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[2015] VSC 110
Supreme Court of Victoria
2015-03-26
DIGBY J
Original judgment source is linked above.
"There are 8 sheets in the ENGINEER'S DESIGN/S AND it/they was/were prepared by STRUCTURAL WORKS ENGINEERING for the BUILDER" [sic].
"If certification is provided to confirm that the filling is compacted as per AS 3798 specifications to "controlled fill" standard as per AS 2870 a "rigid" waffle footing system suitable for the site's reactivity may be appropriate for an articulated brick veneer dwelling. The waffle footing system may bear directly onto the compacted filling and shall be designed to take account for a differential settlement of the fill by an Engineer experienced with the design of "rigid" waffle footings.
ALTERNATIVELY a waffle footing system suspended on piers/piles founded into firm natural B horizon CLAY, may be appropriate for an articulated brick veneer dwelling. Refer AS 2870-1996 fig 3.4 and Clause 3.2. Waffle footing systems shall be designed for an "H" site reactivity by an experienced Engineer".
(a) the slab had deflected in a differential and non-linear manner;
(b) the fill soil below the slab was not consistently or adequately compacted;
(c) the varying densities of the supporting fill were resulting in soil compaction and adverse building movements;
(d) the House and its footings will experience ongoing movement into the future due to the inadequate foundation and the inadequate rigidity of the slab; and
(e) it would be cheaper to demolish and re-build the House than repair it.
30 The following are the key aspects of the Reasons:
(i) The Builder contended that there was no direct evidence as to the Builder's importation of additional fill to the site and the earthworks contractor would not have done work not covered by purchase orders issued to it without approval. Mr Sweeting, the Builder's construction manager, gave evidence that he did not approve work beyond the Builder's purchase orders issued to Earthlift Excavations ("Earthlift"), the Builder's earthworks subcontractor.[6]
(ii) The Tribunal considered that the geotechnical evidence demonstrated that a considerable amount of soil was brought onto the building site, although the Second Plan of the engineer appeared to show that the slab was founded upon subdivisional fill.[7]
(iii) The Tribunal found that after the slab was ultimately poured it was found to be 205 millimetres too high.[8]
(iv) Apart from an extra 40 millimetres of concrete which largely accords with the extra thickness of the edge of the slab, varying from 35 millimetres to 65 millimetres above the designed thickness of 385 millimetres, the geotechnical evidence established that the remaining additional height (of the slab as built) was additional soil brought onto the site by the Builder.[9]
(v) Mr Cross (structural engineer and consultant) said that the slab had not stabilised and will not, because the slab has insufficient stiffness and is founded on loose variable compacted fill. The evidence established that the builder's fill is loose and variable.[10]
(vi) There was some dispute about the depth of the fill and whether there was any builder's fill at all imported onto the site which might account for the greater constructed slab height. No evidence was adduced from those who prepared and constructed the slab. The Senior Member considered that the best evidence of what lay beneath was the geotechnical evidence including the bore logs and the samples that were taken.[11]
(vii) In each case experts have sworn as to the accuracy of their findings on soil profiles and there is no contrary evidence. The mere fact that two experts taking bore logs near each other find a different soil profile is not a reason to doubt the accuracy of either. In the absence of some other evidence the Senior Member considered that he must find that each bore log represents the profile of the soil in the place from where it was taken.[12]
(viii) The subdivisional fill placed by the developer is of a different colour. Both Mr Hennig and Mr Lawrance described it as being light grey or pale grey. The bore logs show that fill of that colour is some distance below the founding level of the slab.
Neither Mr Hennig nor Mr Lawrance suggested that the soil below the founding layer was any different in appearance from the soil above, which is the landscaping fill deposited by the Builder.
Even allowing for an edge beam thickness of 420 to 450 millimetres, more soil would need to have been imported onto the site in order to arrive at a constructed height of 100.690.[13]
(ix) The Tribunal found that on the balance of probabilities the upper layer of red/brown fill was placed by the Builder and that the light grey or pale grey fill immediately above the topsoil was the subdivisional fill placed by the developer.[14]
(x) The upper layer of fill, the portion which is between the subdivisional fill and the underside of the slab is the builder's fill upon which the slab was constructed. Above that is the landscape fill. The relative thicknesses of these levels are shown in the bore logs.[15]
(xi) The learned Senior Member summarised the geotechnical descriptions of landscape fill, builder's fill, subdivisional fill, residual topsoil and residual soil.[16]
(xii) The Senior Member noted that it is unknown whether Earthlift removed any soil from the site or did a cut and fill, without charging for it in either case. However, the Senior Member was satisfied from the bore logs that the Builder brought a substantial amount of fill onto the site. The Senior Member considered that such fill was not what the slab had been designed to be founded upon.[17]
(xiii) The Senior Member concluded that the depth of the builder's fill is highly variable. It ranged from only 50 millimetres in bore log L3 to 130 millimetres in bore logs L1 and L2 and as much as 850 millimetres in bore log C3. In L3, Mr Lawrance found no subdivisional fill at all. Instead that corner of the slab is sitting upon only 50 millimetres of builder's fill placed over the natural topsoil. It would seem from this that what the slab is sitting on down to the depth of 2300 millimetres is highly variable from place to place in regard to what proportion is natural ground, what proportion is subdivisional fill and what proportion is builder's fill. The geotechnical evidence demonstrated that the calculation of the reactivity of the soil is dependent upon an examination of the characteristics of the soil at each level. The footprint of the house as constructed would depend upon where the soil engineer dug. Each spot would appear to have a different reaction to the addition of moisture.[18]
(xiv) Mr Cross said that the builder's fill was unsuitable to support the slab. He said that, at 83 per cent, the soil in bore log C3 was virtually uncompacted. This was supported by Mr Morgans who said that, straight out of the back of a dump truck, soil would have compaction of 85 to perhaps 90 per cent depending on the moisture condition of the soil and how much it just settled under its own weight.[19]
(xv) The Senior Member considered that from this evidence it followed that the soil, at least in some parts, may not have been compacted at all or, if it was, it was certainly not sufficiently compacted. The Senior Member could not find that the builder's fill under the slab is rolled fill as called for in the Building Contract Specification, AS 2870-1996 (Clause 6.4.2(b)), called up in the Second Plan dated 6 November 2006. He considered that the evidence before him was to the contrary.[20]
(xvi) The Senior Member was satisfied that, in breach of the contract, the Builder failed to construct the slab in accordance with the Second Plan and that it also failed to adequately compact the fill material upon which the slab was constructed.[21]
(xvii) The Engineer's Design and AS 2870-1996 required the slab to be placed upon controlled fill. There is no evidence that the builder's fill upon which it had been constructed was compacted at all but, even if it was, the compaction of the soil under the edge beams was found by CivilTest to have been inadequate. Mr Cross said that the Builder should have informed the engineer about the fill before pouring the slab. That is what the note on the Second Plan required and there is no evidence that it was done. The Senior Member was not satisfied that the builder's fill was adequately compacted.[22]
(xviii) The Senior Member was unable to say whether the slab was otherwise constructed in accordance with the Second Plan because there was no evidence as to how the slab was constructed. He was, however, satisfied on the balance of probabilities that the slab is moving irregularly and to an extent well outside what it was designed for and that it was not built upon an adequate foundation. He found that this irregular movement is due to defective workmanship by the Builder in preparing the footing and constructing the slab.[23]
(xix) The Senior Member was satisfied that the slab was not constructed as designed. It was built upon an inadequate foundation. He found that the Second Plan was adequate, notwithstanding that it was not the result of any contemporaneous calculations. Consequently, although the Senior Member found various breaches by the engineer of its duty of care to the Owner, there was no proof of actual damage arising from those breaches. The responsibility for the foundation failure lay wholly upon the Builder.[24]
(xx) Mr McFarlane suggested in his first report that the slab may have stabilised and that once it had stabilised its future performance would be satisfactory. Mr Cross disagreed, because he said that the slab had insufficient stiffness to cope with the foundation upon which it was laid and the loose fill was allowing water to enter under the slab and was not an appropriate foundation for any slab. The material was also not evenly compacted. In this regard his prediction was borne out by the more recent surveys which show that there have been substantial and irregular movements over less than 12 months.[25]
(xxi) Because there has been heave under the slab the Senior Member found that water is entering under the slab. He also found that the loose fill, not being controlled fill and not being evenly compacted, was an inadequate foundation material that was more likely to admit water than properly compacted fill.[26]
31 In summary I consider that the bases of the Senior Member's conclusion that there was "irregular movement due to defective workmanship by the Builder in preparing the footing and constructing the slab" were the Senior Member's findings and conclusions set out in his Reasons,[27] namely that, on the evidence before him, including the expert evidence:
(i) The bore logs establish that the builder imported a substantial amount of fill onto the site;
(ii) Imported builder's fill was not what the slab was designed to be founded upon;
(iii) The slab was placed on varying fill including imported builder's fill;
(iv) The builder failed to adequately compact the fill material upon which the slab was constructed;
(v) The builder's fill under the slab was unsuitable to support the slab because it was not sufficiently compacted; and
(vi) The inadequate foundations under the slab caused the slab to move irregularly to an extent well outside the slabs design parameters.
The Tribunal erred when it found as a fact that "builders fill" was brought onto the site located under the slab, a finding, which fundamentally underpinned the reasoning of the Tribunal and provided the basis upon which it awarded damages (reasons [74], [89], [135] - [137], [149], [182], [206], [210]).
32 At the outset of argument, Senior Counsel for the Builder submitted that Ground 1 (impugning the Tribunal's inference that fill was imported onto the site) and Ground 3 (alleging that in certain respects the Tribunal did not afford natural justice) reflected the plaintiff's key grounds of appeal. Further, the Builder's submission was that, save for Ground 3, the other grounds of appeal relied upon by the Builder were consequential upon the success of Ground 1.[28]
33 The Builder's case on Ground 1 (Question 1) relied on the following key contentions:
(a) There was no evidentiary basis for the Tribunal to infer that the Builder brought additional fill onto site and placed that fill where the slab was ultimately built;
(b) The Builder did not at any time remove soil from site as part of the earthworks;
(c) An analysis of the before construction and post slab construction levels on site show that no builder's fill was imported onto site;
(d) The geotechnical soil samples and tests did not provide a basis from which it could be inferred that the Builder had imported and placed fill under the slab;
(e) The geotechnical evidence showed that there were only two types of fill, namely, subdivisional fill and landscape fill.
I deal with each of the Builder's key contentions below.
There was no evidentiary basis for the Tribunal to infer that the Builder brought additional fill onto site and placed that fill where the slab was ultimately built
34 The Builder's fundamental contention is that the Tribunal had no evidentiary or other reasonable basis upon which it could have drawn the inference that the Builder brought additional "fill" onto the building site prior to the construction of the slab (which exhibited excessive movement), nor any evidentiary or other reasonable basis upon which to infer that the Builder placed such fill under the slab as part of the earthen foundation for that slab.
35 The Builder also argues that Grounds 1 and 2 identify an error of law on the part of the Tribunal because the learned Senior Member made findings which are plainly wrong or unreasonable in the Wednesbury sense.[29]
36 The Builder contends that the Tribunal's finding that it imported "builder's fill" cascades through and infects the Tribunal's findings in respect of the subsidiary questions relating to the materials beneath the slab forming an inadequate base and resulting in slab failure and consequential defects in the structure it supports. If, contrary to the Tribunal's conclusions, the Builder did not import fill onto the site, the Builder contends that the defective slab must have been founded on the original subdivisional fill.
37 The Builder points out that there is no dispute between the parties that the original "subdivisional fill" or "developer's fill" was placed before the Building Contract works commenced, and that this layer of fill was sufficiently well compacted to provide a proper foundation for the slab.
38 The Builder also points out that it was common ground between the parties that when during construction it emerged that the finished level of the slab was too high, the Builder placed "landscape fill" around the perimeter of the house. This occurred after construction of the house had been completed.
39 The Builder asserts that the Tribunal's findings about moisture penetration, destabilisation of the slab and subsidence, were all findings consequential upon the Tribunal's inference that the Builder had imported fill which was placed between the subdivisional fill and the slab and which was not adequately compacted.
40 The Builder also points out that there was no direct evidence as to the importation of builder's fill onto the building site. The Builder emphasises that the bore log results upon which the Tribunal relied were all taken from around the perimeter of the slab, and were drawn on by the Tribunal to infer the nature and characteristics of the soils beneath the slab.
41 Further, the Builder submits that although the dimensions of the slab were said by the Tribunal to be part of the basis for inferring placement of builder's fill under the slab, the Tribunal ultimately relied solely on the bore log results to make that finding.
42 Accordingly, the Builder focused in its appeal on what it says was the Tribunal's unsupported and unreasonable inference and erroneous conclusion that the Builder imported fill which was placed on top of the original subdivisional fill and beneath the slab.
43 The Builder also contends that because there was no acceptable bore log test undertaken through the slab, the Tribunal's conclusions as to the nature and characteristics of the soils under the slab were necessarily inferred from the bore log results from around the perimeter of the slab.
44 The Builder argues that because the soil reported in the bore logs, and inferred to be "builder's fill", is of substantially the same colour and characteristics as the "landscape fill", it was illogical, unsupported by the evidence and not open for the Tribunal to find that under the slab there was a separate and different layer of fill to the landscape fill.
45 The Builder says that it was not open to the Tribunal on the evidence before it to draw a distinction between an upper layer of landscape fill and a middle layer of builder's fill, and a lower layer being "subdivisional fill" beneath the middle and upper layers.
46 The Builder argues that prima facie the slab was built on the subdivisional fill which was highly compacted.
47 The Builder also argues that the layer of scoria which was placed under the slab is compliant with contract specifications. I deal separately with this issue below under Ground 6(e) (Question 6(e)).
48 The Builder contends that the key vitiating error made by the Tribunal was the drawing of the unsupported inferences that it was the imported and inadequately compacted builder's fill placed under the slab which caused damaging slab movement.
49 The Builder acknowledges that the defective slab has moved and moved substantially. The Builder says that the unacceptable movement of the slab was caused by water penetration under the slab resulting in the reaction of the subdivisional fill and the naturally occurring clays. The moistening of the soils resulted in expansion of the reactive clays and the lifting of the slab, in particular at the edges of the slab where there is the least resistance.
50 The Builder in its submissions concedes that there was a sufficient evidentiary basis for the Tribunal to find that the slab had been subject to subsidence, rather than heave.[30]
51 It appears that the Builder's case before the Tribunal was that, in various ways, the Owner failed to prevent water penetration and ingress in the immediate vicinity of and under the slab. The Builder, in its submissions, recognises that the Tribunal addressed the question of water ingress and the Builder did not contest that the Tribunal's findings, on that aspect, were based on evidence which had been adduced at trial.
52 It was not argued by the parties before the Senior Member, or on this appeal, that the design or construction of the concrete slab itself was deficient.
53 The Builder also argues that because the Senior Member proceeded to reach his key findings on the basis of the unjustifiable inferences, the only way justice can be served is for the Court to set aside the Tribunal's present orders in this matter and remit the matter back to a different Tribunal member to rehear the Owner's applications.[31]
54 In my view the Tribunal was provided with sufficient evidence to support and justify the key finding referred to in paragraph [31] above including the Tribunal's finding that "builder's fill" was brought onto the site located under the slab. That evidence included the following.
55 In his Report of 26 March 2013, Mr Buffington of CivilTest, a geotechnical witness called by the Owner, concluded that the edge beams of the house were founded on "builder's fill".[32] He stated that the compaction tests conducted on the upper layer of fill (the builder's fill) showed that the in place density (compaction level) revealed poorly compacted fill which would barely meet the requirements of rolled fill as defined by AS 2870 6.4.2(b) and would be unsuitable to support edge beams as shown by AS 2870 6.4.3(ii) and (iii). At 3.3.3.1 in his Report,[33] Mr Buffington also concluded that the builder's fill under the edge beams was loose and could not be termed 'controlled fill' as defined in AS 2870 1.7.13.[34]
56 I also note in relation to The Construction of Slabs, Filling at clause 6.4.2(a) of AS 2870, that the Australian Standard there incorporated, namely AS 3798, requires controlled fill to achieve a 95 per cent minimum relative compaction.
57 Mr Cross, an engineer called by the Owner, stated in his Report dated 5 September 2012, that the soil below the slab is not consistent or adequately compacted.[35] He concluded that the varying densities of the supporting fill had resulted in inadequate soil compaction and adverse building movements. Mr Cross also said that the CivilTest results were taken immediately adjacent to the footings of the waffle slab and reveal that the soil was not compacted in a consistent or adequate manner. He concluded from the CivilTest results that the Builder did not properly supervise the compaction work and that the inconsistent and inadequate compaction of the soil had resulted in adverse slab movement. Mr Cross considered that the soil on site is an unsuitable material to support the slab of the house.[36]
58 In addition to the above, I accept the Owner's submissions[37] that there was a large body of expert evidence before the Senior Member, on the basis of which it was open to the Senior Member to conclude that the layers of fill immediately adjacent to the slab and the fill extending under the slab were inadequately compacted, including inadequately compacted materials extending to at least a metre beyond the outer face of the edge beams bordering the slab. That same body of expert evidence also supported a finding that the edge beams were not placed on controlled fill as they were required to be under AS 2870.
59 I also note that the Owner contended before the Tribunal, and on appeal, both that it was irrelevant to his case whether or not the Builder placed fill under the slab and that the geotechnical bore log evidence showed that there was builder's fill under the slab.[38] The Owner, however, placed his emphasis on the proposition that whatever was under the slab was not compacted to contractual requirements. It appears that this approach by the Owner was influenced by the argument which took place before the Tribunal about whether the Owner bore any burden of proof in relation to the issue as to whether the Builder placed fill under the slab.
60 Further, that evidence, including Mr Lawrance's expert evidence,[39] provided a basis upon which it was open for the Senior Member to conclude that there were two distinct layers of fill placed above the underlying subdivisional fill, and that the Builder probably placed both those layers of fill on site.
61 There are also other parts of the expert evidence which opine that the fill material below the slab is likely to be of varying densities, below those contractually specified, and is not consistently or adequately compacted.[40]
62 Further, Senior Counsel for the Owner highlighted the following expert evidence given by Mr Lawrance, who was called by the Builder, during his cross-examination:
Do you agree it's more likely than not that what you've shown under the edge beam is accurate, which is a layer of subdivisional fill and a layer of some other fill? --- As sure as I can be by drilling down the outside of the edge beam, yes. It's possible that it doesn't extend underneath there but as sure I can be by drilling down the outside.
You would say based on that, it's more likely than not that you've got two layers of fill under the edge beam? --- That's fair.
I mean where there's subdivisional fill, subdivisional fill that's been disturbed, builder's fill, whatever it is that this slab is founded on has been tested and it does not comply with 95 per cent compaction that's required for a residential house? --- I agree, that's the results of the tests done.[41]
The builder did not at any time remove soil from site as part of the earthworks
63 The Builder also argues that the evidence establishes that there was no charge for removing soil from the site by Earthlift and therefore no material was removed from the site. Accordingly, the Builder contends that if, as the Tribunal inferred, the Builder imported fill this would have resulted in the slab being built much higher than it was in fact built.
64 The Builder refers to a letter from Earthlift to the Builder dated 10 August 2012[42] where Earthlift mentioned site preparation earthworks as involving "placement of site excavated soil and/or imported fill placed at in situ moisture content by spreading certain loose layers and track rolling to elevate the fill areas to the required level" and criticises the Tribunal's conclusions. The Senior Member concluded that the plaintiff's earthworks contractor did not charge for removing any soil from the site nor for cut and fill.[43]
65 The Builder contends that the Senior Member did not explain how he concluded that "site preparation", referred to in Earthlift's invoice,[44] did not include a reference to cut and fill works.
66 In my view, however, a fair reading of the contemporaneous invoice of 10 January 2007[45] and the Earthworks letter dated 10 August 2012 reveal that it was open to the Tribunal to conclude that Earthlift had not recorded the undertaking of earthworks in the nature of cut and fill and had not charged for such work at the site. The invoice of 10 January 2007 does not refer to removal of soil from the site or work in the nature of cut and fill. The letter of 10 August 2012 does not refer to cut and fill, but rather stripping, excavation and equivocally, the placement of site-excavated soil and/or imported fill.
67 The Builder also submits that the Senior Member was wrong to suggest that upon receipt of Earthlift's invoice, the Builder should have followed up with Earthlift to see whether the Builder's instructions, including to remove soil from the site, had been carried out.[46] The Senior Member considered that because the Earthlift invoice did not charge for soil removal the Builder should have realised that its instructions to Earthlift to cut and fill the site and to remove the surplus soil and proof roll the surface may not have been undertaken.[47]
68 However, I do not consider that it is of any real significance that the Senior Member speculated as to whether Earthlift had carried out the Builder's earthworks instructions. This is because the Senior Member did not need to conclude that the Builder removed excavated materials from the site. This was not a matter in respect of which a finding was necessary so as to determine whether or not builder's fill had been imported onto the site and whether the Builder was responsible for placing poorly compacted fill under the slab.
69 The learned Senior Member concluded that it was not established to the Tribunal's satisfaction, whether or not Earthlift had removed any soil from site or whether Earthlift had undertaken cut and fill earthworks.[48]
70 The Senior Member made sufficiently clear that his critical finding as to the Builder's importation of fill onto site was based on the expert geotechnical evidence presented to him by way of a number of site bore logs.[49] The Senior Member also made it sufficiently clear that his findings relating to the importation and placement of substantial quantities of builder's fill under the slab, were not primarily founded on the as-built level of slab or the extent of earthwork undertaken by Earthlift.[50]
71 The Builder argues that the Senior Member erred in finding that fill was imported onto the site. It points to the evidence of Mr Sweeting, the Builder's construction manager. Mr Sweeting stated in his evidence that there was no additional fill imported onto the site. Mr Sweeting supported this assertion by adding:
Earthlift would not have done any work not covered by the purchase order without approval, as this would have meant that they wouldn't have been paid, and any approval would have needed to have come from me.
72 In my view the Senior Member satisfactorily explained his bases for not being persuaded by Mr Sweeting's evidence. The Senior Member first identified the assumptive basis of Mr Sweeting's assertion, namely Earthlift's records not recording the importation of fill.[51] The Senior Member also highlighted the unreliability of Earthlift's records which did not record importation and placement of scoria although it was undisputed that scoria had been brought onto the site.[52] Finally, the Senior Member explained that he was persuaded by the expert geotechnical evidence which demonstrated a considerable amount of soil had been brought onto the site.
73 Further, the Senior Member pointed out that there was no evidence available to the Tribunal from those who prepared and constructed the slab, and the best evidence available to the Tribunal as to what materials lay beneath the slab was the expert geotechnical evidence including the bore logs and samples that were taken.[53]
74 The Senior Member also dealt extensively with what the expert geotechnical evidence establishes in relation to the materials supporting the slab.[54]
75 Two experts, Mr Hennig and Mr Lawrance, described the subdivisional fill placed by the developer as "light grey" or "pale grey" in colour. The bore log evidence established that the subdivisional fill was some distance below the founding level of the slab. The Senior Member was persuaded, on the evidence before him, particularly the expert evidence, that the upper layer of material under the slab, which was "red brown" in colour was placed by the Builder. This layer beneath the slab is the builder's fill. The layer of material below the builder's fill, is the light grey/pale grey subdivisional fill.[55]
76 The Senior Member not only made it plain that his satisfaction about the importation of fill onto the site was based upon the expert geotechnical evidence adduced, he also mentioned the bases for his lack of confidence in the Builder's records concerning earthworks and associated activities and cited the above mentioned examples relating to the importation of scoria.
77 In my view, the Tribunal's finding that fill had been imported onto the site was adequately justified on the basis of expert geotechnical evidence which I have referred to above.
An analysis of the before construction and post slab construction levels on site show that no builder's fill was imported onto site
78 The Builder also argued that a reconstruction of the levels on site which were recorded by Wilson Surveying in September 2006, together with surmise as to the extent of Earthlift's work onsite, provided a basis for concluding that the slab was constructed on the original subdivisional fill.[56] This thesis is put forward by the Builder to establish that it was not open to the Tribunal to find that the Builder imported fill and placed substantial quantities of fill under the slab.
79 By related submissions the Builder says that because the Tribunal considered that, as built, the slab was 205 millimetres higher than the design called for, the Tribunal was led to erroneously conclude that the Builder imported fill to provide the material to found the slab at a higher level.
80 The Builder says that the slab was placed higher than required by the design because the Builder did not cut to the specified level of 100.1 millimetres.[57]
81 The Senior Member, however, mentioned the paucity of the Builder's records by noting that there was no evidence as to the extent to which the Builder excavated to reduce the levels of the site.[58]
82 The Senior Member dealt with the Builder's argument that it could be inferred from pre-construction site levels that the Builder did not need to import fill onto the site to found the slab at the levels it was constructed.[59]
83 The Tribunal, as was open to it on the evidence presented, was not satisfied that the reconstruction argued for by the Builder was likely to have occurred. The Tribunal was, on the contrary, satisfied on the balance of probabilities that the best evidence in relation to what lay beneath the slab was the expert evidence of what the bore logs disclosed. That finding was open on the bore logs and associated expert evidence to which I have referred and was also both cogently explained and reasonable in my view.
84 The issue concerning the reconstruction of site levels and what they were said to demonstrate was of some prominence and consumed much time at the trial before the Senior Member. A good deal of evidence was presented to the Senior Member on this aspect.[60] On the evidence, including expert surveying and geotechnical evidence presented to the Tribunal, the Senior Member found that the slab was 205 millimetres too high when poured,[61] and that the additional height of the slab was because of additional soil brought onto the site by the Builder (the builder's fill).
85 Accordingly, I am satisfied that the Senior Member had before him sufficient evidence to reject the Builder's hypotheses concerning what should be concluded from the relative levels on site before and after construction. The Senior Member had before him evidence sufficient to found his conclusion that the Builder had imported and placed additional fill under the slab. These were hotly contested factual disputes in the Tribunal proceeding, and resulted in factual findings which, for the reasons I have stated, I consider I should not disturb.
The geotechnical soil samples and tests did not provide a basis from which it could be inferred that the Builder had imported and placed fill under the slab
86 The Builder argues that if it had imported fill and placed it under the slab, and the fill had the characteristics of the material shown in the bore logs, that would have been disclosed in the results of test hole 5 (which was drilled through the concrete slab in the middle of the house). The Builder contends that, in these circumstances, the result of test hole 5 would disclose two different layers of fill.[62]
87 The Builder argues that the Senior Member's conclusion that a large amount of fill was imported onto the site by the Builder, up to a possible volume of 145 cubic metres, was not reasonably open or, alternatively, was a conclusion that was so unreasonable that no reasonable Tribunal could have so concluded.
88 The Builder also argues that the geotechnical results of bore log tests and the test holes showed that there was "no way that there was builder's fill under the slab", and the Builder emphasises that test hole 5, produced by CivilTest, was consistent with this in that it showed there was only one type of fill ("brown silty clay, firm to stiff") extending down under the slab to 1200 millimetres.[63]
89 The Builder criticises the Senior Member for interpreting the bore log results to mean that there were two different types of fill above the subdivisional fill when the reported bore log results do not justify such an interpretation. In this respect the Builder relies on Mr Hennig's bore hole C1 and Mr Lawrance's L1 and L2 results.[64]
90 However, in my view the asserted differences between the bore log report by Mr Hennig in relation to C1 and the Senior Member's description of the same soil assays (brown silty clay - soft firm moist - 270 - 500; and below that pale grey - silty clay stiff/v stiff moist - 500 - 800)[65] are not substantial or material. The engineering log[66] appears to accord with the table in the Senior Member's Reasons.[67]
92 Mr Lawrance appears to depict a dividing point for L1 at 400 millimetres between red/brown silty clay - variably to moderately compacted filling and below 400 millimetres to about 820 millimetres, light grey silty clay - moderately to well compacted filling. Save to note that with L2,[70] the Senior Member has apparently omitted the word "variable" in relation to compaction, I can identify no substantial discrepancy between the cited geotechnical bore log and the Senior Member's Reasons summarising them.
93 Accordingly I am not satisfied that, in the respects relied on by the Builder, the Senior Member has materially misunderstood or mis-described the evidence. Further, in my view the omission of the word "variable" by the Senior Member is immaterial, principally because the key information which the Builder asserts was misinterpreted, and/or misunderstood by the Tribunal, was the type of material under the slab and not the state of compaction of that material.
94 I am not satisfied that the Senior Member has erred in any substantial or material way in relation to his transposition or understanding of the geotechnical information before him and referred to in his Reasons.
95 The Builder highlights the results of Mr Lawrance's test at bore log 3[71] and the CivilTest result at test pit 3.[72] The Lawrance test at L3 shows builder's fill (silty clay red/brown) between 250 to 300 millimetres whereas the CivilTest, at CivilTest's nominated C3, disclosed builder's fill (brown silty clay) from 250 to 1,100 millimetres.
96 Although the bore holes compared above are relatively close they are not testing the soil at the same location. Accordingly, I do not regard the comparisons and differences highlighted by the Builder as sufficient to satisfy me that the Senior Member lacked the evidence to support the findings he made as to what the geotechnical evidence established on the balance of probabilities.
97 The Builder also argued that if a decision on a matter is so unreasonable that no reasonable Tribunal could ever have come to it, then there is jurisdiction to interfere with that decision.
98 The Builder also submits in relation to CivilTest result C3 that it appears to be an "unreliable log". The Builder, however, adds that it is not for this Court, on an appeal of this nature, to make a finding to that effect. I accept that it is not appropriate for me to make such a finding, given the nature of this appeal.
99 In my view, the Tribunal's findings about the importation and placement of fill by the Builder were open on the evidence referred to above, and should not be interfered with on appeal. On the expert geotechnical evidence relied on by the Senior Member, including the bore logs and samples referred to in the Senior Member's Reasons,[73] the Senior Member had a proper basis upon which to infer that imported builder's fill had been placed under the slab.
100 For the reasons I have also referred to above, I am unpersuaded that on the available evidence the Senior Member's findings in relation to the geotechnical issues sought to be impugned by the Builder were plainly wrong or unreasonable in what the Builder refers to as the Wednesbury sense.
101 The Senior Member also relegated the Buffington C5 compaction tests as unreliable because of non-compliance with the required compaction testing regime.[74] This component of Mr Buffington's testing is, however, separate from the results he recorded as to the colour and general characteristics of the soils found at test location C5. The Senior Member was content to refer to these non-compliant results as nevertheless recording soil colour and general characteristics.[75]
102 The Builder had argued that the best evidence of what is under the slab is the CivilTest core through the concrete slab at C5. Mr Buffington, a CivilTest Expert reported the soil composition results at C5, down to 725 millimetres. I do not consider that this sole assay negates the many test results around the perimeter of the slab. For this reason I am unpersuaded the C5 results which showed "brown silty clay"[76] below the 30 millimetres of "red ground gravel", establish that the Senior Member's findings based on the expert geotechnical evidence, which included a number of perimeter bore log tests, are without an evidentiary base, or illogical or unreasonable or wrong. The Senior Member, having heard all the evidence, including the expert evidence, concluded that the perimeter bore logs were the best evidence of what was under the slab. The Senior Member did not regard the results at C5 as displacing the numerous other soil tests from around the perimeter of the slab. Further, I add that the soil which the Senior Member refers to being discovered at C5 ("brown silty clay")[77] is consistent with a layer of fill existing above the subdivisional fill at that point. As referenced above the Senior Member was furnished with the evidentiary basis to make such findings.
The geotechnical evidence showed that there were only two types of fill, namely, subdivisional fill and landscape fill
103 The Builder argues that the geotechnical evidence was only capable of supporting the view that there were two types of fill;
(a) the light grey/pale grey fill (subdivisional fill);
(b) the brown or red-brown fill (landscape fill).[78]
This represented part of the Builder's base contention that the evidence did not support a finding that there was a layer of builder's fill, placed on top of the subdivisional fill and under the slab, and that the Builder had not imported any fill, other than landscaping fill, placed after construction of the slab.
104 The Builder submits that the bore logs do not say anything about any other layer of fill or a split of the top layer of fill.[79]
105 The Builder argued that the Senior Member had misunderstood the geotechnical evidence, and that the Senior Member should have concluded that there were only two types of fill to be found on site, namely the underlying subdivisional fill (pale grey/light grey in colour) and the brown-red/brown fill above the subdivisional fill.[80] The Builder designated all the brown-red/brown fill as "landscaping fill", and also argued that the "landscaping fill" had been placed after the slab had been constructed.
106 The Senior Member concluded that, leaving aside the 30 millimetres of scoria gravel, the soil formation on which the slab is constructed comprised:
(i) an upper layer of red/brown silty clay fill placed by the builder;
(ii) below that, subdivisional fill of light grey/pale grey silty clay;
(iii) and below that the underlying topsoil.[81]
107 The Senior Member summarised the two layers of fill above the topsoil, and referred to the top 250 to 270 millimetres of the material as landscape fill.[82] This was the material located at the side of the slab down to the level representing the approximate soffit of the slab at 250 to 270 millimetres.[83] I do not consider that it is a fair reading of the Senior Member's Reasons to conclude that he has unjustifiably "split" the material referred to in what he calls the "upper layer" of fill.[84] The Senior Member explains that he refers to the portion of the "upper layer" of fill between the subdivisional fill and the underside of the slab as builder's fill, being the fill upon which the slab was constructed. Above that he refers to the fill brought on to the site to build up the soil level around the edge beams of the slab as landscape fill.[85]
108 The Tribunal collated the data at the cut-off point of the approximate soffit of the slab, at about 250 to 270 millimetres. It is sufficiently clear, on a reading of the Senior Member's Reasons that his findings and conclusions[86] are based on the collation he has produced[87] after considering all of the evidence including the expert geotechnical evidence.
109 At all events the bore logs, for example at C1 and C2 and L1 and L2, do depict extensive fill immediately adjacent to and at levels below the soffit of the slab. This fill commences on top of the underlying topsoil, and both Mr Lawrance and CivilTest concluded, that above the topsoil was subdivisional fill and on top of the subdivisional fill was fill in the nature of brown/red brown silty clay.
110 The Builder also contends that the Senior Member was wrong to rely on the bore logs (except C5) to demonstrate what was under the slab.[88]
111 It argues that it was not appropriate to infer what was under the slab from the expert geotechnical evidence derived from the tests conducted at the immediate perimeter of the slab.
112 The experts, however, clearly relied upon the test pit and bore logs at the edge of the slab to establish, by inference it is clear, that the materials identified at those points were likely to be the same materials as extended beneath the slab. In my view the expert evidence in this regard is logical and reasonable. In my view the inference drawn and conclusion reached by the Tribunal as to what material was probably under the slab at certain depths was appropriately founded on the geotechnical information and opinions to which I have referred, and was also therefore reasonable.
113 In my view the Senior Member's findings and conclusions about the nature and characteristics of the soil formations under the slab, cannot be successfully impugned on the grounds that the Senior Member did not have any basis to draw such an inference or that such an inference was not reasonably open, or was plainly wrong, considering the body of geotechnical and expert opinion that was in evidence.
114 Furthermore, the Senior Member found that the site levels were such that there was fill placed between the subdivisional fill (which was already in situ at the time of the plaintiff's earthworks) and the slab, to achieve a slab finished height of 100.690.[89]
115 The Senior Member found that the landscape fill was imported and placed on site after the subject slab had been placed, to build up area around the elevated slab and edge beams.[90]
116 The Senior Member found that the brown-red/brown fill was placed at two separate times and in two distinct places. The lower part was placed to raise the level of the building platform to support the slab. The Senior Member referred to the lower part of the "brown-red/brown fill" as "builder's fill". The Senior Member referred to the upper part of brown-red/brown fill as "landscape fill".[91] These two placements of fill were in addition to the underlying subdivisional fill.
117 So understood, the Senior Member cannot be validly criticised for concluding that overall there were three layers of fill.[92]
118 Furthermore, in my view, the Senior Member was justified in concluding that there were three components of fill, and that the Builder had placed the brown-red/brown fill, which the Senior Member called "builder's fill", between the existing subdivisional fill and the soffit of the slab and edge beams which it formed and poured early in the construction sequence. This is so because although the colour and characteristics of the "builder's fill" and the "landscape fill" were substantially similar, they were placed at separate times as distinct layers of fill.
119 This must be so, even on the unchallenged facts which are accepted by the Builder, because after the slab was constructed in January 2007, an unknown quantity of soil, which the Builder agrees was in the nature of "landscape fill" was brought onto the site by the Builder to cover the slab rebates. That is, to build up the ground level around the perimeter of the slab, which as built was 205 millimetres higher than had been anticipated.[93]
120 The parties accepted that there was the post slab construction placement of "landscape fill".[94]
121 Therefore, the "landscape fill", placed around the perimeter of the slab and the "builder's fill" placed earlier under the slab were justifiably referred to by the Tribunal as separate and distinct layers of fill. Accordingly, in my view, it was accurate for the Senior Member to say that there were three layers of fill, not two as contended for by the Builder.
122 In my view the Senior Member's finding that the layer of fill below the slab and above the subdivisional fill was placed there by the Builder is quite open on the evidence, logical and cogent. This is because it is an uncontested fact that in September 2006, prior to the works, the building site presented as a layer of subdivisional fill over the original topsoil.[95] Therefore, sometime after September 2006 and before construction of the slab and edge beams in January 2007, fill was placed on top of the pre-existing "subdivisional fill" in the vicinity of where the slab was ultimately constructed in January 2007. The existence of red-brown silty clay fill above the subdivisional fill and below the slab depicted in the bore logs demonstrates that fact.
123 There is no dispute as to the Builder being the party in control of the building site, and also responsible for the design and construction of the house, including its foundations and its slab and edge beams.
124 Accordingly, the Senior Member was justified in finding that it was the Builder that was responsible for the placement of the layer of additional fill on top of the pre-existing subdivisional fill, sometime before the slab and edge beams were formed and poured in January 2007.
125 Accordingly, I reject the Builder's contention that the Tribunal fell into material error by identifying three layers of fill by reference to the geotechnical reports.
126 The fundamental findings and conclusions about the soil compositions accurately summarise the main layers of fill above the underlying topsoil on site, as described by the geotechnical experts.[96] Of these components of fill it is the layer of red/brown fill which the Senior Member justifiably concluded was imported by the builder and which the Senior Member justifiably considered was not adequately compacted and had thereby caused the slab to fail. These findings and conclusions, made and arrived at by the Senior Member, were open to the Tribunal on the evidence, including the expert evidence, and were in my view reasonable, given that evidence.
127 Similarly, on the evidence to which I have referred, the Tribunal was justified in concluding that the test pits, bore logs and expert opinions established on the balance of probabilities that the soil material assayed at the immediate perimeter of the slab, provided a logical, reasonable and probative basis upon which to find that the soils underneath the slab were of the same types and characteristics shown to be present in the pits and bore holes very nearby.
128 Accordingly, I am not satisfied that the Builder has established that the learned Senior Member made the finding sought to be impugned in the absence of relevant probative evidence, or that such an inference was not reasonably open on the evidence before the Tribunal. Nor am I satisfied that such a finding was otherwise plainly wrong or unreasonable.
The Owner's primary case against the Builder should succeed even if the Builder was found not to have imported fill
129 In argument the Builder highlighted that the Owner's case was that he did not need to prove what is under the slab because whatever is there was not compacted properly and the slab had moved. The Builder's response to that argument was that the Tribunal approached the matter differently and inferred that there was builder's fill under the slab.[97]
130 However, even if it was not open for the Senior Member to find that the builder imported fill which was then placed under the slab, I am not persuaded the Tribunal's decision under appeal is vitiated by error of law. I accept the Owner's argument that a finding of lack of adequate compaction alone was enough to support the Tribunal's decision.
131 This is because the Senior Member's ultimate findings are, in any event, supported by the geotechnical evidence that there was extensive "fill" beneath the failed slab (whatever the source or means of placement of that fill may have been) and that fill was not adequately compacted. As a result, those materials did not provide a stable support for the slab and for that reason the slab failed.
132 The design and construction of a sound slab was the Builder's responsibility and the Builder did not argue otherwise.
133 The Senior Member's Reasons identify the evidence drawn upon to conclude that the Builder breached the subject Building Contract by failing to construct the slab in accordance with the Second Plan and identify the evidence upon which the Senior Member concluded that the Builder failed to adequately compact the fill material upon which the slab was constructed.[98]
134 In summary, for the reasons I have referred to above, I conclude the following in relation to the Builder's key contentions on this Question:
(a) There was no evidentiary basis for the Tribunal to infer that the Builder brought additional fill onto site and placed that fill where the slab was ultimately built.
The Tribunal had a sufficient evidentiary basis to infer that the Builder imported fill onto the site and placed that fill where the slab was ultimately built.
(b) The Builder did not at any time remove soil from site, as part of the earthworks.
The Tribunal was justified in concluding that it was not able to decide whether or not the Builder removed soil from site.
(c) An analysis of the before construction and post slab construction levels on site show that no builder's fill was imported onto site.
The Tribunal was justified in concluding that on all the relevant evidence builder's fill was imported onto site.
(d) The geotechnical soil samples and tests did not provide a basis from which it could be inferred that the Builder had imported and placed fill under the slab.
The Tribunal was justified on the evidence before it in inferring that the Builder had imported and placed fill under the slab.
(e) The geotechnical evidence showed that there were only two types of fill, namely, subdivisional fill and landscape fill.
The Tribunal was justified on the evidence in concluding that there were three layers of fill on site, namely in ascending order: subdivisional fill, builder's fill and landscape fill, and that under the slab, in addition to a thin layer of scoria, there was a layer of builder's fill on top of the subdivisional fill.
The Tribunal erred when having found there was "builders fill" brought onto the site located under the slab it found that more than six years later such fill was not compacted, causing the slab to fail.
135 The Builder's second ground argues that the Tribunal erred when it found, as a fact, that the Builder failed to adequately compact the fill material upon which the slab was constructed.
136 In argument, Senior Counsel for the Builder submitted that the Builder could only succeed on Ground 2 if the Court first finds that the fill material under the slab was not imported fill.[99]
137 Further, Senior Counsel for the Builder acknowledged that if the Builder succeeds on Ground 1, then Ground 2 becomes redundant.[100]
138 I also note that Ground 6(d), which is wholly dependent upon the Builder succeeding on Ground 1 in this appeal, is, given the above findings, now similarly redundant. This is because I have found against the Builder in relation to Ground 1 and also because the Builder does not press Ground 5,[101] which provided the foundation (that is, the finding of non-stabilisation) for the Builder's argument in Ground 6(d).
The Tribunal acted contrary to the hearing rule of natural justice when on 3 December 2013 it refused an application by Metricon to drill an exploratory hole through the slab in circumstances where it nevertheless ordered a further inspection of the house, including by experts to take place during what was otherwise a lengthy adjournment in the part heard proceeding.
139 The Builder asserts that in refusing it leave to undertake further thorough soil testing by drilling through the slab the Tribunal acted contrary to ss 97, 98(1)(a) and 102(1)(a) and (b) of the VCAT Act and deprived the Builder of natural justice.
140 Sections 97, 98(1)(a) and 102(1)(a) and (b) of the VCAT Act provide, in essence, that the Tribunal must act fairly, and in accordance with the rules of natural justice, and in accordance with the substantial merits of the case before it, and in doing so the Tribunal must allow parties a reasonable opportunity to call or give evidence, and to cross-examine or re-examine witnesses.
141 During the running of the case before the Tribunal, circumstances arose which caused the parties to agree to a lengthy adjournment. At about the time the proceeding at the Tribunal was adjourned, the Builder applied to the Senior Member seeking leave to undertake more investigations in relation to the issue of the existence and nature of the builder's fill under the slab. The Senior Member rejected the Builder's application to undertake further tests in the nature of coring through the slab from within the dwelling and assaying the soil below.
142 In his Ruling dated 3 December 2013 and associated reasons dated 9 December 2013 ("Ruling"), the Senior Member rejected the Builder's application to conduct an additional test through the slab, in substance, for the following reasons:
(a) The question as to whether or not there was builder's fill under the slab was not a novelty and that issue had been raised in April 2013 when the Owner's expert witness Mr Buffington provided his report.[102]
(b) The Builder had had a reasonable opportunity since April 2013 to address and answer the questions relating to the soil underneath the slab.[103]
(c) The hearing had commenced on 7 October 2013 with 10 days allocated.[104]
(d) By the time of the Builder's application to conduct an additional geotechnical test the evidence relating to geotechnical matters had been addressed over a three day period involving five expert witnesses.[105]
(e) To reopen the geotechnical evidence would require the Owner to recall his geotechnical witnesses and the issues already gone over would have to be re-agitated.[106]
(f) The recalling of the geotechnical witnesses would prejudice the Owner by requiring him to reopen a substantial part of his case and re-litigate it at his own expense. This would also add to overall hearing time.[107]
(g) The Senior Member's Reasons also stated that decisions made during the conduct of litigation cannot always be undone. The Senior Member noted that the overriding consideration was justice to the parties and that often mistakes can be corrected by granting an extension or indulgence if that can be done without injustice to the other party.[108]
(h) The Senior Member was satisfied that the Owner would be prejudiced by having to re-open a substantial part of his case and re-litigate at his own expense, at least in the first instance.
(i) The Senior Member noted that there may be prejudice to the Builder arising because of a refusal of its application to undertake a further investigation. The Senior Member added, however, that such prejudice is impossible to assess because the Tribunal did not know whether anything different would be found if the Builder were to carry out the further investigation it sought to undertake.[109]
(j) The Senior Member expressly considered s 102 of the VCAT Act.
(k) The Senior Member considered that, in all the circumstances, the Builder had already been afforded a reasonable opportunity to call evidence.[110]
143 In addressing the Builder's above application made on 16 October 2013 and on 26 November 2013, the Senior Member agreed that the question of whether or not there was "builder's fill" under the slab was a 'crucial issue'. The Senior Member also expressly recognised that he was required to give each party a reasonable opportunity to call evidence. The Senior Member, however, expressed the view that the Builder had been given the opportunity to lead the evidence it desired to lead. He added that in his view s 102 of the VCAT Act, which obliged the Tribunal to give a party a reasonable opportunity to lead evidence, did not preclude the Tribunal from deciding that there should be limits on what evidence a party may be permitted to adduce in addition to the evidence it had already filed and served.
144 The Builder contends that in refusing its application to undertake further tests and call evidence as to the results of such tests, the Tribunal:
(a) wrongly characterised the decision it needed to make as a "discretionary" one whereas it was in substance a matter of determining (subject to the Act) what natural justice and a fair hearing required in all the circumstances,
(b) failed to correctly identify and take account of the actual prejudice which would be suffered by Metricon being denied the opportunity to investigate and lead evidence on whether or not there was a layer of uncompacted "builder's fill" under the slab (an issue which the Tribunal conceded was "critical" and on which it accepted the existing evidence was limited),
(c) could not have relied on s.102(2) of the Act by reason of the fact that it was clearly not satisfied there was already sufficient evidence of the matters about which the plaintiff sought to investigate and lead evidence on, and
(d) took undue account of case management issues over the substantive justice of the matter,
(e) failed to take into account that there would be no delay to the adjourned hearing if such an order were made and that orders for an inspection during the adjourned period were already in place.[111]
145 In the Ruling, the Senior Member refused the Builder's Amended Application dated 26 November 2013, to undertake further under-slab tests and to file and serve further expert reports.
146 The Tribunal's interlocutory ruling of 3 December 2013 was in the nature of a discretionary decision although, as the Senior Member made clear by referring to the requirement in s 102 of the VCAT Act and the overriding consideration of justice to the parties, the decision took into account that the Builder was entitled to natural justice, including the reasonable opportunity to call evidence.
147 When deciding whether a tribunal has erred in the exercise of its discretion, the test is not whether the reviewing court would have reached a different decision had it been in the tribunal's position. Rather, it must appear that some error has been made in the tribunal's exercise of its discretion. Such error might be apparent as a result of the tribunal acting on a wrong principle, allowing extraneous or irrelevant matters to guide or affect the decision under review, basing its decision upon a mistake of fact, denying procedural fairness, and/or failing to take into account some material consideration.
148 It is also possible in some instances that, although it may not be clear how the tribunal has reached its decision or order, that decision or order is manifestly unreasonable or plainly unjust. In that case the appellate court is entitled to infer that in some way the tribunal has failed to properly exercise its discretion. In such cases, although it may not be possible to discern the nature of the error made in the exercise of the discretion, the appellate court may undertake the proper exercise of that discretion, on the basis that a substantial injustice has in fact occurred.[112]
149 I will now address the errors sought to be established by the Builder in paragraph 144 above, and in the order listed above.
(a) "Wrongly characterised the decision it needed to make as a 'discretionary' one whereas it was in substance a matter of determining (subject to the Act) what natural justice and a fair hearing required in all the circumstances"
150 The Builder submits that the exercise of the Tribunal in this regard was in substance a matter of determining (subject to the VCAT Act) what natural justice and a fair hearing required, in all the circumstances. The Builder argues that the Tribunal erroneously approached the task as though it had a discretion as to whether or not natural justice and a reasonable opportunity to call or give evidence would be applicable.
151 The Tribunal's decision in relation to the Builder's application to investigate and file and serve additional evidence was, I consider, correctly characterised by the Tribunal as a decision which involved the exercise of the Senior Member's discretion. The Senior Member recognised that his interlocutory decision as to whether to grant or refuse permission to the Builder to further investigate and put on additional evidence involved taking into account that s 102 of the VCAT Act required the Tribunal to allow a party a reasonable opportunity to call or give evidence, and that he was evaluating a number of relevant factors to ensure that his decision was just to the parties.
152 Many exercises of discretion involve determining what natural justice and a fair hearing require, in all the circumstances. Here the Senior Member was considering the alternate paths of either granting or refusing permission to undertake and lead evidence in relation to further investigations. The Tribunal was required to grant or refuse the application, depending on whether it considered the Builder had been given a reasonable opportunity to call evidence of the type to which the proposed investigation related. The requirement to give a reasonable opportunity to call evidence raises substantially the same considerations of natural justice and procedural fairness as between the parties.
153 The provisions of the VCAT Act referred to above required the application of certain principles and considerations, however, at all events, the Builder's application under consideration by the Tribunal was interlocutory in nature. The Senior Member was not at law bound to make a particular ruling. The Senior Member was empowered to consider all relevant matters, including any statutory requirements and those imported by the rules of natural justice, as part of the exercise of his discretion.
154 In my view neither the Senior Member's Ruling on the Builder's application, nor what was said by the Senior Member in relation thereto, support the conclusion that the Senior Member proceeded to determine the Builder's application on the basis that he would decide, in his discretion, whether or not the Builder should be afforded natural justice or a reasonable opportunity to lead evidence.
155 Put another way, I am not persuaded that the Senior Member proceeded on the basis that in the exercise of his discretion the Senior Member could determine whether the Builder would be afforded natural justice or as to whether the Senior Member would be bound by the sections of the VCAT Act relied upon by the Builder.
156 I consider the Senior Member proceeded to determine the Builder's application on the basis that it was entitled to natural justice and to the reasonable opportunity to call evidence. In that process, in my view, the Senior Member appropriately recognised that he had a discretion as to whether, in all the relevant circumstances, including applying the said sections of the VCAT Act, his discretion should be exercised in the Builder's favour.
157 For these reasons I reject the Builder's submission that the Senior Member wrongly characterised the nature of the decision he was called upon to make and I also consider that the Senior Member proceeded appropriately to determine, subject to the VCAT Act, what natural justice and a fair hearing required in all the circumstances.
(b) "Failed to correctly identify and take account of the actual prejudice which would be suffered by Metricon being denied the opportunity to investigate and lead evidence ..."
158 The Builder argues that it was grossly unreasonable for the Senior Member to refuse the Builder's request to undertake further testing, given that there was an extended time within which that testing could be done before resumption of the hearing before the Tribunal, and to thereby deprive the Builder of the opportunity to adduce what may be important and favourable evidence.
159 The Builder also submits that the Tribunal erred, when assessing the Builder's prejudice, by taking into account that it was uncertain as to whether or not the Builder's further investigations would produce any evidence of value to its case. In that regard the Builder submits that the Tribunal failed to correctly identify and take account of the actual prejudice which would be suffered by the Builder.
160 I note that the Tribunal expressly stated the following:
I do not ignore prejudice to the Builder by refusing its application to make further investigations. Such prejudice is impossible to assess because I do not know whether anything different would be found if the Builder were to carry out the further investigations.[113]
161 The Senior Member identified and weighed in the balance the prejudice he considered would be suffered by the Owner if the Builder was to be granted leave to further investigate and file resultant evidence. The Senior Member stated that if the Builder were permitted to re-open the geotechnical evidence the Owner would be required to recall his geotechnical witnesses and the geotechnical issues already traversed during the hearing would be re-agitated.
162 The Senior Member noted amongst his Reasons that the question of whether there was builder's fill under the slab was not a new issue, but an issue raised many months before the commencement of the hearing. The Senior Member also noted that the hearing had commenced and been underway for many days and that during its course all the geotechnical evidence had been called and completed. He noted that most of the geotechnical evidence had been given concurrently by the experts. The Senior Member also noted that it was likely that were the proposed additional investigations to be undertaken and resultant evidence presented, a substantial part of the case would probably need to be re-opened and argued with attendant extra cost and extra time.
163 It is clear that the Senior Member took into account both the consideration of potential prejudice to the Builder and also to the Owner.
164 I do not consider that the Senior Member's evaluation of the weight to be given to the Builder's potential prejudice was inappropriate because he considered that it was "impossible to assess" the possible prejudice to the Builder due to uncertainty as to the outcome of the proposed further investigations. Concomitantly, I do not consider this to be an irrelevant consideration taking into account the stage the proceedings had reached when the Builder's application was made and the conclusion of the geotechnical evidence which had already been filed and addressed. Nor do I consider that, in the circumstances the Senior Member erred in regarding the proposed investigations and the possibility of additional geotechnical evidence from the Builder as of little weight in the balance of prejudice as between the parties because there was no basis upon which it could be concluded that the Builder's proposed further tests would result in any probative and significant evidence in the proceeding. In this sense the Builder did not point to "actual prejudice which it would suffer" if it could not test and present additional evidence.
165 Finally, on this aspect the Senior Member's Reasons reflect that he considered that the Builder had by the time of the application to test and file additional evidence, had the opportunity to investigate and lead evidence.
(c) "Could not have relied on s 102(2) of the VCAT Act ..."
166 The Builder submits that the Senior Member could not have complied with s 102(2) of the VCAT Act because the Senior Member was not satisfied that there was sufficient evidence of the matters about which the Builder sought to investigate and lead evidence.
167 The Senior Member's Ruling makes it clear that the Senior Member included as part of his focus, consideration of whether the Builder had been afforded a reasonable opportunity to call or give evidence in the proceeding.
168 I do not consider that there is any basis upon which to conclude that the Senior Member ignored or had insufficient regard for s 102(2) of the VCAT Act. The Senior Member's Ruling ([17], [18], [21] and [22]) demonstrates that the Senior Member was mindful of and specifically considered the requirements of that section.
(d) "Took undue account of case management issues over the substantive justice of the matter"
169 High Court authority supports the Senior Member's consideration of "case management issues" as a factor to be weighed in the balance in the exercise of the Senior Member's discretion.[114]
170 The Senior Member stated that he took account of when the issue of the composition of the fill beneath the slab emerged and the date of the commencement of the hearing. He considered the geotechnical evidence that had been called and completed at the hearing including by way of concurrent expert evidence, and emphasised the likely impact upon the proceeding, and the Owner, including in relation to hearing time and costs, of additional geotechnical evidence being adduced. The Senior Member also considered the reasonable opportunity which the Builder had already enjoyed to obtain and present geotechnical evidence. Finally, the Senior Member expressly turned his mind to and evaluated the prejudice to the Owner and the Builder. Accordingly, case management issues were relevant considerations, and they were not the Senior Member's only considerations.
(e) "Failed to take into account that there would be no delay to the adjourned hearing, even if the order permitting inspection was made ..."
171 I consider that the Senior Member took into account that the adjourned hearing at the Tribunal was sufficiently distant that it was unlikely that the investigations for which leave was sought would delay the re-commencement of that hearing.
172 The Senior Member does not appear to have regarded potential deferral of the re-commencement of the adjourned hearing as a factor which rendered it less just to accede to the Builder's application. It was the likelihood of the need to re-open the geotechnical evidence, prolongation of the overall proceedings and generation of additional costs, particularly for the Owner, which the Senior Member noted as relevant and persuasive in favour of refusing the Builder's application.
173 Accordingly, I am not satisfied that the Senior Member failed to take into account that granting the Builder's application would not delay the re-commencement of the adjourned hearing.
174 For the reasons I have referred to above I do not find Ground 3 made out by the Builder. I am not persuaded that any form of error attended the Senior Member's rejection of the Builder's application to undertake additional geotechnical tests and file resultant additional expert evidence.
175 Further, even if the Tribunal did err in refusing further geotechnical testing by the Builder, and I therefore considered that it is appropriate to exercise the discretion which had miscarried below, I would nevertheless not accede to the Builder's application to undertake further testing and, if it chose, to file additional expert evidence. I would not accede to the Builder's application because in my view the justice of the situation and the weight of relevant considerations constituted by:
(a) The extensive opportunity which had already been provided to the Builder (by the time of the Builder's application) to adduce all necessary geotechnical evidence in support of its case;
(b) the very late point in the proceeding at which the Builder sought to undertake additional geotechnical tests;
(c) the fact that the Builder had already conducted one through the slab soil test and relied on the results of that test;
(d) the issues concerning the nature and performance of the soil materials under the slab having been in the parties' clear focus for many months;
(e) the completion of the extensive geotechnical evidence at the hearing including concurrent evidence by a number of experts;
(f) the likelihood that further soil testing by the Builder would result in the tendering of the results of such testing and the re-opening of the geotechnical case; and
(g) resultant likely extra hearing time and extra costs, including to the Owner which would probably occur if the Builder's application were allowed;
outweigh any prejudice to the Builder arising as a result of it being deprived of a further opportunity to test certain soils, and if it chose, to tender the results of such tests.
The finding of defective workmanship by the builder in preparing the footing and constructing the slab causing it to move irregularly [207] was a finding made contrary to law.
176 The Builder does not press Ground 4.[115]
The Tribunal erred in law when having found that "builders fill" had not been compacted [74], [145] and that the slab was founded on it, the Tribunal concluded that more than six years later, the slab had not stabilised and that any stabilisation of the soil would be at some indeterminate time in the future.
177 The Builder does not press Ground 5.[116]
When concluding that the slab had not stabilised and that any stabilisation of the soil would be at some time in the future [70], [218], the Tribunal erred in law by:
(a) Failing to take into account relevant expert evidence of "edge heave" and "heave recovery" leading it to make an erroneous finding which was plainly wrong or unreasonable in the Wednesbury sense,
(b) Failing to take into account relevant survey evidence being the Wilson 2013 survey which showed the level of the slab to be the same level as survey by Wilson in 2006 [45],
(c) Failing to take into account relevant evidence as to elevated moisture levels,
(d) Basing such a finding upon the proposition that the slab was founded on "builders fill", itself a finding arrived at due to an error of law as identified in paragraph 1,
178 The Builder does not press grounds 6(a), (b) and (c).[117]
179 In my view, for the reasons expressed under Ground 2 above I consider that the Builder does not press Ground 6(d).
180 For the reasons provided in relation to the dismissal of Grounds 1 and 2 and, in addition because Ground 4 was not pressed by the Builder, I also consider that Ground 6(d) should fail.
When having regard to the placement of scoria [153], a material of the class to which the structural engineering drawing referred and which on the evidence is commonly and routinely used for such purposes, the Tribunal irrelevantly and contrary to the drawing, the contract and AS 2870 incorporated into the contract, purported to apply the Building Code of Australia as the basis of a breach of warranty.
"I am satisfied on this evidence that the use of scoria was in breach of the Building Code of Australia and so was in breach of warranty and that its use has contributed to the passage of water under the slab although the extent of that contribution is uncertain".[118]
182 I note at the outset in relation to this issue that although the Senior Member found that the use of scoria by the Builder was contractually impermissible and contributed to the passage of water under the slab, the Senior Member was unable to determine the extent of that contribution.
183 The Senior Member's relevant conclusions are founded on the following findings, which address the Owner's claims that the engineer was negligent:
Quarry Product
(i) The "optional quarry product" allowed under the slab is not identified in the Second Plan. Mr Yap said in evidence that it was intended to be a levelling layer of well-graded material in varying sizes from gravel to dust. He said that it is very hard to get a level surface on clay but they had to ensure that the waffle boxes were placed very flat.
(ii) Mr Cross referred me to Clause 3.2.2.2(a)(1) of the Building Code of Australia which provides that filling placed under a slab must be controlled fill or rolled fill and that sand used in controlled fill or rolled fill must not contain any gravel size material. He said that this was because gravel cannot be compacted and there are always voids where water can enter. Mr McFarlane pointed out that the scoria used varied in size from coarse to fine material and that any voids would be filled either by the fine scoria or by the clay in the soil. He said that putting scoria under a slab was common practice.
(iii) I accept that in specifying "optimal quarry product" the Engineer ought to have stated that it should not contain any gravel sized material in order to comply with Clause 3.2.2.2(a)(1) of the Building Code of Australia. However it was for the Builder to ensure that, if it used any quarry product it would not contain any such material. Whatever Mr Yap might have thought would be used, the Second Plan did not specify gravel and so I find no breach of duty.[119]
The Builder's argument that the use of scoria was compliant
184 The Builder relies on clause 3.2.0 of the Building Code of Australia ("BCA") which it submits permits the Builder to construct compliant footings, or slabs, by satisfying certain performance requirements. Clause 3.2.0 of the BCA provides:
Performance Requirements
P 2.1 and P 2.2.3 are satisfied for footings and slabs if they are installed in accordance with one of the following manuals:
(a) the footing or slab is constructed in accordance with AS 2870;
(b) piled footings are designed in accordance with AS 2159.
185 The Building Contract, by its Specification, provided in clause 2 [concrete slab] that the Builder would build in accordance with AS 2870.1-1996 and in accordance with the Engineer's Design.[120]
186 Accordingly, the Builder says that its obligation was to meet the nominated performance requirements by constructing the relevant footings or slab in accordance with AS 2870.
187 The stipulations of AS 2870 differ from those in clause 3.2.2.2 of the BCA. Clause 3.2.2.2 of the BCA contains an optional set of requirements which provides Builders with an alternative way in which to achieve compliance with the Australian Building Code.
6.4 CONSTRUCTION OF SLABS
6.4.1 General The construction of slab footing systems including slab-on-ground, footing slab, stiffened slab with deep edge beam, stiffened raft and waffle raft shall comply with the requirements of Section 5 and of this Clause. For Class H and E sites additional requirements are given in Clause 6.6.
The methods given for sloping sites assume that landslip is not a design consideration. Where landslip is possible the design shall be given individual consideration.
6.4.2 Filling Filling used in the construction of a slab, except where the slab is suspended, shall consist of controlled fill or rolled fill as follows:
(a) Controlled fill is material that has been placed and compacted in layers by compaction equipment within a defined moisture range to a defined density requirement. Except as provided below, controlled fill shall be placed in accordance with AS 3798.
Sand fill up to 0.8 m deep, well compacted in not more than 0.3 m thick layers by a vibrating plate or vibrating roller, shall be deemed to comply with this requirement. A satisfactory test for sand fill not containing gravel sized material is the achievement of a blow count of 7 or more per 0.3 m using the penetrometer test described in AS 1289.F3.3.
Non-sand fill up to 0.4 m deep, well compacted in not more than 0.15 m layers by a mechanical roller, shall be deemed to comply with this requirement. Clay fill shall be moist during compaction.
(b) Rolled fill consists of material compacted in layers by repeated rolling with an excavator. Rolled fill shall not exceed 0.6 m compacted in layers not more than 0.3 m thick for sand material or 0.3 m compacted in layers not more than 0.15 m thick for other material.
NOTE: The depths of fill given in this Clause are the depths measured after compaction.
6.4.3 Foundation for Slabs The foundation shall satisfy the following:
(a) Topsoil containing grass roots or other organic material shall be removed from the area on which the slab is to rest.
(b) On sites subject to wind or water erosion, the foundation of the edge beam or footing shall be protected.
(c) The slab, including edge and internal beams, shall be founded as follows:
(i) Slab panels, edge beams, internal beams and load support thickenings are to be supported on natural soil with an allowable bearing pressure not less than 50 kPa.
(ii) Slab panels, internal beams and load support thickenings are to be founded on controlled or rolled fill compacted in accordance with Clause 6.4.2.
(iii) Edge beams shall not be founded on rolled fill. Edge beams may be founded on controlled fill compacted in accordance with Clause 6.4.2(a). This fill shall continue past the edge of the building by at least 1 m and shall be retained or battered beyond this point by a slope not steeper than two horizontal to one vertical.
(iv) Edge footings not tied to a footing slab (see Figures 3.2 and 3.3(b)) shall be founded in natural soil with an allowable bearing pressure of 100 kPa or may be founded on controlled sand fill on a Class A or S site.
(d) The base of edge beams and footings may be stepped or sloped not more than 1 in 10.
(e) A blinding layer of sand is not required but where used shall comply with Clause 6.4.2 if deeper than 100 mm.
6.4.4 Treatment of sloping sites The treatment of slabs on cut-and-fill sloping sites shall comply with one of the following methods:
(a) The site shall be cut and filled and the fill (see Figures 6.1(a) and 6.1(b)) shall continue past the edge of the house by at least 1 m and shall be retained or battered beyond this point by a slope protected from erosion and not steeper than two horizontal to one vertical. The interior of the slab shall be founded on compacted material, satisfying Clause 6.4.3(c). The edge beams shall be founded on natural soil or on controlled fill or may be supported by piers designed in accordance with engineering principles.
(b) The site shall be cut and filled with fill material that satisfies Clause 6.4.3(c) and the fill shall be retained at the edge in accordance with Clause 6.4.5 as shown in Figure 6.1(c).
(c) The slab and beams may be stepped in combination with methods in Items (a) or (b) above to reduce the extent of excavation or fill. At the change in elevation, the step shall comply with the following:
(i) The ground behind the step shall be properly drained and the slab shall be waterproofed.
(ii) Care shall be taken that Clause 5.3.4 is satisfied.
(iii) Steps in stiffened rafts shall be designed to preserve the structural continuity of the system.
(iv) Steps in slabs for Class A and Class S sites shall comply with Figure 6.2 where the height of the step is less than 1.2 m. The masonry retaining wall shown in Figure 6.2 shall comply with Clause 6.4.5(b). Steps in beams shall comply with the principles of Clause 5.4.3.
189 The Builder submits that under the option of compliance regime established via the Acceptable construction manual (BCA clause 3.2.0),[121] compliance with AS 2870 does not carry with it any prohibition on the use of gravel size material.
190 The Builder submits that Clause 6.4 of AS 2870-1996 does not prohibit the use of gravel size material.
191 Further, the Builder says that the Australian Standard distinguishes between fill material and a topping layer of material of less than 100 millimetres in depth, such as a 30 millimetre scoria layer which the Builder placed under the slab. The Builder says that the Australian Standard requirements in relation to fill only apply where the layer on top of the fill is greater than 100 millimetres.
192 The Builder also argues for the application of the following provisions of the 2006 BCA, applicable in 2007 when the house was constructed, and in particular:
3.2.2.2 Filling under concrete slabs
Filling placed under a slab (except where the slab is suspended) must comply with the following:
(a) Filling must be either controlled fill or rolled fill as follows:
(i) sand used in controlled fill or rolled fill must not contain any gravel size material ..."
(b) ...
(c) A level layer of clean quarry sand must be placed on top of the fill, with a depth of not less than 20 millimetres".
(d) A graded stone termite barrier complying with Part 3.1.3 may be substituted for the sand required in (c).
193 The Builder contends that the 30 millimetre scoria layer which it placed constituted a thin layer of material placed on top of the fill, which it argues would, in any event, be compliant with BCA clause 3.2.2.2(c).
194 The Builder also submits that clause 3.2.2.2(d) of the BCA clarifies that a graded stone barrier can be substituted for a layer of clean quarry sand placed on top of the fill, provided such a barrier complies with Part 3.1.3 of the Code.
(i) it elected, as it was contractually entitled to do, to build the relevant slab in accordance with the requirements of AS 2870; and
(ii) the Tribunal's identification of a breach of the BCA in relation to the optional Acceptable construction practice requirements of clause 3.2.2.2(d) is irrelevant, given the Builder's election to choose a different construction method.
196 The Owner concedes that the requirements of the BCA, clause 3.2.2.2(a)(i), are only contained in the "Acceptable construction practice" section of the BCA.
197 Although it appears that the expert witnesses, Mr Cross and Mr Buffington, gave evidence that the scoria placed by the Builder was porous, allowing water ingress under the slab, the Senior Member was not willing to make a finding as to the extent to which the Builder's use of scoria contributed to the passage of water under the slab.[122] Accordingly, the Senior Member's finding that the use of scoria contributed to the passage of water under the slab was ultimately not established as causative of slab movement or building distress or loss and damage to the Owner.
198 The Builder asserts that the Tribunal made an error of law in applying the BCA to the Building Contract between the parties and in holding that the Builder was in breach of the requirements of the BCA, by placing about 30 millimetres of scoria as a layer of material beneath the slab.
199 The Builder also argues that clause 1.1.4 of the BCA does not assist the Owner. Clause 1.1.4 provides:
1.1.4 Differences between referenced documents and the Housing Provisions
The Housing Provisions overrule in any difference arising between it and any Standard rule, specification or provision in a document listed in Part 1.4.
200 Part 1.4 entitled "Document Adopted by Reference" sets out a schedule of documents which are referred to as the Housing Provisions. That Schedule includes a reference to AS 2870-1996 "Residential slabs and footings - Construction" thereby adopting AS 2870-1996 as part of the Housing Provisions.
The Owner's arguments as to the use of scoria under the slab
201 The Owner's submission accepts that clause 3.2 ("Footings and Slabs") of the 1996 BCA provides for construction to be undertaken in accordance with "A. Acceptable construction manual", for example AS 2870, or alternatively, "B. Acceptable construction practice". The requirements of clause 3.2.2.2(a)(i) are contained in the alternative "Acceptable construction practice" section.
202 The Owner argues however that, clause 1.1.4 of the BCA, which deals with inconsistencies between referenced documents, including AS 2870-1996 and the Housing Provisions of the BCA, should be construed as requiring a builder adopting the requirements of AS 2870, to also comply with clause 3.2.2.2(a)(i) of the BCA. Specifically the Owner submits that:
Accordingly, the builder could not "elect" to breach clause 3.2.2.2(a)(i) of the BCA on the purported basis that it had chosen to comply with AS 2870 instead.[123]
203 At the date of the Building Contract, 1 November 2006, clause 1.1.4 provided:
The Housing Provisions overrule in any difference arising between it and any standard rule, specification or provision in a document listed in Part 1.4.
204 The Owner argues that the BCA stipulations should prevail in relation to differences between AS 2870, which is one of the documents adopted by reference in Part 1.4 of the BCA, and the stipulations of clause 3.2.2.2 of the BCA.
205 However, I consider that the Builder adopted an optional construction solution available to it as provided for in clause 3.2.0 (Acceptable construction manual) of the BCA and built the slab in accordance with AS 2870.
206 The Builder did not proceed to build the slab at Hollows Circuit, Tarneit in accordance with the possible alternative path of adopting the "Acceptable construction practice", via clause 3.2.1 of the BCA.
207 Accordingly, in my view there is no relevant difference between the applicable part of the BCA, namely clause 3.2.0 and AS 2870 which is called up by that clause, and the Acceptable construction practice requirements, set out in clause 3.2.1 and following. This is so because adoption by the Builder of the Building Solution available under clause 3.2.0, utilising AS 2870, is an alternative and does not require the Builder to comply with the requirements of the "Acceptable construction practice" in clause 3.2.1 and following, including clause 3.2.2.2 of the BCA. Therefore, Part 1.1.4 of the BCA has no application in the present circumstances.
208 The Owner also contends that AS 2870 and the engineering design to which the house was built do not permit the use of scoria. The Owner says that the reference in AS 2870 (6.4.3(e)) to "sand" and the reference in the design to "quarry product" do not call up or permit the use of gravel sized material.
209 The Owner submits that, in any event, the Builder's use of scoria amounted to a failure to carry out the works in a proper and workmanlike manner, and with reasonable care and skill and to provide a building which was fit for purpose.[124] The Owner refers to the evidence of Mr Buffington and Mr Cross in support of that submission.[125]
210 The Owner also points out that before the Tribunal the Builder had inconsistently argued that the use of scoria complied with the BCA, however in this proceeding the Builder argued that the 30 millimetre layer of scoria which the Builder placed under the slab, was an element of the foundation materials which was distinct from "filling under the concrete slabs".[126] However, I do not consider that anything turns on this possible inconsistency.
211 Further, the Owner refers in its submissions to material which could arguably have supported a finding by the Tribunal that breaches of the more general nature mentioned in paragraph 209 above were made out against the Builder. However, the Senior Member made no such finding.
212 In my view there is no proper basis upon which to conclude that it was not open on the evidence for the Tribunal to reject the Owner's claims that the Builder had perpetrated the more general breaches asserted by the Owner. Nor, in my view, can the Owner successfully argue that on the evidence it was unreasonable for the Tribunal not to find the more general breaches alleged by the Owner. The Senior Member's findings and conclusions[127] relating to "Quarry product" do not disclose an error of law in relation to the Senior Member's refusal to find the Builder had not performed the works in a proper and workmanlike manner, or with reasonable care and skill, or in a way that failed to provide a building that was fit for purpose.
Builder was entitled to place scoria under the slab
213 In my view the Builder is correct in its contention that in choosing to build a compliant slab adopting the BCA Clause 3.2.0 "Acceptable construction manual" Building Solution, in accordance with AS 2870 and the Engineer's design, the Builder obviated any need to also comply with the optional Acceptable construction practice requirements in clause 3.2.1, including clause 3.2.2.2 of the BCA.
214 The goals of the BCA Housing Provisions include defining practical alternative routes to enable the achievement and maintenance of acceptable standards of structural sufficiency, safety (including safety from fire), health and amenity in respect of subject structures. The BCA achieves such goals by ensuring that structures satisfy certain Performance Requirements.
215 The BCA specifies alternative ways by which those Performance Requirements may be satisfied (BCA clauses 1.0.3, 1.0.4 and 1.0.5). The Performance Requirements of the BCA are attainable via defined optional Building Solutions as defined in the BCA.
216 A Builder may adopt and implement a Building Solution which complies with defined Performance Requirements and do so by satisfying the Deemed-to-Satisfy Provisions of the BCA or the Alternative Solution of the BCA, as outlined in Clauses 1.0.4 and 1.0.5. The Deemed-to-Satisfy Provisions are in part set out in the Acceptable construction practice section of the BCA, clause 3.2.1 and following, including clause 3.2.2.2.
217 Alternatively, the Builder may satisfy the BCA Performance Requirements by implementing the optional Building Solution provided for in the Acceptable construction manual section of the BCA, clause 3.2.0.
218 In this instance, the Builder chose to satisfy the BCA requirement for the construction of a domestic slab, by constructing that slab in accordance with Australian Standard 2870 referred to in clause 3.2.0 of the BCA, rather than by complying with the Acceptable construction practices in clause 3.2.1 and following, of the BCA.
219 The construction practices in clause 3.2 of the BCA, including clause 3.2.2.2 are not precisely the same as the construction stipulations in AS 2870-1996. An example is the different specifications to be found in the BCA clause 3.2.2.2 as compared to AS 2870-1996, in relation to the extent of sand fill permissible, the BCA requirement for a levelling layer of clean quarry sand, and the optional blinding layer of sand specified in AS 2870.
220 The different specifications relating to "Filling" in BCA clause 3.2.2.2 compared with AS 2870-1996, make it clear that it is not the intent of the BCA that if a builder adopts the "Acceptable construction manual" method of constructing a slab thereby complying with the relevant parts of AS 2870, the builder must also comply, to the extent reasonably possible, with the "Acceptable construction practice" requirement of the construction of a slab in clause 3.2.1, including 3.2.2.2 of the BCA.
221 Consistent with the above scheme and the intent of the BCA, clause 1.1.4 of the BCA must be read as being intended to permit the operation of the options for construction referred to in Part 1.0.3, 1.0.4 and 1.0.5 which are provided to a builder in Part 3.2 and elsewhere in the BCA. Accordingly, it is most unlikely that clause 1.1.4 is intended to operate as argued for by the Owner, namely in a way which would afford precedence to the Housing Provisions of the BCA in clause 3.2.2.2, vis a vis the different construction requirements in AS 2870, which expressly provides optional specifications for a domestic slab sufficient to satisfy the BCA's Performance Requirements.
222 For these reasons the Builder was not required to comply with clause 3.2.2.2(a) of the BCA and is therefore not in breach of that stipulation. The Senior Member erred in concluding otherwise.
223 Further, I accept the Builder's submissions that, if applicable (which under this contract I have held it is not), clause 3.2.2.2(a) of the BCA is, in any event, confined on its language to apply to "fill". This interpretation is bolstered by clause 3.2.2.2(c) and (d) which deal with a layer of material that may be placed "on top of the fill". In my view the 30 mm layer of scoria placed by the Builder under the slab was not fill because it was a separate and discrete relatively thin layer of material separate from and different to the layers of fill below it.
224 Finally, I return to an earlier observation, namely, that the Senior Member did not conclude that the breach he found in relation to clause 3.2.2.2(a)(i) of the BCA had caused any discernible damage or loss.[128] Therefore, the error of law I consider to have been made by the Senior Member on this discrete and relatively minor aspect, has no impact on the ultimate decision and orders under appeal.
225 Finally, I note that the above consideration of the Owner's allegation that the Builder breached the provisions of the BCA is predicated upon my acceptance of the Senior Member's findings[129] as to what the parties to the contract intended in relation to the applicable engineering design for the house to be constructed by the Builder. That issue is addressed below in relation to the Owner's Notice of Contention.
The Tribunal erred in law when it proceeded to award damages of $264,794 based upon an assumption of demolition and reconstruction and $15,600 based upon an assumption of lost rental during demolition and reconstruction.
226 In relation to this ground, the Builder acknowledged that it carried an onus to establish that the Owner's course of action, involving demolition of the house, was unreasonable, and unreasonable in the sense that in all the circumstances no reasonable tribunal could have accepted that course.[130]
227 It is convenient here to extract parts of the Builder's argument, as to the state of the house, and the passages of the Senior Member's Reasons cited by the Builder as part of this argument. The Builder submitted:
What we think at the end of the day in this case is that the level of damage that was sustained by this house was very modest. The work that was done to repair it, when it was repaired by Metricon, ran into only a few thousand dollars. When inspections were done as to the state of the premises at a time shortly prior to the VCAT hearing, there was some evidence of minor cracking, internal and external, and some debate about some sticking doors and windows.
There was debate about it, our version was in fact windows weren't opening simply because there was a lot of sand and grit in the carriages of the windows. There was also evidence that this property had, for a period prior to the VCAT case where it was vacant, been let and that there was a condition report prepared. The tenants had not complained about anything except the stuck front door and that this was property was absolutely liveable. There was no suggestion whatsoever that it was unsafe or likely to become unsafe.
So the level of damage we say was absolutely modest and what happened was that the tribunal said, because I don't accept that there's been a stabilisation of the situation and because there is a prospect of, to use the tribunal's words - perhaps I will go to the reasons, Your Honour, and that's the easiest way to do this, in short compass. Reasonableness was dealt with at page 45, paragraph 221 and following.
In 225, you will see about six lines down the tribunal says: "The house requires constant maintenance... problem with assessing damages in some other way. How do I know what the Owner will have to pay to maintain this building over and above the normal maintenance as a result of its defective foundation for the period of its expected life", but in 223 the tribunal says: "This is not a situation where one can say that although work is not in conformity with the contract, it is nonetheless serviceable. The house will require constant and ongoing repair." Perhaps one last reference, at 238, Your Honour, having gone through a series of factors put by the Owner: "There is some substance to all of these matters but I do not believe that the house was in a dangerous condition. I am satisfied that despite its defects, it could have been rented by the Owner, albeit at a reduced rate."
There was some debate about that rate and I think it was $290 to $310, a loss of $10 or $20 a week. So there's some conflicting material in the reasons about the state of repair of the house but fundamentally what Mr Walker did was he said, I don't know when the house is going to stop moving. I believe that it will require constant maintenance over and above normal maintenance. It will continue for the life of the building and this is likely because of the defective foundation.
It's very difficult to challenge any of these findings, in fact it's not possible to challenge these findings of fact before Your Honour. That was the case put by our learned friends and it was accepted by the tribunal. The fact that a house that's only losing a little bit of rent and it's got a few cracks, et cetera, needs to be pulled down at the massive cost that was ultimately awarded, we would say is quite simply disproportionate but there was the issue that there was uncertainty about the resolution of the movement and so again, we say if the position is, peeling all of this back, that the tribunal had found that there was no fill introduced, that there was no failure to compact, it would have then had to look pretty carefully at this issue of what caused the movement in the soils and what caused the slab to heave. Was the return of the slab heave recovery and is it now likely that in the absence of some other drought or other type event, that we have reached the point of effective equilibrium here, and therefore that it was not likely that there be any substantial movement into the future, perhaps that minor risk of movement could not be attributable to the builder but was really something attributable just to the natural soils, therefore a proper award is to make some allowance for some maintenance in the future but otherwise, it is fit for purpose. Fit for purpose was a ground argued by our learned friends as one of their points of claim, but not found by the tribunal. So it's not suggested the house wasn't fit for purpose and yet it had to be demolished.[131]
228 The Builder seeks to establish that the Tribunal has erred in law in relation to its determination of damages consequent upon its findings of breach.
229 The Builder does not argue that the Tribunal has erred in the sense that it has reached a conclusion which cannot be supported by the evidence. The error here asserted is that the Tribunal has proceeded on the wrong legal premise, namely that the cost of demolition and reconstruction should form the basis of the damages calculation and further, that the defendant should not have been compensated for loss of rental during the period of demolition and reconstruction.
230 The Builder's submissions in relation to Ground 7 conceded that the Builder had to satisfy a very high threshold in seeking to persuade this Court to find that the decision that the house should be demolished and rebuilt was so unreasonable that no reasonable Tribunal in the place of the Tribunal would have so found.[132]
231 Senior counsel for the Builder clarified that the Builder was not arguing that the Tribunal's award of damages was so unreasonable that the Tribunal could not have come to the view which it did.[133]
232 Further, in order to succeed on Ground 7, the Builder concedes it must also succeed on Ground 1 in this appeal. In this regard the Builder also acknowledged in argument that in respect of Ground 7, the Tribunal did have available to it evidence sufficient to base the findings it made in relation to the need for the house to be demolished.
233 The Builder argued in substance, that the Tribunal would not have found as it did in relation to the need for the house to be demolished if the Tribunal had not concluded that the slab was founded on imported builder's fill which was inadequately compacted, causing slab instability.[134]
234 In relation to this quantum aspect of the appeal, the Builder again submitted that the "whole complexion of the case would have been different", in these respects, if the Tribunal had not concluded that the Builder had imported fill and had failed to adequately compact that fill.[135] If a contrary decision had been made on these matters it is doubtful whether the Tribunal would have regarded the damage caused by the movement of the slab as so severe as to justify demolition. In this way the Builder argues, the Tribunal's conclusions about the importation of builder's fill "filters all the way through, even down to the decision on quantum".
235 I have earlier held that Ground 1 should fail, and for the above reasons this should dispose of Ground 7.
236 Furthermore, the Tribunal found that the damage to the house referable to the unstable slab was Category 3 and Category 4 damage, as defined by AS 2870-1996. The Tribunal accepted, as a matter of fact, that the house was not stable, as a result of slab movements. This finding has not been challenged.
237 The Tribunal also found that because of its inadequate foundation the subject house is still moving seven years after the slab was poured. This finding was also not challenged.
238 Nor is there any challenge to the Tribunal's finding that, as a result of the inadequate foundation, the consequent movement of the house is likely to continue for the life of the building giving rise to the likely future need for constant maintenance.[136]
239 The Builder again and again pointed to what is characterised as the fundamental flaw in the Tribunal's approach arising from the Tribunal's unjustified conclusion that the Builder introduced fill onto the site and placed it where the slab would be situated.
240 Furthermore, given the nature of this appeal, including the requirement that the Builder identify error of law, including the nature and scope of the Builder's Grounds of Appeal, the analysis of the Tribunal's Reasons should focus on whether there is no sufficient evidence upon which the Tribunal could have concluded that the slab was in part founded upon imported builder's fill.
241 However, I have earlier found, including by reference to the Tribunal's Reasons,[137] the Tribunal had a sufficient evidentiary basis from which to conclude that the Builder had placed inadequately compacted fill on the site at the location upon which the slab and edge beams were then constructed.
242 I also consider it to be something of a "red herring" whether the builder's fill under the slab was imported onto the site from elsewhere or produced by the Builder from cut elsewhere on site. Ultimately the critical aspect is that whatever the Builder placed under the slab was compliant with the Building Contract specifications and requirements. It was not.
243 As earlier referenced, the Tribunal had ample evidence upon which to find that substantial parts of the material under the slab and edge beams were not compliant with the Building Contract and that this non-compliance had caused unacceptable movement and damage which had afflicted the defendant's property over a period of years.
244 I again express the view and record my conclusion that I do not accept that somehow the Tribunal's finding that the Builder had imported the fill upon which the slab was founded, filters all the way through the Tribunal's findings, including to its decision on quantum. Whatever the source of the fill beneath the slab, the Builder was ultimately responsible for its characteristics and its performance.
245 Further, irrespective of whether the scoria placed by the Builder was technically compliant with the Building Contract's specification of what could, or what should, be placed under the slab, the expert evidence outlined above provided a sufficient basis for the Tribunal's conclusion that the Builder's failure to adequately compact fill beneath the slab caused excessive movement of the slab and the consequent damage to the house.
246 For these reasons, I consider that the Tribunal's reasoning and decision as to quantum was properly founded on the Senior Member's above conclusions concerning excessive slab movement and consequent continuing damage.
247 Furthermore, I note questions of what remedial work was necessary and reasonable are questions of fact ultimately determined by the Senior Member based on the evidence before him.[138] The Builder did not argue that the Senior Member lacked an evidentiary basis for these findings, and accordingly this Court should not interfere with those findings.
248 Finally, I am also of the view that the Senior Member had a sufficient evidentiary basis upon which to conclude that the house would have to be demolished and reconstructed, and as a result the decision did not suffer from Wednesbury unreasonableness. This conclusion also necessarily renders unsustainable the Builder's claims that the Senior Member erred in awarding damages to the Owner in the sum of $264,784 for the cost of demolition and re-construction. Further, the Builder conceded this in its submissions extracted above. The Builder thereby submitted in substance that there being a dispute before the Tribunal about whether the house could be rectified and the Tribunal having decided that factual dispute in the negative, the Builder was not able to challenge those findings in this Court. That is, unless the Builder had succeeded on Ground 1 and it was thereby open to argue that the Senior Member was wrong in his conclusions about what had caused the slab to move. Such a finding, the Builder contends, would have allowed the Builder to mount a causation argument on appeal and thereby undermine the Senior Member's decision on quantum. However, for the reasons I have explained above I consider that the Builder should fail on Ground 1. On the basis argued by the Builder, that then results in it also failing on Grounds 7 and 8.
249 By Notice of Contention dated 13 October 2014, the Owner seeks determination of an issue as to the Engineer's Design agreed by the parties pursuant, or in relation to, the Building Contract for Hollows Circuit, Tarneit.
251 The Owner alleged by its Amended Statement of Claim in the Tribunal proceeding that the Builder breached the Building Contract by failing to install 38 bored concrete piers to support the slab.
252 The Owner's pleaded damages were calculated on the basis of demolition and a reconstruction which included the 38 concrete piers. The Tribunal awarded damages on that basis, notwithstanding that the Tribunal found that the Building Contract, by implication, provided for a waffle slab to be constructed, and on appeal the Owner supported the quantum of damage awarded by the Tribunal, albeit on the basis of a concrete pier slab design not a waffle slab design.
253 The damages awarded by the Senior Member were in the sum of $264,784 based on the cost of demolishing and reconstructing the house on a slab supported by 38 bored piers, as estimated by Mr Cross.[139] The practical result of this is that because:
(i) the Builder has failed on Grounds 7 and 8 of its appeal which sought to overturn the Tribunal's damages award; and,
(ii) the quantum awarded by the Senior Member has, in any event, been based on the construction of a slab with 38 bored piers; and
(iii) the Owner's case that the Builder has perpetrated a number of workmanship type breaches (separate and distinct from issues relating to compaction of fill) has failed,
it will make no ultimate difference to the outcome of this appeal which of the designs in dispute is held to be the agreed Engineer's Design. This is because it is not the design of the slab which has caused the relevant failure and consequent damage, and further, the quantum of damages assessed has been unsuccessfully disputed by the Builder, for the reasons I have set out above.
254 Therefore, given my findings and conclusions in relation to Grounds 1, 2, 7 and 8, the outcome of this appeal is not altered by either the Owner's success or failure on its Notice of Contention. The parties have however made it clear that they seek a decision on the Notice of Contention.
The Tribunal's Reasons as to the agreed Engineer's Design
255 In summary, the Senior Member dealt with the issue of what engineering design requirements had been agreed by the parties as follows:
(i) The plaintiff and the defendant signed the Building Contract on 1 November 2006;
(ii) The Building Contract referred to the Building Works, namely the construction of a dwelling house as set out in the Specifications and Plans, and referred to eight sheets of engineering design prepared by Structural Works Engineering for the Builder [AB 160];
(iii) There were eight pages prepared by the Engineer, Structural Works Engineering, which were appended to the Contract, but those eight pages were not in the nature of engineering designs, but were entitled, Geotechnical Site Investigation and Footing Recommendations dated 26 September 2006, in the nature of soil tests and recommendations as to the construction of footings [AB 206-213]. Each of these eight pages was initialled by the parties. The Geotechnical Site Investigation and Footing Recommendations, recommended alternative footing systems, depending on site conditions and related matters. The alternative footing design solutions were a rigid waffle footing system or a waffle footing system suspended on piers/piles;
(iv) Prior to the Building Contract being executed, the Engineer, Structural Works prepared a set of plans for a waffle pod slab supported by 38 boxed concrete piers [the First Plan]. The date of the First Plan is 19 October 2006, about two days before the signing of the Contract. The First Plan was not initialled by the parties nor attached to the Building Contract;
(v) The Engineer, Structural Works also prepared a different set of plans for a rigid waffle slab, which did not have 38 boxed concrete piers [the Second Plan] which was certified on 8 November 2006 (under the supervision of Structural Engineer Mr Yap) and which was endorsed by the Relevant Building Surveyor on 13 November 2006;
(vi) The slab at the new dwelling was constructed, purportedly in accordance with the Second Plan;
(vii) By reference to the signed Building Contract, and attached documents initialled by the parties, it appeared that the parties intended that the signed and initialled documents were the only documents which the parties intended to record their agreement;
(viii) The signed and initialled contract documents, contained the Geotechnical Investigation and Footing Recommendations which contemplated alternative footing designs and page one of the contract specification provided that the concrete slab of the dwelling was to be constructed in accordance with AS 2870.1-1996 and in accordance with Engineer's Design;
(ix) There was no specific design for the dwelling slab in the contract documentation, and indeed the contract documentation contained the Geotechnical Investigation and Footing Recommendation which mentioned two alternative design solutions for the required concrete slab;
(x) The signed and initialled contract documents did not reflect the intent of the parties to incorporate the First Plan which included 38 boxed concrete piers, which was a design that in fact Mr Hooper had never seen nor considered;
(xi) Because the Building Contract did not include an engineering design of the contemplated concrete slab and because the construction of the planned dwelling necessitated an engineering design in that regard, and it was common ground that the Builder was obliged to provide the design, the Tribunal discovered an implied term of the Building Contract that the Builder would obtain engineering designs suitable for the construction that were consistent with the contract documents;
(xii) The Tribunal emphasised that the Building Contract provided some flexibility concerning the engineering design to be adopted for the required concrete slab. The Tribunal referred to the alternative designs contemplated in the Geotechnical Site Investigation and Footings Recommendations provided by the Engineer, Structural Works which referred to alternative waffle slab designs, and the provisions of clauses 2.1 and 2.2 of the Specification, which referred to either a raft or a waffle slab;
(xiii) The Tribunal also made reference to the following background and context, which appeared to explain why the First Plan was not ultimately adopted.
(xiv) A note on the First Plan states:
Footings designed assuming that the filling on site will not be certified as 'controlled fill' in accordance with AS2870-1996. The slab design may change if certification is provided.
(xv) Possibly in response to this note, an employee of the Builder sent to Mr Yap a copy of a letter dated 12 January 2006 that the Builder had received from one Winslow Constructors Pty Ltd enclosing compaction results ("the Compaction Results") of the fill material that had been deposited on the subdivision by the developer ("the Subdivisional Fill"). The letter states:
The attached compaction results, which were located randomly throughout the fill profile, are considered to be representative of the bulk fill materials that were placed across the allotments by Winslow Constructors during this period.
(xvi) On 6 November 2006 that is, five days after the Contract was signed, the Engineer designed an amended footing layout plan in which the piers were removed from the design and the steel reinforcement was "upgraded". This was the Second Plan. The work was done under the supervision of Mr Yap and he certified the design on 8 November 2006.
By its Notice of Contention the Owner seeks to support the Tribunal's ultimate decisions
256 By his Notice of Contention, the Owner seeks to affirm the Tribunal's decision that the Builder breached the Building Contract, by now asserting that the Builder breached the warranty under s 8 of the DBC Act, and also breached clause 11 of the Building Contract, because the construction of the house did not comply with the First Plan, which specified a slab comprising 38 concrete piers.[140]
8 Implied warranties concerning all domestic building work
The following warranties about the work to be carried out under a domestic Building Contract are part of every domestic Building Contract -
(a) the builder warrants that the work will be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract;
(b) the builder warrants that all materials to be supplied by the builder for use in the work 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) the builder warrants that the work will be carried out in accordance with, and will comply with, all laws and legal requirements including, without limiting the generality of this warranty, the Building Act 1993 and the regulations made under that Act[141];
(d) the builder warrants that the work will be carried out with reasonable care and skill and will be completed by the date (or within the period) specified by the contract;
(e) the builder warrants that if the work consists of the erection or construction of a home, or is work intended to renovate, alter, extend, improve or repair a home to a stage suitable for occupation, the home will be suitable for occupation at the time the work is completed;
(f) if the contract states the particular purpose for which the work is required, or the result which the building Owner wishes the work to achieve, so as to show that the building Owner relies on the builder's skill and judgement, the builder warrants that the work and any material used in carrying out the work will be reasonably fit for that purpose or will be of such a nature and quality that they might reasonably be expected to achieve that result.
258 Clause 11 of the Building Contract provides contractual warranties in the same terms as those provided for in s 8 of the DBC Act.
The Owner's argument on the Notice of Contention
259 The Owner rejects the Tribunal's finding that no Engineer's Design (including the First Plan) was incorporated into the Building Contract.
260 There is no dispute that the slab, for the house agreed, was not constructed on 38 concrete piers.
261 The Tribunal accepted the Builder's argument and found:
(a) that no Engineer's Design was incorporated into the Contract; and
(b) the Contract included an implied term to the effect that the 'Builder would obtain engineering designs suitable for the construction that were consistent with the contract documents; that is, any such design would have to be consistent with the architectural plans, the specifications and the geotechnical report.'[142]
262 The Owner contends that the following principles of interpretation were applicable and that the approach of the High Court extracted below was apposite to the determination of what Engineer's Design the parties agreed to:
...The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties ... intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".[143]
263 The Owner did not challenge the Tribunal's finding that Mr Hooper had not ever seen, or turned his mind, to the First Plan.[144] However, the Owner argues that Mr Hooper's subjective view is irrelevant to the objective interpretation of the contract.
264 The Owner also argues that, because of the existence of s 31(1) of the DBC Act it would have been an offence for the Builder to enter into a Major Domestic Building Contract which did not contain a footing design sufficient for the issue of a building permit under the Building Act 1993 (Vic).
265 The consequence of such a breach as noted by the Owner, is potential liability, on the part of the Builder, to 50 Penalty Units under the DBC Act.
266 The Owner submits that the following provisions of the Building Contract, facts and circumstances, support its case on this issue:
(a) The Particulars of Contract identify the agreed engineering design by providing under the heading "THE BUILDING WORKS":
"There are 8 sheets in the ENGINEER'S DESIGN/S AND it/they was/were prepared by STRUCTURAL WORKS ENGINEERING for the BUILDER"[145]
(b) Cl. 1.0[146] of the general conditions of the Contract provides:
'Building Works' means the works to be carried out and completed by the Builder as shown in the Contract Documents ...
'Contract Documents' means this signed Contract and these Conditions, signed Specifications, signed Plans and an Engineer's Design.
'Engineer's Design' includes a footing design or other structural design that has been prepared by a qualified Engineer for the concrete footings, stumps, piers or slab construction, or for a particular part of the Building Works that requires a structural design, drainage design where appropriate and computations accompanying the foregoing.
(c) The Building Works are as depicted in the Contract Documents.
(d) The definitions. The Contract Documents include an Engineer's Design (not a 'signed' Engineer's Design, compare this with the expression "signed Contract", "signed Specification", "signed Plans", used in the definition).
(e) The Engineer's Design is expressly stated/identified in the Contract Particulars to be 8 sheets prepared by Structural Works Engineering.
(f) Structural Works Engineering was the qualified engineer that prepared the First Footing Plan included in the three pages of drawings and five pages of computations referred to in the Certificate of Compliance - Design, which is the Engineer's Design (as defined in the Contract). The Owner submits that this is the only Engineer's Design prepared by Structural Works Engineering in existence at the time that the parties entered the Building Contract.
267 The Owner's submissions point out that Structural Works Engineering produced a "Certificate of Compliance - Design" dated 25 October 2006.[147] Structural Works Engineering also produced a second "Certificate of Compliance - Design".[148] This later version was dated 8 November 2006 and was signed by Mr Travis Yap. The version signed by Mr Yap identifies the "Design Documents" as "Sheets 1'A'-3'A'". However, this document does not contain or identify any computations.
268 The Owner submits that Structural Works Engineering "issued" a Soil Test Report and the First Plan and that Structural Works Engineering prepared these documents and provided them to the Builder. However the First Plan was not "issued" or provided to the Owner. The Owner stated this during cross-examination.
269 The Contract Particulars and contract wording reflect that the parties intended the Building Works include the Engineer's Design prepared by Structural Works Engineering.
270 Pursuant to the Second Plan, which was produced after the execution of the Building Contract, the bored piers/piles depicted in the First Plan were deleted and the footing layout plan which was part of the Second Plan provided in Note (3) that:
The entire building platform should be well compacted at optimum moisture content by repeated rolling with an excavator or non-vibrating smooth drum roller in orthogonal directions as per AS 2870-1996. Clause 6.4.2(b) prior to placing waffle boxes any filling placed as part of cut and fill shall be placed and compacted in 150mm layers. If building platform is soft or suspect then contact this office for additional requirements.[149]
271 According to the Owner, the Tribunal's interpretation of the Building Contract which incorporated the Second Plan by implication is inconsistent with:
(i) the above text of the contract, and results in the words of the Building Contract having no work to do; and
(ii) s 31(1)(d) of the DBC Act, as it assumes that the Builder intended to commit an offence under the Act.
272 The Owner also argues that the Tribunal's reasoning,[150] which led it to conclude that the parties did not intend to include an Engineer's Design in the Building Works, is in error. The Owner argues that the reference to the "Contract Documents" in the Contract, is not expressed to include a signed Engineer's Design and, the 'fact' that the Engineer's Design was not 'signed and initialled by the parties' is not consistent with the language of the Contract. The Owner points out that the "Engineer's Design" is a Contract Document, but it is not required to be signed and/or initialled.
273 Further, the Owner submits that the side note under the heading 'Building Works' in the Contract Particulars which requires the parties to sign and date the documents listed under Building Works (which would include the Engineer's Design), does not form part of the Contract because of the operation of cl. 2.0 of the Interpretation Clause of the Contract.
274 The Owner also argues that the Tribunal's findings and interpretation on the issue of what Engineer's Design had been agreed by the parties, are contrary to the express language of the contract's terms and the Builder's obligations under the DBC Act. The Tribunal's findings are, the Owner contends, at odds with the contract and common sense and lead to an absurd outcome.
275 The Owner also argues that the implied term as found by the Tribunal, is inconsistent with the express terms of the Building Contract and is inconsistent with s 31(1)(d) of the DBC Act. Further, the Owner contends that the implied term is unnecessary because the parties intended to include the Engineer's Design.
276 The Owner asserts that it is also unlikely that, despite the language of the Contract, the parties entered into an agreement without including the existing Engineer's Design, and instead, it went without saying, that the parties intended nevertheless that the Builder would at some time in the future obtain another Engineer's Design which was inconsistent with the Engineer's Design that they already had.
277 The Owner argues that the intended design cannot be the Structural Works Engineering Engineer's Design dated 6 November 2006 and produced five days after the contract was signed. Similarly, the Owner contends the intended design cannot be the Soil Test Report.
278 It is clear that the words used in the Contract Particulars "8 sheets in the ENGINEER'S DESIGN/S ... prepared by STRUCTURAL WORKS ENGINEERING" do not mean the Soil Test Report, as this phrase has its own definition or meaning in cl 1.0 of the contract:[151]
'Soil Test Report' - means an investigation of the Building Site to seek evidence of filling on the Land ...
279 The Tribunal also found that the Soil Test Report does not contain an Engineer's Design.[152]
280 The Builder's response and arguments in relation to the Engineering Design applicable to the Building Contract note that in evidence before the Tribunal were four original drawings prepared by Structural Works Engineering dated 19 October 2006. These were:
(a) "Footing Layout Plan";
(b) "Footing Details - Type 2";
(c) "Part Roof Framing Plan"; and
(d) "Articulation Plan".[153]
281 The "Footing Layout Plan", or First Plan, was stamped "superceded" in several places on that drawing. The Builder points out that there was no reason or explanation put forward at VCAT for this drawing being so endorsed.
282 Also in evidence before the Tribunal were four amended drawings bearing the same titles as set out in sub-paragraphs (a) to (d) above, but marked as amendment 'A'10. These amended drawings were dated "6.11.06", and were all stamped by ACME Building Consultants Pty Ltd in the same way as the original versions.[154]
283 The Builder submits that by specification clauses 2.1 and 2.2,[155] the Building Contract informed the Owner that the Builder would deliver a concrete slab constructed in accordance with AS 2870.1-1996 and also in accordance with the Engineer's Design. The Builder also argues that these clauses also reflected the parties' agreement to that arrangement.
284 The Building Contract Specification provides in clauses 2.1 and 2.2:
2.1 Concrete slab shall be constructed in accordance with AS 2870.1 1996 and in accordance with engineers design.
2.2 Foundations/Concrete Slab includes:
• Concrete Slab
• Type - Raft Slab/Waffle Slab
(Note: Raft slab will only be used at the discretion of Metricon Homes)
285 The Builder argues that the slab the Builder was to provide was to be a raft or waffle slab at the discretion of the Builder.
286 The Builder points out that s 6.1.2 of the Structural Works Engineering "Geotechnical Site Investigation and Footing Recommendations",[156] states that if the Builder builds a waffle slab then it might be in the form of one or two alternative designs.
287 The Builder argues that the objective intention of the parties, as reflected in the building contact documents at 1 November 2006, was not that any particular one of the two alternative waffle slab designs was the agreed design.
288 The Builder submits that, absent any knowledge by the Owner of the First Plan, the Building Contract documents convey that the Builder was required to construct a concrete slab in accordance with AS 2870, as designed by an appropriately qualified engineer. This obligation imposed upon the Builder is recorded in the provisions of clauses 2.1 and 2.2 of the Building Contract Specification.
289 In my view the terms of the Building Contract reflect the parties' agreement that the Builder would, after the date of contract but before commencement of construction of the footing system, decide upon, and design, a suitable footing system. This is the substance of the recommendations in Part 6 of the Geotechnical Site Investigation and Footing Recommendations which formed part of the Building Contract executed on 1 November 2006. The recommendation also states that if a waffle slab is used then it might be a rigid system or alternatively a waffle system suspended on piers or piles.
290 Further, the Specification for dwelling, Clauses 2.1 and 2.2, stipulate that a concrete slab be constructed in accordance with AS 2870.1 1996, "in accordance with engineers design", including a concrete slab of a raft or waffle design at the discretion of the Builder.
291 In my view at the time of contract, beyond agreeing the above regime by which the concrete slab design would be finalised by the Builder, the parties failed to expressly agree or identify or incorporate the First Plan, or any other specific finalised slab design, via the reference to "Engineer's Design", in the particulars of Contract or the defined "Building Works", or otherwise.
292 Accordingly, in my view, the Senior Member's decision on the Owner's Notice of Contention discloses no error of law.
293 In substance the Senior Member's analysis[157] reflects the required approach of objectively considering the language used by the parties in the contractual documents which their signatures and formal initialling connote they intended to contain their agreement.
294 In my view the Senior Member's Reasons also reflect that he has objectively considered the parties' contractual language, in the surrounding circumstances known to them, and taking into account the commercial purpose and object of the Building Contract. In this regard the Senior Member took into account the background and context of the Building Contract. Further, by the analysis referred to above, the Senior Member has considered what a reasonable person would have understood that language to mean. In dealing with this issue the Senior Member proceeded to address this issue according to law.
295 In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd the High Court said the following about the correct approach in relation to this topic:
This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement...[158]
296 The Owner argues that the Tribunal's interpretation of the Building Contract is inconsistent with the objective theory of contract, because the Tribunal interpreted the contract taking into account the irrelevant subjective view of the Owner that he had never seen or turned his mind to the First Plan providing for a slab constructed on 38 concrete piers.
297 In my view however the Tribunal's reference to its factual finding that the Owner had at no stage turned his mind to the First Plan, is referred to by the Tribunal as an aside, and not as a reason for concluding that the Building Contract did not include any engineering designs. On a fair reading of its decision the Tribunal reached this conclusion based on the form of the Building Contract and the other documents the parties initialled.[159] The Senior Member held that the parties intended that those signed and initialled documents, and no others, recorded their agreement. The documents which were signed and initialled by the parties as the agreed Building Contract did not include the First Plan.
298 In so reasoning the Senior Member accepted the approach submitted by the Builder, namely to objectively assess the parties' intention by reference to the Contract Documents. In my view it is clear enough that this is what the Senior Member did.[160] I also note that the Senior Member's construction is supported by clause 3.0 of the Particulars of Contract, which provides that the contract is complete in itself and overrides any earlier agreement, whether made verbally or in writing.
299 Further, I also consider that the signed Contract Documents are somewhat unambiguous in that the Contract Documents contemplate the production of "an Engineers' Design" consistent with the specification at 2.1 and 2.2 and the Geotechnical Site Investigation and Footing Recommendations, and thereby provide flexibility to the Builder to develop alternative slab designs. This scheme accords with the Building Contract contemplating, in this particular case, that the Engineer's Design may not be available to be signed together with those other parts of the contract which are to be signed as part of the Contract Documents, including the "Contract" and "Specification" and "Plans".
300 Understood in this way, for the reasons I have referred to above, I consider that there is no inconsistency which arises between the implied term recognised by the Senior Member[161] and the Building Contract agreed and signed by the parties. Indeed such an implied term in my view is consistent with the scheme of the Building Contract, and, as explained by the Senior Member, necessary.
301 The Owner contends that it is the Tribunal's reasoning at [25] of the Reasons which led the Tribunal to conclude that the parties did not intend to include an Engineer's Design in the Contract Documents. The Owner argues that the phrase "Contract Documents" is not expressed to include a signed Engineer's Design and the fact that the Engineer's Design in the form of the First Plan was not signed and initialled by the parties, was not inconsistent with the words of the contract.
302 In my view the answer to the Owner's above contention, and the reason for the First Plan not being included in the Contract Documents, is that the First Plan was not signed or initialled by the parties together with the other Contract Documents as one of the specified contract documents, nor was the First Plan specifically or effectively identified in the signed Building Contract so as to bring about its incorporation by reference.
303 Finally, as explained above the signed Building Contract contemplated the Builder having latitude to finalise a design for the slab after the other terms of the Building Contract were entered into, and it specifically referred to alternative designs in that regard.
(i) The First Plan, produced on 19 October 2006 was neither initialled by the parties, nor attached to the Contract nor at any stage sighted or considered by the Owner, Mr Hooper.
(ii) The First Plan was however in existence at the date of Contract, which was 1 November 2006.
(iii) The "Specification" and the "Plans" referred to under "the BUILDING WORKS at Page 1 of the Particulars of Contract" [AB 160] were both initialled and attached to the Contract.
(iv) It was accepted by the parties that "STRUCTURAL WORKS ENGINEERING" was the Engineer under the Building Contract. The Engineer was subcontracted to the Builder.
(v) There were eight pages produced by STRUCTURAL WORKS ENGINEERING which were initialled and attached as part of the Contract, however those eight pages were entitled "Geotechnical Site Investigation and Footing Recommendations" dated 26 September 2006 [AB 206-213]. These pages are not in the nature of "Engineer's DESIGN/S".
(vi) The slab, as built by the Builder, was generally in accordance with the Second Plan, which omitted the 38 concrete piers.
(vii) The house could not have been constructed without engineering designs.
(viii) It was common ground that the Builder was responsible for the provision of a suitable engineering design, including for the subject slab.
305 For the above reasons, I am not persuaded that the Tribunal has erred in law in not being satisfied that the First Plan formed part of the Building Contract by incorporation, or otherwise. In my view no proper or sufficient basis has been made out for the incorporation of the First Plan into the Building Contract dated 1 November 2006. This is because the First Plan was not included by the parties as part of the Contract Documents. The First Plan was not signed or initialled by the parties and the Contract Particulars do not specifically or effectively incorporate the First Plan by reference.
306 For these reasons, in my view, the Senior Member did not err in concluding that an objective interpretation of the Contract Documents does not establish that the parties probably intended that the Engineer's Design would be constituted by the First Plan.
307 It is of no assistance to the Owner that by failing to effectively include in the Building Contract enough information by way of plans and specifications for the work to enable a building permit to be obtained, the Builder may have contravened s 31(1) of the DBC Act. The answer to the question as to the suggested incorporation of the First Plan by the Owner is to be found in the objective interpretation of the relevant contract documents, in accordance with the approach earlier referred to and directed by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[162] and Electricity Generation Corporation v Woodside Energy Ltd,[163] as addressed above, and not by reference to s 31(1) of the DBC Act.
308 Further, for the above reasons, I am also of the view that the implied term, found by the Senior Member, namely that the Builder would obtain an engineering design suitable for the construction and consistent with the geotechnical report, the architectural plans and the specifications forming part of the contract,[164] does not contradict the express terms of the Building Contract. Reading the contract as a whole, such an implied term is consistent with the Contract, accepting that in this instance the parties have omitted to agree and include any applicable Engineer's Design/s for the foundation solution at the date of contract. The parties did, however agree, as explained above, that the Builder would provide a suitable foundation/slab design, and agreed a regime within which that would occur.
309 It follows from the above that I am not persuaded that the Senior Member fell into error at law by implying a term which was unreasonable, and/or unnecessary and/or contrary to law. In my view the term which the Senior Member implied, was in all the relevant circumstances contractually necessary and lawful.[165]
310 Accordingly, the Owner's contention that the decision of the Tribunal under review should be affirmed on the alternative basis that the Builder has breached s 8 of the DBC Act and s 11 of the Building Contract because it constructed a house that did not comply with the First Plan is unsustainable and should fail.
311 Save in relation to the Tribunal's decision as to non-compliant placement of scoria (Question 6(e) Ground 6(e)) no error has been shown to exist in the Tribunal's Reasons or in relation to its decisions dated 3 November 2013 [Order 6] and 18 March 2014 [Order 1] and 1 April 2014 [Order 1].
312 Further, in relation to the Tribunal's error in concluding the placement of scoria by the Builder breached the BCA, as explained above, that error is ultimately of no consequence because the Tribunal correctly found that other breaches by the Builder were causative of the slab's unacceptable movement and consequent distress to the dwelling.
314 I am not persuaded that the Tribunal has erred in law in finding that "builder's fill" was brought onto the site and placed under the slab. In my view the Tribunal had an adequate evidentiary basis for these findings, and such findings were not plainly wrong or unreasonable.
315 Further, however, in my view it is of no moment whether the fill under the unstable slab was imported onto the site by the Builder. Even absent the Tribunal's findings in relation to this issue, the Tribunal's ultimate decision attributing responsibility for the damage to the subject dwelling to the Builder appears to be devoid of error because there is no dispute that the Builder was liable to ensure that the design of the foundations for the house were adequate and the Builder was similarly liable for the construction of the foundation system and the footings and slab placed thereon.
316 On appeal there is no contest as to the unacceptable movement experienced by the slab and the extent of resultant damage to the house. Furthermore, given that the Tribunal did not find that ingress of water via the scoria layer caused any damage, the sole cause of distress to the house was inadequate compaction of the fill beneath the slab resulting in unacceptable movement of the slab.
317 Accordingly, irrespective of whether the Builder imported fill onto site, the Tribunal's finding that the Builder is liable for the distress to the Owner's dwelling is without error.
318 I am not persuaded that the Tribunal has erred in law in concluding that the "builder's fill" located under the slab was not adequately compacted and the slab had not stabilised. The Tribunal had an adequate evidentiary basis for this finding. It also follows that such finding was not plainly wrong or unreasonable.
319 I am unpersuaded that the Tribunal erred in law in making the Ruling, and thereby refusing the Builder's application to undertake additional testing of foundation materials from under the slab and to file resultant additional expert geotechnical evidence.
322 I consider that the Builder was contractually entitled to place a 30 millimetre layer of scoria under the slab and on top of the fill, as a blinding layer. Therefore the Tribunal erred in law in concluding that the Builder was in breach of the BCA in its placement of scoria beneath the slab.
323 I also consider that, for the reasons I have explained elsewhere, this error on the part of the Tribunal does not vitiate its orders which are sought to be overturned in this appeal.
324 I am unpersuaded that the Tribunal erred in awarding damages in the sum it did, based upon the cost of demolishing and reconstructing the house and the loss of rental during demolition and reconstruction.
325 The Tribunal did not err in law in finding that the First Plan did not form part of the Building Contract. The Builder was entitled to design and construct the foundation system and slab, as it did, and in accordance with the Second Plan.
326 The Tribunal did not err in implying into the written Building Contract the term defined by the Tribunal and set out in its Reasons.[166]
327 For the above reasons the Builder's appeals against the Tribunal's orders referred to in paragraph 3(a), (b) and (c) above are dismissed.
328 I shall hear the parties, if necessary, as to the form of final orders and as to the costs of this appeal.
[2] Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Limited [2014] VSCA 353, [47], [49] and [52] (Warren CJ), [159], [162]-[171] (Whelan JA, with whom Santamaria JA agreed).
Metricon Homes Pty Ltd
Hooper [2015] VSC 110
(a) An award which was plainly wrong or unreasonable in the Wednesbury sense,
(b) An award which resulted from the misapplication of the decision of the High Court in Belgrove v Eldridge [1954] HCA 36 [sic] to which the tribunal referred?