Mr Roberts six working days assessment. I will find in the owner's favour in the sum of $1,197.00 in connection with this item.

Failure properly to seal the Ritek wall cladding at the eastern wall. Amount in issue $14,122.00

1. The next defect relates to the failure properly to seal the Ritek wall cladding at the eastern wall, item 8.
2. The owner's claim under this heading comes in two parts. The first is to remove and replace the joint strips from the Ritek panel joints. The second part is to finish the wall with a trowel render finish. The owner's expert refers to a failure to seal and paint the Ritek wall cladding at the eastern wall and to the delamination of cover strips.
3. In final written submissions a breach of section 18B(a) of the Act is relied upon, namely a failure to carry out work in a proper and workmanlike manner and in accordance with the drawings and specifications.
4. There is no evidence or submission that there is any section of the specification that would address this issue. Mr Roberts also states that there is no BCA provision that relates to the issue.
5. The builder's expert relies upon two contract drawings, CC03G and CC08F which he states explain the position.
6. Drawing CCO8F states in connection with the front block of the premises 'Painting not necessary. Face abuts adjacent building.' Drawing CC03G states in relation to the eastern wall of the premises 'Render and paint finish'.
7. Despite these annotations on the drawings the owner's expert states that the Ritek walls should have been sealed.
8. In his reply report of 16 November 2012, the owner's expert considers the affidavit of Mr Brett Matterson in connection with this issue. In addition he states that the builder stated in its tender that the Ritek walls were to be finished in accordance with AS 2589.1-1997 - Level 4 and that the builder failed to do that. In addition and importantly in my view, Mr Roberts states that 'It is industry practice to paint set joints on external wall cladding to prevent breakdown and deterioration of the setting material.'
9. The specification does not address the issue raised by this defect item.
10. In my view where one of the parties to the underlying contract has gone to the cost and effort of causing detailed drawings to be prepared, such drawings being those referred to in section 18B(a) of the Act, as the 'plans', I should give them close consideration. I note that both drawings are 'F' issue, drawn after a meeting on 5 June 2003. I find that drawing CCO8F provides the greater detail. It is an elevation drawing that shows the east side of the building. It clearly depicts an area within which there is the annotation, 'Painting not necessary. Face abuts adjacent building.' Of importance in my view is the fact that the Legend to the drawing specifies where a textured paint finish to Ritek walls is required. Such a textured paint finish is required in 3 locations adjacent to the area where painting is stated to be unnecessary.
11. Drawing CC03G is a plan of the first floor.
12. In my view drawing CCO8F is to be preferred to drawing CC03G so far as the treatment of the eastern elevation is concerned. It has more detail and clearly states what is required.
13. I find that that the builder has not breached section 18B(a) of the Act in that it did not fail to perform the work in accordance with drawing CCO8F.
14. Despite the finding that I have made the evidence is that the builder did place cover strips between Ritek wall panels which are delaminating. Mr Roberts has stated that 'It is industry practice to paint set joints on external wall cladding to prevent breakdown and deterioration of the setting material.' The delamination of the cover strips and the unpainted set joints are capable of supporting a finding in the owner's favour for breach of the obligation to perform work in a proper and workmanlike manner.
15. However the evidence before the Tribunal does not specifically deal with the cost of the rectification of cover strips and the painting of set joints. In the absence of such evidence I am unable to make a finding of the rectification cost of doing so in the owner's favour. To do so would require me to make an uninformed guess of that cost.
16. For the reasons set out above this item of the owner's claim is dismissed.

Cracking of the external wall on the southern elevation. Amount in issue $1,780.00

1. The next defect is the cracking of the external wall on the southern elevation, item 17. Exhibit L shows the crack in question. I will state at the outset that the owner has to do more to establish its claim, than to show that a crack exists.
2. The defect complained of is a lack of movement joints and/or struck joints at junctions between dissimilar building materials. The owner's expert has not stated clearly in his reports the dissimilar construction materials that have been used which in his opinion make the provision of a movement joint necessary. However the builder's expert does not dispute that there are dissimilar construction materials.
3. The owner's expert states that there was a lack of movement joints and struck joints through the render finishes. He states that AS 3700-2001 applies.
4. Section 4.3 of the specification is also relied upon which requires the builder to provide movement joints in the finish which coincide with movement joint in the substrate.
5. The builder's expert concedes that AS 3700-2001 applies to the walls in issue.
6. In final written submissions a breach of section 18B(a) of the Act is relied upon, namely a failure to carry out work in a proper and workmanlike manner and in accordance with the drawings and specifications.
7. Mr Taylor for the builder raises a submission on the interpretation of AS 3700-2001. This leads him to conclude that there may be a defect in the design of the premises because the structural drawings do not show or specify movement joints.
8. In response to Mr Roberts reference to the specification, the builder's expert makes the point that the specification requires the identification of movement joints in the substrate for the correct positioning of the movement joint in the render finish. He points out that Mr Roberts has not identified that there is a requirement for a movement joint in the substrate in the locations that he has identified.
9. I have stated in connection with section 4.3 of the specification that it is clear that movement joints in the finish which coincide with the movement joints in the substrate are required. Mr Taylor states that a movement joint is not specified in the substrate at the location in issue. In my view Mr Taylor's interpretation of the specification is incorrect. The specification requires the builder to provide movement joints in the finish at the locations stated, namely to coincide with the movement joints in the substrate.
10. I accept Mr Roberts' evidence that a lack of a movement joints is the cause of this defect.
11. The experts do not agree on the rectification costs for this item. Mr Roberts provides a fulsome rectification methodology which is costed at $1,780.00. All told it allows three working days which included the re painting of affected areas. Mr Taylor only allows for four hours of work. I prefer Mr Roberts costing as being the most probable estimate of rectification costs.
12. I will make an order in the owner's favour in the sum of $1,780.00.

Courtyard tiling. Amount in issue - included in item 24

1. Courtyard tiling, item 20. The issue in relation to this item is the alleged lack of perimeter joints in the courtyard tiling. Exhibit M is relevant to this issue.
2. The rectification cost of this defect item 20 is included in item 24.
3. The owner's expert has identified a number of requirements which he states are relevant and which he also asserts have not been complied with. They are: 1. AS 3958.1-1991; 2. The Guide to Standards and Tolerances issued by the Office of Fair Trading; and 3. Section CD405 of the specification which deals with tiling.
4. In final written submissions a breach of section 18B(a) of the Act is relied upon by the owner, namely a failure to carry out work in a proper and workmanlike manner and in accordance with the drawings and specifications.
5. The owner's expert states that there have been 'retro cut' intermediate joints in the floor tiles. He states that these joints do not extend the full depth of the mortar bed and were not wide enough to comply with the specification. Mr Roberts does not identify where these retro cut intermediate joints have been made. In addition, Mr Roberts states that the area of drummy tiling was 10% of what is described as the 'external entry walkway'.
6. Annexure B to Mr Roberts report shows what he describes as the extent of drummy floor tiling. There are numerous locations of tiling shown on Annexure B. However, very few of those areas are discussed or reported on in the section of Mr Robert's report which deals with this defect item 20. Despite this lack of discussion, Mr Roberts recommends the removal and replacement of drummy tiling.
7. Mr Roberts' recommends the removal of the floor tiles to the entire central courtyard area. The purpose of this rectification methodology is stated to be required to address the failure of the waterproof membrane on the central courtyard and the resultant moisture ingress to the garage/carpark area.
8. I would observe that the reason for rectification ought to be to make good a breach of contract. If I have understood Mr Roberts evidence in relation to this item, his main complaint is that there are drummy tiles to 10% of the 'external entry walkway' and there are 'retro cut' intermediate joints in the courtyard area.
9. The rectification recommendation is in relation to the central courtyard area. The reason for this rectification is said to address the failure of the waterproof membrane on the central courtyard. However Mr Roberts provides no evidence at all in this section of his report that there has been a failure of the waterproof membrane. His complaint relates to a lack of movement joints.
10. The builder's expert predictably denies that the matters raised by the owner amount to a defect. He states that the tiling on site has been installed to a reasonable trade standard, with minor exceptions attributable to the owner. He states that there was a small percentage of drummy tiling. For example, in his view, only 2% of tiling in the courtyard was drummy.
11. As a general observation the builder's expert has undertaken a study of the owner's complaint with a greater amount of precision and analysis than has the owner's expert.
12. He has: 1. Counted drummy sounding tiles in the courtyard floor, 18 / 1,100 = < 2%; 2. Identified drummy tiles reasonably assumed to have been damaged by other work carried out; 3. At paragraph 484 of his report observed where control joints were installed at unidentified locations; 4. Identified that the width of some joints was 4mm when the minimum width is 6mm; and 5. Identified that the movement control joints divided the courtyard into 12 areas which , with one exception, measured less than the specified maximum of 16 m2 ,
13. Despite the thoroughness of Mr Taylor's report, he has not addressed the issue raised by Mr Roberts that there have been 'retro cut' intermediate joints in the floor tiles which do not extend the full depth of the mortar bed and were not wide enough to comply with the specification. Exhibit M shows such a retro cut movement joint which is only 4mm deep. However Mr Roberts' report does not establish how many unsatisfactory retro cut intermediate joints there are.
14. I prefer the evidence of Mr Taylor in connection with this item.
15. In my view the defects that Mr Roberts has identified would not in themselves justify the removal and replacement of floor tiles to the central courtyard. It is the inter-relationship of this area to defect item 24 that would justify such an approach. The need for such an approach in my view arises out of defect 24, more than this defect item 20.

Failure of waterproof membrane to planter boxes. Amount claimed $66,500.00.

1. The next category of defect is failure of waterproofing to the planter boxes, items 22, 31, 37, 39, 40 and 41.
2. These items relate to alleged failures of waterproof membrane in planter boxes in the central and rear courtyard areas, and mineral staining to the slab/wall junction at unit 2 relating to the alleged failure of the waterproof membrane in planter boxes. This failure is said to affect units 5, 6, 7 and 8.
3. The owner's expert attributes the cause of the failure to be: 1. Membrane not being installed in accordance with manufacturer's recommendations; and 2. Lack of suitable protection of the membrane coating applied to the walls and use of membrane that is not UV stable, where exposed.
4. The owner's expert further states that the failure of the membranes causes water to leak through the slab and through the ceiling of the car-park which is directly below.
5. The builder's expert states that the work carried out by the builder is not defective and that there is no evidence of water penetration of the walls of the planter boxes.
6. The owner's final submissions state that breach of section 18B(a) and (b) of the Act is relied upon, namely a failure by the builder to carry out work in a proper and workmanlike manner and in accordance with the drawings and specifications, and a failure to carry out the work in accordance with the law.
7. Mr Roberts has carried out a careful examination of the circumstances relating to the waterproof membrane to the planter boxes. He states that the membrane has clearly failed. He arrives at this conclusion by way of his observation that the membrane has peeled and cracked. He also observed that the membrane appeared to be a 'bitumen modified' membrane.
8. He has established that the contract specification does not address the membrane to be provided by the builder. Mr Roberts was unable to establish the manufacturer of the membrane or the particular product used. Moreover, he states that that at the relevant time the BCA did not address the issue and there were no Australian Standards that addressed the waterproofing of planter boxes. He also states that he has been unable to test the membrane as he was unable to obtain a suitable sample.
9. Mr Roberts states that the usual requirement of recognised membrane manufacturers is for 1mm thickness of membrane made up of two coats. He states that had two coats been used, he would have been able to have taken a sample. Since he was unable to get a sample, the inference is that only one coat was used and the thickness was less than 1 mm.
10. There are other matters raised by Mr Roberts, namely that walls of the planters were not provided with protection boards to protect the membrane from mechanical damage. Further there is a lack of filets at the base of the planter at the slab/planter wall junction to provide resistance to tearing and failure at the junction due to movement.
11. Mr Roberts states that as a result of the membrane issues that he has referred to, there is water ingress through the concrete slab of the central courtyard into the garage below.
12. Mr Taylor's evidence on this issue is at paragraphs 510 to 524 of his report dated 8 September 2011. I will say at the outset that his evidence on this issue is to my mind unsatisfactory. His evidence at times tended toward advocacy on behalf of the builder. He does not address the issue raised by the owner's expert, namely whether there has been a failure of the waterproof membrane.
13. His report in connection with this item is pre-occupied with the issue of whether there is water seepage or ingress into the garage area. However, that is a separate, albeit connected, issue to the question of the failure of the planter box waterproof membrane.
14. Mr Taylor's evidence regarding the condition of the waterproof membrane can go no higher, in my view, than 'Above ground level the exposed membrane had a weathered appearance.'
15. I prefer the evidence of Mr Roberts on this issue. His evidence persuades me that the waterproof membrane was not applied to the required thickness of 1mm and that the builder failed to install filets at the base of the planter at the slab/planter wall junction to provide resistance to tearing and failure at the junction due to movement.
16. I am satisfied on this evidence that there was a breach of section 18B(a) of the Act. I can see no basis for a breach of section 18B(b) of the Act as contended in the owner's final written submissions. I do however consider and find that the evidence on this defect establishes a breach of section 18B (f) of the Act that the waterproof membrane would be fit for purpose. I find that it was not fit for purpose for the reasons expressed in the preceding paragraph.
17. So far as quantum is concerned the amount claimed by the owner is $66,500.00. That amount is calculated in the owner's Scott Schedule dated 24 May 2013 which is document 13 in volume 5 of the bundle of documents. Mr Roberts' rectification methodology is set out in the Scott Schedule having been reproduced from his reports filed in the proceedings. Mr Taylor states that drip trays should be placed in the carpark areas to collect any water that might seep through the slab. That rectification methodology is the one he puts forward in relation to defect item 24.
18. However at appendix E of his report dated 8 September 2011, Mr Taylor, as alternative C, costs the work required to provide a new membrane which is described as 'Remove and store plantings, remove soil, apply new membrane and reinstate.' He breaks this work down and arrives at a total cost of $18,801.00. The rates he uses are based primarily on those in Cordells. In one instance he provides a rate which is identical to a similar Cordells rate. The rates used by him are current as at September 2011.
19. Mr Roberts estimated rectification cost of $66,500.00 is calculated as 81m² x $750m² = $60,940.00 plus seal face of planter walls 8 m² x $70 m² = $5,600. $60,940.00 + $5,600 = $66,500.00. Mr Roberts' calculation is incorrect. The correct total is $66,540.00.
20. Mr Roberts' report dated 30 July 2013 which is at tab 17 of volume five of the bundle and which is exhibit F deals with his estimate of rectification costs in these proceedings. At paragraphs 5.2.3 - 5.2.12 he states in detail the calculations which together make up the rate of $750m² as referred to above.
21. The rates used by Mr Roberts are those based on rates that he was provided with by a specialist rectification contractor, Mr Jakovljevic from remedial Building Services. I will state that I accept this method of calculating rectification costs and that I accept Mr Jakovljevic's evidence. The detailed evidence contained in paragraphs 5.2.3 - 5.2.12 of the 30 July 2013 report persuades me that the rate of $750m² used by Mr Roberts is a realistic rate and to be preferred to the rates used by Mr Taylor and that the total estimated cost arrived at by Mr Roberts is to be preferred to Mr Taylor's total estimated cost.
22. On the basis of the reasons in the preceding paragraphs the owner will be successful in obtaining an award in the sum of $66,540.00 in connection with the defect items referred to.

Water penetration through the slab into the car park, item 24. Amount claimed $145,080.00

1. This is a substantial claim which is in dispute between the parties.
2. During my site inspection which took place on 14 April 2014, it was clear that there is water leaking through the slab into the garage area which provides parking for 21 vehicles. As stated by the owner's expert, there is mineral and water staining to the underside of the concrete slab that forms the ceiling of the garage/carpark.
3. Mr Robert's on behalf of the owner has produced ample photographic evidence of water ingress through the ceiling of the garage/carpark.
4. This item of claim is stated to be a claim for the consequences of failures of waterproof membranes to the: 1. central courtyard; 2. central courtyard planter boxes; and 3. first floor Unit courtyard slabs.
5. In order to be successful the owner must establish the breaches of the Act that it contends have caused the water ingress through the ceiling of the garage/carpark.
6. I have found in the owners' favour in connection with the builder's failure to install the waterproof membrane in the central courtyard planter boxes. My findings in connection with the central courtyard are limited to drummy tiles and retro cut intermediate joints.
7. Mr Roberts for the owner states at paragraph 9.24.3 of his first report that he did carry out a destructive investigation in one location of the central court yard slab which exposed a waterproof membrane. Despite the presence of the membrane, Mr Roberts has provided photographic evidence of water penetration through the ceiling slab of the garage /carpark area which indicates failures of the membrane.
8. The owner's rectification methodology is to replace the waterproof membrane over the entire central courtyard area. To do that it will be necessary to remove the tiling in that area.
9. The builder's position in connection with this head of claim is one of denial. The builder's expert does not deal with this issue in a forthright way. The issue is in my view whether or not the ceiling of the garage/carpark leaks. If it does, the question is why. If it does not, there is nothing further to be said.
10. In my view Mr Taylor does not engage with these issues. Instead, he engages as an advocate on behalf of the builder.
11. Mr Taylor makes observations about the supposed design intent of wet masonry walls and wet infill concrete floor slab and the drainage arrangements relating to that. Be that as it may, that does not address the issue of a leaking ceiling. Mr Taylor's comments about there being no need for the car park to be dry and free of water ingress does not take into account the issue of or the potential for the reinforcing steel in the ceiling slab corroding due to the ingress of water from the areas above.
12. Mr Taylor then makes the point that there is no regulatory requirement to prevent water penetrating the garage /carpark through the roof slab. In my view that submission is more properly a legal submission. Mr Taylor's expertise in this case relates to his engineering and building experience. His willingness to address the exception in Part FP1.4 of the BCA is in my view an indication of his desire to find a reason, for the benefit of the builder, to avoid addressing the simple issues that I have outlined above.
13. Ultimately, Mr Taylor concedes at paragraph 533 of his report dated 8 September 2011 that it is undesirable for water to seep through a concrete slab as it causes damage to car paint. He states that the water may be collected in metal trays and then re-directed into the stormwater system. I find this position to lack credibility.
14. Perhaps my criticism of Mr Taylor's evidence may be abated by reference to the joint memoranda of the expert's conclave which is exhibit I in the owner's case. In connection with this item the joint memoranda states the following. 'Agree defect in Park' and 'Experts agree that instances where water leaks through the roof of the car park onto car spaces are - defects. AE considers the defect extends to all areas of the car park where waterproofing has been applied above (est by intrusive investigation - reported) and leaks occur below indicating defective waterproofing. RE disagrees for his reported opinion. Experts maintain their differing reported opinions for rectification methods and extent.'
15. Having regard to the above extract and the experts' reports I take it that the experts agree that there are defects causing water ingress into the car park. There may be disagreement between them as regards the extent of the defects.
16. Although he states that 'there is only slight seepage at a few locations' Mr Taylor at paragraph 534 of his report identifies locations where he observed water entry.
17. The issue of the builder's use of Xypex concrete additive is relied upon by the builder in contending that there is no breach of the statutory warranties in connection with this defect item. In his statement of 24 June 2011, Mr B Matterson, a director of the builder states that a Xyplex waterproofing additive was mixed into the concrete before pouring the slab. Mr Matterson is not relied upon as an expert witness. Insofar, as Mr Matterson's evidence provides an opinion on technical matters relevant to these proceedings, I will not take that evidence into account in these reasons for decision.
18. Mr Roberts describes Xypex as a chemical additive recommended to prevent water penetration in concrete.
19. The builder's position as regards Xypex appears to be that since Xyplex waterproofing additive was mixed into the concrete before pouring the slab, the water penetration should not be occurring, or is of no consequence.
20. The builder's evidence relating to Xypex can only go so high. I accept that Xyplex waterproofing additive was mixed into the concrete before pouring the slab above the garage/carpark. I also accept that Xypex is intended by the manufacturer to prevent the penetration of water into the slab.
21. Based on the evidence before the tribunal, namely that from Mr Taylor and Mr Roberts, I do not accept that Xypex has water proofed the central courtyard concrete slab which forms the ceiling of the garage/carpark area. I find as a fact based on the evidence that I have referred to that water penetrates the central courtyard concrete slab and enters the garage/carpark areas at multiple points, as referred to by the experts in the plans that they have marked up and attached to their reports.
22. In connection with Mr Taylor's evidence that 'there is only slight seepage at a few locations' I specifically reject that evidence. In my view the water ingress is more than slight. Mr Roberts in his report of 18 June 2010 refers at paragraphs 9.24.3 (i) - (xii) and annexure D to numerous places where there is moisture ingress. I accept his evidence in that regard. I have also had regard to Mr Roberts report dated 9 May 2013 in which plans A and B indicate points of moisture ingress through the slab forming ceiling of the basement carpark. I also accept this evidence and the moisture ingress points marked on plans A and B.
23. I find that by reason of the ample evidence of the water penetration of slab which forms the ceiling of the garage/carpark area resulting in water leaking onto the floor of the garage/carpark the builder has breached sections 18B(a) and (b) of the Act in that it has failed to carry out the application of the membrane or failed to provide a membrane good and suitable for the purpose for which it was used, namely to waterproof the slab. Moreover I find that the use of Xypex by the builder has not been successful in waterproofing the slab.
24. These findings are reinforced by the fact that the builder's expert has agreed that there are defects in the waterproofing of the slab which forms the roof of the car park.
25. So far as quantum is concerned in connection with this item, the experts are not in agreement. The owner's expert in his amended Scott Schedule assesses the rectification cost $145,080.00. The builder's expert has assessed the rectification cost at $9,309.00 being the cost of installing drip trays.
26. I find that the builder's rectification method of ignoring the fact that the waterproofing of the slab which forms the roof of the car park was either not installed or has failed is completely inadequate.
27. The only evidence that there is of the cost of rectifying the failure to waterproof is that tendered by the owner. Mr Roberts has stated this cost to be calculated on the basis of 223.2m² x $650/ m². The evidentiary basis for the rate of $650/ m² is stated at paragraphs 5.2.13 - 5.2.20 of Mr Roberts 30 July 2013 report which is exhibit F.
28. As previously stated the rates used by Mr Roberts are those based on rates that he was provided with by a specialist rectification contractor, Mr Jakovljevic from remedial Building Services, as referred to in Mr Roberts' 9 May 2013 report. I will state that I accept this method of calculating rectification costs and that I accept Mr Jakovljevic's evidence.
29. The detailed evidence contained in paragraphs 5.2.13 - 5.2.20 of the 30 July 2013 report easily persuades me that the rate of $650m² used by Mr Roberts is a realistic rate for the carrying out of the work in question. There is no evidence to contradict Mr Roberts' calculation of the area involved, namely 223.2m². I accept that calculation.
30. I will find in the owner's favour in the sum of $145,080.00 in connection with this item.

Cracking to corner setting angle in the staircase of the front block near unit 11 - Amount in issue $865.00

1. Cracking to corner setting angle in the staircase of the front block near unit 11. Defect 25.
2. The owner's expert has observed that the plasterboard has cracked and delaminated from a corner setting angle. He states that the cracking is likely to be the result of movement as a result of poor fixing and/or setting of the metal corner angle.
3. The builder's expert states that there is a removable door/panel providing access to a service riser. The damaged or cracked plasterboard is adjacent to this area. In Mr Taylor's opinion the area of cracked plasterboard is in a location which is vulnerable to damage from accidental damage from tradesmen (and their tools) accessing this area.
4. I prefer Mr Taylor's evidence in connection with this defect.
5. The owner's evidence has not persuaded me that the builder was in breach of section 18B of the Act in connection with this defect.

Failure of water-proof membrane on the balcony of unit 10 - Amount in issue $27,880.00

1. This alleged defect relates to the failure of the water-proof membrane on the balcony of unit 10. Defect items 26 and 50 are referred to. These defect items, both of which relate to unit 10, are related.
2. I would state at the outset that there is no direct evidence that the waterproof membrane to the balcony off the second bedroom has failed.
3. The main defect is defect 50 which relates to the floor tiling to the balcony off the second bedroom.
4. However I will consider defect 26 first. This defect relates to the wall adjacent to the upper flight of stairs being moisture damaged at the slab/wall joint. Mr Roberts states that the affected area was directly adjacent to the balcony area off the second bedroom in unit 10.
5. Mr Roberts states that there is clear evidence of moisture damage to this area. The photographs in his report bear that out.
6. Mr Roberts also states that he tested the affected area with a moisture meter. The meter showed a high moisture reading of 1000. A normal moisture reading is said to be 220. As a result of these facts Mr Roberts has concluded that the waterproof membrane in the balcony area off the second bedroom has failed thereby allowing water to affect and damage the wall adjacent to the upper flight of stairs.
7. Mr Taylor's evidence confirms Mr Robert's evidence that there is moisture damage to this area.
8. The difference between the experts is the cause of the moisture ingress/damage to this area. Mr Roberts states that the cause is the fact that the membrane to the balcony off the second bedroom has failed, such failure allowing water to enter the building in this area.
9. Mr Taylor states that he has observed moisture damage extending from the south western corner of the second bedroom following the balcony floor level. He states that the moisture damage coincides with an area where there has been rectification work to the balcony off the second bedroom of unit 10 which in his view has been carried out in an un-tradesmanlike manner, causing irrevocable damage to the floor tiling and skirting tiling in that area. He states that he is instructed that the builder did not carry out the work and that he has assumed that the work was carried out by the owner of unit 10.
10. Mr Matterson of the builder gives evidence in connection with this item at paragraphs 14 - 17 of his affidavit sworn 15 November 2010. Mr Matterson states that an agreement was reached with Andrew Torrens, who the builder asserts was the Chairman of the owner at the time as well as the owner of unit 10. The substance of the agreement was that the builder would pay Mr Torrens the sum of $1,000.00 as compensation for defects to the balcony of unit 10, which were referred to as 'water egress' which Mr Torrens was to rectify himself. I accept Mr Matterson's evidence regarding these factual matters.
11. There is no direct evidence before the Tribunal about who actually carried out the rectification work to the balcony off the second bedroom of unit 10, as referred to by Mr Taylor.
12. It is common ground that there is moisture damage at the slab/wall joint to the wall adjacent to the upper flight of stairs outside unit 10.
13. The owner's expert states that the cause of the damage is a failure of the waterproof membrane which underlies the balcony tiling. The only evidence of the failure is the fact that there is moisture damage to the area under discussion. There is no other evidence which would support a finding of the failure of the membrane. In that regard I note that in relation to defect item 50, the owner's expert states that the tiling in the balcony is drummy. However his evidence does not go so far as to state or suggest that drummy tiling will cause a waterproof membrane to fail.
14. The builder's expert states that the cause of the damage is that rectification work has been carried out to the balcony causing damage to the floor and perimeter tiles.
15. I accept Mr Taylor's evidence that he observed the balcony area including the area where repairs had been carried out in an un-tradesman like manner, in his view causing irrevocable damage to the floor tiling and skirting tiling in that area.
16. In my view by reason of the builder's settlement with Mr Torrens as referred to above, the inference is open that the owner of unit 10 carried out the rectification work to the balcony of unit 10, as observed and commented upon by Mr Taylor.
17. I find that it was the owner of unit 10 who carried out defective rectification work to the balcony off the second bedroom and that such defective rectification work is the cause of the of the wall adjacent to the upper flight of stairs being moisture damaged at the slab/wall joint.
18. It follows from the reasons in the preceding paragraphs that the owner has failed to establish that the builder breached section 18B of the Act with the result that the damage referred to above came into existence.
19. Defect item 26 of the owner's claim is dismissed.
20. As regards defect item 50, the major issue identified by the owner's expert is that the there are no visible perimeter or intermediate movement joints. It is alleged that the floor tiling was drummy over 100% of the balcony and 40% of the balcony skirting tiles were drummy and delaminating. In his report dated 16 November 2012 Mr Roberts deals with drummy floor tiling in a general way. He states that drummy tiles cause movement between building components which may lead to a range of matters from cracks in grout joints through to delamination of tiles from the floor. Mr Roberts further states that during his inspection of the premises he observed such damage on floor and skirting tiles by the builder.
21. The owner's expert identifies the following regulatory sources as being relevant: 1. AS 3958.1-1991; 2. The Guide to Standards and Tolerances issued by the Office of Fair Trading; and 3. Section CD405 of the specification which deals with tiling.
22. The owner's case is that the requirements to be found in the above documents required the builder to incorporate perimeter or intermediate movement joints in the balcony tiling and the failure to do that has resulted in the floor and skirting tiles becoming drummy.
23. Mr Taylor for the builder for a range of reasons denies that there was any defective work carried out. Mr Taylor states that he inspected the site and found that the tiling was performing properly and was not defective. He stated that the tiling was free of cracking to the joints or the tiles. He further stated that there were no loose tiles or other irregularity and that on testing he found a drummy but hollow sound, but despite that he saw no evidence of the tiling being loose or de-bonding.
24. This evidence is in contrast to Mr Roberts' evidence that 40% of the balcony skirting tiles were delaminating, and that the floor tiling was drummy over 100% of the balcony.
25. There is no photographic evidence that would support a finding that balcony skirting tiles are delaminating.
26. In connection with Mr Roberts' evidence that there has been a failure to comply with AS 3958.1-1991, Mr Taylor states that the standard is a guide only and not mandatory. In connection with Mr Roberts' evidence that there was a failure to comply with the specification, and in particular the requirement to provide movement joints, Mr Taylor at paragraph 754 of his report offers the comment that Mr Roberts does not particularise the relevant parts of the specification on which he relies or the location of the movement joints alleged to be required. In my view these comments are not helpful. It is clear that Mr Roberts is referring to section 5.1 of the specification as Mr Taylor acknowledges. In my view it is plain that section 5.1 of the specification is relevant to the balcony of unit 10 and it is relevant in that it is being referred to in the context that it calls for movement joints to divide large tiled areas into bays, as Mr Taylor acknowledges. It is not for Mr Roberts to identify the location of the movement joints required as Mr Taylor suggests. That was for the builder to do. Mr Roberts' point is that the builder has not provided the movement joints which the specification plainly calls for.
27. Mr Taylor's position is that because he has been instructed that the tiling to the balcony is laid directly on an 'Impact Sound Acoustic Underlay', it was not necessary to comply with the specification. He states that he cannot see a requirement for the movement joints.
28. The fact that the tiling to the balcony is laid directly on an 'Impact Sound Acoustic Underlay' has not been established by other evidence and the builder makes no submission to point to the source of the evidence, if it exists. In any event Mr Roberts has attached to his report documents which established that the manufacturer supplied two different types of Impact Sound Acoustic Underlay to the builder for use on the project.
29. Be that as it may, Mr Taylor's comment that he cannot see a requirement for movement joints overlooks the fact that the contract and the Act required them.
30. Section 18B(a) of the Act which is a statutory warranty provided by the builder for the benefit of the owner provides: 'a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract,'
31. Mr Taylor's evidence does not state that movement joints are provided. If anything he concedes they are not provided, but states that in his opinion they are not necessary.
32. I find on the evidence before the Tribunal that in breach of the contractual specification, the builder failed to provide movement joints to the floor tiling to the balcony off the second bedroom in unit 10.
33. Mr Roberts does not state that because of the lack of movement joints the tiling in the balcony area has become drummy. All he states at 9.50.3 of his report is that 'The area of drummy floor tiling was 100% of the balcony area and was therefore considered a building defect.' No doubt he bases this conclusion on the Guide to Standards and Tolerances issued by the Office of Fair Trading which states that drummy tiles will be considered a defect if the cause is attributed to the builder, as referred to in 9.4.2 and 9.50.2 of his report.
34. Mr Taylor asserts that the Guide to Standards and Tolerances issued by the Office of Fair Trading have no application to the work carried out by the builder for detailed reasons provided by him in section 14 of his report. I regard that section of his report as a submission made on behalf of the builder. Nonetheless it focuses attention on the status of the Guide to Standards and Tolerances.
35. The statutory warranties contained in section 18B of the Act do not contain a warranty that the work will be performed or done in accordance with the Guide to Standards and Tolerances issued by the Office of Fair Trading NSW. It is possible that the Guide may have relevance if it were referred to in the specification. However there is no suggestion that it is referred to in the specification which is a contract document. It may also have relevance if there were evidence before the Tribunal that work performed in a proper and workmanlike manner would comply with the Guide. However there is no evidence of that nature before the Tribunal.
36. I have also had regard to the fact that the Guide to Standards and Tolerances issued by the Office of Fair Trading NSW as at 2003 did not apply to class 2 buildings. A class 2 building is defined in Volume One of the BCA as a building containing 2 or more sole occupancy units. The premises would in my view be a class 2 building.
37. On the evidence before the Tribunal, and on the basis of submissions received, including those from Mr Taylor, I do not accept that work being defined as a defect in the Guide to Standards and Tolerances issued by the Office of Fair Trading NSW will, without anything more, be the basis of a breach of a warranty referred to in section 18B of the Act.
38. So far as Australian Standards are concerned, in Bruno Pisano -v- Georgia Dandris at paragraph 91 Hammerschlag J stated: 'The Building Code is an instrument, produced by a Board on behalf of the Federal and State and Territory governments, intended to achieve nationally consistent minimum necessary standards including for structural safety and amenity. It contains technical provisions for the design and construction of buildings and other structures. Australian Standards are published by a non-government standards organisation and are guidance documents to ensure quality over a wide spectrum of activities including construction and engineering. The proceedings were conducted on the footing that the Building Code and applicable Standards represent acceptable practice.'
39. As stated above, Mr Taylor for the builder states that in his opinion the provisions of AS 3958.1-1991 are a guide and not mandatory.
40. The issue for determination is whether the evidence of Mr Roberts supports a finding that the builder carried out defective work in breach of section 18B of the Act the effect of which caused the floor and perimeter tiling of the balcony off the second bedroom of this unit to be drummy. I have found that in breach of the specification the builder failed to provide movement joints to the floor tiling to the balcony off the second bedroom in unit 10. AS 3958.1-1991 called for both intermediate joints and perimeter joints, neither of which were provided by the builder. I am of the view that since AS 3958.1-1991 is a guide, as conceded by Mr Taylor, its provisions ought to have been followed by the builder as part of performing the work in a proper and workmanlike manner.
41. The next issue is whether the floor tiling is drummy, and if so was the failure to provide movement joints, intermediate joints and perimeter joints the cause of the floor tiling being drummy. The evidence of the experts conflicts on the issue of whether the balcony floor tiling is drummy.
42. I prefer the evidence of Mr Taylor as to whether the balcony floor is drummy. He gives a detailed account of the examination that he carried out and the reasons that he relies upon for concluding that the balcony tiles are not drummy, or more precisely are not loose or de-bonding. Mr Roberts does state that on his inspections of the premises he saw instances of damage to tiles ranging from cracking in grout joints to delamination of tiles from the floor. However in relation to unit 10, Mr Roberts does not provide a detailed description of his testing of the balcony tiles. He simply states that 'the floor tiling was drummy', and briefly and without any detailed description, refers to the 'continued delamination of the of the floor tiling'. It is on this basis that I have preferred Mr Taylor's more specific evidence.
43. Given that I have found that the evidence does not support a finding that the floor tiling of the balcony off the second bedroom is drummy, the finding that the builder breached the Act in failing to provide perimeter joints in accordance with the specification, has not been shown to have caused damage.
44. The builder also asserts that the owner of unit 10 entered into a settlement with it in connection with the defect alleged. Mr Matterson of the builder gives evidence in connection with this item at paragraphs 14 - 17 of his affidavit sworn 15 November 2010. The builder asserts that in consideration of the payment of $1,000.00 the owner in effect released the builder from rectifying the defect of 'water egress' from the balcony of unit 10. The agreement was reached with Andrew Torrens who the builder asserts was the Chairman of the owner at the time as well as the owner of unit 10. The substance of the agreement was that Mr Torrens would carry out the rectification work and receive the sum of $1,000.00.
45. It is unnecessary for me to deal with this issue given that I have found that the builder's breach of the Act has not been demonstrated to have caused the damage that the owner alleges. However, I have formed the conclusion that whatever occurred between the builder and Mr Torrens, that did not release the owner's rights as Mr Torrens had no authority to bind the owner without a proper resolution of the lot owners or a resolution of the owner's executive committee.
46. This item of the owner's claim is dismissed.

Water penetration through the window in the staircase to the front block. Defect 27

1. This defect is agreed by the builder. The cost of the rectification work is agreed at $2,030.00.

Water leak into unit 1. Defect 29

1. This claim is based upon an incident of water entry into unit 1 in 2010. There is no evidence of ongoing water ingress into this unit. The persons who occupy this unit, which is a unit used for commercial purposes, have not provided evidence regarding its condition as regards water entry.
2. Unit 1 is stated to be a commercial unit. Mr Roberts states that he observed widespread water entry on an inspection of this unit after a period of rain on 3 June 2010. Mr Roberts took moisture meter readings which he states resulted in high level readings of 23.5%, when normal readings ought to be 8 -10%.
3. I accept Mr Roberts' evidence concerning his inspection of the premises and the moisture meter readings he took during the course of his inspections.
4. Mr Roberts states in his report that there has been water entry into unit 1 through the eastern boundary wall and that as a result there has been non-compliance with Part FP1.4 of the BCA which states that an external wall must prevent water penetration causing, among other things, undue dampness or deterioration of building elements. In particular, Mr Roberts was of the opinion that water entry into this unit from the eastern boundary wall was indicative of the fact that the external tanking to the wall had failed.
5. Mr Taylor for the builder states that he inspected unit 1 on 4 March, 18, 21 and 22 July 2011 and saw no evidence of ongoing water ingress. He points out that there was heavy rainfall on 20 - 22 July 2011. He also states that he did not observe evidence of ongoing water penetration of the eastern wall such as cupped or stained timber flooring, salt deposition, damaged skirtings or damaged wall finishes.
6. Mr Taylor also refers to drawing S203 and states that there was no requirement for the builder to tank the eastern wall. He does however raise the possibility that water ingress may have occurred at the slab /internal wall interface relating to unit 1.
7. Mr Taylor ultimately states that the owner has not established that the builder's work is defective. That is not an issue for Mr Taylor to decide.
8. I have considered the evidence relating to this issue which in my view goes no higher than to establish that there was water ingress into unit 1 on 3 June 2010. I accept Mr Taylor's evidence that he inspected unit 1 on 4 March, 18, 21 and 22 July 2011 and saw no evidence of ongoing water ingress.
9. I also accept Mr Taylor's evidence that contractual drawing S203 does not require the builder to tank the eastern wall of the premises.
10. I find that the owner has not established that the builder breached section 18B of the Act in connection with this alleged defect. In particular I find that one recorded incident of water ingress over a number of years does not breach Part FP1.4 of the BCA.
11. This item of the owner's claim is dismissed.

Delamination of skirting tiles in courtyard of unit 4, Defect 35

1. Mr Roberts states that skirting tiles were observed to be delaminating for the full length of the skirting wall in the rear courtyard of this unit. He states that the adhesive used to fix the skirting tiles to the wall was either incorrectly applied or not suitable for the substrate.
2. Mr Taylor for the builder agrees that there are 10 loose skirting tiles that require refixing. He states that in his opinion the cause of the defect may be attributed to the tiling subcontractor and is a defect in that subcontractor's work. Defective work by a subcontractor does not relieve a builder from being responsible for the defective work.
3. Since the experts agree that the delamination of the skirting tiles constitutes defective work. I will find in the owner's favour that the builder has breached the warranty contained in section 18B (a) of the Act in connection with this head of claim.
4. Mr Taylor states that in his opinion the cost of refixing the 10 loose skirting tiles that he observed is $270.00.
5. In considering the issue of the rectification cost for this defect item, I have had regard to item 35 of the joint report which states that the rectification cost is included in item 24, which relates to the Garage /Carpark area and moisture ingress through the ceiling slab. As the owner has been successful in connection with that item, there will be no finding of a rectification amount in its favour in connection with this item.

Drummy floor tiles unit 11, defect 52

1. The relevant area in connection with this alleged defect is the balcony on the western side of this unit.
2. Mr Roberts states that this area was constructed without perimeter or intermediate movement joints. He states that the floor tiling was drummy over approximately 90% of the floor area and that skirting tiles were delaminating and drummy for approximately 30% of the balcony perimeter.
3. The owner's expert identifies the following regulatory sources as being relevant: 1. (d) AS 3958.1-1991, section 5.4.5.2; 2. The Guide to Standards and Tolerances issued by the Office of Fair Trading; and 3. Section CD405 of the specification which deals with tiling.
4. Mr Roberts makes a further observation that an intermediate joint had been installed in the floor tiles, but the joint did not extend the full depth of the mortar bed and was only 3mm wide, rather than 6mm wide as required by the specification.
5. At the experts' conclave on 7 March 2013, the builder's expert agreed that skirting tiles should be re-applied for approximately two metres and that the waterproof membrane should be patched at the south west corner.
6. In the joint report of 9 September 2013, which is exhibit G, Mr Roberts states that partial repair of a membrane over a habitable space is not good building practice and unlikely to be warranted by a remedial builder.
7. In my view the comments by the owner's expert are appropriate and the rectification approach that he recommends are accepted. The owner's right to damages for breach of the warranties in section 18B of the Act is a one off right. If for any reason the waterproof membrane that the builder's expert concedes requires repair cannot be 'patched' or is found to require a repair or replacement over a greater area than conceded, the owner will not be entitled to apply to the Tribunal for additional compensation. There is also the factor of the repair option recommended by the builder's expert being accompanied by the possibility of a lack of warranty, as suggested by the owner's expert. That suggestion is not in my view far-fetched. For these reasons I find that the repair option suggested by the owner's expert is both necessary and reasonable. I accept paragraph 253 of the owner's submissions in this regard.
8. The amount of $15,950.00 is stated by Mr Roberts to be the rectification cost. Mr Taylor originally provided a rectification cost of $5,075.00 for the same work.
9. Mr Roberts' estimate of cost is set out in the owner's Scott Schedule dated 24 May 2013 which is in bundle volume five. He estimates the rectification cost as 23 m² at $650.00 per m² = $14,950.00 with $1,000.00 added for tipping fees.
10. Mr Taylor's estimate of $898.00 is contained in the builder's Scott Schedule response filed in the Tribunal on 14 June 2013, a copy of which is also in bundle volume five. The estimate of $898.00 is based on Mr Taylor's limited rectification option which is that skirting tiles should be re-applied for approximately two metres and that the waterproof membrane should be patched at the south west corner. I have rejected this rectification option.
11. Mr Roberts' costing of the rectification method that he has put forward is not the only costing of that method. In his original report Mr Taylor sets out a calculation in appendix E. In that appendix Mr Taylor refers to tiling area of 32 m², yet only allows for a tiling area of 18.7 m², which he costs at a composite rate of $271.40. The composite rate of $271.00 is derived from his costing in connection with item 50. Apart from the discrepancy regarding the area to be rectified, the main difference between the experts is the composite rate. Mr Roberts' rate is $650.00 per m² which he has not broken down in the Scott Schedule dated 24 May 2013. Mr Taylor's rate is $271.00 per m² which has been broken down, but which I note is based upon rates current at September 2011. The rate of $650.00 per m² is explained and set out in paragraphs 5.2.13 - 5.2.20 of Mr Roberts' report of 30 July 2013 which I have referred to earlier in these reasons and accepted.
12. Having regard to the matters in the preceding paragraph, I will find in the owner's favour in connection with this defect item in the sum of $15,950.00. The reasons for doing so are that Mr Roberts' estimate of $650.00 per m² as at 30 July 2013 is more current than Mr Taylor's September 2011 estimate. In addition there is a slight discrepancy in Mr Taylor's calculation as regards the area to be rectified. In my view it is desirable that rectification costs accepted by me are as current as possible to guard against an award being made in the owner's favour which is out of date and places the owner in the position of being unable to arrange rectification work for the amount awarded.
13. Finally, the builder's expert states that if the owner is successful in connection with this item the default is attributable to the sub-contractor. That is of course a submission on the part of Mr Taylor which is more properly for counsel to make rather than an expert. In so far as it is a submission, it is in my view hopeless as a sub-contractor's default will not serve to discharge a contractor from contractual liability and in particular liability for breach of a warranty contained in section 18B of the Act. Submissions of this type from Mr Taylor reinforce my comment earlier in these reasons of his tendency toward advocacy on behalf of the builder.

Drummy floor tiles in the balcony of unit 15, defect 65

1. Mr Roberts states that the floor tiling to the balcony off the lounge has been constructed without visible perimeter or intermediate joints. He also states that in his opinion the floor tiling was drummy over 35% of its area.
2. As above, Mr Roberts identifies the following regulatory sources as being relevant: 1. AS 3958.1-1991, section 5.4.5.2; 2. The Guide to Standards and Tolerances issued by the Office of Fair Trading; and 3. Section CD405 of the specification which deals with tiling.
3. Mr Taylor's response is also similar to his response in connection with items 50 and 52, namely that he has examined the tiles in question and concludes that of 168 tiles only 16 gave a hollow or drummy sound. In connection with those tiles Mr Taylor's evidence was that the 16 tiles had not de-bonded.
4. For the same reasons as those given in connection with defect item 50, I find that the owner has not established that the builder has breached section 18B of the Act in relation to this defect item.
5. This item of the owner's claim is dismissed.

Summary of findings regarding defects

1. I have dealt with the owner's defects case in the reasons set out above.
2. The table set out below records where the parties have reached agreements on defects both as to liability and quantum, and where I have determined whether the owner is entitled to recover for a claimed defect where there has been no agreement between the experts. I have used the notes of conclave and the Scott Schedule signed by the experts at the conclave as basis of recording where the parties have reached agreements on defects both as to liability and quantum.
3. So far as builder's margin is concerned, I have had regard to the joint report which is exhibit G in which the owner claims overhead and profit at 8% and the builder states that 10% is appropriate. I will allow 8% as claimed by the owner.
4. There is a dispute between the parties about the owner's claim for supervision which the owner claims at 15% in the joint report, exhibit G. The builder's position is that third party contract administration is not required for smaller projects. I disagree. In my view it is reasonable for an owner in the position of an Owners Corporation to have a degree of management in place for a rectification project. It follows in my view that in a contract for rectification the owner would be prudent in entering into a contract which provides for a contract administrator appointed by the owner to deal with usual contract administration issues, including, importantly those of access and quality. It is essential in my view that an owner's representative ascertain that all contractual and specification requirements are being fulfilled to ensure that the works are carried out and completed in accordance with all contractual requirements. The owner will be unable to manage that process unless, in my view, it is represented by a competent contract administrator such as a project manager or an experienced architect.
5. At paragraph 1061 of his original report Mr Taylor assesses this cost at $33,000.00 on an 'if found' basis. There is no indication of how this amount is made up. As a percentage of the net amount found in the owner's favour, the amount of $33,000.00 translates as a rate of 14%. As this very closely approximates the 15% figure sought by the owner, I will allow the owner the sum of $33,000.00 for supervision, or contract administration as I have described it. Scott Schedule defect item Defect description Amount agreed or determined 2, 46, 49, 61, 67, 68, 74 & 75 Cavity and sill flashing $2,770.00 5 Cracked and drummy render above door frame $270.00 6 and 10 Corrosion to corner angles Nil 7 Cracking to the external wall front block northern elevation $1,197.00 8 Failure to seal Ritek wall cladding Nil 17 Cracking to the external wall southern elevation $1,780.00 20 Courtyard tiling Included in item 24 22, 31, 37 39, 40 & 41 Failure of waterproof membrane to planter boxes $66,540.00 24 Water penetration through the slab in the car park $145,080.00 25 Cracking to corner setting angle in staircase front block Nil 26 and 50 Failure of water proof membrane on balcony Unit 10 Nil 27 Water penetration through window - front block Agreed at $2,030.00 29 Water leak into unit 1 Nil 35 Delamination of skirting tiles in courtyard unit 4 Included in defect 24 52 Drummy floor tiles unit 11 $15,950.00 65 Drummy floor tiles unit 11, balcony Nil Sub-Total $235,617.00 Overhead and margin 8% $18,849.36 Sub -Total $254,466.36 Supervision $33,000.00 Total $287,466.36 GST 10% $28,746.63 Grand Total $316,212.99

1. It follows from the table which summarises these findings that an order will be made against the builder in the owner's favour in the sum of $316,212.99.

Auscore Constructions Pty Ltd

1. Auscore Constructions Pty Ltd is the third respondent in these proceedings. It took no part in the hearing.
2. On the basis of the owner's written submissions, I will find in the owner's favour against Auscore Constructions Pty Ltd for the full amount claimed, namely the sum of $496,008.00 as stated in the Joint Report dated 5 September 2013, filed in the Tribunal on 9 September 2013.

Brodyn Pty Ltd v Auscore Constructions Pty Ltd

1. The builder claimed the sum of $184,463.00 from Auscore in Tribunal proceedings HB 11/06382. Its claim was based on breaches of contract and also sought contribution from Auscore based on Part 4 of the Civil Liability Act.
2. As stated Auscore took no part in the hearing. In final submissions the builder has not sought an order against Auscore. In order to dispose of HB 11/06382, I will make an order dismissing the builder's case against Auscore on the basis that the builder has presented no evidence which goes to the breaches of contract on the part of Auscore as alleged. The claim against Auscore is also dismissed on the basis that the builder has failed in its defence that the owner's claim was an 'apportionable' claim under section 34 of the Civil Liability Act.

Costs

1. Either party is at liberty to make a costs application in these proceedings.
2. Any costs application pursuant to section 53 of the Consumer, Trader and Tenancy Tribunal Act 2001 or regulation 20 of the Consumer, Trader and Tenancy Tribunal Regulation 2009 must be lodged in the Tribunal and served on the costs respondent within 21 days of the date of this order either attaching or referring to the documents relied upon in support of the application.
3. The costs respondent will have 21 days after the date of receipt of the costs application referred to above, to lodge in the Tribunal and serve on the costs applicant the submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.
4. The cost applicant will have 14 days after the date of receipt of the cost respondent's submissions to lodge in the Tribunal and serve on the costs respondent the submissions, if any, in reply, such submissions either attaching or referring to the documents relied upon.
5. The Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal. D Goldstein Senior Member Civil and Administrative Tribunal of New South Wales 31 March 2015

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: 11 June 2015