Robson v The White Ant Company Pty Ltd

The Robsons build a house 3Between the northern New South Wales towns of Evans Head and Woodburn runs a road about 10 kilometres long. Evans Head is a coastal fishing town and Woodburn is on the southern bank of the Richmond River, 36 kilometres upstream from Ballina. Originally the residents of Woodburn may have described this road as the "Evans Head road" or "road to the beach" and the residents of Evans Head as the "Woodburn road". The road is now formally known as Beach Road. The Robsons purchased a block of land comprising 22 acres adjoining this road, 4.2 kilometres from Evans Head. At the time of construction of the house, the postal address was 420 Beach Road, Evans Head. There are now between 12 and 15 dwelling houses in this locality and the hamlet has been formally named Doonbah. The Robsons block of land is on the southern side of the road and is flood prone. 4Construction of the Robsons' house commenced in 2000. An engineering plan for the house, exhibit D, bears date 10 July 2000. The same document bears a hand written endorsement which suggests that the house slab may have been inspected, after laying, on 2 August 2000. Because the land was flood prone, the house had to be built on a mound. There is a concrete slab on which was erected a timber frame. The external cladding was brick, the internal cladding plasterboard. There was town water and town electricity available, but a septic sewer system needed to be installed. The house was to contain three bedrooms (the master bedroom having an ensuite bathroom), a study and "sunken family room" in addition to the usual rooms found in a normal family home. On the western side of the house was to be added a double garage, but at a lower level on its own separate slab. Because of its geographical location, the house needed to have protection from termites. Mr Robson decided to install a "Termite Tite" barrier protection system because he had "used it a few times previous to this job and to the best of [his] memory [he had] seen it on another job and thought it was a good product" (T 30 May 2013, p 6.02).

Termite Tite Pty Ltd 5Termite Tite Pty ltd (ACN 076 847 811) was registered on 19 December 1996. On 8 January 1997 Mr Terry John Trapnell of Banora Point became a director, secretary and a shareholder. Mr Ian David Fraser of Terranora also became a director and a shareholder. Annexed to the report of Mr Christopher Langley of 17 September 2012 (exhibit 5) is a letter of instruction to him from the defendant's solicitor dated 19 June 2012 which annexes CSIRO Technical Assessment 224, originally dated August 1997. That concerns the "White Ant Co. System" which was formerly known as the "Termite Tite System". The Technical Assessment was "updated" when the present defendant forwarded further material to CSIRO. However, the Technical Assessment does give certain information relevant to Termite Tite Pty Ltd. On page 4 of the Assessment appears the following: "During the appraisal, the company name Termite Tite Pty Ltd was registered by Mr T J Trapnell who also trades as TJT Construction. Thus, information provided by TJT Construction is relevant to this appraisal." The Assessment then lists a large number of "drawings and details showing various profiles and methods of fixing for various types of construction". On the same page appears this matter: "2. TJT Constructions, P O Box 6418, Tweed Heads South, New South Wales 2486. (Facsimile 15 May 1996): This included physical properties of the components and technical data from the suppliers, viz. details on the aluminium, plastic components and the various adhesives for joining aluminium to aluminium, aluminium to PVC, aluminium to concrete, aluminium to clay brick, aluminium to concrete blocks, PVC to concrete, PVC to clay brick, PVC to concrete blocks and general purpose adhesive. Also included were copies of the licence design issued to trained installers, quotation form, installers job record, meter box label, the notification to home-owners, and a treatment certificate." Also on that page commences a list of Test Reports made between 13 August 1996 and 17 May 1999 relevant to the Termite Tite System. 6Mr T J Trapnell ceased to be a director, secretary and a shareholder of Termite Tite Pty Ltd on 4 July 2002. On the same date Ms Judith Dawn Fraser of Terranora became a director and the secretary of the company. Mr I D Fraser and Ms J D Fraser had the same address at Terranora. The inference is easily drawn that they are related. The Frasers ceased their involvement in the company on 19 September 2005. 7The present defendant was incorporated on 28 May 2002. (T 20 May 2013, p 3.05). It forwarded to CSIRO "Product Codes and Illustrations Book (Updated 1st January 2004)." The logo of Termite Tite Pty Ltd (see exhibit 3) and of the defendant (see exhibit 8) are the same. Indeed, if any writing appears connected to the Termite Tite logo it is "Termite Tite P/L", and, if any writing appears connected to the White Ant company logo, it is that company's name on top and "Termite Tite Barrier Systems" below. 8The inferences to be drawn are that Mr Trapnell devised the "Termite Tite system" and that Termite Tite Pty Ltd was incorporated for the purpose of marketing that system. In mid 2002 the present defendant acquired (probably by purchase) the intellectual property in the system. Hence one can understand why the present defendant involved itself in what ought to have been a dispute between the plaintiffs and Termite Tite Pty Ltd, and why the plaintiffs' recourse is to the Deed of Agreement referred to in [1].

The Termite Tite system 9The Termite Tite system is a physical barrier system, designed to exclude termites from the building in which it is installed. Mr Langley describes the system in this fashion (with some grammatical corrections): "6.2 The function of a termite barrier is to deter against concealed entry by subterranean termites. 6.3 There are different types of termite barriers. One type of barrier is a chemical barrier (which uses some form of termiticide). Another type is a combined barrier such as a composite barrier being a physical component plus a termiticide. An example of a composite barrier would be an impregnated membrane. 6.4 Despite the installation of these barriers, it would still be possible for termites to gain access to a building: 6.4.1 by building over or around the barrier. For instance, this could happen if termites were able to build up along an external wall. This is described at clause 1.7.1 of Australian Standard 3660-2000, Termite Management, Part 1: New Building Work (the "Standard") as bridging; or 6.4.2 if the barrier is compromised in some way. For instance, this could happen if there is a penetration through the barrier material which allows entry such as the installation of a pipe or other service facility. This is described at clause 1.7.2 of the Standard as breaching. 6.5 For many years termite barriers were installed to protect the whole of a house footprint by extending under the slab and around the external perimeter. However, clause 2.3.1 of the Standard allows a properly constructed concrete slab to form part of the termite barrier system. This means that it is only necessary to protect the perimeter of a building as the slab itself will operate as a barrier against entry. This is referred to as a perimeter barrier. 6.6 Perimeter barriers are now the most common form of termite barrier as they are significantly cheaper to install than a full under slab application. 6.7 The Termite Tite barrier system is a perimeter barrier system which utilises strip metal (originally aluminium but now stainless steel) installed with one edge on the brick course and which is then folded down the inside edge of that brick course and is then folded again at right angles so as to protrude horizontally towards the interior of the building. That protruding edge is cast in to the slab when the concrete slab is poured. As such, the entire physical termite barrier system is comprised of the concrete slab into which the shielding is cast [as well as the strip shielding]. 6.8 If the entire (or sufficient depth ) of a concrete slab edge is exposed in a building then there is no need for an additional physical barrier to that part of the perimeter as the exposed edge of the slab itself forms the area that the termites would have to bridge to gain access to the building. Such an exposed slab area is at the garage of the building in this matter. 6.9 This is because if termites build up an external wall they will leave mud tunnels or tracks which will be seen by anyone performing regular maintenance. This is described at clause 1.7.6 of the Standard. Regular inspections should be conducted so as to detect any such unconcealed entry. The fact that termites are undertaking this type of activity will also be an indication that the termite barrier installed is doing its job properly. " Diagrams of this barrier system for installation in brick veneer buildings with a concrete slab are found in exhibit 3 (Termite Tite P/L) and exhibit 8 (defendant's). These are not easily reproduced. The easiest (for me) way to describe the system is to consider a right-angled "Z" where the upper ledge rests on top of the brick which forms part of the external wall of the building, the vertical shaft runs along the inside part of the height of the brick and the lower ledge is inserted into the concrete slab. Mr Robson described the upper ledge as being 120mm long, the vertical shaft as "about 50"mm long and the lower ledge as "probably" a similar length. If the physical barrier provided by Termite Tite Pty Ltd be the same as that provided by the defendant, then the vertical shaft and the lower ledge are each 35mm long (see exhibit 8). Such appears to me to be likely. Useful photographs of the barrier system installed before the pouring of the concrete slabs are found in CSIRO Technical Assessment 224, referred to above. In addition to including in the construction of the building a perimeter barrier, a barrier must also be installed around slab penetrations, including cavity piping. In the current matter there is no suggestion that a slab penetration has been the site of termite ingress to the plaintiffs' home. 10The external barrier is not a continuous piece of metal. It comes in lengths of 2.4m (T 30 May 2014 p 18.10) which must be cut if the length of the wall be shorter than 2.4m and then joined to lengths on adjoining walls or, if the length of wall be greater than 2.4m, then two or more lengths must be joined together. Joining is by way of overlapping. According to exhibit 7, the minimum lap width is 15mm. Exhibit 7 indicates that adhesive should be placed along the entire length of the overlap, but such appears not to have been the case at the time of the installation at the plaintiffs' home. Exhibit 7 is an extract from the defendant's Training/Technical Manual of January 2004. 11The terminology I have used in [9] above is not technical. What I have described as "ledges" were sometimes described as "tongues". What I have described as the "vertical shaft" was variously described: "turn down"; "return"; "vertical shaft"; "vertical joint"; "upright"; "fold down".

The process of laying the slab 12As might be expected, the builder of the Robsons' house was Mr Robson himself. He gave evidence of the steps taken in the laying of the concrete slab. He also drew three diagrams (exhibit E) which visually portray this process. The steps taken are these: (i)Concrete is laid onto which the perimeter brickwork is to be laid. Into this concrete are inserted "starter bars". These are metal bars that are designed to tie the perimeter wall footing to the slab of the house when it is laid. Starter bars were installed every 600mm around the perimeter of the house. The starter bars at this stage are "L" shaped, the horizontal length and part of the vertical length being embedded in the concrete footing for the perimeter brickwork. (ii)The perimeter brickwork is then laid in its concrete footing. There were six courses of bricks laid, except where the sunken family room was to be, where only four courses of bricks were laid (T 30 May 2014, p 7). (iii)Within the perimeter wall is laid a filling of "subgrade" (road base or gravel) which was compacted. The engineering drawing (exhibit D) makes this stipulation: "Any fill placed on this site is to be granular non-cohesive material with a CBR of not less than 15. Fill is to be placed in layers of loose thickness not exceeding 200mm and compacted to 98% standard compaction to AS1289." Exhibit E shows that as the filling approached the perimeter wall its height was lowered so that its edge reached the top of the concrete footing of the perimeter wall, on its inside edge. (iv)Pipes were then laid for drainage and electricity, but not for water (T 30 May 2014, p 9). (v)A "vapour barrier" was then laid over the filling and the pipes. This was a black plastic waterproof membrane, often called by a brand name "Visqueen" (T 30 May 2013, p 9). That term was used by Mr Langley, the defendant's pest expert. Mr Robson made it quite clear (T 5 November 2013, p 28) by marking the third drawing in exhibit E that the vapour barrier did not reach the perimeter brickwork but was cut or so placed that it reached only about half way along the concrete footing of the perimeter, stopping where the starter bars emerged from it. (vi)The starter bars are then "turned down" (T 30 May 2013, p 14) so that they will lie in the concrete slab when it was poured. See also T 31 May 2013, p 20. (vii)Reinforcing mesh ("reo") was then laid over the vapour barrier and the starter bars (T 30 May 2013, p 9). Exhibit D stipulates "F82 mesh". (viii)The Termite Tite barrier was then laid by an installer. The top ledge of the barrier rested on top of the highest bricks in the perimeter wall, with the bottom ledge protruding into the cavity which was to be filled with concrete. (ix)"Formboards" or "edgeboards" were then placed on top of the termite barrier to create a "rebate", so that where the timber frame of the house would be erected is higher than the brick veneer wall (T 30 May 2013, p 10). (x)The slab is then poured. Exhibit D stipulates a 100mm thick slab, but it is clearly much thicker than that at the perimeter where it must be either six or four bricks high. (xi)The poured concrete must then be compacted. Mr Robson gave this evidence on 5 November 2013: "Q. Where were you when the slab for your house was poured? A. There on site. Q. When the slab was poured what was done? A. The slab was pumped with a concrete pump and placed by concreters and also my own self and the fellows that work for me; we manually compact it and it's screeded and trowelled and finished. Q. When you say finished, what do you mean by finished? A. With a trowelling machine, the concrete is placed and manually compacted and it's screeded off with a concrete screed then it is finished with a helicopter - called a helicopter which is a trowelling machine. Q. Right, how is concrete manually compacted, what's involved? A. Well the pump does a fair bit of it when it's pumped in but it's also done just with gumboots and shovels and trowels and these days it's mechanically vibrated with a vibrator but back then it wasn't." (xii) Work would then stop to allow the slab to "cure". Exhibit D stipulates: "All slabs to [be] fully cured, to minimise cracking. Ensure concrete is kept continuously wet for at least 7 days following concrete pour. Alternatively apply an approved curing compound immediately following concrete finishing." The evidence does not disclose which alternative Mr Robson adopted. 13A complication arising in the pouring of this slab occurred because of the sunken family room. This was explored in cross-examination of Mr Robson on 6 November 2013. This evidence was given: "Q. Can I just get some idea from you about constructing the concrete slab in one pour, with a step down? A. Yeah. Q. That's more difficult than the usual flat slab, isn't it? A. It is. Q. That's because you need to rebate with form board, do you, and there's a fair amount of weight against it? A. That's correct. Q. Can it flow down underneath the form board? A. Can the concrete flow down? Q. Yes? A. Well, it needs to, yeah. Q. Because there's a little gap, is there, to - it flows down to form the lower part? A. Yeah, well, the bottom of the board's at the height of the lower level and the top of the board's at the top of the high level. You can imagine there's a monolithic slab all fully connected and - did you have - there's a detail, I think, in there that shows that. Q. You pour the top one? A. We pour it all together. Generally poor the bottom first, okay. Fill the bottom and then the pour the top cause otherwise well, tell a lie, we can do it either way. It depends on what concrete you like, you use, you know. Actually, they generally do do the top one first and then as it starts to go off they do the bottom one and then Q. When you say, "go off" does that mean harden? A. Yes. Q. You often hear concrete talked about, green. Is that when it's hardening or it A. Well, green's unhardened concrete or - Q. When I say, "often" I've heard it? A. Yeah, yep. Q. When you construct the form boards - to effectively create a dam, don't you? A. Yep. Q. How do you brace the form board in place? A. Generally with wire. Q. Are they called form pegs? A. We use timber pegs too, yep, and wire back to the reinforcement to hold it straight. Q. Is that what you did with your house? A. Yep. Q. When you say back to the reinforcement is that laterally or vertically? A. The peg goes vertical and gets nailed to the edge of the board on the outside, okay. We generally run a wire back to the reinforcement, sort of maybe in the centre of the span, to hold it - help - stop it from bowing out under the weight of the concrete. Q. After the concrete had gone off, the top layer, do you then pull the pegs out? A. As it starts going off, you do, you take the pegs out and ram it full of concrete after you take it out. Q. Do you recall doing that with - A. We do it all the time. Q. So you don't specifically recall doing it with your house but that's what you say you did? A. It would have been done, for sure." 14The slabs for the garage and for the porch and breezeway were laid separately and at different times. The sequence was first the house slab, second the garage and third the porch and breezeway (T 30 May 2013, p 17). The slab for the garage is at a lower level to that of the house, 700mm to 800mm lower, and the slab for the porch and breezeway is lower than that of the house, but not as low as that of the garage ("stepped down" - T 30 May 2013, p 17.02). 15There is some evidence inconsistent with this analysis but I cannot accept that evidence. Mr Robson was the builder of his own house and supervised all the work (T 6 November 2013, p 2.45). I accept that Mr Robson attempted to tell the truth and I must reject evidence inconsistent with his description of how relevant work was done. For example, Mr Witty, an architect retained by the defendant, said that starter bars were placed at 300mm along the perimeter footings but that can only be a generalisation based on his experience and is not what actually occurred at the Robsons' house. Mr Langley, the defendant's pest management consultant, said this: "The stages of construction is that masonry goes up and then the Termite Tite installed and then the vapour barrier's laid, the concrete is poured. But the vapour barrier impedes the key [bottom edge] of the concrete with the actual Termite Tite." By this last sentence Mr Langley meant that the vapour barrier impeded the bottom edge of Termite Tite being embedded in the concrete slab. He then drew a sketch (exhibit 6) of how he believed the slab had been laid, which is completely inconsistent with Mr Robson's evidence and exhibit E. I can not accept Mr Langley's evidence on this aspect of the case. Indeed, Mr Robson was not cross-examined to suggest the method of construction propounded by Mr Langley.

The installation of the Termite Tite barrier 16The Termite Tite barrier was installed on 2 August 2000. As I pointed out in [4] the evidence also suggests that that was the date of inspection of the slab after laying. The name of the installer recorded on the Termite Tite Pty Ltd "Installer's Job Record" (Exhibit 12) is "K+M" Archbold". I infer that the plus sign replaces an ampersand. That document also contains the name "Keith" and the inference to be drawn is that the installer was a partnership of Keith Archbold and his wife. According to Mr Robson, the installer was a contractor to Mr Ron Jeffrey (T 5 November 2013, p 63.10). Exhibit 13 contains a letter from Ron Jeffrey, White Ant Co. - Northern Rivers. On the top right hand corner of the letterhead is this matter: "The White Ant Co - Northern Rivers (R Jeffrey Holdings Pty Ltd) 104 Carrs Drive Yamba, NSW 2464" together with the usual data as to how to contact the business. Mr Robson said that he thought that Mr Jeffrey "bought the White Ant franchise in our area" (T 5 November 2013, p 63.14). The inferences to be drawn are that Mr Jeffrey, through his company, was an agent, licensee or franchisee of initially Termite Tite Pty Ltd and more recently of the defendant and he contracted with K and M Archbold to install the Termite Tite barrier at the plaintiffs' house. The installer did not remain at the site for the pouring of the concrete (T 6 November 2013, p 3.07). It seems likely that he left the site immediately after he completed his work. 17At the time of installation, the barrier could be made of either stainless steel or aluminium. At the commencement of the hearing there was an issue as to which metal was used at the Robsons' site (T 30 May 2013, p 16) but it was eventually common ground that it was made of stainless steel (T 6 November 2013, pp 50.48 - 51.13). 18According to Mr Tony John di Betta, the defendant's technical manager since December 2008, the work of the installer was "done very well" (T 7 November 2013, p 13.48).

Warranty 19Termite Tite Pty Ltd issued to the Robsons a warranty (exhibit C) numbered 6386 signed by Mr Terry Trapnell, its managing director, on 15 August 2000. Under the heading "Effect of Warranty" occurs this matter: "In the event of subterranean termite damage occurring to structural members of the premises, Termite Tite Pty Ltd will effect the repair or replacement of the damaged members of the premises or, where practical, repair the Termite Tite Protection System to a maximum of $50,000.00 per dwelling or $100,000.00 for multi-unit premises." Consequential loss or damage was excluded. The warranty was for ten years from 2 August 2000. Ten stipulated events voided the warranty. Two of those events are: "2. The owner of the premises allows timber or rubbish to be stored in close proximity to the premises. 4. The owner of the premises allows the Termite Tite Protection System barrier to be bridged or broken by any other material." 20Paragraphs 23 to 40 of the further amended statement of claim filed in Court on 21 May 2013 rely on the warranty on the basis that "the defendant legally assumed the obligations upon the installer that arose under the warranty" (par 24). However, learned Counsel for the plaintiffs abandoned the claim based on the warranty during addresses (T 7 November 2013, p 29.38). In light of how termites first entered the plaintiffs' home, Counsel's decision was proper.

Discovery of termites in the plaintiffs' home 21Mr Robson said that he first became aware of termites at his home at the end of January 2006. He rang "the White Ant Company" and "they" turned up the next day or very shortly thereafter. There is no dispute that on 1 February 2007 Mr Ron Jeffrey and Dean Watkins attended the Robsons' home and carried out certain work. I believe that Mr Robson has mistaken the time of his discovery. I shall return to the issue of timing later. 22The ensuite of the master bedroom adjoins the garage. In particular the WC of the ensuite, which has its own door to close it off from the rest of the ensuite, adjoins the garage. The jamb on which that door swings is fixed to the wall between the ensuite and the garage. Mr Robson initially heard noises in the wall but did not realise that they were being made by termites until "they surfaced in the jamb near the toilet there". He immediately went into the garage where he had placed an open-shelved, wooden cupboard. He moved the cupboard and saw termite mudding behind it, which had bridged the Termite Tite barrier. He rang "the White Ant Company" and was advised to knock down the termite mudding and that a man would come out to carry out an inspection. He then made a thorough inspection of the outside of his house but did not find any other "breaches" of the barrier. Mr Robson was clearly referring here (T 30 May 2013, p 22.50) to other bridging by termites over the Termite Tite barrier. At the hearing it seemed to me likely that the termites had entered the garage penetrating the 10mm expansion joint between the slab of the garage and the brick footing of the house below the house's termite barrier. Mr Robson described this expansion joint as Abelflex (T 30 May 2013, p 25). However it is clear from another diagram drawn by Mr Robson (exhibit G) that the base of the garage slab rests on top of the outer edge of the cement footing of the house. Exhibit G shows a bridge of termite mudding passing over the termite barrier. Mr Robson then explained how they had entered the garage: "That concrete slab is 100mm thick which is 4 inches, and the termites came out between the concrete slab and the top brick there [of brick footing below the barrier] and built a mud barrier [bridge] around and into the frame. There's cladding there. They've gone between the cladding and the brickwork and got into the premises." Concealing themselves behind the cupboard, the termites built a bridge over the termite barrier and were thus able to enter the house. The evidence discloses that a gap of one millimetre is sufficient to enable termite penetration. 23According to Mr Robson a gentleman from "the White Ant Company", a "representative" or "employee", not Mr Jeffrey, attended his home and carried out certain work (T 30 May 2013, p 24). He drilled holes along the expansion joint and through the brickwork and injected termiticide into the holes. However, termites reappeared "a month, 6 weeks, something like that" later. Mr Robson noticed dirt on the floor near the entrance to the separate WC between the laundry and the bathroom at the back (southern) side of the house. They were in the pine panelling of the wall between the laundry and the WC on the WC side (eastern) where there is a short hallway before the WC door. He telephoned Mr Jeffrey's business and on this occasion Mr Jeffrey came out to the Robsons' home with one of his employees and performed another inspection and another treatment. When asked what that treatment was, Mr Robson replied: "At that stage I think - they did quite a few different treatments over a couple of years and ... at the stage they put boxes on the walls with termiticide in the boxes near where the - they put one in the laundry and one in the office, I think that was the - might have been the next visit. On that visit I'm not exactly sure what treatment they did but they did do some treatment on every visit." (T 30 May 2013, p 28) This evidence is relevant to timing. 24I do know from exhibit 13 that on 1 February 2007 Mr Ron Jeffrey and Mr Dean Watkins attended the Robsons' home and recommended the installation of a "Sentricon" bait station in "the hallway". This appears to be the second visit of personnel from "the White Ant Company" at the plaintiffs' home from both Mr Robson's description of those personnel and the treatment provided and the site of the treatment. If that be so, which in my view is probable, then Mr Robson's first discovery of termite ingress at his home is likely to have been at least four weeks (perhaps six weeks), perhaps a little earlier, than late January 2007, perhaps in December 2006 or very early in January 2007. That exhibit 13 does not record the first visit by the gentleman who carried out the work in the garage is wholly explicable. Exhibit 13 was tendered to quantify the defendant's cross-claim (T 7 November 2013, p 6). Mr Robson accepted responsibility for the initial termite ingress from the beginning (T 5 November 2013, p 65.34). For the work first done by the defendant "an invoice was raised and the Robsons paid it" (T 6 November 2013, p 62.15). Apparently work done at the initial visit was performed by a "Brisbane technician" sent by the defendant (ibid, line 10), rather than by someone from Mr Jeffrey's business.

Further termite ingress 25I have now found that Mr Robson first discovered termite ingress to his home sometime in either December 2006 or very early January 2007. He found further termite workings, clearly shortly prior to 1 February 2007. On 8 February 2007 Mr Dean Watkins attended the Robsons' home and installed the Sentricon bait station which had been recommended a week earlier. Mr Watkins again called at the plaintiffs' home on 22 February, 26 February, 12 March and 14 March 2007 to check the baiting system and on 12 March to replenish the bait. On 17 April 2007 Mr Watkins called again, performed a "full visual termite inspection" and checked the baiting system. At some time, I infer in 2007, Mr Robson detected further termite workings in the sunken family room. He thought that this was "somewhere between 4 and 6 months" after he discovered termite workings in the hallway near the WC. Mr Robson marked on exhibit B (plan of the house) a section of the southern wall of the house between the sliding doors to the back garden and the wall between the sunken family room and the kitchen (eastern side of the sunken family room sliding door). He called Mr Jeffrey, and Mr Jeffrey and "one of his employees" called "within a day or two". Mr Robson said that one could see that the architraves around the sliding door were eaten away and also the skirting board of the wall. He believed that they "put a box in the wall" of the sunken family room and also another in the laundry, although it is possible that that was placed subsequently. 26Exhibit 13 records that on 1 May 2007 Mr Jeffrey and Robert Ingleson "from Head Office" attended the plaintiffs' home and "(r)emoved part of the garage wall sheeting to inspect for activity." It is unclear to me whether this is the occasion to which Mr Robson was testifying. However, exhibit 13 does not record a further occasion when Mr Jeffrey attended with another for the purpose of treating for termite ingress. However, the same exhibit does not refer to the setting of any baits other than that installed on 8 February 2007. I accept Mr Robson's evidence that more than one bait station was installed, so exhibit 13 may not be accurate or adequately describe the work actually performed. Exhibit 13 goes on to record that Mr Jeffrey again attended the plaintiffs' home on 18 and 24 September 2007 "to assess if [there was] any further activity." 27Mr Robson said that the termites "reappeared" in late 2007. He noticed that the laundry door jamb "was eaten out"; i.e. the door between the laundry and the rest of the house, not the door from the laundry to the back garden. He also noted them in the jambs of the door from the hallway to the master bedroom. Mr Robson was then asked what action he took. He gave this evidence (T 30 May 2010, p 32): "I rang Mr Jeffrey again. He came out on site and explained to me that they didn't think the responsibility was theirs and because the cupboard was up against the garage, and I quite accepted that, and ... he said they weren't going to do any ... more rectification work, and at that stage I rang a local pest fellow." The "local pest fellow" was Mr James Pearson of Pestagon (NSW) Pty Ltd trading as Pest-A-Gon, of Woodburn. 28Exhibit 13 records this matter: "September 26, 2007 Owner called Yamba office to report suspect activity. Ron advised owner that he would contact Head Office to arrange an inspection. October 26, 2007 Treatment proposed by Head Office pest technician, Terry Adkins." Initially I believed that the last conversation that I have just recorded between Mr Robson and Mr Jeffrey occurred on 26 September 2007 but, on reflection, it seems more likely to have occurred after 26 October 2007. Mr Jeffrey, in exhibit 13, does not record his advising the plaintiff of "declining liability" but only of an approach to Head Office. Mr Atkins then inspected and proposed further treatment. Furthermore, Mr Pearson did not carry out his treatment until 21 February 2008 and I do not believe that Mr Robson would have delayed further treatment of his home for a period of almost five months. The better view is that the conversation with Mr Jeffrey which I am now considering was after 26 October 2007, later in that year. Accordingly, the fourth discovery by Mr Robson of termite workings was later in 2007 than 26 October. It may be that the telephone call of 26 September 2007 relates to Mr Robson's third discovery of termite workings, in the sunken family room, but that does not fit comfortably with what I have recorded in [26]. Suffice it to say that the important facts are of four separate discoveries of termite workings and the interaction of Mr Robson and Mr Jeffrey, the defendant's agent, licensee or franchisee who was not called in the defendant's case.

Events of early 2008 29Mr Robson and his employee assisted Mr Pearson in carrying out the works of 21 February 2008 to make them "a bit cheaper". Holes were drilled every 300mm around the perimeter of the house, through the porch, breezeway, through the pavers at the back of the house and through the slab of the garage adjacent to the wall of the house and the holes were injected with termiticide. Mr Pearson's "Certificate of Termite Treatment" (exhibit H) states that no termite nest was located. It describes the work done thus: "A Treated Zone was installed to the following area(s) full perimeter of residence using the liquid termiticide(s) Termidor which contain the active constituent(s) Fipronil. The concentration of the liquid termiticide/s used was 6% and the total volume used was 480Lt. Termiticide barriers degrade (break down) over time and should be replenished in the future. The Termiticide manufacturers claim their products should last from 2 to 10 years depending on the type and strength of termiticide used and the site conditions. So in the future, after one of the required regular inspections of the property, the inspector may advise you of the need to re-install the treated zone or barrier." The "life expectancy" of the termiticide was 5 years. Mr Pearson recommended inspection every three months. 30Mr Pearson's treatment was not immediately effective. Mr Robson gave this evidence: "It took a little while for them to work and ... I was sort of a bit panicky at that stage so I rang James back up and said they don't seem to have stopped them because they reappeared again, so at that stage he suggested I ring John Elder because he was, in his opinion, the best in the area, he has the dogs to find them..." (T 5 November 2013) Mr Robson telephoned Mr Elder and explained what had happened. On 27 March 2008 Mr Gavin Skinner of Elders Pest Control carried out a visual inspection of the plaintiffs' home. Mr Skinner's inspection report is part of exhibit J. It states that the drill hole spacings made by Mr Pearson were not to Australian standards. However, Mr Robson stated that Mr Elder carried out the inspection. In that regard he is mistaken. Mr Elder first inspected the Robson's property on 12 June 2008 (extract transcript 30 May 2013, pp 20 - 21). Exhibit J tells me that on 10 June 2008 Mr Elder was requested by Mark Flynn and Associates, solicitors, to have an "onsite meeting" with the Robsons and Mr Flynn. The inference to be drawn is that that meeting was held on 12 June 2008. In cross-examination, Mr Elder gave this evidence: "Q. You decided at that point that the barrier had failed, didn't you? A. Yes. Q. And you had no explanation as to why it had failed did you? A. At that stage no. Q. Your hypothesis on 12 June 2008 was well I don't know how the termites have gotten in therefore the barrier has failed? A. I come simply to that conclusion because the barriers - the physical barriers are meant to expose the termites on the outside of the building, okay. On a full perimeter check of the building there was no evidence whatsoever that the termites had exposed themselves on the outside of the building. So one could only assume that they had bypassed the barrier." The problem with that evidence is that the Robsons only retained Mr Flynn of Flynn and Associates on the recommendation of Mr Elder. That was the evidence of Mr Elder himself (extract transcript pp 21.48 - 22.08) and Mr Robson (T 5 November 2013, pp 18.34 to 19.41 and in cross-examination at p 62). Mr Robson gave this evidence (T 5 November 2013, p 18): "Q. So after Mr Elder came out what did you do about the termite situation? A. His advice to me was that the barrier had breached and that I should contact a solicitor. He ... didn't think any more treatment needed to be done just at that stage. I cant remember whether he said just to give it a couple of weeks or whatever but we didn't. My next move was to contact Mark Flynn." Either that advice was given by Mr Skinner or Mr Elder gave that advice after reading Mr Skinner's report but without himself inspecting the property. The latter appears more likely to me. 31On 4 April 2008 there was a meeting at the plaintiffs' home arranged by the defendant's head office. Present were the plaintiffs, Mr Pearson, Mr Jeffrey and Mr Watkins. I know of this meeting from exhibit 13. It was not canvassed in oral evidence. 32Fortunately for the plaintiffs, and as anticipated in Mr Elder's advice to Mr Robson, termite activity at the plaintiffs' home stopped by the end of April 2008 and "they haven't appeared since" (T 5 November 2013, p 60).

The mediation meeting 33On 11 June 2008 Mr Flynn sent a letter by facsimile, most likely to Mr Jeffrey. This raises another dating problem. It seems to me more likely that such a letter would be sent after the meeting involving the plaintiffs, Mr Elder and Mr Flynn than before it, so that meeting may have been held on 10 June rather than 12 June. Mr Flynn's communication was replied to by Mr Rob Monahan, the then general manager of the defendant, by email on 14 June 2008. Mr Flynn's letter has not found its way into evidence, but Mr Monahan's response is part of exhibit 10. The substance of the email is this: "Your letter (by fax) of 11 June has been forwarded to me. I confirm that Ron Jeffrey is an accredited licensee for The White Ant Co Pty Ltd. As General Manager of the company I advise that all further correspondence in relation to this matter should be directed to me. Our Licensee was surprised to receive your letter as it is his view that after having attended site and spoken to both the homeowner and an independent pest control contractor at the site that our termite barrier system was not defective nor defectively installed and therefore not consequential to the termite infestation. In terms of your instructions and in seeking further clarification of your letter we request the following information: ● Details and particulars of the independent verification from alternative Pest Control Consultants that significant termite damage has been rendered to their property as a consequence of defective installation of termite barriers at the time the property was constructed. ● Details of the extensive invasion work that will be required to be undertaken to source the full extent of the termite invasion. ● Particulars of the professional qualifications and / or experience of the consultant (s) engaged by your client and cited in your letter. Naturally we seek an amicable resolution to this matter and trust that we may be able to work toward this end without the necessity to become involved in court proceedings however we are not prepared to admit liability based solely on the contents of your letter. We therefore propose that you provide the requested particulars and any additional information you may possess that would indicate our liability. We further request the opportunity to attend site with or without our own independent experts to enable verification of the findings so far." I infer that the fourth paragraph refers to the meeting of 4 April 2008 discussed in [31]. Eventually the meeting suggested in the last paragraph was arranged. The second page of exhibit 10 proposed a meeting at the Robsons' property involving the plaintiffs, Mr Monahan and Mr Jeffrey on 16 October 2008. That suggestion was made to Mr Flynn on 25 August 2008. However there is no evidence that it occurred. 34Mr di Betta gave evidence that he attended the plaintiffs' home in December 2008. He was with Mr Monahan and Mr Elder attended as well as the plaintiffs. Mr di Betta said this: "I had been with the company for ... one week and I was there to look at the building, look at the problem. I had been given records of what had occurred and I met with Mr Elder as well." Unfortunately, this meeting was not canvassed elsewhere in the oral evidence and there is no written record of it. In particular, Mr Elder did not attest to it and was not cross-examined about it. Whether it occurred or not is one of the many small mysteries in the current matter but, if it did occur, is of no significance. Mr di Betta said that there was a second meeting, which was a formal meeting. There is no issue about the occurrence of this meeting. 35What has been referred to as the "mediation meeting" occurred on 10 February 2009. In his report of 22 November 2012 Mr Elder described the meeting thus: "On 10.02.09 Onsite meeting - Following a discussion with the Robson's [sic], Mark Flynn and myself inside the Robson's [sic] house, representatives from the White Ant Company held a meeting outside (Mr Monahan, Mr Jeffrey and Mr Di Betta). They then returned and the General Manager Mr Monahan advised the Robsons they agreed to carry out invasive work to the home and the Robsons Solicitor, Mr Mark Flynn to draw up a simple agreement between the two (2) parties." The "simple agreement" referred to by Mr Elder is the Deed of Agreement described in [1].

The Deed of Agreement 36The Deed is very poorly drawn. I set it out below without the attestation clauses. Matter in square brackets has been inserted by me either to supply missing words or to supply appropriate meanings to misused or misspelt words: " DEED OF AGREEMENT BETWEEN MICHAEL AND JUDITH ROBSON of 420 Beach Road, Woodburn NSW 2472 ("the homeowner") AND THE WHITE ANT COMPANY PTY LTD ACN 100 706 009 of 104 Carrs Drive, Yamba NSW 2464 ("the contractor") RECITALS A) Michael & Judy Robson are the registered proprietors of the property known as 420 Beach Road, Woodburn, NSW 2472 ("the property"). B) Michael & Judy Robson caused a residence to be constructed on the property ("the home"). C) In the course of construction of the home, the contractor was retained by the homeowner to install a termite barrier system for termite prevention within the home ("the procedure"). D) The homeowner has subsequently located termite infestation within the home and it is alleged that following visual termite inspection of the home on or about 10 June 2008, termites have breached the termite barrier system rendering significant damage to the home. E) The homeowner alleges that the damage is due to a breach in the termite barrier system as a consequence of defective workmanship on the part of the contractor and the allegation is not omitted [admitted] by the contractor ("the dispute"). F) The parties have engaged in Meditation on 10 February 2009 and have agreed to resolve the dispute on an interim basis in accordance with the terms and conditions of this Agreement. THE PARTIES AGREE AS FOLLOWS:- 1. The contractor shall forthwith and no later than 28 days from the date this Agreement commences [do] all such necessary works at its expense to restrain and minimise any further termite activity in the home and undertake all such investigations to determine conclusively whether or not the termite infestation in the home is due to a breach of the termite tight [Termite Tite] barrier system. 2.The homeowner shall provide all such consents and all such assistance to facilitate the works to be performed. 3. The contractor will ensure that it effectively liaises with Elders Pest Control Pty Ltd to independently report and determine for the benefit of the homeowner the accuracy or otherwise of the finding of the contractor. 4. The homeowner hereto acknowledge and agree that in the event that the termite infestation to the home is due to a cause not referable to any negligent [negligence] or breach of negligent conduct on the part of the contractor or any breach of any contractual obligation by it due to the homeowner it will reimburse the contractor all reasonable costs incurred by it in performing the works described herein. 5. The homeowner hereto acknowledge and agree that in the event that the termite infestation to the home is due to a cause not referable to any negligent [negligence] or breach of negligent conduct on the part of the contractor or any breach of any contractual obligation due to the homeowner it will reimburse the contractor all reasonable costs incurred by it in investigating and treating the termite infestation and activity that was performed prior to the meeting of the parties and on-site inspection on 10 February 2009. 6. The contractor acknowledges and agrees that in the event that the termite infestation is found to be due to any negligent work or breach of contract on its part to the home owner it will provide all reasonably [reasonable] indemnities to the homeowner and be responsible for all reasonable cost [costs] of rectification to the home as determined by an independent building consultant who shall be briefed for these purposes and retained to report at the expense of the contractor. 6. [6A.] Neither parties [party] shall assign or any of their rights hereunder without the prior written consent of the other party. 7. The Agreement will anew [accrue] to the benefit of and binding on the excessors [successors] and assigns of the parties and the parties shall not sell or assign, transfer, or otherwise dispose of their rights under this Agreement without the expressed [express] written consent of both parties [the other] hereto. 7. [7A.] This Agreement is subject to all valid and applicable laws and regulations and in the event that the Agreement is found to be inconsistent with or contrary to any such valid laws or laws and regulations the later [latter] shall prevail and this Agreement will be notified [modified] accordingly. DISPUTE RESOLUTION 9.1 The parties hereto shall not commence any Court proceedings (except proceedings seeking interlocutory relief) in respect of a dispute arising out of this Agreement unless it has fully complied with the obligations set out hereunder [herein]. 9.2 A party claiming that a dispute has arise under the Agreement must notify the other party giving details of the dispute within 21 days of the dispute arising. 9.3 During the 21 day period each party to the dispute must use its best endeavours to resolve the dispute. 9.4 If the disputants are unable to resolve the dispute within the initial period, each disputant agrees that the dispute must be refereed [referred] for Mediation in accordance with the Mediation Rules of the Law Society of New South Wales at the request of any disputant, to:- a) a Meditator agreed on by the disputants; or b) if the disputants are unable to agree on a Mediator within 7 days after the end of the initial period it shall be a Mediator nominated by the then current Chairman of Leader [LEDA] of the Chairman's nominee. 9.5 The role of the Mediator is to assist in negotiating a resolution of the dispute. A Mediator may not make a decision that is binding on a disputant unless the disputant has so agreed in writing. 9.6 Any information or documents disclosed by a disputant under this clause:- a) must be kept confidential; and b) may not be used except to attempt to resolve the dispute. 9.6 [9.6A] Each disputant must bear its own costs of complying with this clause and the disputants must bear equally the cost of any Mediator engaged. 9.7 After the initial period, a disputant that has complied with clause 9.1, 9.2 & 9.3 may terminate the Dispute Resolution Process by giving notice to each other disputant. 9.8 If in relation to a dispute a disputant breaches any provision of clauses 9.1-9.6 inclusive, each other disputant need not comply with clause 9.1-9.6 inclusive in relation to that dispute. 10. Each party shall bear its' owns costs of an [and] incidental to this Agreement. 11. The parties acknowledge hereto [hereto acknowledge] that they have had the benefit of independent legal advice of and incidental to this Agreement and fully understand their respective obligations under it. EXECUTED AS A DEED" Clause 1 required the defendant within 28 days of 9 April 2009 to "undertake all ... investigations to determine conclusively whether or not the termite infestation" in the plaintiffs' home was "due to a breach of" the Termite Tite barrier system. The necessary investigations were to be made within the 28 day period, not the "conclusive" determination. Clause 2 required the plaintiffs to cooperate and clause 3 required the defendant to liaise with Mr Elder so that he could verify the determination of the defendant, in essence, on behalf of the plaintiffs. The question which then arises is: what then happened?

Inertia 37The last question can be answered briefly: very little. I do know that Mr Flynn wrote to the defendant a letter dated 3 September 2009. That letter was not put into evidence. It may have arranged a meeting at the plaintiffs' home on 30 September 2009 or referred to such a proposed meeting. Mr Flynn wrote again to the defendant by email addressed to Mr Monahan at an address previously provided by him and by letter addressed to the defendant at Mr Jeffrey's street address. This communication is dated 15 October 2009 and its substance is this: "We refer to our letter dated 3 September 2009 and deed of agreement dated 24 February 2009. We note that you failed to attend the inspection scheduled for our client's residence on Wednesday, 30 September 2009. In these circumstances, you are in breach of your obligations under Clause 1 of the deed. Therefore; please treat this letter as formal notification that in the absence of you immediately contacting our client's consultants, Elder Pest Control representative, Mr. John Elder, 1800 686 617 (nola@elder.com.au), we are instructed to commence District Court proceedings on account of alleged negligent installation of termite barrier system. Our client will rely upon the contents of this letter of [sic] support of any application for indemnity costs. We will require you to implement the necessary arrangements with Mr John Elder to facilitate commencement of rectification works within seven days, otherwise the proceedings foreshadowed will be commenced without further notice." 38The defendant replied to Mr Flynn's letter of 15 October 2009 by email. In cross-examination Mr Robson gave this evidence, the questions being more relevant than the answers (T 5 November 2013, pp 68 - 69): "Q. In response to that letter where there was the accusation of the failure to attend an inspection are you aware that Mr di Betta wrote to Mr Flynn copying Mr Elder on 19 October 2009 in an email and said, "Dear Mark" which was Mr Flynn: "I was not made aware of a site meeting for 30 September as there had been so many changes to the times and dates. I will be booking a date directly with Mr John Elder to arrange to carry out a joint investigation. I will be away interstate for the balance of this week and will put the dates of 27 or 28 October to Mr Elder to arrange access." A. That may well. Q. So it wouldn't surprise you to learn that Mr Flynn has accused the White Ant Company of failing to attend a meeting in circumstances where the White Ant Company wasn't advised of the meeting? A. That may well have happened, I wouldn't know." The suggestion in the last question that the defendant was unaware of the meeting proposed on 30 September 2009 is not borne out by Mr di Betta's evidence (T 6 November 2013, p 62). "Q. After the meeting in February 2009 can you tell his Honour what you or The White Ant Company took to undertake the investigation of the premises in accordance with the deed? A. There was some delay in the deed being executed, according to what I found out. The then general manager was removed from his position and the case was handed to me where I proceeded to go through the normal lines of contact with the solicitor at the time and John Elder to try and coordinate to do the inspection, which was difficult. Q. Why was it difficult? A. Getting people to reply, getting three parties together and it it I didn't get an action a reaction from a request or a phone call or whatever. I went about my normal daily duties. Q. When you say, "Getting people to reply", can you be more specific? A. Both I found it difficult to coordinate both Mr Elder and through the solicitor. Q. Do you recall when you eventually arranged a meeting? A. It was after I got an email that we we didn't attend a site meeting in September." The email of 19 October 2009 forms part of exhibit 10. Mr Johnstone did not quote it in full. The penultimate sentence of the email is this: "I request that all correspondence relating to this matter be addressed to our Head Office and my email address as there is no Mr Monahan". Mr Flynn was sending letters to Mr Jeffrey's business' street address and emails to Mr Monahan but may have been unaware of Mr Monahan's removal as managing director. 39A meeting was held on 28 October 2009. Mr Elder's report of 22 November 2012 (part of exhibit J) describes this meeting thus: "On 28 October 2009 an onsite meeting with myself, Judy Robson - homeowner and Tony Di Betta of the White Ant Company. The purpose of the visit was to carry out invasive work to the external perimeter of the house to determine the termite ingress into the building by removing external brickwork and whether the barrier installed by the White Any Company had impeded termite entry into the building as it is designed to do. [...] Termite mudding was clearly visible on the concrete slab edge [...]. Once finished the invasive inspection Mr Di Betta returned Mr Jeffrey's phone call from onsite. Mr Di Betta advised at the time that repair work would be undertaken by the White Ant Company to restore the integrity of the barrier. He gave no timeframe on commencement or scope of rectification work which I advised should be undertaken immediately as the home is susceptible to further termite attack. At my request rectification work carried out by the White Ant Company must also include a Termite Proposal, Treatment Certificate - Certificate of Termite Treatment in accord with Australian Standard AS3660.2 - and advice to the home owner regarding ongoing termite management for the property. Once the White Ant Company determines the scope of their intended work and the termite barrier has been repaired, invasive work to the internal structural members of the building can commence which will determine the extent of the termite damage. This work must be documented as it will be vital should the property be sold in the future. It was also agreed that no work would be undertaken by the White Ant Company without my supervision on site on behalf of the Robsons requested by Mr Mark Flynn, Solicitor for the Robsons." This is an expurgated version of what was actually written by Mr Elder, omitting parts successfully objected to by Mr Johnstone. A series of photographs (exhibit 9) was taken by Mr di Betta at this time. 40This meeting was followed by further inertia. Mr Robson gave this evidence in cross-examination (T 5 November 2013, pp 69 - 70). Q. After that inspection nothing further happened until February, March or April 2010 to your knowledge? A. No. Q. I've given you three months there because I'm asking what your knowledge is and whether any of those dates prompt you? A. Well they don't prompt me but the only other time the White Ant Company were there was when they turned up without Mr Elder to do further removal of the bricks. Q. Well I'll suggest to you that that date was 27 April 2010? A. Yeah. Q. The person who attended was Mr Ken Bodycote, does that sound familiar? A. Yeah. Q. Do you know Ken Bodycote? A. I don't. Q. I'll suggest to you that the reason why he was there was to clean up the site, sorry clean up that area, that is remove the muddying from inside the cavity created by the removal of the bricks? A. Yeah. Q. Do you agree? A. I don't know what he was there for. Q. I suggest that the reason why he attended was in furtherance of Mr di Betta having said to you that he would arrange for somebody to attend to apply Protectant to the area and seal it off? A. I was under the understanding that they were doing more invasive work to the perimeter which was what the agreement was and John Elder needed to be present. That's Q. Is that because John Elder told you that? A. No, I was at the meeting. Q. So you thought from the meeting that John Elder had to be there whenever the White Ant Company attended? A. That's right. After discussing his interaction with Mr Elder on 28 October 2009, Mr di Betta gave similar evidence (T 6 November 2013, p 64): "Q. After that with Mr Elder, did you do anything that date? A. No. Q. What did you do thereafter in terms of what you had told Mr Elder you intended to do? A. I put together my internal report for the file and I emailed off to Ron Jeffreys, the local to arrange to get one of his gentlemen down there to do the work. Q. Do you know when that work was then carried out or do you know if it was carried out? A. It was carried well, the work was started. That's where those other photos came from. Ken Bodycote was sent down to the place at a mutually agreed time with the Robsons, I'm led to believe, through their Yamba office. He attended the site. He started to do his work and then he was asked to leave because Mr Elder wasn't there. Q. When was the next time you had occasion to visit the property? A. When this action started." 41What prompted action in April 2010 was an email from Mr di Betta to Mr Jeffrey sent on 15 April 2010 (exhibit 11). Its substance is this: "We need of repair [sic] the barrier at the step down area on the southern side of this property, The problem is that the case-in barrier has not set in the vertical joint to seal this [area] off. This area will need to be cleaned and sealed with Protectant and the bricks reinstated both here and at the doorway to the laundry. There is a second area in the garage that is question able and will need the barrier sealed, this is at the corner of the garage wall and the joint to the slab area of the laundry. This is the external corner that is a straight wall on the inside of the garage. The barrier folds down into the slab at this point and is partly covered by the wall sheeting, it is not possible to say if the termites came out at this point or came down to this point from inside the building. Please arrange this work as a matter of urgency as this has been at this stage for [too] long. You and I will need to work out an offer about the damage I believe that we should not except the full repair cost but I will need more info to address this with the Robson's." On 27 April 2010 Mr Ken Bodycote from Mr Jeffrey's business attended the Robsons' home "to clean and return barrier at stepdown after opening brick wall [on] 28 October 2009" (exhibit 13). As Mr Elder was not present, the Robsons refused permission to Mr Bodycote to carry out any work. However another series of photographs was taken at that time (exhibit 5). 42Any inertia of the defendant was compounded by the tardiness of Mr Flynn, who was later struck off. This is alluded to in the evidence of Mr di Betta which I have already quoted. There is direct evidence of Mr Flynn's dilatoriness from Mr Robson. That can be found at T 5 November 2013, pp 25, 66 (where the word "antipathies" is a mis-transcription of "antithesis") and p 67 where Mr Robson admitted that he was "sure" the defendant had "trouble" in dealing with Mr Flynn. 43The events of 27 April 2010 were the last "amicable" interaction between the parties. The current proceedings were commenced by the filing of a statement of claim at Ballina on 29 March 2011. The delay between these two dates is wholly explicable by Mr Flynn's inaction (T 5 November 2013, p 25). However, Mr Flynn's conduct does not explain all the delay or inertia. The defendant has not adduced evidence to show what it did between 9 April 2009 and 30 September 2009 to fulfil its obligation under clause 1 of the Deed and the inaction between 28 October 2009 and 15 April 2010 must be laid squarely on the defendant. At the meeting of 28 October 2009 Mr di Betta undertook to do certain things but did, on his own evidence, nothing until 15 April 2010. I find as a fact that the defendant breached its obligation under clause 1 of the Deed that I identified in [36]. Neither Counsel made any submission as to whether time was of the essence on the proper construction of the Deed. Assuming it were not, the delay has been so inordinate as to be wholly unreasonable.

The experts 44It is convenient at this stage to identify the experts and their field of expertise before commenting on some forensic issues. (i)Mr David Oke was qualified by the plaintiffs' solicitors. He is a building consultant with Northern Rivers Building Consulting Services Pty Ltd. He was qualified as a carpenter and joiner in 1984 and as a building foreman and clerk of works in 1986. He was accredited as a building consultant by the Master Builders Association of NSW in 2005. He obtained qualifications in Queensland in 2006. His experience in building, as distinct to his experience as a building consultant, is this: "Sub-Contract Carpenter on residential construction including new luxury homes; extensions and renovations, roof inserts and roof conversions to existing homes on the upper and lower north shore and northern beaches areas of Sydney (6 years). Licensed Builder in carrying out extensions and renovations on small to medium scale work in the Sydney region (5 years). Practical experience in other trade work suck as brick and blocklaying; concreting; plastering; metal roofing; ceramic tiling; painting; landscaping. Licensed Builder in carrying out construction of new homes and extension and renovation work (medium to upper standard) in the northern rivers region of NSW (11 years). Quantity estimates and detailing of structural members of timber framed buildings for a building materials supplier (5 years)." (ii)Mr John Elder is the principal of Elders Pest Control Pty Ltd, which is based at Yamba but has a branch at Helensvale in Queensland. He is a pest management technician and consultant in the pest management industry. He has been in that industry for 40 years. His basic qualifications were obtained from NSW TAFE. He described his work history in his curriculum vitae thus: "●Established Elders Pest Control initially as a single operator in 1979. Today Elders are a multi-award winning company and one of Australia's most accredited pest control firms. ● Manager of Elders Pest Control until January 2003. Company management handed over to son, Chris Elder. ● Responsible for the infield education and training of company technicians. ● Regularly used as an independent consultant for termite related issues. ● Head of Elders renowned K9 Division and in charge of training, developing and operations. ● Developed world first canine for detection of West Indian drywood termites. ● Developed Australia's first bed bug detection dogs." He is very well described as a "hands on" expert. He was called by the plaintiffs. (iii)Mr Christopher Langley is a pest management consultant qualified by the defendant's solicitors. Like Mr Elder his basic qualifications are from NSW TAFE, with many further qualifications obtained from NSW TAFE, Queensland TAFE and AEPMA. He has more academic qualifications as a pest management consultant than Mr Elder and has engaged in research and has published. (iv)Mr Michael Witty is an architect qualified by the defendant's solicitors. Mr Witty was qualified to assess the quantum of the plaintiff's claim. He has an impressive curriculum vitae. (v)Mr Graham Lancaster is the manager of the Environmental Analysis Laboratory (EAL) at the School of Environmental Science and Management at the Southern Cross University at Lismore. He obtained the degree of Bachelor of Applied Science (Coastal Management) in 1989 and Honours in 1990. He is currently studying for a PhD in Soil Carbon particularly Phytoliths at Southern Cross University. He gave evidence about Scanning Electron Microscopy (SEM) of certain samples taken from the Robsons' home. The circumstances in which he came to be qualified by the plaintiffs' solicitors I shall discuss later.

Forensic investigations 45On 28 October 2009 Mr di Betta, in the presence of Mr Elder carried out what has been described as invasive work. He removed one and a half bricks from the eastern end of the sunken lounge wall where it makes a "T" intersection with the wall of the kitchen. The kitchen wall extends 600mm further south than the wall of the sunken lounge. The bricks were taken from above the Termite Tite barrier. As is stated in [39], termite mudding was visible on the concrete slab edge, above the termite barrier. 46On 17 May 2012 Mr Oke inspected the plaintiffs' home. That led to his report of 26 June 2012 which is part of exhibit A. Mr Robson cut openings into the plasterboard (internal) wall lining at certain locations to allow his inspection of those areas. The inspection points were: (a)Sunken family room: eastern wall; 2 on southern wall (b)Bedroom 4: southern wall. (c)Laundry: eastern, southern and western walls. (d)Master bedroom: western wall beneath wall opening. (e)Garage: eastern internal wall. It should be noted that Mr Oke describes the sunken family room as the office/study, although there is a separate room identified as "study" on the architectural plan (exhibit B). Paragraph 14 of his first report is this: "Evidence of past termite activity, comprising of damage to wall timbers, was observed at all locations, except to Bedroom 4. There was also evidence of termite sub-nest or similar mass mudding, within the eastern wall cavities and spaces of the Office/Study, both ends of the Laundry eastern wall, and the Garage eastern wall." 47On 21 June 2012 Mr Langley inspected the house. Also present were Mr di Betta and Mr Robson. This led to his report of 17 September 2012, which is part of exhibit 5. He noted in par 7.0 that a brick next to the laundry door on the south-western wall of the house had been removed during the "earlier exploratory investigations (in 2009)", probably on 28 October 2009. Paragraph 7.11 of his report is this: "On inspecting the cavity at SW corner between kitchen and sunken family room where the three bricks were removed I noted that a black PV 'Visqueen/moisture vapour membrane' laid under the concrete slab was visible between the inner concrete slab edge and turn down of the Termite Tite Barrier strip shield. I cannot inspect the part of the concrete slab where the strip shield barrier has been cast in because there are bricks preventing such inspection. However, as a result of seeing the Visqueen above the Termite Tite Barrier I consider it is most probable that the PVC moisture vapour membrane has impeded a cast (of the strip shield) into the concrete at this point. To confirm this opinion I would require a more invasive investigation to determine whether this membrane has allowed termites to breach the termite barrier system made up of the strip shielding and the slab. I did however note that the strip shielding at this position (where exposed) was intact (apart from a saw cut I am informed was made in the course of removing the bricks), the metal of the strip shielding was in all places it was necessary for it to be, the glue was apparently intact, and the metal of the strip shielding was observable at the edge of the rest of the bricks." Mr Langley took a sample of the vapour barrier referred to in that quotation. It found its way into evidence as exhibit 4 (see T 5 November 2013, pp 60.39 - 61.20). There is no dispute that it is a piece of vapour barrier. The vapour barrier is 200 micrometres thick and is plain. It is to be contrasted with "damp course"/"flashing"/ wall moisture barrier which was installed between the brick veneer and the plasterboard of the walls. The wall moisture barrier is 500 micrometres thick and is patterned. According to Mr di Betta termites do eat plastic and exhibit 4 "certainly looks as if they've chewed the edges.": see T 7 November 2013, pp 24 - 25. Exhibit 4 has foreign matter on it, about which there is a dispute. 48There was another inspection on 4 September 2012. Present were: Mr Witty, Mr Langley, Mr di Betta, Ms Nadia Braad (solicitor for the defendant), Mr Robson, Mr Elder and Ms April Grenquist (solicitor for the plaintiffs). Of this inspection Mr Langley wrote this in his first report: "8.2 Apart from areas I had previously inspected on 21 June 2012 and which remained as they were then, Mr Robson had removed a section of wall panel in the garage wall where termite activity had occurred in 2006 (as referred to at paragraph 7.7 above). Mr Robson had also cut an opening in the gyprock stud internal wall of the sunken family room - this wall being the wall between the sunken family room and the kitchen. (Refer photos 11 and 12 of this report). 8.3 The removed section of wall panel in the garage exposed a 1.8m length of termite timber damage to the stud wall bottom plate. Wall studs exposed were clear of termite attack. I was informed this area was reported as being a point of identified termite ingress, bridging the inspection zone of the concrete slab edge exposure. The builder provided a slab edge exposure as termite management to garage set down wall and, as acknowledged at my initial inspection, it was most probably his failure to maintain regular inspection that allowed termites to ingress at this point undetected until 2006. Those matters I have referred to at paragraph 7.7 above. As such, termites would have bridged the inspection zone at slab edge exposure and detection through frequent visual inspection was not maintained by the homeowner. 8.4 The removed section of internal wall gyprock from the wall of the sunken family room between the kitchen and the sunken family room exposed termite mudding against one corner wall timber stud known as an 'aggregation point' where termite workings provide moisture retention and shelter for above ground activity. (It should be noted that an aggregation point is not a termite nest or colony). In my view it is most probable this termite activity was associated with that activity I noted in this area (where the three bricks had been removed) during my first inspection of the building. I have referred to that evidence of termite activity at paragraphs 7.8 and 7.11 above and I set out that it indicated termite ingress into the building at or nearby that point (where the three bricks had been removed). Such evidence of mudding (where there three bricks have been removed or exposed by the removed section of internal gyprock) does not indicate any evidence of breach to the perimeter strip shield installation. 8.5 Mr Robson had also lifted the carpet edge in bedroom 1 to allow visual inspection along the carpet smooth-edge timber strip affixed to the concrete floor. I noted a movement crack in the concrete slab in bedroom 1, which crack runs parallel to the wall along which there is the wardrobe between bedrooms 1 and 2. There is termite activity tracking between the smooth-edge and timber skirtings from the entry into the ensuite, along the bay window and around to the doorway of bedroom 1. At a junction between the external perimeter wall and the dividing wall between bedrooms 1 and 2 (which aligns to alleged termite wall damage in the wardrobe of bedroom 2) the termite activity tracks back under timber skirting to what I consider likely to be an area of probable termite ingress by reason of the additional termite activity etching the carpet underlay at this point. However, from my inspection there was no evidence that termite ingress was due to a failure of the Termite Tite Barrier as installed. (Refer photos 13 and 14 of this report) 8.6 I was also granted access to the roof void. However, ceiling insulation more than [...] limited visual inspection. I removed several insulation batts to expose ceiling joist and wall top plate timbers immediately above the SW corner between the kitchen and sunken family room. There was no visible sign of termite activity or termite damage to timbers and it is probable the termite ingress below is only of localised termite activity resulting in limited damage in that area." It should be noted that the insulation in the ceiling had only relatively recently been installed. There was none when Mr Skinner inspected on 27 March 2008. There is no suggestion of any damage or termite workings in the roof frame or ceiling space. 49On 22 January 2013 Mr Oke carried out a second inspection. The purpose of the inspection was for "analysing comments made by the other Experts", namely Mr Langley and Mr Witty. Additional bricks were removed from the existing inspection opening outside the sunken family room for the purpose of better viewing the termite barrier and slab. Two further bricks were removed, increasing the total removed to three and a half. As pointed out by Mr Oke, Mr Langley was in error in stating that three bricks had already been removed. Mr Oke states this in par 10 of his second report of 22 January 2013: "Mr Langley confirms that he was able to gain a clear view of the slab edge where the termite barrier is embedded into the slab edge and then makes the assumption that the "pvc moisture vapour membrane has impeded a cast (of the strip shield) into the concrete at this point." At the time of my second inspection, and with a larger inspection opening available and removal of the cavity flashing, I can confirm that there was no evidence of the under-slab moisture vapour membrane protruding from under the slab or across the termite barrier at his location". (Emphasis in original.) Further on he expressed some opinions: "30 At the time of my second inspection, two extra bricks were removed from the inspection opening outside of the sunken lounge area. At this time I have observed a lapped join in the strip shielding at this location. With reference to images taken at the first inspection, the lapped join was already uncovered at that time and was readily visible. 31 It is my opinion that the termite barrier has failed at the lapped joint as the remaining mudding accumulates along the edge of the concrete slab edge in the vicinity of the lapped join. There was no evidence of mudding across the top surface to indicate that termites had traversed across the shield from outside of the building and therefore it is my opinion that the failed lapped join is the point of ingress for this particular area of damage to the wall framing. 32 From this observation, it is therefore reasonable to assume that other lapped joins have not been successfully connected and have been penetrated by the termites within a concealed area of the building that is not available for periodic inspection as required by AS 3660.1. This would apply to the three known ingress points, as follows: - via the external wall of the kitchen/sunken lounge - via the external wall adjacent to the Laundry door opening - via the external wall at the junction of the wall common to Bed 1/Bed 2 and the external wall." 50On 8 March 2013 Blanch J, CJ of DC set the current proceedings down for hearing during the sittings commencing 20 May 2013. On 23 April 2013 the Registrar at Lismore advised the plaintiffs' solicitor that this matter was number 1 in the list for that sittings and should be ready to proceed at the conclusion of the call-over on the first day of the sittings. At the same time, the Registrar gave the same advice to the defendant's solicitor. This produced a flurry of activity. 51On 9 May 2013 Mr Langley carried out a third inspection. Also present were the Robsons, Mr di Betta and Ms Felicity Dore from the defendant's solicitors firm. Mr Langley noted the removal of two further bricks. At par 4.5 of his report of 15 May 2013 he said this: "I am not sure what Mr Oke saw or did not see but on my third inspection the Visqueen/moisture vapour membrane remains visible as circled in below image taken 9 May 2013". He went on to confirm his earlier opinion as to the compromise of the termite barrier by the vapour barrier and his opinion that the lapped joint in the termite barrier uncovered by removing bricks remained intact. 52On Friday 17 May 2013 in the afternoon Mr Oke conferred with learned Counsel for the plaintiffs, Ms Smith. On Sunday 19 May 2013, Mr Oke inspected the house again. Mr Robson and Mr Elder were both present. Mr Oke's report of 19 May 2013 contains this matter in its preamble: "2. The inspection was considered necessary after meeting with the Robson's Legal Counsel in Lismore late on Friday afternoon (17th May). At this meeting, I was presented with the following documentation:

• second inspection Report by L.T.D. (Consultant) Services, authored by Christopher E. Langley and dated 15th May 2013
• Expert Witness Report by Elders Pest Control, authored by John Elder and dated 22 November 2012. 3. After reading of the Langley Report, my additional inspection was deemed necessary to inspect the plastic membrane that is alleged to compromising the metal shield termite barrier. It became apparent that I had not seen this particular piece of plastic and had focused my observation and opinion given in my Supplementary Building Report, dated 22nd January 2013, on a different piece of plastic photographed within the wall cavity. 4. I contacted Mr Robson by phone at approximately 10.00am on the Sunday morning to gain permission to enter the property. Mr Robson informed me that John Elder was attending the property at 1.00pm. I agreed to attend at the same time. 5. Also present at the time of the inspection were John Elder and Michael Robson. I can confirm that Mr. Robson did not offer instruction or comment during the inspection however he respectfully answered questions regarding the method and processes of construction utilised. 6. Digital images depicting various stages of the inspection were taken by John Elder." The substance of the report is this (omitting photographs and the captions). To ease understanding of the report I must point out that the further bricks to be removed, from below the termite barrier are from the "T" intersection at the eastern end of the sunken family room and the brick 2 is the most easterly i.e. touching the kitchen wall, brick 1 is next to it and half brick 3 is the most westerly. "COMMENTS REGARDING the LANGLEY REPORT: 10. Paragraph 4.5 of the Langley Report clearly identifies the plastic membrane that is visible at his first and second inspections. 11. I can confirm that the piece of plastic does exist and is, in my opinion, black plastic sheeting that is used under the concrete slab as a moisture vapour barrier. 12. The vapour barrier is visible on top of the termite shield at the internal corner and its presence at this location is not typical of a properly installed vapour barrier. It is not known if the plastic is part of the vapour barrier and extends through the concrete or if it is a piece of debris caught on the termite shield where it forms a ledge. METHOD OF INSPECTION: 13. John Elder requested the removal of bricks below the termite barrier, which were duly removed by me by progressive crumbling of masonry units with a lump hammer and 25mm cold chisel and removal of the debris by hand. 14. John Elder would then closely inspect and remove fine mortar and brick dust particles by hand brush. 15. I confirm that care was taken to preserve the barrier material by not distorting or puncturing the metal shield when crumbling and removing the larger pieces of the bricks. THE INSPECTION: 16. Brick 1 was selected as it was directly below a lapped joint in the termite shield. 17. After removal of Brick 1, it is apparent that the concrete had not been compacted in a "text book" fashion where now exposed. 18.This means that there was a void between brick wall and the edge of the concrete slab at this location however the horizontal edge of the termite shield was adequately embedded into the concrete along the entire length now exposed. 19. A small quantity of termite mudding was also observed on the face of the exposed concrete slab in this void. 20. We observed a perforation to the termite shield, approximately 20mm from the external edge and just to the left of the lapped-join edge. The perforation is consistent with corrosion of the aluminium sheeting, possibly from lime within the mortar or the masonry unit directly below. There was no termite mudding or staining to indicate past termite activity surrounding or through this perforation and therefore it is not considered to be the cause of the infestation. 21. This means that the perforation is not connected to the infestation but does indicate a weakness in the material as a permanent barrier. 22. Also, as no-one has previously made this observation, I confirm that it was present at the time of my first inspection but not recognised by any Expert in subsequent inspections until now. The following image taken at my first inspection, and prior to the removal of additional brickwork, clearly shows the corrosion perforation. 23. At this time I noticed unevenness to the dark sealant applied along and over the upper edge of the lapped joint. I was able to insert a piece of fencing wire, which was brought to the inspection by John Elder, into the gap of the sealant. The wire easily penetrated between the lapped joint and as it did not emerge below the shield, it was deemed to be penetrating between the vertical layers of the termite shield. 24. [Corner brick] was then removed and it was found that the edge of the concrete slab was properly placed and compacted against the brickwork and there was no void between the brickwork and the concrete slab edge in this vicinity. 25. I did not observe any termite mudding or staining to the concrete slab edge at this location. 26. It was observed that 3 layers of the termite shielding was present where the barrier changed from the vertical to the horizontal plane at the internal corner. It was also apparent that the lowest layer of the shielding had not been sealed where exposed however the sealant applied to the overlapping layers of termite shielding above may have provided a monolithic barrier at this location. This could not be confirmed at this time of the inspection. 27. It was also apparent that the black plastic material was not visible below the termite shield. In my opinion this indicates that the plastic does not compromise the termite barrier and is not the cause of the breach and the subsequent infestation. 28. Half of Brick 3 was removed and I observed that the concrete edge of the slab was properly placed and compacted and there was no void between the brickwork and the concrete slab edge in this vicinity. 29. At this stage of the inspection the termite shield was completely exposed except for the horizontal edge embedded into the concrete slab. There were no other perforations identified and the material was, in my opinion, considered to be in a satisfactory condition. 30. Cutting the Termite Shield - At this time, Mr. Elder and I decided to separate the lapped joint. This was completed with the use of a paint scraper being forced through the adhesive applied between the layers and pulling the shield apart. Cutting across the shield with tin-snips was also carried out [to] facilitate separation of the joint. 31. Mr. Elder inspected the exposed termite shield and stated that he observed termite faecal staining between the layers of the material, which in his opinion clearly indicated termite activity along this path. 32. Closer inspection of the separated joint revealed that the adhesive/sealant used within the joint was not applied within the lap to completely seal and adhere the layers. As indicated by the clean and unmarked surface of the metal shield, it became apparent that the adhesive had not been applied into the vertical section of the shield, which is where the fencing wire had penetrated into. 33. It is also important to acknowledge that a concentration of termite mudding was located directly above the lapped joint. It is usual for termites to produce "mudding" for their concealment and protection, even in inaccessible areas. This is supported by the construction of the concealment tubes under the carpet as observed within the Main Bedroom. 34. My comments in Paragraph 31 in my second Report remain valid in view [of] the recent observations with regard to the failure of the lapped joint which has allowed the termites to breach the termite barrier. 35. This means that the joint is considered to be defective as a result of poor workmanship by the installer of the termite barrier by not applying the adhesive to completely fill the lapped joint. SUMMARY: 36. Based upon my observations at the time of the inspection undertaken on the 9 May 2013, it is my opinion that the termite barrier is defective and is the cause of the termite infestation to the "Sunken Family" area of the Robson Dwelling." Mr Elder took photographs at this time and they are contained in his report also dated 19 May 2013. Larger copies of those photographs are exhibit K.

The first part of the hearing 53I called this matter on for hearing on 20 May 2013. As might be expected, the developments of the previous day were to cause problems. On 20 May, Mr Johnstone, for the defendant, pointed out inadequacies in the pleading of the statement of claim which Ms Smith for the plaintiffs accepted. Mr Johnstone also foreshadowed that he would be objecting to the plaintiffs' experts' reports on a number of grounds including "failure to comply with the code of conduct; ... a mixture of hearsay evidence; evidence beyond their expertise; unsubstantiated [and] inexpert opinion" (T 20 May 2013, p 11.07). I adjourned this matter to 2pm on 21 May directing the plaintiff to prepare a further amended statement of claim so that the defendant would know the case it had to meet. 54On 21 May 2013 I granted leave to the plaintiffs to file in Court a further amended statement of claim. It contained these particulars of negligence and breach of the contract referred to in recital C of the Deed of Agreement quoted in [36]: "a. Installing the Protection System in a manner that did not force subterranean termites to expose themselves by bridging the termite barrier before gaining access to the dwelling; b. Installing the Protection System in a manner which allowed the internal access of subterranean termites to the dwelling; c. Failing to ensure that the joins in the Protection System were completely covered and bonded by sufficient adhesive; d. Using barrier material for the Protection System which allowed the development of holes in the physical barrier through which subterranean termites could enter the dwelling undetected; e. If the Protection System has been compromised by the intrusion of any under-slab black plastic moisture membrane, failing to ensure that there was sufficient clearance between the membrane and the Protection System at the time of installation of the Protection System." Mr Johnstone accepted that particulars (a) and (b) were, in essence, the same and amounted to no more than an allegation of breach of contract and negligence. It was accepted that particular (c) arose as the result of enquiries made on 19 May. The defendant raised no objection to particular (d), as the expert evidence did not establish that it was causative of the damage. Mr Johnstone accepted that particular (e) amounted to a withdrawal of a previous admission, but he did not oppose it. After granting leave to the plaintiffs I said I would hear argument as to whether the plaintiffs should be permitted to rely on particular (c), which was the substantive basis of the defendant's objection. In the course of argument I suggested to Mr Johnstone that his experts ought return to the plaintiffs' residence and inspect the work done by Sunday 19 May, to see whether the defendant's expert or experts could meet the new matter raised by the plaintiffs' experts, and that this be done promptly. Mr Johnstone acceded to that course and I adjourned the matter to Monday 27 May 2013. 55On Wednesday 22 May Messrs Witty and Langley inspected the new investigatory work at the plaintiffs' residence, accompanied by Mr di Betta and the defendant's Counsel and solicitor. As a result of that investigation Mr Witty prepared a report dated 23 May 2013 and Mr Langley a report bearing the same date. 56Another problem then arose: Mr Oke was going away on holiday on Saturday 25 May. I agreed that he could give his evidence at 2pm on Thursday 23 May. However, Mr Oke was not affirmed until 3.53pm. The interim was taken up in dealing with objections made to his evidence and included the delivery of an interlocutory judgment. At the conclusion of Mr Oke's evidence, the matter was again adjourned to Monday 27 May 2013. However I could not return to this matter again until Thursday 30 May. 57On 30 May, Mr Michael Robson commenced his evidence-in-chief. That evidence ceased at the luncheon adjournment. After lunch Ms Smith sought to call Mr Elder who was unavailable on the following day, the last day of the sittings, because of a family funeral. Again, time was taken dealing with objections and Mr Elder was not called to the witness box until 3.27pm. Mr Elder's evidence was concluded on that day. At 10am on 31 May Mr Witty was interposed, by consent. At the conclusion of this evidence there was insufficient time left to complete Mr Robson's evidence-in-chief, let alone the rest of each party's case. I then adjourned the matter to Sydney for hearing on Tuesday 5 November 2013 with an estimate of three days. 58Very shortly before I adjourned at Lismore on 31 May 2013, this interchange occurred: "HIS HONOUR: Can I blithely [Scots usage] observe that this case - one of the issues in this case could be quickly put to bed if somebody took some samples [from the lapped joint] for analysis. Are we looking at dirt or are we looking at mudding and faecal staining from termites. Some clinical analysis, if not DNA analysis, would sort that out completely. SMITH: Would your Honour give us leave to file that evidence and serve, being part-heard? HIS HONOUR: ... It would appear the only sensible thing to do, ... the only trouble is, of course, that if you go down the route of DNA it costs an arm and a leg and will take forever, and I have not idea of what chemical analysis - what someone would look at in the microscope and things of that nature. SMITH: Well, perhaps we'll have a chat between us and see what we can arrange. HIS HONOUR: Well, if the parties want to do that, the thing to do would be to agree on a common independent expert and let him decide that." The plaintiffs took up my suggestion but the defendant did not wish to participate.

Mr Lancaster's investigation 59Mr Lancaster provided a report dated 31 October 2013. It provides this "Executive Summary": "The objective of this SEM (Scanning Electron Microscopy) assessment was to provide an independent assessment to identify if evidence is present of termites at the lapped join of the termite barrier in the exposed hole outside of the sunken lounge room of the house located at 420 Beach Road, Evans Head, NSW. Soil and glue samples were collected by Graham Lancaster of the EAL (Environmental Analysis Laboratory) from inside the termite barrier lapped join on the 9th October, 2013. These samples were analysed by Electron Microscopy at Southern Cross University, Lismore, NSW. The photographic evidence of the samples of material from the lapped join gives clear indication that termite activity was present at some stage inside the termite barrier in the exposed hole outside of the sunken lounge room of the house located at 420 Beach Road, Evans Head, NSW." Paragraph 2.1 of the report is headed "Site Visit" and contains this: "Graham Lancaster of EAL attended the site at approximately 10.30am on the 9th October, 2013. Three samples were collected from inside the lap join in the exposed hole outside of the sunken lounge room. An additional 4th sample was collected from the termite infestation area at the back of the garage of the property (refer Appendix 2 for COC - Chain of Custody - of samples collected). Results section 3.1 identifies the photos of the samples collected in the sterile vials and identifying the location of each sample. The samples were identified as follows: ● Site 1 - EAL Code C9290/1 - Lap join - Yellow glue samples collected ● Site 2 - EAL Code C9290/2 - Lap join - Soil/ sand type material collected ● Site 3 - EAL Code C9290/3 - Lap joint 3 - Soil/ sand type material collected ● Site 4 - EAL Code C9290/4 Garage 4 - Termite workings/ soil type material with wood. The samples were collected in prepared 10ml poly propylene sample vials, immediately placed in an esky, and transported to the NATA accredited EAL for sample accession and subsequent SEM analysis. Samples were passed onto Maxine Dawes (SEM operator) for sample preparation and analysis. The resume for Maxine Dawes identifying her SEM experience is provided as Appendix 5. Samples were initially assessed by standard light microscopy to identify any distinguishing features of the sample. Photos were taken of each sample. Samples were subsequently subsampled onto SEM stubs and carbon and gold plated through standard SEM sample preparation procedures. An additional 'control' termite soil and faeces wood sample was collected from an active termite infestation at a property in Byron Bay. This sample was labelled LT with three subsamples labelled 1, 2 and 3. The sample was only used to confirm any distinguishing features of termite wood infestation." The report contains light microscope photographs taken during the preliminary assessment. These are in colour (Figures 5 to 9). There are then SEM images (Figures 10 to 31). Paragraph 4.1 of the report commences thus: "SEM Images identifying features in samples from lapped join of termite barrier The following comments relate to Figures 10 to 23. These are SEM images taken from the three samples collected from behind the termite Lapped Join in the exposed hole adjacent to the sunken Lounge room. From a literature review carried out, Termite mud workings consist of broken down wood fibres (cellulose) and often some fungal hyphae, fungal spores and bacteria (Radek, 1999; Matsurra, 2006). Also associated with termites are small balls known as "Fungal Termite Balls" which is a fungus with a symbiotic relationship with the termites (Matsurra, 2006). Termites have an extraordinary ability to decompose organic matter (wood) into very small pieces. The SEM images taken in this investigation (Figures 10 - 23) show evidence of termite mud (regurgitated) workings, degraded cellulose wood material and the fungi and bacterial assemblage typical of termite activity (refer Radek, 1999). The termite midgut, hindgut and rectum images (refer to Li et al, 2012) SEM images identified in this published paper are consistent with the cellulose particularly evident in Figures 11, 12, 16 and 17." On the following pages (25 to 26) are detailed comments on each of Figures 10 to 31 describing what each shows and how it is termite related. There follows a short table comparing images referable to the plaintiffs' site with images from the control site at Byron Bay. The report concludes thus: "The samples collected from the exposed hole outside of the sunken lounge room of the house located at 420 Beach Road, Evans Head, NSW were analysed by SEM and images provided for assessment of any evidence of termite activity. The SEM images clearly indicate evidence of termite activity is present in the three samples collected from inside the exposed hole outside of the sunken lounge room. The evidence included characteristics consistent with termite activity - i.e. mud workings, fungal and bacterial activity and presence of decayed wood cellulose material. SEM image comparisons were made of the material in question (identified as samples C9290/1, C9290/2 and C9290/3) to an onsite historically termite infested mud workings sample (identified as samples C9290/4) and an offsite active termite mud workings sample (identified as samples LT). This comparison identified a clear SEM image termite characteristics similarity between all samples analysed hence confirming the evidence of termite activity inside the termite barrier lapped join in the exposed hole outside of the sunken lounge room of the house located at 420 Beach Road, Evans Head, NSW. In field investigation cases for termite "soil" material identification the question is often asked as to the possible association to ant activity. It is possible ants may evident have been present at this site, however the decayed wood cellulose, mud workings and fungal activity is highly evident characteristics of termite activity. From assessment of available literature on microscopic termite activity, it is evident that limited SEM analysis has been conducted on termite frass (i.e. Termite waste), termite mud workings or in relation to termite activity. Light microscopy tends to be a more common routine tool for termite activity assessment but this is likely due to historical data collection and the high costs and availability issues traditionally related to SEM analysis. SEM is clearly a superior tool for analysis of termite activity."

The resumed hearing 60The first issue raised on 5 November was whether the plaintiffs ought be given leave to rely on Mr Lancaster's evidence. I granted that leave. I append to these reasons my ruling on that issue. The evidence-in-chief of Mr Michael Robson was then completed and Mr Lancaster was called at 2.33pm. There was a lengthy voir dire commencing shortly after 2.33pm. Eventually, Mr Johnstone accepted Mr Lancaster's expertise, perhaps as a result of "attrition" (T 5 November 2013, p 52.27). The parties agreed that evidence on the voir dire be evidence in the trial. Mr Robson returned to the witness box at 3.52pm. His evidence was completed on the following day, and Ms Smith then closed her case. Mr Johnstone called Mr Langley at 10.22am and Mr di Betta at 2.44pm. His evidence continued on 7 November and then Mr Johnstone closed his case. Mr Johnstone addressed me for the rest of that day. Ms Smith addressed me on Friday 8 November, but there was insufficient time to enable me to give judgment and my time was fully booked until the end of term.

Multiple sites of termite ingress 61One thing that Messrs Elder, Oke, Witty and Langley agree upon is that there were multiple sites of termite ingress into the Robson's home. There are seven suggested points of entry, and some common agreement. There is also a view expressed by Mr Elder that there were two incursions by termites at one site on different occasions. Both Mr Oke and Mr Witty were qualified as building experts but neither could resist offering his opinion on issues relating to termites, each having some incidental experience with these common household pests. Indeed, Mr Oke became the main protagonist for the plaintiffs on this issue. 62The seven suggested points of ingress are: (i)The wall between the garage and the ensuite of the master bedroom, "the garage upstand wall", where the termites bridged the Termite Tite barrier when hidden behind the shelved cupboard placed by Mr Robson. All four experts agree on this. (ii)The south-eastern wall of sunken family room, near the "T" intersection with the kitchen wall, where most of the investigatory work has been performed. All four experts agree on this. (iii)The wall adjacent to the laundry door, where one brick was removed. All four experts agree on this, provided I am correctly interpreting what Mr Witty means at [4.6.3] of his report of 14 September 2012. (iv)The external wall near the junction of the master bedroom (or bedroom 1) and bedroom 2. (v)A crack in the concrete slab of the master bedroom. (vi)Below the broom cupboard at the northern end of the laundry, the southern wall of the garage, where Mr Witty identifies a crack in the "building base" (slab) and evidence of a moisture build-up under the slab. (vii)A vertical crack in the "exterior foundation wall" below the slab, in the wall between the garage and ensuite (photograph 21 in Mr Witty's report of 14 September 2012). I shall discuss (iv) to (vii) separately. 63Site (iv) is supported by Mr Oke and Mr Langley. It is not the subject of any comment by Mr Elder. Mr Witty supports another nearby site, site (v) but Messrs Oke, Elder and Langley do not support that site at all. Termite ingress at site (iv) explains adjacent damage to the house. The balance of probabilities supports ingress at site (iv). 64As just mentioned Mr Witty suggests entry at site (v). In his report of 22 November 2012, Mr Elder said this of that suggestion: "Reports served by the Defendant [that] the termite installation ... was a result of the termites coming through the concrete slab cannot be determined without invasive work being carried out. There is no visible evidence through the slab to warrant this work". I have already quoted at [48] Mr Langley's description of the termite workings exposed when Mr Robson lifted the carpet edge in the master bedroom. Paragraph 9.7 of the same report is this: "As for the bedroom1/wardrobe/bedroom 2 area, as I have set out at paragraph 8.5 above, the point or cause of ingress was not apparent to me. It was not apparent to me that there was any evidence of termite ingress through the crack in the slab in bedroom 1. At a junction between the external perimeter wall and the dividing wall between bedrooms 1 and 2 (which aligns to alleged termite wall damage in the wardrobe of bedroom 2) the termite activity tracks back under timber skirting to what I consider likely to be an area of probable termite ingress by reason of the additional termite activity etching in the carpet underlay at this point . (see photos 13 and 14) However, from my inspection, there was no evidence that termite ingress was due to a failure of the Termite Tite Barrier as installed." Mr Oke said this in par 20 of his report of 22 January 2013: "Paragraph 9.7 - I agree with Mr Langley's opinion that there has not been termite ingress through the crack in the concrete slab. At the time of my first site inspection, I had formed the opinion that the crack in the concrete slab was not a termite ingress point as the mudding under the carpet was built over the crack. If the crack was the ingress point, then it is likely that 1 or more mud tunnels would be emanating from 1 location within the crack." I am unable to accept site (v) as one where termites entered the plaintiffs' house. The weight of the evidence is clearly against it and that evidence also supports the finding I have made in [63]. 65Site (vi) was also proposed by Mr Witty, in par 4.6.3.3 of his report of 14 September 2012. He has marked photograph 29 in that report to show that there was termite mudding behind (i.e. within) the wall of the broom cupboard in the laundry, the back of which is part of the southern wall of the garage and below which are stairs giving internal access from the garage to the hall of the house. However, such termite mudding can be easily explained by the termites entering the laundry from site (iii). Furthermore, Mr Witty points out that there is no evidence of concealed entry to the dwelling at site (vi) in par 4.6.3.4, so he proposes inferentially that the entry was overt i.e. by bridging. Because of the stairs, this area cannot be used to place something which might conceal such bridging and one would expect those stairs to be regularly used by members of the household. These things make it improbable that termites gained entry at this point. Mr Langley specifically states in his report of 17 September 2012, par 7.2 that mudding in this area is from ingress through site (iii) and photograph 9 of his report is of the same area as Mr Witty's photograph 29 and the caption on that clearly states that there was no evidence to suggest termite ingress at this point. Further still, Mr Robson was not cross-examined to suggest that he had found bridging of the Termite Tite barrier in places other than behind the cupboard in the garage, and had knocked the same down, and had concealed such observations and activity from the experts and the Court. I am unable to accept that site (vi) was another point of termite ingress. 66Site (vii) is also proposed by Mr Witty, but is supported by no one else. I light of what I have found concerning site (vi), I am unable to accept Mr Witty's opinion on this without supportive evidence.

Two invasions through site (i)? 67This was proposed by Mr Elder. When asked to give the number of entry points in cross-examination, Mr Elder said that there was "a further entry point in the Robsons' ensuite or around that area." This evidence was soon given: "Q. Now Mr Robson said he first observed termite damage in the door jamb to that lavatory that's on the garage side of the lavatory entrance, you see that? A. Yes sir. Q. Now why would you postulate another entry point in that area when we know that they came up behind the yellow highlighter? A. Because sir the damage in that area continued well after the highlight area had been stopped, or the Robsons had removed their cupboard. The damage continued in that area sir, which was not associated with the garage. The damage done in the garage is minimum but the damage done throughout the Robsons' en-suite and the bedroom area is extensive, and that continued after. Q. You only turned up at these premises you told me on 12 June 2008? A. Yes sir. Q. And the termites were first detected by Mr Robson in January 2007 - 2006, some 2-and-a-half years earlier. So I mean the extent of the damage done at the initial time could only be the subject of what you were told, correct? A. Yes sir." The continuation of damage, even after treatment, was observed after the Pest-A-Gon treatment on 21 February 2008. Termite activity ceased at the end of April 2008, after about six weeks. Mr Elder had advised Mr Robson to wait, the activity would eventually stop. It did. Mr Elder's advice was correct. The continuation of damage after discovery and treatment does not indicate a further invasion at or near the same point. Nor does the extent of damage - termites can move quickly. Ockham's Razor must be applied. Why should I accept two invasions when only one is necessary to explain the damage? Furthermore, there is some evidence of partiality on the part of Mr Elder (and also on the apart of Messrs Oke, Witty and Langley) about which I must say something further, later. I only accept one invasion at site (i). This goes directly to the quantum of damage.

Possible causes of termite ingress 68To summarise thus far, I accept that there were four points of termite ingress into the plaintiffs' home: sites (i), (ii), (iii) and (iv). Responsibility for site (i) entry clearly falls on the plaintiffs, as does responsibility for the resultant damage to their home. What is or are the cause(s) of the ingress at sites (ii), (iii) and (iv)? The evidence raises five possible reasons: (a)other bridging by termites; (b)a hole in the termite barrier in the sunken family room wall where bricks were removed; (c)compromise of the termite barrier by the vapour barrier being cast over the lower edge of the termite barrier; (d)poor concreting or vibration of the concrete such that the lower ledge of the termite barrier was not fixed into the concrete OR the concrete did not seal the lapped joint of the termite barrier; (e)penetration of termites through a lapped joint in the termite barrier where it was not sealed. I shall discuss each of these possibilities separately, except that the second alternative in (d) needs to be considered with (e).

Other bridging 69This is proposed by Mr Witty. In his report of 14 September 2012, he includes a photograph of a right-angled bend in the external brickwork being the junction between the master bedroom and bedroom 2. This is significant because it is at site (iv). The caption above the photograph is this: "Junctions of exterior building base revealing evidence of sealing and what appears to be the remains of mudding up the exterior of the building at the eastern end of the south face of the building." The first part of par 4.6.3 of the same report says this: "4.6.3 The area of the Bathroom, Separate WC & Laundry - 4.6.3.1 There are 4 possible points of termite ingress for this area. It is not possible to say which, if any, is more likely to be the actual point of ingress. 4.6.3.2 3 of the 4 likely points of ingress in this area are of the same type. That is, there are a number of surfaces on the external part of the dwelling where I observed paint and mastic which showed clear and obvious signs that it had been cleaned and/or repaired. Around the entire dwelling, there are about 5 surfaces where this cleaning/repair is apparent. There are 3 of these areas on the southern and western walls of the Laundry. A picture of one such surface in this area appears at photo 28. The evidence of moisture plus cleaning/repair that I observed is commensurate with what I have witnessed on other occasions when I have been engaged to assist with termite eradication & building rectification. That is, where termites have bridged the barrier up to the weep holes & gained exposed entry to the internal wall linings, there is mudding on the external walls. When this is cleaned/repaired there are often signs of that cleaning/repair on the external wall. I observed this evidence in 3 areas on the southern and western walls of the Laundry. For these reasons I consider that these are likely to be points of termite ingress in this area." Paragraph 4.6.3.3 raises site (vi) as a possible entry point, but I have already rejected that. Paragraph 4.6.3 concludes with 4.6.3.4 which is: "4.6.3.4 On the basis of my inspection or information available to me there is no evidence that the termites gained concealed entry to the dwelling in this area. Further there is no evidence that the Termite Tite barrier had failed in this area. To the contrary, there was evidence that the Termite Tite barrier was working and forced the termites to bridge over the barrier making them subject to visual inspection as they entered the building." Mr Langley inspected the premises earlier (21 June 2012) and at the same time as Mr Witty first inspected the premises. Mr Langley in his report of 17 September does not identify any evidence of external bridging but raises it as a possibility. 70Mr Oke who inspected the premises on 17 May 2012 said this in his second report of 22 January 2014: "...at the time of my inspection which was carried out prior to Mr Langley's inspections, there was no evidence of termite mudding or concealment tubs evident to any external wall surface." Mr Elder, in his report of 22 November 2012, par 2, comments that there was no visible evidence of termites prior to the removal of the brickwork at the south-eastern corner of the sunken family room where it abuts the kitchen wall. He does not refer to any other matter which might indicate bridging. 71The remarks I made in [65] are equally applicable here. I again point out that Mr Robson was not cross-examined to suggest that he, or any member of his household, had found bridging of the Termite Tite barrier, other than where he admitted it in evidence-in-chief, and had removed such bridging, and had concealed this from the experts and the Court. When Mr Robson first realised that termites had entered his home, he acted quickly. He looked for other bridging but found none. I accept that he would have remained vigilant. The fact that he "panicked" when the Pest-A-Gon treatment did not work immediately, as recited in [30], is evidence of his vigilance, and concern for his own home. As I have said earlier, I accept that Mr Robson did his best to tell me the truth. Accordingly, I am unable to accept the suggestion that there was other bridging of the Termite Tite barrier by termites. 72In addition, Mr Witty made a number of concessions in cross-examination. This evidence was given: "Q. Now isn't it true that the cleaning of any sticky or staining substance on a painted brick wall will do damage to the paintwork? A. It does. Q. And it's possible that what you see there is simply something else that's been cleaned off and not necessarily mudding? A. What I saw on the building is commensurate with what I've experienced in the past and the damage occurred subsequent to termite mudding on the exterior being cleaned off. Q. So you've drawn an inference that that's what happened there, is that right? A. From my experience that's what's occurred. Q. Because you've seen it elsewhere on other buildings you assume because it happened here it was mudding that had been removed and cleaned off, is that right? A. I gave an opinion as to what I saw on the building, yes. Q. It's entirely possible that there was something else there that was cleaned off that left that as well isn't there? A. Could be. Q. You didn't see any actual mudding did you? A. No. It was all cleaned off by the time we got there. Q. Well you think there was mudding that had been cleaned off but you didn't see any mudding did you? A. Correct. Q. So you can't from your own observation tell the court that there was ever any mudding actually there can you? A. Correct. Q. All you know from your own observations that some sections around the house had been cleaned and done some damage to the paint? A. Yes."

Hole in the termite barrier 73This hole was identified at the inspection of 19 May 2013 by Messrs Oke and Elder - see [52]. Mr Oke, in a passage cited, there expressed the view that it was not a cause of termite ingress. Mr Witty and Mr Langley agree on this but there is a dispute as to how the perforation occurred. Mr Witty said this in his report of 23 May 2013: "3.20 The small perforation to which Mr Oke refers was not visible when I last inspected the site. Mr Oke says that it is consistent with corrosion of the aluminium sheeting. 3.21 I disagree. First, the strip shield is stainless steel, not aluminium. The hole is not consistent with corrosion as there is no brown staining (consistent with corrosion) present at all. I believe that [this] hole is damage caused at some stage by the removal of bricks. 3.22 In any event, I agree with Mr Oke that it is not the cause of any termite ingress." Mr Langley agreed with Mr Witty - report 23 May 2013 par 4.3. There is no evidence that termites entered the plaintiffs' home through this hole. Corrosion appears to be unlikely. The better view is that it was caused when bricks were removed, long after all termite activity had stopped.

Compromise of the Termite Tite barrier by the vapour barrier 74This is the main plank of the defendant's factual defence. It was raised by Mr Langley - see [47] and [48]. In his report of 17 September 2012 Mr Langley later said this: "As for the kitchen/sunken family room area, as I have set out at paragraph 7.8, on inspecting the cavity where the three bricks were removed I noted that the black PVC 'Visqueen/moisture vapour membrane' laid under the concrete slab was visible between the inner concrete slab edge and turn down of the Termite Tite Barrier Strip shield. However, as a result of seeing the Visqueen above the Termite Tite Barrier I consider it is most probable the PVC moisture vapour membrane has impeded a cast (of the strip shield) into the concrete at this point. I consider that this could well have compromised the termite barrier system as a whole - but such was not as a result (of the fault of) the manner in which the strip shielding was installed. I noted that the strip shielding (where exposed) was intact (apart from a saw cut I am informed was made in the course of removing the bricks), the metal of the strip shielding was in all places it was necessary for it to be, the glue was apparently intact, and the metal of the strip shielding was observable at the edge of the rest of the bricks. Rather, the fault lay in the pouring of the concrete slab by failing to ensure that the strip shield was cast into the slab and was not impeded by the Visqueen." Mr Witty agreed with Mr Langley - report of 14 September 2012 par 4.6.4. At [49] I have set out what Mr Oke said after his inspection of 22 January 2013, and at [51] what Mr Langley said after his inspection of 9 May 2013. At [52] I set out what Mr Oke said after his inspection of 19 May 2013, in which he admitted seeing the vapour barrier that was alleged to compromise the termite barrier. In the same paragraph I quoted at length what Mr Oke had to say about the vapour barrier. In his report of 28 May 2013, Mr Elder said this: "I do not agree that the vapour membrane in the right hand corner of this site is a point of ingress for the termites as there is no apparent termite faecal staining on the small piece of plastic in this location nor is there any termite mudding on, around or connected to the plastic." 75Were Mr Elder's just-cited observation correct, my task would be easier. However I cannot accept it as exhibit 4 (the piece of vapour barrier removed by Mr Langley - see [47]) has on it either residual mudding or, more likely, termite faecal staining. 76A preliminary enquiry is whether the piece of vapour barrier discovered in the sunken lounge wall represents how the vapour barrier was laid or might it only be a remnant as suggested by Mr Oke? At [15] I specifically rejected Mr Langley's opinion as to how the plaintiffs' house was constructed. The finding of the vapour barrier in the sunken wall is the result of some accident in construction of the perimeter wall rather than a deliberate choice as to how to carry out the construction. In addition to the suggestion of a remnant of the vapour barrier's being in the wall, the evidence also canvasses a suggestion of the vapour barrier's "kicking up" during the pouring of the concrete. It must be remembered that, on top of the vapour barrier are the bent over starter bars and the metal reinforcing of the slab - see [12]. 77In cross-examination, Mr Oke was asked whether the vapour barrier moved under the weight of the concrete during pouring and Mr Oke accepted that there would be some movement. When cross-examined about the vapour barrier found in the sunken lounge room wall, he sought to avoid answering questions that it ought not to have been there, but agreed it was there but he "couldn't determine how far it extended into the concrete slab." His cross-examination concluded in this fashion: "Q. So you don't know actually whether or not the Visqueen goes straight across at the same level where the Termite Tite barrier is meant to be cast in? A. No. Q. And if that's the case then termites quite easily could come up between the slab and the Termite Tite shield using the moisture vapour barrier couldn't they? A. It is a possibility, yes. Q. And that is the fault of the concreter isn't it? A. It would be yes." 78In cross-examination, Mr Elder maintained the position which I rejected in [75] and became argumentative: "Q. You saw when Mr di Betta(?) removed the bricks in 2009 that there was mudding in the corner didn't you? A. In the corner? Q. You know what I'm talking about. In the corner-- A. There was - when - when the bricks were removed, the three bricks that were removed initially, there was mudding all around that area. Q. And you saw it was concentrated in the corner on the right-hand side? A. It was not concentrated in the corner on the right-hand side and there's no photograph there to indicate that. Q. I'm not asking you whether there's a photograph there to indicate that. I'm asking you what you saw in 2009? A. It was not congregated in the right-hand corner. There was no mudding in the right-hand corner. Q. But subsequent to that time that mudding has been removed and demonstrates that casting to the barrier between the concrete slab and the Termite Tite barrier was a piece of moisture vapour barrier plastic wasn't it? A. Yes. Q. And you saw that? A. Yes. Q. And that is a compromise of a barrier system of this type, isn't it? A. I - yes I - I cannot - I cannot argue that there is a piece of plastic in - not a piece of plastic there, but there is no termite workings on or near that piece of plastic. None whatsoever. Q. That's because they've been cleaned off? A. You cannot remove them and clean off termite workings unless you to scrub it or pressure clean it and then I can guarantee in 40 years experience you cannot remove it and to my knowledge no one has even removed it and I can assure you there was no termite workings there in the right-hand side of that building, and as far as the piece of plastic goes there is no termite workings around that and there's now faecal staining on it. So forget the piece of plastic. You're wasting the court's time. Q. I'm grateful for your concern for the court's time? A. Thank you. Q. Thank you Mr Elder that's very good of you. I'll return to the question. The plastic vapour barrier being cast in over the Termite Tite barrier between it and the concrete is a compromise of a barrier system of this type isn't it? A. Yes." 79In cross-examination Mr Witty made a number of concessions on this issue: "Q. ... would you agree in order for the vapour membrane to be thrown up when the slab was poured it would have to get past the starter bars? A. Correct. Q. Because the starter bars are below where the termite barrier is, is that correct? A. Yes correct. Q. How many slabs have you seen poured in your career sir? We won't hold you to the exact number? A. Probably in - probably in excess of 600. Q. And how many of those have been poured over vapour barrier? A. In excess of 600. Q. And in your experience how often have you seen the vapour barrier rise up through the concrete when the concrete's poured? A. Never. Q. And how often have you seen the vapour barrier rise up through the concrete and get caught on the termite barrier? A. Never. HIS HONOUR Q. May I assume that these 600 or more occasions are when you are the builder yourself? A. No your Honour. As an architect you're involved in inspections of all concrete slabs prior to pouring and during pouring, so in my 42 years in - in the trade I've been at every pour that's occurred on any of my jobs. Q. The point that I was getting at was it would either be your job as the builder or your job as a supervising architect to make sure that the vapour barrier didn't lay over the termite barrier before the pour? A. Correct. SMITH Q. And having done that-- A. Yes. Q. --and assuming that was done correctly-- A. If it's done correctly then the pour proceeds. If it's not it gets stopped and the pour - and it is corrected before the pour proceeds. HIS HONOUR Q. Have there been any occasions when you have observed that defect which required correcting? A. Yes. Q. How frequently would that occur? A. Probably only about four or five. Q. Infrequently in other words? A. Infrequently. SMITH Q. By that defect - I'm sorry your Honour I just want to clarify - by that defect are you referring to it being hung on the termite barrier, caught up on the termite barrier? A. Correct. HIS HONOUR Q. Yes that's what I - that's what the question was designed to and that's what you have-- A. Correct. Q. Four or five occasions the waterproof membrane found over termite barrier before pour and had to be corrected? A. Correct. SMITH Q. Now sir as to the piece of vapour membrane that you saw in the open brickwork outside the sunken family room at the Robsons' home-- A. Yes. Q. --you cannot be certain that that is in fact attached to the vapour membrane which is under the slab can you? A. Correct. Q. And you can't be certain that it actually passes all the way down to under the slab? A. Correct." Four or five occasions out of in excess of 600 represents an incidence of less than 1% - one might say extremely rare. 80Ms Smith also obtained a number of concessions from Mr Langley in cross-examination. He agreed that he did not report seeing and did not see any vapour barrier plastic where a brick had been removed from beside the laundry door. He also conceded that he did not actually know that the vapour barrier plastic in the sunken lounge wall was actually part of the vapour barrier. It follows from these concessions that the vapour barrier plastic in question might only be a remnant of plastic which in some way became entangled in the concrete pour. Furthermore, no one actually knows whether this vapour barrier plastic lies over the entire bottom ledge of the Termite Tite barrier rendering it ineffective. The only way that one could find that this piece of plastic impedes the bottom ledge of the Termite Tite barrier would be to find termite workings in the area in question which are not otherwise explicable. Before making a finding on this issue, I must consider other possible causes of termite ingress.

Poor concreting/vibration 81Poor concreting could lead to a failure of the bottom ledge of the Termite Tite barrier to be embedded in the house slab. The slab of the plaintiffs' house was not mechanically vibrated - see [12(xi)]. In [52] I quoted in extenso from Mr Oke's report of 19 May 2013. Paragraphs 17 and 18 of the report are contained in the quotation and comment on the compacting and vibration but maintain that the bottom ledge of the Termite Tite barrier was adequately embedded in the slab. Mr Elder also accepts that the concreting is of poor quality: "I acknowledge that the quality of the concrete below the barrier in this area is not ideal. I have inspected this area several times and on 19 May 2013 spent 2 hours determining if in fact there was evidence of termites entering the building via the concrete area in question. There is no hole in the concrete which may have allowed termite ingress. It is noted neither Mr Witty or Mr Langley have provided any photographs or demonstration of holes in the concrete which they say would have allowed termite ingress above the barrier." Mr Witty makes these comments in his report of 23 May 2013: "3.14 I agree completely that the concrete slab has not been vibrated & placed in a 'text book' tradesman-like fashion. Indeed it looks to me that the concrete has not been properly placed (vibrated) at all in this corner. The result is that there are considerable amounts of air holes (honeycombing) in the slab. In my opinion this is contrary to the requirements of the installation standard for residential slabs prescribed by AS 2870 a copy of the relevant part of which I have annexed at MW-7. 3.15 Further, air holes & cavities in concrete can often be the source of concealed termite entry. 3.16 I also was now able to observe that at this point the strip shield has not been cast in to the concrete at the point where the strip shield folds down (as it should have been) which is further indication of the poor quality of the concrete installation. 3.17 These two factors together have caused me to reconsider my earlier opinion as to the cause of the termite ingress at this point. Whilst I remain of the opinion that the casting in of the moisture vapour barrier at this point has compromised the system and is a likely source of termite ingress at this point, the poor quality of the concrete at this juncture together with the failure to completely cast in the strip shield has revealed a second independent point of likely termite ingress at this point." It is important to note that Mr Witty does not say that the bottom ledge of the termite barrier is not embedded in the slab, but that the vertical shaft has not been so embedded. This is relevant to the extent to which the lapped joints of the termite barrier are required to be sealed, and whether concrete acts as such a seal, and I shall discuss this when considering means of ingress (e). However logic dictates that if the bottom ledge is firmly embedded in the slab, then, unless termites can pass through a lapped joint, the barrier will be effective. 82Mr Oke was cross-examined on this issue but maintained the view expressed in his report: "Q. And it is the builder who ensures that the termite barrier and the concrete are installed in the same manner so as to create the termite protection system, correct? A. Yes. Yep that's fair. Q. Now you agree, don't you, that when you did your last inspection on Sunday that the slab had not been installed at one point in a textbook fashion? A. That - that's generally the words I used, yes. Q. You'd agree that it hadn't been vibrated properly wouldn't you? A. I made the comment it hadn't filled up to the back of the brickwork properly and there was a void remaining. Q. Well I'm asking you a different question. I know what your comment was. I'm-- A. I don't know if he vibrated the slab or not. Q. I didn't ask you that either. I said vibrated properly. HIS HONOUR: The witness said he didn't know whether the slab was vibrated, so if you're asking whether it was vibrated properly it assumed there was a - it was to be vibrated. JOHNSTON Q. When you looked at the concrete slab there were airholes in it weren't there? A. Well there was a - a rough surface to it, yes. Q. And that's often an indication that it hasn't been properly vibrated? A. Well placed and vibrated to fill the void, yes. Q. And indeed you also observed didn't you that at the famous sunken window spot the strip shield hadn't been cast into the concrete completely up to where it folds down over the internal side of the brick wall? A. Yeah the horizontal leg, yes. That's why we had that void there. Q. So you'd agree at that point on our analysis of the system there was a failure in the system or a potential failure in the system because there had been poor concreting? A. There had been poor concreting in that area but it's still my opinion that that leg of the termite barrier was embedded in the concrete. Firmly embedded. Q. Yes but you've told me there was a void? A. Yes. Q. And you know, don't you, that when this system is installed the slab needs to be poured up to the point where the barrier turns down, and it had not been had it? A. It was not placed up against the brick wall. Q. So still looking at my piece of paper here-- A. Yes. Q. --assuming this is the top of the brick wall-- A. Yes. Q. --where the termite installer installs his lap joint by sealing the two interconnecting parts across the top, on the assumption that the concrete will be properly poured up to that point it's reasonable for him not to have to seal any further, in the expectation that the concreter will do his job, you agree with that don't you? A. No, cause where - where it wasn't sealed that area - the - that portion of the termite barrier is not encased in the concrete at any time. Q. But that's the point that you're talking about, aren't you, that runs along the top of the cavity wall itself? A. We - yeah, we separated the - the lap joint above the brickwork to the edge of the concrete slab and because we had removed the brick below we were able pull that vertical leg of the lap joint and spread it apart as well. Q. Now this is the-- HIS HONOUR: Excuse me, I want to follow this. Does anyone have a further copy of the third report? A spare one? Well that's enough. Q. Now on page 2 of your third report, Mr Oke, you've provided me with a helpful illustration of the concrete barrier? A. That's right. Q. Now Mr Johnston's been asking you questions about a gap in the concrete has he not? A. Yes. Q. Now could you mark with a highlighter on this copy where the gap is? A. The gap to the concrete? Q. Sorry? A. The gap of the concrete? Q. Yes that you found, that you were asked questions about? A. (No verbal reply) Q. Thank you? A. Just there. HIS HONOUR: Show that to counsel. Now is somebody tendering that. JOHNSTON: I'll tender that, your Honour. EXHIBIT #1 FURTHER COPY OF REPORT OF MR OKE DATED 19/05/13 AS MARKED BY HIM ON PAGE 2 ON THE DIAGRAM THEREON IN YELLOW HIGHLIGHTER TO SHOW THE EXTENT OF THE GAP IN THE CONCRETE TENDERED, ADMITTED WITHOUT OBJECTION HIS HONOUR Q. So as far as you were concerned there was still a little bit of the end of the termite shield embedded in the slab? A. Yes. Q. Is that right? A. Yes." Exhibit 1 depicts a void underneath the bottom ledge but its end is embedded within the slab. 83Mr Elder was also cross-examined about this and gave evidence to the same effect: "Q. I'm referring to the termite barrier that you inspected at the sunken lounge area the Sunday before last. It's a simple question. You observed that at that point in the construction the termite barrier had not been cast in to the slab at the fold down point didn't you? A. Not in its entirety. Q. Yes or No? That's what you observed isn't it? It had not been cast in where it folds down? A. Into its entirety? I can't answer your question. I can't answer your question because the concrete is actually gripped to the back of the termite barrier. I cannot say Yes or No to your question because the barrier itself is still encased in concrete. So yes I've admitted in my - in my report that the concrete is not ideal in that area. I've admitted that. But I cannot answer you a Yes or No to that question because the barrier is still encased in concrete. Even though the concrete's not - not real good in that area." Further cross-examination immediately thereafter indicates that Mr Elder and Mr Johnstone might have been talking about different parts of the termite barrier, but Mr Elder maintained the position that the bottom edge of the barrier was embedded in the slab. 84I accept that, although the concrete in the area of the south-eastern corner of the sunken family room is hardly ideal, the bottom ledge of the termite barrier is adequately embedded in the slab.

Did termites penetrate a lapped joint in the Termite Tite barrier? 85In [52] I quoted extensively from Mr Oke's report of 19 May 2013. Paragraph 31 of that report states that Mr Elder inspected the exposed termite barrier and stated that he observed termite faecal staining between the layers of the barrier, i.e. within the lapped joint which indicated to him that termites had used the lapped joint as a path. In par 3 of his report of 28 May 2013, Mr Elder said: "It is apparent on the photograph [exhibit K, no.6] that at the top left hand end of the cut termite barrier there is termite mudding on the elbow where the barrier turns down into the wall cavity [vertical shaft]. When the lapped joints were intact this mudding would have been between the layers of the overlapped barrier." In par 7 of the same report he says this: "Photo 6 of my report dated 19 May 2013 clearly shows that the adhesive does not go all the way to the elbow of the turndown. In my opinion, this is an entry point where termites have entered the property by coming from the back of the uppermost layer of the barrier, through the lapped joins at the elbow turndown, and out onto the top of the lower layer of the barrier." In cross-examination it was put to Mr Elder that this was not termite mudding but dirt (T 30 May 2013, p 25.12) but Mr Elder said that that was incorrect. 86In his report of 23 May 2013, Mr Witty said this: "Whilst I cannot comment on what Mr Elder said or did not say, I did not see any termite faecal staining between the layers of the strip shield. As I have said, even if termites passed between the layers of the strip shield (which does not appear to me to be the case) there is no evidence that they passed through any join in the strip shield". In chief, Mr Witty said that what Mr Elder identified as termite workings was "dirt", "construction material and so on". In cross-examination he maintained that it was "dirt and not termite droppings." This conflict of opinions lead to my making of the suggestion recorded at [58] and to the generation of Mr Lancaster's report. 87Like Mr Witty, Mr Langley "could see no evidence that termites had penetrated through [the] join" after re-examination on 22 May 2013. Paragraph 4.16 of his report of 23 May 2013 is this: "4.16 I disagree with the conclusions of the Oke report and in particular paragraphs 32, 34 to 38 inclusive. From my further inspection including by inspecting between the layers of strip shield, I saw no evidence at all that termites had tracked through the strip shield or had penetrated the lapped join through the sealant. The fact that I could now observe termite mudding below the strip shield means nothing as the purpose of the Termite Tite installation is to keep termites below the barrier system. That there is mudding above the lapped join is only consistent with the fact that termites have gained entry above the installation and tracked along that area. In my opinion, based on my experience, if termites have gained a concealed entry to the house at this point, it is most likely that they have done so either through the bridge created by the black moisture vapour membrane plastic, or through the improperly poured concrete either, or both of which, in my opinion, are potential causes of failure in the barrier system. This is especially so given the complete absence of any indication that the lapped join has been penetrated in anyway." As I pointed out in [60] Mr Langley gave evidence after Mr Lancaster. One would imagine that he had drawn to his attention the contents of Mr Lancaster's report. In cross-examination Ms Smith drew the attention of Mr Langley to photograph exhibit K no.6 and specifically to the lapped joint from which samples were taken by Mr Lancaster. The transcript records this: "Q. Do you see that's termite workings? A. No, it can't be confirmed that that's termite workings. Q. What would you suggest it is, sir, if it's not termite workings? JOHNSTONE: Your Honour WITNESS: It could be anything. JOHNSTONE: It's not a, what can you see from a photograph. This witness has inspected the site and given evidence about it what he saw at the site. HIS HONOUR: All the questions are directed into is this very issue and no doubt the photograph's being used to prompt his memory. SMITH: Yes, your Honour. JOHNSTONE: There was doubt, which is why I objected. It is not being used to prompt his memory. It is being suggested that what he sees in the photograph is termite workings. He's inspected the site. He's answered the question; I can't say what's in that photograph. SMITH: I'll withdraw the question, your Honour." After an interchange between Ms Smith and the Bench the following evidence was given: "Q. In that same photograph you will see that there is an area of adhesive at the top righthand side of the bottom part of the lap join, that's a khaki colour. Can you see that? A. The khaki greeny colour near the K? Q. Yes, near the K? A. Yes. Yes, I can see that. Q. Did you see that substance when you were onsite and doing your inspection? A. No, I don't recall seeing that material. Q. Looking at the photograph do you have a view, an opinion, as to what that material is? A. It almost looks cementitious like base but I'm only just looking at the photograph. I really can't give you an opinion on it. Q. What did you mean by "cementitious"? A. Well, it could be related to some sort of cement or mortar based material, I don't know. It's very flaky, you can see further down from the K. Q. You've read the report of Mr Lancaster, have you, from the environmental analysis lab at the Southern Cross University? A. No. Q. Have you seen it at all? A. No. Q. Has it been discussed with you at all? A. Yes. Q. So you're not aware of Mr Lancaster's findings have been in respect of his investigations? A. No, I'm not familiar with it at all." 88On this issue, I have no hesitation whatever is accepting the evidence of Mr Lancaster that there was termite activity within the lapped joint in question. There is evidence of both termite mudding and termite frass within the joint. This evidence has a 90% statistical probability [T 5 November 2013, p 52.13]. It confirms the opinion of Mr Elder, a gentleman with 40 years practical experience in the field. I am unable to accept the opinions of Mr Witty and Mr Langley to the contrary. The quality of Mr Lancaster's investigation, scanning, report and evidence would easily persuade any tribunal of fact about this issue beyond reasonable doubt, which, of course, is the wrong stand of proof in civil proceedings. 89To understand how the termites could penetrate through the lapped joint, Ms Smith made a model which was marked "2" for identification. It was not put into evidence because it was bulky and fragile. It consisted of a brown box to represent a brick and two pieces of cardboard, one orange and one green, to represent two sheets of the Termite Tite barrier, folded into the appropriate shape. Both Mr Witty and Mr Oke agreed in theory that if only the top ledge of overlapping pieces were sealed it was possible for termites to enter the joint where it was not sealed and travel through it from below the termite barrier to above it. Mr Witty said this in cross-examination: "Q. So I want you to assume for a moment - this is my crude version of a brick wall, okay? A. Yes. Q. And a uniquely crude version of the Termite Tite barrier. You're saying that the concrete's not cast in here, is that what you're saying? A. Above that point? Q. Up here? A. Yes, correct. Q. So the concrete actually comes up above this doesn't it? A. Yes it does. Q. And so you're saying the concrete should come up like so? A. It forms a step, correct. Q. And forms-- A. Yes. Q. Would you accept that the Termite Tite barrier where it goes across the top of brickwork is actually wider than the brickwork? A. Generally it's cut off at the outside edge of the brickwork. Q. It can't fit hard up against the brickwork can it? A. Well no they're two different materials, so no it doesn't fit hard up to the brickwork. Q. So there would be a small void between the brickwork and the termite-- A. Correct. Q. --shield, correct? A. Correct. EXHIBIT K SHOWN TO WITNESS Q. I think it's photo number 5 Mr Witty, if you could go to that please? A. I have it. Q. Now that's a photograph of the back of the turn down, is that correct? A. Correct. Q. Facing out towards the brickwork? A. Yes. Q. And you'll agree that there's no concrete behind there don't you? A. Correct. Q. And you'll agree there's not supposed to be concrete behind there don't you? A. Correct. Q. So it's also your evidence, is it not, that when the Termite Tite shield is sealed at a join-- A. Yes. Q. --that it only needs to be sealed along this edge? A. Correct. Q. It doesn't need to go down here along there? A. It does not. Q. It needs to go from there to the elbow? A. Correct. Q. So would agree sir that if that's the case even if there's concrete hard up against there-- A. Mm. Q. --and there's a small void behind it-- A. Yes. Q. --that termites would get through that, through between the layers? A. Through and behind there yeah, under the shield, correct. Q. So going from the back? A. Yes, they're underneath the shield as designed. Q. Well they're underneath the top of the shield, the top layer of the join aren't they? A. Well the - that is the barrier and the termites are underneath it, correct. Q. They're underneath? A. Correct. Q. That part? A. As the Termite Tite is designed, correct. Q. And if the void behind here-- A. Mm. Q. --concrete up against this, the void behind there? A. Yes. Q. Then the termites - sorry this shield which has not been sealed where the piece is-- A. Yes. Q. --will allow the termites through? A. It could, yes." More succinctly, Mr Langley said this: "HIS HONOUR: Could you pass me MFI 2, please? That's that, isn't it? SMITH: MFI 2, yes, your Honour. HIS HONOUR: You see to me it's a matter of logic, and I may be obtuse. Q. But if you've got a join like that and it's only sealed on the overlap along this section here, right? A. Yes. Q. Then a white ant could come up this way and get in behind it? A. But the requirement of the installation, as I understand it, was that the concrete is supposed to envelope the turndown and the rebate back into the concrete, so the concrete should envelope the strip shield. Q. Yes. But where, if there be a void A. If there be a void Q. If there be a void then the white ant could get between the two layers and get behind that barrier if it was only sealed on the top edge? A. That hasn't been confirmed as yet but, yes, your hypothesis is reasonable. Q. If that was, for example, in concrete there that would be a little void, you see, and the white ant could get through there and go up here and get behind the A. Yes, if there's no sealant there. Q. So both logic and good practice would indicate the seal should go all the way along the join, the hole of the S shape. Do you agree? A. I see no reason, yeah." 90Whilst the theory may be good, the findings of Mr Lancaster show that the termites penetrated the joint where it was sealed as there is organic matter found within the glue which was supposed to seal the upper edge - see figure 5 in Mr Lancaster's report and T 5 November 2013, pp 55 - 56. This validates, in my view, the theory.

Sealing of lapped joints 91The issue just determined raises another aspect of the defence case. It is common ground that at the plaintiffs' home, only the top ledge of the lapped joint in question (and, therefore, probably all the lapped joints) was sealed. I adverted to this at [10] in which I pointed out that exhibit 7, the defendant's Training/Technical Manual of January 2004 states that a lapped joint should be sealed along its entire length, that is both upper ledge, vertical shaft and lower ledge. Mr Witty and Mr Langley both said that the concrete of the slab was a sealant of the vertical shaft, but unsuccessfully so, in my opinion. 92Both the Termite Tite Pty Ltd diagram (exhibit 3) and the defendant's diagram (exhibit 8) show a void or cavity between the vertical shaft of the termite barrier and the vertical surface of the brick upon which the upper ledge is placed. The width of a brick is 110mm (T 6 November 2013, p 35.02) but the upper ledge of the barrier is 120mm - see [9]. As Mr Witty admitted in the last passage of his evidence I cited in [89], the stainless steel barrier and the brick are two different materials, so that the barrier does not "fit hard up to the brickwork." In his report of 23 May 2013 Mr Witty said this: "Additionally the adhesive used to seal the edge needs to extend only as far as the fold down, because it is at this point that it should be cast into a properly down poured concrete slab." Logic rebuts that proposition. If there be a void between the brick and the vertical shaft, only one side of the barrier will abut the concrete - the upper piece of the barrier. 93Mr Elder said this in his report of 28 May 2013: "4. In Mr Witty's Report at paragraph 3.29, he states "additionally, the adhesive used to seal the edge needs to extend only so far as the fold down because it is at this point that it should be cast into a properly poured concrete slab." 5. I have been installing termite barriers for nearly 40 years and in my experience and knowledge lapped joins are sealed along the entire length of the edge of the joins so as to not allow termite ingress via any unsealed area of the joins. Poured concrete is not intended to act as a sealant on the joins. There is also a small void behind the turn down of the barrier between the outside brickwork which will not fill with concrete to form an effective barrier against termites. 6. Photo 5 of my report dated 19 May 2013 clearly shows the clean back of the metal barrier downturn. Therefore, it would be reasonable to expect that the concrete would not be an effective seal of the joins on the downturn. [Lapped] joins needs to be sealed on the entire length with an appropriate adhesive, and in this case, they haven't, as observed by Mr Witty and as evidenced by the clear section of barrier in photo 6 of my report dated 19 May 2013." 94In chief, Mr Langley disagreed with the proposition that "poured concrete is not intended to act as a sealant on the joins." In cross-examination Mr Langley was shown what became exhibit 7 and he agreed that it did not accord with his opinion as to how a lapped joint should be sealed, i.e. he disagreed with the defendant's own expected practice. He also maintained that concrete should fill the small void between the vertical back of the brick and the vertical shaft of the barrier by "going up that gap" with adequate compaction/vibration - an expectation inconsistent with the defendant's own, as shown in exhibit 8. I have difficulty accepting Mr Langley's evidence. For example in par 4.12 of his report of 23 May 2013 he said this: "My accreditation as an installer of several termite management measures including physical barriers of the Termite Tite type, requires me to be familiar with proper concreting techniques." He was cross-examined about those credentials (T 6 November 2013, pp 19.28 - 22.42). He eventually admitted that his statement concerning "physical barriers of the Termite Tite type" "may not be accurate" when put in a proper context. After par 4.14 of the same report, he included a photograph of the hole in the termite barrier [73] and added this to the caption: "The mastic adhesive shown in photo 3 applied between the lapped join is intended to bond whereas the termite resistant adhesive applied along the end to a lapped join is intended to seal from the outer edge back to where the Termite Tite strip shield installation is hard against the off-the-form concrete slab." One could be forgiven for thinking that Mr Langley was identifying two different adhesives. However at T 6 November 2013 p 23.32 he said that they "were one and the same". Further in cross-examination he agreed that what he wrote might mislead the reader (T28.46 to T29.09). He then agreed that he did not actually know that the adhesive included a termiticide as no testing had been done. 95Mr Langley's attention was then drawn to figure 5 in Mr Lancaster's report. This evidence was then given: "Q. As you see at the top it says, "join glue" and would you accept that what appears to me to look a bit like leopard skin, brown spotty material, is either termite faeces or organic matter generated by termites? A. It does give the appearance of that sort of material. Q. But see, if this is what it purports to be then it would indicate that the termites were not disinhibited of dealing with the mastic glue? A. They're not which? Q. Not disinhibited from A. Not inhibited from it? Q. Yes? A. They certainly appear to have been present over the glue. Q. Yes. Which would indicate, would it not, that there probably wasn't any termiticide in it? A. I'm not qualified to make that comment. Q. But I mean, you said the glue itself, if it had the termiticide in it would repel the termites? A. If they tried to ingest the material, that's correct." However, Mr Langley had in chief given evidence about the adhesive containing a chemical Bifenthrin and said this: "The presence of the Bifenthrin would repel any termite activity from the sealant, given the nature of the formulation of the chemical itself to repel termites on contact." Either Mr Langley was qualified or not to give evidence about termiticides in adhesives used in a system such as Termite Tite. He can not have qualifications to give evidence-in-chief but deny the expertise in cross-examination. Furthermore, there is a real distinction to be drawn between a chemical repelling a creature "on contact" and repelling a creature if it "tried to ingest". Repelling on contact would prevent the creature moving over a surface but repelling if it tried to ingest the substance would not. 96I do not accept Mr Langley's evidence that the lapped joint need only be sealed along the upper ledge and that the concrete of the slab was designed to be a sealant of the lapped joint. I accept the opinion of Mr Elder in this regard. Accordingly, I accept that termites were able to enter the plaintiffs' home by penetrating lapped joints which had not been sealed along their complete length.

Compromise of the Termite Tite barrier by the vapour barrier (2) 97In [80] I said that I could only make a finding that the termite barrier was compromised by a piece of vapour barrier by finding termite workings in the area in question which were not otherwise explicable. The lapped joint was very close to the area where the extraneous piece of vapour barrier was found. Termite workings in the area are explicable by my last finding. Again, Ockham's Razor must be applied, especially as there is no direct evidence that the piece of vapour barrier actually surrounds the lower edge of the Termite Tite barrier.

Factual summary 98Of the five possible causes of termite ingress, I do not accept those identified as (a) to (d). I accept that termites gained concealed access to the plaintiffs' home at sites (ii), (iii) and (iv) by penetrating the termite barrier through incompletely sealed lapped joints. I must point out that ingress at site (iii), the wall adjacent to the laundry door, cannot be explained by the compromise of the termite barrier by the vapour barrier, as no vapour barrier was found at site (iii). 99In case it be thought I have overlooked something, I shall point out another possibility raised by the evidence but not pursued by either party. This concerns a "cold joint." Mr Langley's report of 17 September 2012 contains this matter in par 9.9: "Further in respect of the kitchen/sunken family room area, as I set out at paragraph 7.8, there is a possible concrete cold joint at the slab edge of the rebate. In my experience, where a cold joint exists that may allow concealed termite entry such that a termite barrier at the cold joint should be required. This could be a possible source of termite ingress." In his report of 22 January 2013, Mr Oke said this: "Mr Langley has made the assumption that there is a "cold joint"(bearing the abutting of a new concrete slab/edge against a cured or partly cured concrete slab/edge) to the perimeter of the sunken lounge area and states that "this could be a possible source of termite ingress. From visual inspection via the inspection opening in the external wall, it is my opinion that it is impossible to determine to see the up-stand wall and as such one cannot categorically state that a "cold joint" exists around the perimeter of the sunken lounge." At best, the "cold joint" as a source of termite ingress remains only a possibility. The reason the parties did not pursue this is probably because there was no "cold joint" - the two levels of the slab were laid at the same time, in one concrete pour: see [13].

The plaintiffs' case 100The defendant neither designed, manufactured, supplied or installed the Termite Tite barrier at the plaintiffs' home. The plaintiffs' only recourse is to the Deed of Agreement to which I shall hereafter only refer as "the Deed". Paragraph 10 of the further amended statement of claim filed in Court on 21 May 2013 (hereafter "SOC") pleads that the defendant assumed liability for the installation of the Termite Tite Barrier System by recital C of the Deed. The defendant filed an amended defence in Court on 30 May 2013 (hereafter merely "the Defence"). Par 10 of the Defence is: "The defendant denies the allegations pleaded in paragraph 10 of the claim as they are untrue because: a. it was not a term of the Mediation Agreement that the defendant assumed the liability for the installation of the System by Termite Tite; and b. on the assumption that "Recital C of the Deed" as particularised therein is intended to be a reference to Recital C of the Mediation Agreement, that recital is wrong and was drafted by the then solicitor for the plaintiffs." The words "Mediation Agreement" take up words used in the SOC but those words are unnecessary. The Deed records the agreement reached at the mediation on 10 February 2009 when it is clear that the parties wished to have their "simple agreement" reduced to writing. That writing is the Deed. The "Mediation Agreement" and the Deed are the same thing. The recital is in fact erroneous. However, the defendant executed the Deed and there is no plea of "non est factum". The Deed was drawn by the plaintiffs' then solicitor and that can be used if there is a problem in interpreting the document - it would be construed "contra proferentem". However, there is no ambiguity in recital C. It clearly states that the defendant "was retained by the [plaintiffs] to install a termite barrier system for termite prevention within the home". If there be any ambiguity it can only be in the words "termite prevention". 101The plaintiffs rely on estoppel. This estoppel is pleaded in a reply filed in Court on 5 November 2013. Ms Smith relied on the following statement of the law in Halsbury's Laws of Australia/ 190 - Estoppel/ (3) ESTOPPEL BY DEED: "Principle In an action on a deed, estoppel by deed prevents a party to the deed from disputing any distinct allegation of fact which he or she made in it. It is a rule of evidence founded on the principle that a solemn and unambiguous statement or engagement in a deed must be taken as binding between parties and their privies and therefore, as not admitting any contradictory proof. If on the true construction of a deed it is found that the parties agree, for the purpose of a particular transaction, to state certain facts as true, then, for the purposes of that transaction, there may be no question about those agreed facts. It is not necessary that the facts assumed by the parties for the purposes of the transaction be true. However, the statement of fact must be precise and unambiguous; it is not enough to show that it might be inferred from the deed. The principle extends to statements made in a recital, as well as in the operative part of the deed. It is not necessary to show reliance on the statement nor that the party relying on the estoppel would suffer detriment if departure from the statement were allowed. The doctrine of estoppel by deed antedates, but is now considered to be a subset of, the doctrine of estoppel by convention." That the principle extends to statements made in a recital is supported by Re Patrick Corp Ltd and the Companies Act [1981] 2 NSWLR 328; Cabouche & Bond v Ramsay (1993) 119 ALR 215 (FFCA) at 237 per Gummow J (as he then was). 102There are exceptions to this principle. One of them can be found in the decision of the House of Lords in Greer v Kettle [1937] 4 All ER 396 per Lord Maugham at 403E - 405A: "It seems to be clear that, having so recently adopted the view that a recital might operate as an estoppel, the courts had not, at that time, worked out the qualifications which might prove to be necessary unless great injustice was to result. Subsequent cases laid down that the recital must relate to specific facts, must be certain, clear and un-ambiguous, and would not avail persons who were not parties or privies to the deed. In Stroughill v Buck, at p 787, following Young v Raincock, another, and a very important, qualification was laid down. Patteson J, in his judgment in Stroughill v Buck, stated it thus, at p 787: 'When a recital is intended to be a statement which all the parties to the deed have mutually agreed to admit as true, it is an estoppel upon all. But, when it is intended to be the statement of one party only, the estoppel is confined to that party, and the intention is to be gathered from construing the instrument.' My Lords, in agreement with the Court of Appeal and with the opinion of my noble and learned friend Lord Russell of Killowen, I think that this statement of the law is correct; and I also agree with them in coming to the conclusion that, upon the true construction of the recital contained in the guarantee of 20 March 1929, read in conjunction with the charge of even date mentioned in the recital, the fair inference is that the recital is intended to be the statement of the Mercantile Marine, and not to be that of the Parent Trust and Finance Co. Ltd. The latter, accordingly, are not estopped from relying on the admitted fact that the charge was not secured on the 275,000 fully paid shares of Iron Industries Ltd, for the simple reason that these shares had never been issued. My Lords, this conclusion is sufficient for the determination of the present appeal. But it is easy to imagine a deed framed, perhaps by inadvertence, in such a way that such a conclusion, as a mere matter of construction, might be impossible, even in a case of a common mistake, and it seems to me to be desirable to point out that there was another road, not depending on a possibly ill-framed recital, leading more certainly, in such a case, to the same result. Estoppel by deed is a rule of evidence founded on the principle that a solemn and unambiguous statement or engagement in a deed must be taken as binding between parties and privies, and therefore as not admitting any contradictory proof. It is important to observe that this is a rule of common law, though it may be noted that an exception arises when the deed is fraudulent or illegal. The position in equity: is, and was always, different in this respect, that, where there are proper grounds for rectifying a deed, e.g., because it is bred upon a common mistake of fact, then, to the extent of the rectification, there can plainly be no estoppel based on the original form of the instrument. It is at least equally clear that in equity a party to a deed could not set up an estoppel in reliance on a deed in relation to which there is an equitable right to rescission, nor in reliance on an untrue statement, nor an untrue recital induced by his own representation, whether innocent or otherwise, to the other party. Authority is scarcely needed for so clear a consequence of a rectification order, or an admitted or proved right to such an order. The well-known rule of the chancery courts in regard to a receipt clause in a deed not effecting an estoppel if the money has not in fact been paid is a good illustration of the equity view: see the cases cited in Halsbury's Laws Of England (Hailsham Edn)Vol 10, pp 283-287. The decision of Lord Romilly MR in Brooke v Haymes is even more closely in point, and it may be added that the statement of the law in that case appears never to have been doubted. The head-note begins as follows: 'A party to a deed is not estopped in equity from averring against or offering evidence to contravert a recital therein contrary to the fact, which has been introduced into the deed by mistake of fact, and not through fraud or deception on his part.' In a simple case of this kind, it would be unnecessary, as that case shows, to counterclaim for rectification, though, in a case of any complexity, it would certainly be desirable to do so. Since the Judicature Act 1873, the rule in equity must prevail. It would seem to be clear that the case of Lainson v Tremere, if it were tried on the facts at the present day, would be differently decided, and that, in all those cases where the party against whom an estoppel by deed is sought to be raised has a right to rectification which would, so to speak, destroy the alleged estoppel, or a right to rescission on equitable grounds, he has an answer to the estoppel which would not have been open to him at common law. In the present case, apart from the ground on which the estoppel was held to fail in the Court of Appeal, I have myself no doubt that the same result might have been reached on the simple ground that the recital was inserted, so far as the shares in question were concerned, by a common mistake, not alleged to have been induced by the Parent Trust and Finance Co." Lord Atkin, Lord Russel of Killowen and Lord Roche concurred. Their Lordships held that on the proper construction of the deed read in conjunction with a document referred to in the relevant recital, was the statement of one party only to the deed, not a statement which each party to it had agreed to admit. At common law, their Lordships were applying the parol evidence rule. 103Equity permits a party to adduce evidence to establish that the recital is untrue and it was introduced by mistake of fact. When I consider the deed now in question I see no internal inconsistency: the defendant undertook to do in clauses 1 and 6 that which one would expect an "installer" to do. On my reading of the Deed it appears ex facie to record what the parties mutually agreed to admit as true. If I look at the evidence outside the Deed itself, I reach the same conclusion. 104Who knew the truth? Who knew that the defendant was neither the designer, manufacturer, supplier or installer of the Termite Tite barrier system? Who knew that Termite Tite Pty Ltd and the defendant were completely different companies? The answer to these questions is, clearly, the defendant. Mr Robson was an owner/builder, a builder by occupation, not a lawyer, accountant or business analyst. For all he knew, Termite Tite Pty Ltd and the defendant might be the same company, there being only a change of company name or a change of business name. He had dealt with Mr Ron Jeffrey when the Termite Tite barrier was installed and he appears mainly to have dealt with the same gentleman in 2007. To whom Mr Robson initially reported his discovery of termites at his home is unclear. It may have been the "Head Office" or the "Northern Rivers" office (i.e. Mr Jeffrey's business). From his dealings with Mr Jeffrey and others between 2006 and 2010, Mr Robson could be forgiven for believing that he was dealing with the same organisation, the same company, which had designed, marketed and installed the Termite Tite barrier in his home. This would raise other forms of estoppel: estoppel by representation and estoppel by convention. 105Why did the defendant do what it did in 2007, 2008, 2009 and 2010? In [22] to [24] I record the initial interaction between Mr Robson and the defendant or its licensee, Mr Jeffrey. Mr di Betta gave this evidence-in-chief: "Q. At the time of the socalled mediation, which is the meeting in February, had The White Ant Company formed a view about its liability under any warranty that may have been issued in respect of the Robsons' property? A. Yes, we had. Q. What was that view? A. That the we were not responsible for the damage. Q. Why was that? A. Because the infestation had come over the top of the exposed slab edge in the garage, which is a constructed barrier not an installed. Q. So can you tell his Honour why it is that The White Ant Company decided this socalled mediation at all? A. In the lead up to that the company had offered service related to the termite problems which reoccurred and at that time the Robsons were clients of the installer, licensee manager in that area and it was done as an act of good faith. There were some fees that were paid for some work that was carried out that were sent people were sent from Brisbane down to do. Q. When you say, "There were some fees", what does that mean? A. There was some additional work carried out that was advised in in the schedule of things that were there related to some baiting work that our Brisbane technicians went down and carried that work out. Q. When you say they were paid, can you A. There was an invoice raised and the Robsons paid it." Not only might the defendant's actions have been done "in good faith" but it may also have been good practice - to protect the Termite Tite barrier system's reputation, its "brand." In cross-examination Mr di Betta gave this evidence: "Q. Mr Di Betta, you gave evidence yesterday that you were in attendance at a meeting at the Robson's home on 10 February 2009, is that correct? A. Correct. Q. That meeting was also attended by Mr Flynn, the plaintiff's solicitor at the time, Mr and Mrs Robson, Mr Monaghan, who was the general manager of The White Ant Company at that time. Is that right? A. That's correct. Q. Mr Jeffries, who is the local manager for The White Ant Company at Yamba? A. That's correct. Q. Is that everybody that was at that meeting? A. Was not Mr Elder there? Q. Well, I'm asking you. Was Mr Elder there? A. I believe he was there. Q. Would you accept that that meeting was to try to come to some arrangement or agreement about how to proceed in dealing with the termite infestation at the Robson's property? A. That was the intention. Q. As a result of that meeting, was it your understanding that The White Ant Company was to undertake some invasive investigations to try and establish how the termites had gotten into the Robson's residence? A. That's quoted in the deed. Q. Was that your understanding? JOHNSTONE: Well, I object, your Honour. Whatever obligations The White Ant Company assumed are, for better or for worse, in the deed. HIS HONOUR: Yes. But, I mean, this gentleman's belief as to what he was required to do doesn't affect the operation of the deed but it might be some indication of why he did subsequent things. I'll allow the question. SMITH: Thank you, your Honour. Q. So just to recap, as a result of that meeting, was it your understanding that The White Ant Company was to undertake some invasive investigations to establish how the termites had entered the Robson's property? A. At a later date I was I was made aware of what was in the deed. Q. No. A. I didn't deal with the deed. I didn't arrange the deed. I didn't sign the deed. HIS HONOUR Q. Let's forget that. Forget about the deed itself. You were at the meeting. Did you leave the meeting with the understanding that The White Ant Company was going to carry out some invasive investigations to try and ascertain how the termites got in? A. In short, yes. SMITH: Q. I'll leave that. So did you leave that meeting the understanding that the nub of the agreement was that if it was your problem, you'd fix it and if it was the Robson's problem they'd pay for it? A. That's correct." In short, the Deed in substance records what the defendant agreed to do. Rectification of the Deed is not available to the defendant. 106I therefore hold that the defendant is estopped by recital C in the Deed from denying that it was the installer of the Termite Tite barrier system in the plaintiffs' home. 107Paragraph 10A of SOC is this: "It was an implied term of the contract referred to in Recital C of the Deed that the work would be done with due care and in a workmanlike manner." Paragraph 11 of the Defence is this: "As to the allegations in paragraph 10A, the defendant: a. admits that there was an implied term in the Installation Agreement to the effect pleaded therein; b. otherwise denies the allegations pleaded therein because no contract is referred to in Recital C of the Mediation Agreement; c. says further that to the extent that the plaintiff wishes to contend that Recital C of the Mediation Agreement is an operative term of that agreement, the execution of the agreement in those terms was a mutual mistake by the parties and the defendant is entitled to an order that the Mediation Agreement be rectified." The admission of the implied term is welcome. Subparagraph (b) is pedantic and subparagraph (c) I have in substance already rejected. 108The plaintiffs then rely of par 21 of SOC, but only on particular (c): "In the alternative, and pursuant to the Liability Term of the Mediation Agreement [clause 6 of the Deed], the installation was performed negligently and in breach of the contract referred to in Recital C and the defendant is liable to pay the plaintiffs the reasonable costs of rectifying the Dwelling [the residential dwelling to be erected on the plaintiffs' property in question] in the sum of $104,547.00 Particulars (c) Failing to ensure that the joins in the Protection System were completely covered and bonded by sufficient adhesive." The definitions supplied in the SOC are chaotic, but what is intended to be conveyed is clear. Paragraph 19 of the Defence is this: "As to the allegations pleaded in paragraph 21 of the claim and notwithstanding that the matters pleaded as particulars to paragraph 21 are allegations of fact or mixed fact and law which should have been pleaded in the claim, the defendant denies those allegations as they are untrue because the defendant is not liable pursuant to the Liability Term of the Mediation Agreement to pay the plaintiffs' reasonable costs of rectifying the Dwelling in the sum of $104,547.00 because: a. the so-called "Protection System" (which it is assumed means "the System") was properly installed by Termite Tite; b. it was Mr Robson as the builder responsible for the installation of the termite barrier system which consisted of the Termite Tite barrier installation being properly cast in to a properly constructed slab; c. if termites have gained access to the Dwelling other than over the termite inspection zone which was impeded by the act of the plaintiffs, then that access is as a consequence of the conduct of Mr Robson as the builder or his concrete subcontractor; d. the Termite Tite barrier installation was bonded with sufficient adhesive; e. the Termite Tite barrier installation is not constructed of material which allowed the development of holes through which subterranean termites could enter the Dwelling undetected; f. Termite Tite: i. had no obligation to "ensure that there was sufficient cleareance between the membrane and the Protection System at the time of the installation of the Protection System"; ii. could not have known of the manner in which Mr Robson as the builder, or his subcontractor intended to construct slab into which the Termite [Tite] barrier installation was to be cast; g. whatever damage has been cause to the Dwelling by termites has been caused or substantially caused by termites entering the dwelling from the garage and therefore as a consequence of the actions of the plaintiffs; h. the defendants do not admit that the reasonable costs of rectifying the Dwelling are not [sic] $104,547.00 but say further [and] in any event, that any damage caused to the Dwelling as a consequence of termite ingress is as a result of the actions of the plaintiffs." Subparagraphs (e) and (f) of the pleading refer to particulars no longer pressed by the plaintiffs. 109Was the installation of the Termite Tite barrier system "done with due care and in a workmanlike manner" (the accepted implied term of the initial contract with Termite Tite Pty Ltd) or, alternatively, was it done negligently - a test to be applied under clause 6 of the Deed. In my view there is in the present case no distinction between those tests. I have clearly found that damage was caused to the plaintiffs' home by ingress of termites at sites (ii), (iii) and (iv) caused by termites passing though lapped joints which had not been sealed along the whole length of each joint. At [93] I quoted an opinion of Mr Elder, which I have accepted. The lapped joints should have been sealed along their entire length as has been the defendant's practice since January 2004. The installation work was done negligently. Turning to the defence: (i)subpar (b) is not applicable because relevant damage resulted from inadequate sealing; (ii)subpar (c) I have not accepted - [74] to [80] and [97]; (iii)subpar (d) I have just rejected; (iv)subpars (g) and (h) go to quantum. Accordingly, there is no valid defence to the plaintiffs' claim and they are entitled to succeed. 110SOC relies in par 11 on part of clause 1 of the Deed, which the SOC describes as "the Necessary Works Term" but termite activity had ceased in late April 2008 and the Deed operates from 9 April 2009, so it was not necessary for the defendant to do anything "to restrain and minimise any further termite activity" at the plaintiffs' home and, accordingly, there has been no breach of this particular obligation and no damage suffered by the plaintiffs. 111SOC relies in par 12 on another part of clause 1 of the Deed, which SOC describes as "the Investigation Term." The part of clause 1 of the Deed required the defendant "no later than 28 days from the date this Agreement commences ... undertake all such investigations to determine conclusively whether or not the termite infestation in the home is due to a breach of the termite tight [sic] barrier system." I have already found that the defendant breached that obligation: [43]. Paragraph 20 of Ms Smith's written submissions [MFI 10] is this: "Your Honour, quite rightly in my submission, commented that for the issue of the cause of the termite infestation to be determined conclusively required both parties to be convinced by the results of the investigations as to the cause of the infestation. By the fact that these proceedings have been brought and defended it is obvious that the parties are not in agreement as to the cause of that infestation and it was not determined conclusively by any investigations carried out by [the defendant]." However, it is hard to see any direct damage flowing to the plaintiffs as a result of that breach, other than, perhaps, the attendance of Mr Elder at the plaintiffs' home on 28 October 2009 and some work done by Mr Flynn prior to action, that would not be covered by an order for costs. The two heads of potential damage I have just mentioned were never quantified. 112SOC relies in par 13 on clause 6 of the Deed, which SOC describes as "the Liability Term". Ms Smith did not press any breach of clause 6, because it was not enlivened because of the defendant's breach of "the Investigation Term". 113Ms Smith also relied on "Common Law Estoppel" and relied on Halsbury's Laws of Australia pars [190 - 215] to [190 - 285] and, in particular, on Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175. In light of my finding of estoppel by deed I do not need to consider further her submissions, other than to recite the detriment on which the plaintiffs' relied: "40. The general principle of common law estoppel is that a party who induces another party to make an assumption for the purposes of their legal relations that a particular state of affairs exists is estopped from asserting the existence of a different state of affairs if the other party has acted in reliance on the assumption and would suffer detriment if the departure from the assumption was allowed. a. In this case the Defendant has induced the Plaintiffs, by agreeing to accept liability under the Termite Tite warranty and by executing a Deed stating that they were retained to install the termite protection system at the Plaintiffs' residence, to assume that the Defendant was accepting liability for deficiencies, if any, in the termite barrier installation. b. In reliance on that assumption, the Plaintiffs have not attempted to pursue Termite Tite for negligence or breach of contract and would now be statute barred from doing so. c. Although Termite Tite is a deregistered company, it would still have been possible for that company to be restored for the purposes of litigation if investigations had suggest that was a prudent course. d. The Plaintiffs have not, in reliance on that assumption, investigated any other legal avenues for rectification of the termite damage at their home. Instead, the Plaintiffs have, in reliance on the assumption, continued to negotiate and deal with The White Any Company in relation to the investigation and rectification of the termite problems at their home. e. On the Defendant's own evidence (Oral Evidence Mr Di Betta 7 November 2013) prior to commencement of these proceedings Mr Di Better never told the Plaintiffs that, even if there was a proven failure in the barrier, [the defendant] would not be responsible for any rectification or repairs."

Quantum 114SOC alleges that the reasonable costs of rectification of the dwelling are $105,547 and refers to Mr Oke's report of 26 June 2012. That sum is that assessed by Mr Oke. However that is for all termite damage repairs, including damage at site (i) which is the responsibility of the plaintiffs. The costs assessed by Mr Oke for rectification of the ensuite of the master bedroom are $17,461. If that sum is subtracted from the total, the estimate of Mr Oke becomes $87,086, which is the amount put to me in addresses by Ms Smith. There was no agreement on quantum. Mr Witty provides another assessment. The assessments can be tabulated thus: Mr Oke Mr Witty Bathroom $19,780 Sunken lounge ] $12,327.80 Kitchen ] Separate WC $5,536

Laundry $14,834 Bathroom $13,049 Built-in wardrobes $12,843 Kitchen $5,420

Wall framing $28,673.45 Master bedroom ] $2,561.40 Bedroom 2 ]

TOTAL $87,086.45 $44,375.70

One will note from this table that their methodologies are different. 115Mr Oke commences his assessment with this statement: "In preparation of the cost estimates contained within this Report, reference to Rawlinsons Construction Cost Guide 2012 has been used to establish likely labour rates for categories of trade work. The use of the "Detailed Prices" within this publication, being labour and materials for a specific area and/or quantity of work is not appropriate to the type of rectification work to be carried out and therefore I have relied on my building experience in preparation of the Cost estimate." The defendant complained that Rawlinson's Guide was not annexed to Mr Oke's report. According to Mr Oke's evidence it has about 250 pages. He described it as "an industry publication that details building costs on many parameters of building and this particular manual refers to ... residential dwellings and small scale commercial buildings" (T 23 May 2013, p 6). He had not brought it to Court but agreed to give it to the solicitor instructing Ms Smith on loan for the week commencing 27 May 2013. The Guide was not tendered or even referred to subsequently. I can only assume that the defendant did not press the complaint. 116Mr Oke then quotes the "Wage Rates" provided by the Guide. He then calculated the cost of the rectification of timber wall frames as $711.50 per linear metre. He provides a lengthy table showing how that was calculated. It includes a builder's margin of 20% and GST. His assessment of the amount of wall frames to be replaced was 40.5m. $711.50 x 40.5 is $28,815.75. There is a mathematical error. I trust it is Mr Oke's and not mine! That is the final item I have set out in the table above. The remaining part of his assessment is: "Wet Areas 35. Rawlinson Construction Cost Guide 2012 provides "Bathroom fitout and services" costings relating to wet areas within residential buildings. It is estimated that the cost per square metre is $2,366.00 inclusive of supply and installation of fixtures, fittings and services. The cost estimate also includes Builder Margin and GST. 36. The Bathroom is 8.36m2 and therefore would cost $ 19 780.00 to refurbish. 37. The Separate WC is 2.34m2 and therefore would cost $ 5 536.00 to refurbish. 38. The Laundry is 6.27m2 and therefore would cost $ 14 834.00 to refurbish. [...] Built-in Cupboards 40. Rawlinson Construction Cost Guide 2012 provides costings for built-in wardrobes at a rate of $ 834.00 per lineal metre of cupboard, inclusive of Builders Margin and GST. 41. The aggregate total of the built-in robes is 15.4 lineal metres and therefore would cost $12 843.00 to refurbish. Kitchen 42. It is considered that the kitchen benchtop and cupboards, including disconnection and reconnection of fixtures, replacement of splashback, repair to bulkhead, from the western wall of the kitchen is estimated to cost $ 5 420.00." 117Mr Witty divides the house up into different areas and comments on the damage in each area. Commencing at par 6.3 of his report of 14 September 2012, he assesses the internal wall between the sunken family room and the kitchen and the external wall of the southern family room. He states that if the work required to be done by Mr Oke, were done, "then a cost of $5,420.00 including GST and builder's margin might be reasonable if all of that work was required." However, that is only part of the damage in the area. He states that wall rectification in this area is "reasonable", accepts Mr Oke's rate of $711.50 per linear metre, says the length of wall damaged is 9.8m, such that the cost was $6,967.90 but that ought be $6,972.70 (if my mathematics be correct!) At least there appears to be agreement on the rate for replacement of timber wall frames. Unfortunately, Mr Oke does not provide any table showing how 40.5m of walls requiring rectification was calculated. 118As to the internal wall between the separate WC and the bathroom and laundry, Mr Witty says this: "6.4.5 I am instructed that the Plaintiffs have alleged there is rectification work required in this area. Although I was not able to inspect the dwelling to determine whether the rectification work is required, as to each of the areas requiring rectification work as outlined by the Plaintiffs, my opinion is as follows: 6.4.5.1 As to rectification of the Bathroom which the Plaintiffs allege is 8.36 sq.m., I agree that the area is 8.36 sq.m. I am instructed that the Plaintiffs have claimed rectification at a cost of $19,780.00 to remove damaged areas and supply and install fixtures, fittings and services. This is an unreasonably high amount in view of the fact that the Plaintiff is a builder plus the bath, vanity, shower, towel rails, mirror and services to this room are of a type that are readily removable and can be reused without detriment to them. In my opinion, having regard to these factors and to the size of the Bathroom, of 8.36 sq.m. I say that reasonable cost of rectification by the Plaintiffs is $13,049. 6.4.5.2 As to rectification of the WC which the Plaintiffs allege is 2.34 sq.m., I agree that it is 2.34 sq.m. I am instructed that the Plaintiffs have claimed rectification at a cost of $5,536 to remove damaged areas and supply and install fixtures, fittings & services. This is an unreasonably high amount in view of the fact that the Plaintiff is a builder plus the toilet suite, toilet roll holder, & services to this room are of a type that are readily removable and can be reused without detriment to them. In my opinion, having regard to the size of the WC, of 2.34sq.m. I say that reasonable cost of rectification by the Plaintiff is $3,652. 6.4.5.3 As to rectification of the Laundry measuring 6.27 sq.m., I agree it is 6.27sq.m. I am instructed that the Plaintiffs have claimed rectification at a cost of $14,834.00 to remove damaged areas and supply and install fixtures, fittings and services. This is an unreasonably high amount in view of the fact that the Plaintiff is a builder plus the laundry tub, laundry cabinetry, and services to this room are of a type that are readily removable and can be reused without detriment to them. In my opinion, having regard to the size of the Laundry, of 6.27sq.m. I say that the reasonable cost of rectification is $9787." In the next paragraph of his report Mr Witty states, in essence, that the allowance he has made for rectification of these areas includes wall framing in this area. What the length of wall framing is, he does not say. 119Mr Witty then assesses the cost of rectification due to termite ingress at site (i), for which the defendant is not responsible. Mr Oke brought this in at $17,461 plus, clearly, part of wall frame replacement. Mr Witty brought the cost in at $11,520 for both pieces of work. 120Mr Witty then discusses the damage in the master bedroom and bedroom 2. At par 6.6.6 Mr Witty says this: "6.6.6 I am instructed that wall framing rectification work is claimed in this area as part of an aggregate length of 40.5 metres and at a cost of $28,673.45. I say that I am unable to determine whether wall framing rectification work is necessary or reasonable in this area. If wall framing rectification work were required to this area, and I cannot tell, then the number of lineal metres for the area of damaged alleged by the Plaintiff is 3.6 LM which at a cost of $711.50 per LM is a total of $2561.40." On built-in wardrobes Mr Witty says this: "6.6.5 I am instructed that the Plaintiffs allege that the rectification of built-in wardrobes in the dwelling is a total of 15.4 lineal metres at a cost of $12,843.00. Although I was not able to inspect the dwelling to determine whether rectification work is required, as to rectification of this wardrobe I am of the opinion that 15.4 lineal metres is unreasonable. This is because no other built-in wardrobe has been identified by the Plaintiffs as allegedly having termite damage. The built-in wardrobe in this area is only 3.6 LM. I say that a reasonable cost for rectification to this wardrobe, if it were necessary, would be $833 per LM for a total of 3.6 LM giving a total cost of $2998." The dispute on this issue appears to be about the length of built-in wardrobes that needs to be replaced. According to Mr Oke, the cost per linear metre according to the Guide is $834. Mr Witty says $833, with no explanation as to the difference. It seems to me to be merely an error. $834 x 3.6 is $3,002.40. 121As is stated by Mr Oke in his initial report, the extent of damage to the dwelling can only be determined by removal of the wall linings from one side of each wall in the areas where past termite activity has been detected. The assessment of the damage is speculative but the Court must engage in this exercise as determining the full extent of the damage would require large areas of the plaintiffs' home to be pulled down. It appears to me to be appropriate to accept the work proposed by Mr Oke, but then to apply a discount for the vicissitude that some of the work proposed will not be required to be done, although it will be necessary to remove walls, and if no damage be found, to replace them. 122In par 26 of his initial report, Mr Oke describes the "walls which will need to be demolished and reconstructed". Page 6 of that report is part of a copy of exhibit B, the architectural plan of the house on which he has marked damaged walls. Guided by the description of the walls and the highlighting on page 6 of his report (which is fading) and by using a ruler on exhibit D it appears that the following walls and lengths thereof that need to be demolished and reconstructed are: Wall Length ● internal wall between sunken family room/kitchen 4.2m ● external wall of sunken family room 5.0m ●internal wall between separate WC and bathroom 1.6m ● internal wall between laundry and separate WC 3.3m ● external wall of separate WC 1.0m ● external wall of laundry 1.85m ● internal north wall of laundry 1.0m ● internal walls (west, north and east) of master bedroom 12.7m

Total length 30.65m

I measured the wall between the garage and the ensuite, which extends up to the internal north wall of the laundry at 6.0m. If I add that to the last total, I arrive at 36.65. I do not know how Mr Oke arrived at 40.5m. $711.50 x 30.65 gives a total of $21,807.48, which I shall round off at $21,810.00. To that I apply a discount of 10% giving a total of $19,629. 123There is great validity in Mr Witty's observation that many fixtures in wet areas can be removed and replaced. Some may not be able to be reused, depending on their construction. Services such as plumbing and draining will not need to be done again. Applying Rawkinson's Guide, as applied by Mr Oke, the cost of fitout of the wet areas in question are: Bathroom $19,780 Separate WC $5,536 Laundry $14,834

I allow half that sum, i.e. $20,075. 124I allow the assessment made by Mr Oke for necessary work to be done in the kitchen. That sum is $5,420. 125The dispute about built-in wardrobes appears to be the length of the wardrobe in question. Mr Oke says 15.4 linear metres and Mr Witty 3.6 linear metres. It appears from page 6 of Mr Oke's primary report that only the wardrobe in bedroom 2 has been damaged. Mr Witty's estimate of length is correct. $834 x 3.6 is $3,002.40 which I round off at $3,005. 126Another point advanced by the defendant is that as Mr Robson is a builder himself, he might do the work more cheaply himself, rather than engaging another builder. However the plaintiffs' claim is in contract rather than tort. Furthermore he will expend his own time if he does the building himself, which time he could spend working, charging a commercial rate. I must decline to discount the damages further. 127I have clearly not taken into account Mr Witty's assessments. They are merely ipse dixits, without any disclosure as to how he arrived at his figures. That having been said, the total of that I have arrived at is $48,129 which is much closer to his assessment than Mr Oke's. My assessment is based on monetary sums calculated by Mr Oke between 17 May 2012 (inspection) and 26 June 2012 (report) using the Rawlinson Guide for 2012. The assessment is now out of date. I propose to allow pre-judgment interest at the rates applicable under UCPR r 6.12(8) from 1 January 2013 to 22 December 2014. That sum is $6,359.29 which I round off at $6,360. 128There is one further head of damage which the plaintiffs' ought to have claimed and is properly allowable. The plaintiffs paid $1,290.00 to Pest-A-Gon for work done by that business on 21 February 2008. When it was paid is not clear from exhibit H. The invoice bears date 21 February 2008 and was payable within 30 days. I allow pre-judgment interest on that sum from 1 April 2008. If the Termite Tite barrier system had not been penetrated, the plaintiffs would not have incurred this cost. Interest on that sum is $713.03 which I round off at $713. 129The total of these sums is: $48,129 $6,360 $1,290 $713 $56,492

The cross-claim 130It follows automatically from my earlier findings that the defendant's cross-claim must fail. The costs it was claiming it was required to bear under clause 6 of the Deed. The defendant was claiming $6,808.05 plus interest calculated to 8 November 2013 of $1,310.99. However, of the past sum, $1,690 was part of the defendant's costs of these proceedings and ought not to have been claimed in the cross-claim

Orders 131(1) I give verdict and judgment for the plaintiffs against the defendant for $56,492. (2) I give verdict and judgment for the cross-defendants against the cross-claimant. (3) I propose the following orders as to costs: (a)Defendant to pay the plaintiffs' costs; (b)Cross-claimant to pay the cross-defendants' costs. (4) Should either party wish to argue about costs, that party is to notify my Associate and the other party by 4pm on Friday 23 January 2015 by email. If there is to be such an argument it will be heard on Monday 9 February 2015 in the John Maddison Tower, 86 Goulburn Street, Sydney, Court 15A, at 10am. If no such notice is received by my Associate by the appointed hour, I shall make the proposed costs orders in Chambers.

2011/00101316 - MICHAEL ROBSON v THE WHITE ANT COMPANY PTY LIMITED

JUDGMENT - Application by plaintiff to serve evidence out of time 1HIS HONOUR: The plaintiff seeks leave to rely on a report of Mr Graham Lancaster dated 31 October 2013. The report of Mr Lancaster was served on the defendant's solicitor at 1.08pm on Friday 1 November 2013. 2This case was called on for hearing before me at Lismore on 20 May 2013. The matter was before me on a number of days. Evidence was adduced on Thursday 23 May, Thursday 30 May and 31 May 2013. The matter was then adjourned to Sydney to recommence today. The last witness to give evidence was Mr Michael Witty, a qualified builder and architect, called by the defendant. In essence he was the defendant's building expert. At the conclusion of the evidence given on 31 May the following is recorded in the transcript: "HIS HONOUR: Can I blithely [Scots usage] observe that this case - one of the issues in this case could be quickly put to bed if somebody took some samples [from the lapped joint] for analysis. Are we looking at dirt or are we looking at mudding and faecal staining from termites. Some clinical analysis, if not DNA analysis, would sort that out completely. SMITH: Would your Honour give us leave to file that evidence and serve, being part-heard? HIS HONOUR: ... It would appear the only sensible thing to do, ... the only trouble is, of course, that if you go down the route of DNA it costs an arm and a leg and will take forever, and I have not idea of what chemical analysis - what someone would look at in the microscope and things of that nature. SMITH: Well, perhaps we'll have a chat between us and see what we can arrange. HIS HONOUR: Well, if the parties want to do that, the thing to do would be to agree on a common independent expert and let him decide that." 3I am told, without objection, that the transcript of 31 May 2013 only became recently available. Indeed the Court has not yet been provided with it and I am relying on the copy which the plaintiff's solicitor very kindly provided to me. However counsel and solicitors for both parties were present in court when I made my observations on 31 May 2013. There was no prompt response to my suggestion at all. On 7 August 2013 the solicitor acting for the plaintiff sent an email to the defendant's solicitor concerning a number of matters. Under the heading "Further Action" the plaintiff said this: "We are in the process of attempting to locate an expert who may be in a position to test the material at the Robson's residence to determine whether it is dirt and/or termite workings, in accordance with his Honour's suggestion. We expect that this testing will most likely be conducted at a forensic laboratory. Would you please let me know, by close of business, on Friday, 9 August 2013 (if possible), whether your client agrees with this course of action and potentially sharing in the cost of this testing. I would appreciate if you could contact me prior to 18 August 2013 if you consider that anything further remains outstanding in this matter, so that I can attempt to action it prior to going on leave." The plaintiff's solicitor's reference to going on leave is the fact that she would be on annual leave from 21 August 2013 until 20 September 2013. The defendant's solicitor replied by email on the following day. As to the expert testing that I had suggested and which the plaintiff's solicitors were now taking up, the defendant's solicitor said this: "We have been instructed by our client that he does not wish to take part in a test to determine whether dirt or termite workings is the substance found in the area of the Robson's property shown in photo P1 of Mr Langley's report dated 23 May 2013. Whilst we are not asserting that this area has been interfered with by your client, their experts, or anyone for that matter, our client is just simply not in a position to know whether or not any interference into this area has occurred. Accordingly, our client will not contribute to any costs associated with this testing should your clients choose to engage an expert to conduct those tests." 4When the plaintiff's solicitor returned from leave she qualified Mr Graham Lancaster of the Division of Research at Southern Cross University at Lismore. For that purpose she arranged to meet with Mr Lancaster at the plaintiff's property at Evans Head at 10.30am on 9 October 2013. Investigations were made by Mr Lancaster and he arranged electron microscopy scanning, known as SEM (scanning electronic microscopy), assessing the samples which he collected on 9 October 2013. Those are the subject of his report of 31 October 2013. 5There are a number of things to note. This litigation is longrunning, and involved, but the quantum of the case appears to the order of $100,000 not $100,000,000. There must be some consideration of cost effectiveness. The suggestion that I made at the end of the evidence on 31 May 2013 was to try to narrow the issues by obtaining expert evidence which would enable one to determine whether the substance that was in dispute was in fact dirt or droppings from termites and there is opinion evidence based on the SEM in Mr Lancaster's report. The next thing to observe is that the defendant's solicitor did not object to such further expert evidence being collected, did not object to the process that I suggested but, rather, immediately declined to become involved because the defendant could not agree that the site from which the samples were to be collected had not been interfered with. That may still be a valid consideration but that should not have inhibited the defendant's solicitor from participating in the process. 6Under s 56(1) of the Civil Procedure Act 2005: "The overriding purpose of this Act and the rules of court [made pursuant to the Act, namely, the Uniform Civil Procedure Rules] in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings." For those purposes, pursuant to s 56(4), each of the solicitor, the barrister and the party who retains that solicitor and that barrister must not by his or her conduct cause the party himself to be put in breach of the duties identified in the section. In shorthand form, the party to civil proceedings and his lawyers are under a duty to assist the Court to further the overriding purpose of the Act and that "is to facilitate the just, quick and cheap resolution of the real issues in the proceedings." 7Objection is taken to the plaintiff's being granted leave to rely upon Mr Lancaster's report because, clearly, the report has not been served in accordance with the rules. However I have discretion under UCPR 31.28 to extend time in which the report of Mr Lancaster may be served. However, pursuant to subr (4), leave is not to be given unless the Court is satisfied that there are exceptional circumstances to warrant the granting of leave. The provisions of subr (4) (b) are not, here, relevant. The rule itself does not provide what constitutes "exceptional circumstances". An assessment of exceptional circumstances must depend upon a careful consideration of the facts of an individual case: AWA v Independent News Auckland Ltd [1996] 2 NZLR 184 at 186. 8I continue with the commentary from Ritchie's Service: "'Beyond that generality, in order to constitute 'exceptional circumstances warranting the granting of leave' the matters relied on: ●must be assessed against the particular statutory criterion and with a proper understanding of its rationale: R v Buckland [2000] 1 All ER 907 at 912 - 913; [2000] 1WLR 1262 at 1268; ●must be more than circumstances that are regularly, routinely or normally encountered although they need not be unique, or very rare R v Kelly [2000] 1 QB 198 at 208... ●may contribute to characterisation as 'exceptional' because of the relative infrequency of their occurrence, and also by reference to their qualitative significance; R v Buckland [supra] at ALL ER 912-913, WLR 1268 ●may derive their 'exceptional' character from either a single exceptional matter or a combination of other factors which, taken individually, may be either exceptional or ordinary; Ho v Professional Services Review Committee No 295 [2007] FCA 388, [26]." In my view there are, here, exceptional circumstances. Firstly, it was the Court itself which proposed that evidence of the nature to be given by Mr Lancaster be obtained in order to shorten the matter. When the plaintiff, albeit belatedly, sought to do so the defendant's solicitors did not object but merely declined to be involved in the process. The process has been completed, the report has been served. Fortunately, the plaintiff's solicitors have arranged for Mr Lancaster to fly down from Lismore and he will be available for crossexamination this afternoon. 9I anticipate that the crossexamination will seek to establish that the opinions that the witness has expressed are beyond his expertise and no doubt, if that is established, the report could not be admitted. However, in the circumstances, I believe that it is appropriate, where the Court suggested a matter which might shortcircuit issues or narrow the issues joined between the parties, and when no objection was taken by the defendant's solicitor, who declined to become involved in expediting the shortening of the matter or the narrowing of the issues, to find there are special circumstances to warrant the shortservice of the report. Accordingly, I grant leave to the plaintiff to serve the report of Dr Lancaster at 1.08pm on Friday 1 November 2013.

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