Sader v Renbar Constructions PL [2025] NSWCATCD 47;

"On 22 February 2022, a schedule of defects and damages was provided to the Supreme Court as ordered by the Court. Given the cause of defect 12 had not been properly identified, and a proper rectification methodology being able to be agreed or even determined, this defect was withdrawn because it could not be properly dealt with by the Court, given the hearing of the matter had concluded at that time. [A copy of the email providing the Scott schedule and the Scott schedule was exhibited.]"

1. On 22 February 2022 at 2.40pm the owners' solicitors emailed the builder's solicitors. The email: referred to the experts' site inspection on 18 February 2022; said that the owners' expert was unable to provide a definitive opinion regarding the cause of the ensuite water issue and had indicated that further investigation would be required which could not be done at short notice. The email continued:

"In those circumstances, where there is the possibility that this is a major defect, we propose that we should inform his Honour of the above, and we intend to withdraw our clients' claim for this item, subject to the right for Dr Sader's to take this matter further, if so advised".

1. The Court delivered its reasons for decision on 25 February 2022, with final orders being made on 29 March 2022 following debate on those orders further discussed below. At para 34 of his current affidavit Dr Sader said that the two defects described above "were identified too late to be dealt with by the Court at that hearing".
2. At [182]-[183] of the reasons in the earlier proceedings, the Court referred to the roof membrane being damaged when the builder installed solar panels on the roof, accepted the owners' expert's costing, did not mention the drainage and airconditioning issue and, in respect of item 12, referred to the parties' agreement for further expert investigation and said that, "if this defect is to be pressed, I may deal with this matter on the papers once [the experts'] further views are known" [emphasis added]. Item 12 in the existing expert conclave report in respect of this matter was withdrawn and there was no express reservation sought of rights in respect of the alleged defect in its original or expanded form.
3. In the current proceedings the builder contended that the owners were precluded, by the rule in Port of Melbourne Authority v Anshun PL (1981) 147 CLR 589, [1981] HCA 45, from bringing any further claims because of the existing final judgment in the Supreme Court and the non-applicability of the statutory exception in HBA s 18E(2). This had been foreshadowed in a letter dated 20 October 2023, as had been alleged failure to mitigate. Since, for reasons discussed below, there is only one relevant cause of action (absent operation of the statutory exception), the operative principle may be more precisely expressed as res judicata.
4. The owners contended, at the hearing and in closing written submissions, that the builder was estopped from asserting the preclusion by the earlier litigation because the builder had expressly stated that a further claim could be brought (this was stated to be "waiver") and in reliance they did not appeal the refusal in the earlier proceedings to entertain the most significant claim, in money terms, of the owners (being the third claim that was the expanded form of what had been described in the conclave report in the earlier proceedings as item 12). In response, the builder said that the statement alleged by the owners could not have the alleged effect and could not be relied upon and that in any event the relevant claim had been withdrawn so there was no reliance.
5. There was no contest, and I find, that the Tribunal had jurisdiction to hear and determine an estoppel defence and has jurisdiction to hear a waiver defence (to the extent that such a defence is equitable, as opposed to being a common law defence): Steak Plains Olive Farm PL v Australian Executor Trustees Ltd [2015] NSWSC 289 at [67], [73]-[78]. The owners said that the builder waived its right to rely on the general law precluding more than one claim for breach of contract and that the statutory exception to such in HBA s 18E(2) was the only path, or was estopped from relying on such legal rights; alternatively, that the new formulation of deficiency for the items claimed in the current proceedings came within s 18E(2).
6. It should be noted that both sets of legal representatives were in both the earlier proceedings and the current proceedings. During the hearing there was a short adjournment but settlement negotiations proved fruitless.

Entitlement of owners to bring current proceedings

1. The builder first submitted that the DBPA claim, which was grounded in a breach of duty to take reasonable care, suffered from an absence of particulars of the steps that should have been taken to fulfil the duty and whether or not they were taken, relying upon Owners SP 89005 v Stroma [No 3] [2022] NSWSC 1707 at [5]- [9]. The DBPA claim was not pressed by the owners in closing submissions.
2. In relation to the claim for breach of statutory warranty, which did not require the same type of particularisation, as said earlier the builder submitted that the owners fell outside the statutory exception in HBA s 18E(2) to the general law that there was one claim for breach of contract and were precluded by the general law from litigating the matters in the current proceedings. The defects alleged in the current proceedings were said to be of the same "kind" as those litigated in the earlier proceedings. Further, the owners clearly had knowledge or ought to have known from the owners' expert's reports in the earlier proceedings about the defects now sought to be litigated - for example, the roofing defects now referred to were readily detectable by the owners' expert and formed part of his instructions to investigate and report on in the earlier proceedings. The owners made a forensic decision not to reserve a potential for expansion of item 12 in the earlier proceedings; that decision was not dependent on the builder's conduct. There was no appeal of any decision in the earlier proceedings.
3. In cross-examination in the current proceedings the owners' expert: agreed that he had identified in his 2019 report all defects that he could at the time in accord with his instructions; agreed that he did a thorough roof inspection; agreed that absence of overflows and capping would be obvious on such inspection and that staining would infer water ponding and that he saw water ponding which he attributed to inadequate falls; agreed that he knew his report was for use in legal proceedings where he attended with his report in evidence; agreed that in 2019 he took photographs of the failing roof membrane; agreed that for his 2023 report he took photographs depicting the same area as the photographs he took for his 2019 report, that the same matters were visible as in 2019 and that there had been no substantial further deterioration; agreed that he understood that his 2019 scope of remedial work included rectification of the photographed areas.
4. This was consistent with what had been pointed out by the builder's solicitor to the owners' solicitor in a letter dated 20 October 2023.
5. The owners' expert had recorded, in his first report dated 9 December 2019 in the earlier proceedings, that his instructions were to provide his expert opinion as to "The identification of defects in relation to the works performed at the property by the Builder". This accurately repeated the instructions in the owners' solicitors' letter of 23 September 2019.
6. In that report the owners' expert identified, without localisation of the defects, that the roof membrane was "failing at concrete shrinkage cracks to the roof slab ... The membrane is commencing to fail and lift ... Where pipe penetrations occur through the slab, the required collar or puddle flange has not been fitted" and provided photographs supporting the description. These were in addition to the penetrations through the membrane localised to the pool solar heating and other solar panels at ends of the roof. In cross-examination in the earlier proceedings the owners' expert conceded that the membrane showed the signs of deterioration (cracks and lifting) "typically throughout the roof area".
7. The detailed workings to support the owners' expert's costing of $13,022.90 (the sum awarded in the earlier proceedings) referred only to the 39sqm area for primer and membrane application, despite more general language in the time-based costing estimate within that total when the expert referred to removing blistering or defective membrane areas and installing puddle flanges to vents. The ambiguity was pointed out in the builder's solicitors' letter of 20 October 2023 referred to above.
8. The builder's expert's responsive report also referred to minor cracking (as he described it) in locations that were not specific to the solar equipment fixings.
9. In concurrent evidence in the earlier proceedings the owners' expert at pages 113 et seq of the transcript referred to cracks throughout the roof area but focused on the penetrations made by the panels. The builder's expert said that the fundamental difference between the experts was that the owners' expert said that the entire membrane needed to be totally removed and replaced, compared with repair, but again the context was ambiguous and the owners' expert said that he had costed to repair where required rather than entirely remove the membrane and had included in that costing to put one recoat over the entire roof.
10. The owners' opening outline of submissions in the current proceedings relied upon what was submitted to be "an aside" by the Court in the earlier proceedings. This occurred in the course of considering whether or not to allow into evidence over objection the owners' expert's then most recent report dated 21 January 2022. As said earlier, that report expanded, in the light of then-recent heavy rain, on item 12, being the ensuite leak which is the third issue sought to be raised by the owners in the current proceedings:

"... yes, this is the trial, everyone's supposed to be ready, but if this is a problem which has emerged because of weather, reasonably - if it either way looks as if there's some problem within the building, surely there's some means by which we can deal with it ...".

1. After that discussion, the Court directed the owners' and builder's experts to meet onsite, inspect the water leak and report. The experts agreed on a process of the owners' and the builder's plumbers inspecting the floor-standing bath tap which appeared to have a slight leak. The plumbers agreed on testing whether that was the source of the water leak by changing damaged "O" rings in the floor-mounted bath tap. Item 12 was not further considered in substance by the Court; as said earlier, the owners advised its withdrawal on 22 February 2022. The owners' expert's report of 21 January 2022 was not the subject of a responsive expert investigation and report.
2. The owners also relied upon a statement in the builder's closing written submissions dated 23 March 2022, after delivery of the Court's written reasons and which formed the builder's basis for the debate on orders on 25 March 2022 for which this set of closing submissions was filed (under directions provided for in the Court's reasons of 25 February 2022):

"In the event the Defendant [owners] wishes to pursue the Item, then there is nothing stopping the Defendant from pursuing this claim (which is not otherwise statute-barred) in a Court or Tribunal of appropriate jurisdiction".

1. This formed the last of five points in the relevant paragraph of the submissions. The other four said to the effect: (i) on 22 February 2022 after an inspection the owners withdrew the item and informed the Court; (ii) the owners were bound by their legal representatives' conduct of the proceedings; (iii) the agreed mechanism of expert inspection occurred "and the [owners] made the forensic decision to withdraw the item. That offer was accepted by the [builder] and the parties proceeded on that basis"; (iv) it was "entirely inappropriate" to now permit the owners to raise an item "that was withdrawn by consent".
2. Further argument on the "Item" referred to, being the expanded item 12, was not permitted by the Court when it was raised by the owners at the hearing on 25 March 2022; the owners conceded that the drainage defect was not pressed. Near the conclusion of the discussion on expanded item 12, the following exchange occurred between the Court and the owners' counsel (it was extracted as part of the documents attached in the opening outline for the owners that I marked MI1):

"Counsel: Can I assume that there will be - do I assume that there is no estoppel issue or res judicata that arises with respect to item 12 if it's dealt with elsewhere?

His Honour: I don't propose to say anything about that. Of course not. This is yet another matter that Dr Sader, through his legal advisers, has brought upon himself, to be frank."

The fact that a person entitled to the benefit of a statutory warranty specified in paragraph (a), (b), (c), (e) or (f) of section 18B has enforced the warranty in relation to a particular deficiency in the work does not prevent the person from enforcing the same warranty for a deficiency of a different kind in the work (the other deficiency) if -

(a) the other deficiency was in existence when the work to which the warranty relates was completed, and

(b) the person did not know, and could not reasonably be expected to have known, of the existence of the other deficiency when the warranty was previously enforced, and

(c) the proceedings to enforce the warranty in relation to the other deficiency are brought within the period referred to in subsection (1).

1. The principles were not in issue, rather, their application to the facts. HBA s 18E(2) expressly contemplates that an owner (or relevant subsequent owner) can bring separate claims for distinct alleged defects - "deficiency of a different kind" - that allegedly breach the same set of statutory warranties. Whether or not the requirements of s 18E(2) are met, particularly paras (b) and (c), are questions of fact: Shousha v Habuco Projects PL [2020] NSWCATCD, unreported, 14 April 2020, at [55]. Those requirements, especially para (b) which relates to the knowledge of the claimant at time of previous enforcement of warranty, are expressly inconsistent with the general law that there is one cause of action for breach of a contractual promise to carry out works in a good and workmanlike manner expounded in Conquer v Boot [1928] 2 KB 336, a decision which was approved and followed in Onerati v Phillips Constructions PL (1989) 16 NSWLR 730 in a general law context independent of s 18E. A claim for breach of contractual requirements concerning all alleged defects must be brought in the one proceeding. The general law was confirmed to apply to HBA Pt 2C as it then stood in Honeywood v Munnings [2006] NSWCA 215; (2006) 67 NSWLR 466 esp at 470, [2006] NSWCA 215. According to the explanatory note to the Home Building (Statutory Warranties) Bill 2006 (NSW), the amendments to HBA s 18E in Pt 2C (together with amendments to s 18D) were made to overcome that decision.
2. The foregoing was extensively analysed, in the context of amendments adding further alleged breaches of statutory warranty, in Parkview Constructions PL v Owners SP 90018 [2023] NSWCA 66. The discussion in that case at [85] et seq recognised, at [88]-[89], [91] and [103], the distinct causes of action that arise under HBA s 18C(1) (a deemed contract between the subsequent owner and the developer, as here) and the actual contract between builder and developer in respect of which a successor in title and a non-contracting co-owner are given rights under s 18D(1) and (1A). Section 18C(1) creates a statutory entitlement which is not predicated on or limited by any actual contract between the developer and builder: Baron Corporation PL v Owners SP 69567 [2013] NSWCA 238 at [12]- [13], [49]; Owners SP 66375 v King [2018] NSWCA 170 at [317]; Parkview at [28], [30].
3. In Parkview at [104] the Court of Appeal left open whether an "acute" difference in the nature of the defects (such as major and non-major defects with differential limitation periods) affected the analysis that there was one cause of action for purposes of permitting amendments to add further alleged breaches of statutory warranty. In Crystele Designer Homes PL v Wood [2023] NSWCATAP 242 the Appeal Panel at [66]-[70] upheld the primary decision permitting amendments (recorded in the Appeal Panel decision at [17.7]) on the basis that the difference in the defects sought to be added by amendment was not "acute". In the Supreme Court decision on review in Crystele [2024] NSWSC 1438 at [123], the solution was posited as drawing a distinction in causes of action between actions for breach of contract for major and non-major defects.
4. In light of the foregoing context (historical, current and legal) I now consider the owners' claimed entitlement to litigate in the current proceedings each of the three alleged defects identified in the owners' expert report in the current proceedings. The nature of those alleged defects are further analysed in the final part of these reasons. In this section the alleged defects are summarised to assist in determining the entitlement to litigate issue.
5. Defective waterproof roof membrane and related waterproofing measures: The owners agreed that in the earlier proceedings they had been awarded $13,022.90 and said that this was specific to claimed rectification of damage to only a portion of the roof membrane when the builder installed solar equipment at each end of the roof and the fixings penetrated the membrane without adequate protection. This finding reflected acceptance of the owners' expert (the same expert as in the present proceedings) on that matter. The ambiguities in the scope of the owners' expert's conclusions have been noted above.
6. The owners relied in the current proceedings on the owners' expert's later assessment in his report of 11 August 2023 that the repairs now required were to the balance of the roof membrane. The owners alleged that no primer and inadequate coats of waterproofing had been applied during installation. The membrane had degraded with shrinkage cracks causing failure within six years of installation. There were inadequate falls to drainage outlets, inadequately-sealed perimeter cappings and flashings, inadequate flanges around pipe penetrations and inadequate overflow provision at the perimeter to deal with surcharges in extreme rain events. The original remediation was only to 39sqm out of the 154sqm of roof area. The owners' expert's estimated remediation cost for the further work was $16,771.17.
7. As already said, the focus of the inquiry is on whether the defect is of a different "kind" and the state of knowledge, objectively assessed, of the homeowner. The wording of the statutory provision makes it clear that those are distinct and cumulative requirements for the exception to the usual general law rule to apply.
8. An issue in both the earlier and the current proceedings concerned the allegedly defective waterproof roof membrane and related water penetration protection.
9. The owners alleged in the current proceedings that the alleged defects described above that were now sought to be litigated were different in source and nature from the actual defect alleged and found in the earlier proceedings even if the consequence and effect were similar, namely, water penetration and damage. Here the sources and nature of water penetration as described above were distinct, not only from each other but also from the penetration of the roof membrane by the solar panel fixings. This distinctiveness was said to be evident, not only by observation of the defect, but also from the difference in required manner and scope of remediation.
10. I am prepared, with significant hesitation, to accept (for the purposes of considering the knowledge element below) that, in the circumstances of this case and despite the owners' expert's answers in cross-examination and the ambiguities in his evidence in the earlier proceedings described above, it was established that the defects alleged in the current proceedings constituted "a deficiency of a different kind" from the defect alleged and found in the earlier proceedings, as required to satisfy HBA s 18E(2). Although instructed to identify all defects, apparently carrying out an investigation to do so on a roof which did not appear different at the time of the assessment for the current proceedings and referring in general terms to cracks and other failures in the membrane, the expert focused in his costings in the earlier proceedings on a particular defect in a particular part of the roof which had similar consequences and effect in terms of water penetration but required a different manner and scope of remediation. The localised nature of the identified defect resolved in the earlier proceedings made it a distinctive component within the waterproofing protection structures. That will not always, or perhaps even often, be the case. One can easily envisage an integrated waterproofing system comprising all the elements which were the subject of complaint in the current proceedings. If I am later found to be wrong on the knowledge element for this alleged defect, my acceptance should not be treated as a positive finding and would need to be revisited for a finding on the matter.
11. Turning to the knowledge element in HBA s 18E(2)(b), it may be that the extent of consequences and effect of the roof membrane and related defects as now identified, and the required manner and scope of remediation, could reasonably have become known to the owners, not through their own observation, but only through expert evidence that it was not reasonable to expect to have been obtained with the original manifestation of the roof membrane defect being focused in a small roof area.
12. However, the expert's answers in cross-examination in the current proceedings set out above clearly indicated that his expertise was instructed to be applied and was applied to all defects that could be reported at the time and that his 2019 scope of remedial work included rectification of the same photographed areas as those photographed for his 2023 report. The non-localised references to membrane cracking and failings also set out above indicated that he had identified a broader set of defects than his rectification costing focused on. On that evidence the defects now complained of ought reasonably to have become known to the expert and through the expert's knowledge to the owners for the purposes of and prior to the earlier proceedings. The owners' evidence in the current proceedings confirmed their knowledge of the owners' expert's report of 21 February 2022 for the purposes of the earlier proceedings.
13. Accordingly, even if the evidence was sufficient to establish that "a deficiency of a different kind" was in issue in the current proceedings, the owners did not establish the required absence of actual or constructive knowledge under HBA s 18E(2)(b) for the dispensation to apply. Absent such exception, there was no independent cause of action.
14. Water ingress from inadequate falls in drainage lines: The owners' expert said that there was non-compliant minimum fall in the stormwater pipes externally and below the floor slab. This restricted flow and allowed backup in the aerial pipe connected to the stormwater pipes. A pipe had been retro-fitted as a condensate drainage outlet from an airconditioning system into the aerial pipe. In times of extreme drainage flow (such as severe rain runoff) the back up could flow through the airconditioning vent and the aerial pipe into internal areas of the lower level of the dwelling and cause water damage. The owners had had another builder rectify the problem at an invoiced cost of $19,241.20. The preferred evidence is the actual cost where it is available unless it is established to be otherwise appropriate: Hyder Consulting (Australia) PL v Wilh Wilhelmsen Agency PL [2001] NSWCA 313 at [19], [99]. The owners' expert estimated the cost at $45,648.03 if further rectification was required.
15. It is not in dispute that this item was not dealt with in the earlier decision and proceedings. It appears to be of a different "kind" of issue within waterproofing since it is a distinct location and component of the waterproofing measures in the dwelling.
16. However and in any event, the owners' expert identified the defect in his report of 21 January 2022 for the earlier proceedings. The owners' expert's reference in a report in the earlier proceedings indicates that the deficiency was known, or could reasonably be expected to be known, to the owners. This is sufficient to deny the owners the opportunity to raise the claim in the current proceedings. Absent such exception, there was no independent cause of action.
17. Water leak from bedroom 1 ensuite affecting study and internal areas below: The owners' expert said that the origin of the leak was defective ensuite waterproofing in the form of waterstops, undersized shower outlet and membrane failure. The owners alleged that extensive damage had occurred to the rooms below the ensuite, specifically a study.
18. As described earlier, in the course of the final hearing of the earlier proceedings, and after onsite inspections by the experts (at the Court's direction) and the parties' plumbers, the "O" ring solution had been pursued by the owners as the simplest and cheapest if in fact that was the cause and the remediation worked. The owners adopted and carried forward (with their own plumber) that solution and, when it did not resolve water penetration and damage to the study and other areas on the building level below, implemented a further solution with their own remedial builder at an invoiced cost of $5,656.20, which was to seal with silicon sealant the hole in the upper floor concrete slab and divert any water to the exterior through a drainage pipe which was also silicon-sealed in. (The builder contested the sealant, which is dealt with below.)
19. The owners' expert said that the potential failure of sealant meant that the sealant was not a final solution (which again was contested and is dealt with below). The owners relied upon quotations from the remedial builder who had performed what the owners contended were the interim measures that had been put in place to date. The remedial builder quoted $121,176.62 for the complete remediation which substantially involved wholesale removal of the ensuite bathroom and reinstatement after repair of the leak source and the water-affected areas below. The owners' expert had assessed the cost of such complete remediation at $134,998.86 and pointed to the customised features in the bathroom as producing a markedly higher cost than standard bathroom. The quotation is the preferred evidence by analogy with Hyder unless the basis of the quotation is successfully challenged.
20. This was submitted to constitute an acute difference from the solution (replacement of an "O" ring to prevent leaking from the floor-mounted bath tap) that was stated as the cause by the builder. As recorded in the conclave report in the earlier proceedings, the owners' expert had costed the "O" ring repair at $1,248 and the builder at $710.
21. The difficulty with this contention is that it avoids the central issue in respect of seeking to use HBA s 18E(2) to escape preclusion from bringing the claim. The "deficiency" in waterproofing, even if it was of a different "kind" from a leaking tap which it appears to be because of its different origin, was clearly known, or could reasonably be expected to be known, to the owners in the earlier proceedings because their expert identified the source or origin of the water leak and damage (the result of the deficiency) as at least requiring further investigation, in his report of 21 January 2022 for the earlier proceedings. It is a reasonable inference that, if the experts had carried out at the time of the earlier proceedings the investigation that the owners' expert carried out which produced his conclusion on source in his report for the current proceedings, then the owners would have known from their expert that conclusion and litigated it in the earlier proceedings. It was apparently not pursued in the earlier proceedings while a minimalist solution was investigated and implemented, but the position to contend for further investigation and reporting was not reserved or, if a mechanism for such reservation was not available or was refused by the builder or the Court, pressed for determination prior to judgment. Rather, the testing of the minimalist solution extended into mid-2023 when judgment in the earlier proceedings was delivered in early 2022.
22. Consequently, the owners fail to satisfy the requirement in HBA s 18E(2)(b). On the same factual matrix they are precluded from raising the expanded item 12 claim in the current proceedings. There is no independent cause of action (absent that statutory exception).
23. The owners also do not succeed in establishing that the builder was precluded by its conduct from relying upon the expanded form of the owners' item 12 claim being excluded by the final judgment in the earlier proceedings. The two statements by the Court, quoted in the owners' opening outline, do not assist the owners' case in that respect. The statement by the builder's counsel, quoted earlier as constituting the relevant conduct by the builder, occurred after the hearing had finished and reasons had been delivered, with the expanded item 12 claim not being the subject of consideration and testing at hearing and of findings.
24. On the evidence described above of what was said in Court and in communications between the parties' solicitors, a means of carrying forward an expanded item 12 was discussed with the Court and progressed, but there was no conduct by the builder after that point other than the builder accepting the owners' expressed intended course not to press the expanded item 12 claim.
25. As said earlier, the builder did not indicate any agreement, and was not asked to agree, to a reservation of the expanded item 12 claim for further investigation, report and determination, even if the Court had allowed such deferral if it had been asked, which it was not. The owners did not seek to adjourn or otherwise defer, or to withdraw and reinstitute, the defects claim after completion of investigations.
26. On the foregoing conclusions, the owners' claim in the current proceedings must be dismissed.
27. In the event that I am later found to be wrong on my conclusions concerning the owners' preclusion from litigating all or some of the matters the subject of these proceedings, I turn to consider the concurrent expert evidence, the conclave report and the experts' reports and make findings on the merits of the owners' claims in the current proceedings.
28. The owners' preclusion from bringing these claims is, I have found, by reason of principles of law applied to the facts and not because the Tribunal lacked jurisdiction to determine the claim (a matter discussed earlier in these reasons), so it seems apposite to proceed to make findings on the merits of the claims.

Principles governing loss arising from defective and incomplete work

1. The ordinary, natural and probable consequence of a breach of statutory warranties under HBA s 18B as to compliance with approved plans (and laws, codes or standards), due care and skill and fitness for purpose is remediation to achieve compliance, due care and fitness by doing of the remediation work or paying to have it done by others. As the High Court said in Bellgrove v Eldridge (1954) 90 CLR 613, [1954] HCA 36 at 617, cited with approval by the High Court in Tabcorp Holdings Ltd v Bowen Investments PL (2009) 236 CLR 272, [2009] HCA 8 at [15]:

"In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract."

1. This is applicable unless disproportionate on the principles discussed below.
2. Under HBA s 48O(1)(c) the owner is required to specify action by the builder that is grounded in proof by the owner of, not only the defect, but also the manner of remediation: Catapult Constructions PL v Denison [2018] NSWCATAP 158 at [46]- [61] and the authority there cited. In my view as I set out in Marr v JCK Building Solutions PL [2018] NCATCCD, unreported, 4 December 2018, HB 16/43946 at [46]-[54] and in subsequent decisions, an element of the manner of remediation in certain circumstances may inherently require inspection, properly defined so as to be sufficiently specific, to establish the need for and required scope of remediation.
3. In Bellgrove v Eldridge (1954) 90 CLR 613, [1954] HCA 36, the High Court said that the scope of remedial works must not be disproportionate to the defect. The High Court has also stated that there is a high bar for unreasonableness or disproportion once a breach is established: Tabcorp Holdings Ltd v Bowen Investments PL (2009) 236 CLR 272, [2009] HCA 8 at [13]- [20]; see also Walker Group Constructions PL v Tzaneros Investments PL [2017] NSWCA 27 at [186]; Barwick v Shetab [2017] NSWCATAP 127 at [87]- [88].
4. The analysis in the paragraphs in the Tabcorp decision, and the authority there reviewed, also makes it clear in these passages that reinstatement, provided it is not extravagantly disproportionate, is the appropriate measure of relief.
5. Reinstatement means what the builder was obliged to build, namely, contract works with a certain standard of regulatory compliance, amenity and presentation which includes not being at risk of emergent problems returning or growing. It also means that the form and finish of remediation and rectification produces an outcome that matches other components of the contracted works in form and finish and makes the works of the originally-intended quality and integrity.
6. There is a co-ordinate focus on the conduct of the owner in assessing the form of relief. In ordinary principles of contract law imported into construction contracts, an owner's claim for monetary compensation requires the owner to act reasonably in relation to the claimed monetary loss in order for the claimed loss to be recoverable: cp HBA s 18BA(1), (5). This includes giving the builder a reasonable opportunity to remediate or complete, or to minimise damages by remediating what it can and will do: cp HBA s 18BA(1), (3)(b), (5). The owner may be justified in a reasonable loss of confidence in the willingness and ability of the builder to do the remediation and completion.
7. The evidential onus is on the builder to prove that the owner acted unreasonably: Owners SP 76674 v Di Blasio Constructions PL [2014] NSWSC 1067 at [42]- [48], adopted in Owners SP 78465 v MD Constructions PL [2016] NSWSC 162 at [26]- [30] and GPM Constructions PL v Baker [2018] NSWCATAP 119 at [38]. This is consistent with the orthodox principles at general law: TCN Channel 9 PL v Hayden Enterprises PL (1989) 16 NSWLR 130 at 158; principles summarised in Downer EDI Rail PL v John Holland PL [2018] NSWSC 326 at [585] and authority there cited.
8. If the owner has acted reasonably then, since the builder is a wrongdoer, it will not defeat the owner's claim that the builder can suggest other and more beneficial alternative methods of remediation: Unity Insurance Brokers PL v Rocco Pezzano PL (1998) 192 CLR 603 at 654; Karakominakis v Big Country Developments PL [2000] NSWCA 313 at [187].

Alleged defective works - consideration and conclusions

1. I have described, earlier in these reasons, the alleged defects and do not repeat that description below before summarising the builder's expert's response and my findings.

Defective waterproof roof membrane and related waterproofing measures

1. In addition to saying that the alleged defect was a subject of the earlier proceedings and challenging whether the defects had been established to be defects and aspects of their alleged remedial cost, the builder's expert repeated his instructed assumption that the overflow outlets and capping were directed by the owners not to be installed and his assessment that, if the items had not been built, there would have been no charge for them in a cost-plus contract so there was no loss. If the builder was, contrary to his instructed assumption, found responsible for those items then he estimated the remediation cost of those items (overflow outlets and capping) at $4,311.45 including builder's margin and GST. There was no evidence otherwise contesting the owners' expert's assessment of remediation cost.
2. The builder's expert gave no expert evidence contesting that the alleged matters constituted defective work in breach of statutory warranty, apart from the falls to outlets being said to be in place, supported by measurements taken by the builder's expert that were not contradicted by measurements of the owners' expert.
3. The owners denied the alleged instructions concerning overflow outlets and capping.
4. HBA s 18F provides:

(1) In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from -

(a) instructions given by the person for whom the work was contracted to be done contrary to the advice of the defendant or person who did the work, being advice given in writing before the work was done, or

(b) reasonable reliance by the defendant on instructions given by a person who is a relevant professional acting for the person for whom the work was contracted to be done and who is independent of the defendant, being instructions given in writing before the work was done or confirmed in writing after the work was done.

(2) A relevant professional is independent of the defendant if the relevant professional was not engaged by the defendant to provide any service or do any work for the defendant in connection with the residential building work concerned.

(3) A relevant professional is not independent of the defendant if it is established that the relevant professional -

(a) was engaged on the basis of a recommendation or referral of the defendant to act for the person for whom the work was contracted to be done, or

(b) is, or was within 3 years before the relevant instructions were given, a close associate of the defendant.

(4) In this section, relevant professional means a person who -

(a) represents himself or herself to be an architect, registered design practitioner or registered principal design practitioner (within the meaning of the Design and Building Practitioners Act 2020), engineer or surveyor, or

(b) represents himself or herself to have expert or specialised qualifications or knowledge in respect of residential building work or any particular aspect of residential building work, or

(c) represents himself or herself to be engaged in a profession or to possess a qualification that is recognised by the regulations as qualifying a person as a relevant professional.

1. In the absence of competing expert evidence I find that the alleged defects were established in respect of all items except the falls to outlets and constituted breaches of the statutory warranties in HBA s 18B, subject to any successful defence. Even though the evidence did not establish falls to outlets, such would need to be re-worked as a part of roof membrane replacement so form part of the overall remediation and cost.
2. In respect of the defence that the owners directed no overflow outlets and capping, the builder relied upon a text message from Dr Sader on 26 February 2018 "No overflows through external walls anywhere that can be seen - Sandra has spoken". The builder responded "No problems. I will only act as instructed by you", to which Dr Sader messaged "No external overflows" and the builder replied "Noted".
3. It is clear that this message chain at most could be raised as a defence to overflow outlets, not capping.
4. The language of HBA s 18F does not neatly fit the circumstance where the alleged instructions were not to do certain work that was required for the overall works to comply with relevant laws, standards and codes. However, the reference to "deficiencies of which the plaintiff complains", and to "the work" in s 18F(1)(a), are sufficient in my view to refer to the area of building work (in this case, the roof waterproofing) of which the specific work instructed not to be done was an element.
5. There is no evidence to which I was taken to show that this was in response to the prior advice of the builder, that is, prior to the roof waterproofing work commencing. Accordingly, the builder's defence fails for non-compliance with a requirement of s 18F.
6. HBA s 18F is not couched in express language that it is the only means of establishing a defence based on instructions. Given the protective purpose of the statutory warranty provisions I consider that such was the intent.
7. In any event, in face of the owners' denial and where it was in the builder's interest to document such an important waterproofing instruction, I do not accept that the builder has established that such an instruction was given. It goes against belief that a layperson in construction matters would give such an instruction, let alone that a builder who would, or ought to, know the importance of the matter to proper waterproofing would not document such an instruction and the builder's warning about it.
8. With no defence such as under HBA s 18F, the absence of overflow outlets and capping are defects and the owners would be entitled to the cost of remediating those defects, whether or not they were charged for the items. In those circumstances it is not necessary to investigate whether, in the mass of material from the earlier proceedings that is in evidence in the current proceedings, there is or is not a charge by the builder for that work.
9. I accept the owners' expert's costings in the absence of serious challenge (with relatively minor differences on hours of labour and cost of materials on some aspects).
10. In the circumstance that the merits of the defects are being considered, it follows that a finding has been made (going further than my assumption described earlier) to the effect that the award in the earlier proceedings was for a defect of a different kind from those litigated in the present proceedings, and that the owners did not have the requisite knowledge, despite the ambiguity in the owners' expert's report and evidence described earlier. That cuts the ground from under the builder's submission that no compensation should be awarded in the current proceedings because the compensation awarded in the earlier proceedings covered the complete scope of roof waterproofing defects.

Water ingress from inadequate falls in drainage lines

1. The builder's expert said that the owners' expert had not identified a defect and that the leakage from the airconditioning units in the kitchen and the rear living room of the lower ground level was likely to have been caused by a lack of maintenance; he assessed the claim at nil value. If the builder was found responsible to re-locate the condensate pipe, clean the airconditioning units, extend the pipe to the external west path and make good the guest room plasterboard, then he estimated the remediation cost of those items at $6,476 including builder's margin and GST.
2. I do not consider that the owners' expert's photographic and observation evidence unsupported by measurement, when assessed against the relevant standards for required fall and the builder's expert's measurement evidence, establishes the defect in respect of the falls between drainage pits. There is also an absence of empirical evidence to support the owners' expert's thesis about the internal drainage line and backup if the alleged inadequate falls between drainage pits are not established.
3. I consider that, in the absence of establishing the owners' expert's thesis about backup in the drainage lines, the owners' expert's thesis about water flow to the airconditioning vents also has no established basis. There was no evidence of an abnormal storm prior to the work in mid-2023. The airconditioning contractor's invoice in June 2023 referred to "coils with dirt and debris built up" which was consistent with the builder's expert's thesis about lack of maintenance.
4. Accordingly, this claim fails on the merits. If a contrary view is later found, I note that the first two components had unchallenged quantum evidence and I accept that there is insufficient basis to challenge the third party invoice for the work in mid-2023.

Water leak from bedroom 1 affecting study and internal areas below

1. The builder's expert recited the matters discussed in the preceding section of these reasons, on entitlement to bring the claim. If the builder was found responsible, he estimated the work to fit a drainage pipe as $3,603.60 including builder's margin and GST. If the entire ensuite was to be demolished and reinstated he estimated the cost to be $63,573.91 including builder's margin and GST.
2. It is clear that the builder's original posited solution of the "O" ring replacement was not the cause of water escaping from the ensuite.
3. In my view, it is not clear that the owners have established that there is a defect in the ensuite waterproof membrane, or that the existing remediation is not sufficient and if necessary able to be economically replicated. Absent invasive investigation and evidence of continuing water flow after the current form of remediation there is insufficient evidence of a defect in the membrane. On that issue the owners' expert gave an at best ambiguous answer in cross-examination: "we don't know how long that repair will last and the other question is whether the defect is in the waterproof membrane". There is doubt that the owners' expert's thesis concerning the risk from sealant failure has any basis, given the competing evidence that sealant has not been used but, rather, solvent cement on the builder's expert's evidence.
4. In those circumstances I consider that the risk of failure of membrane and/or of the current solution has been established to justify total ensuite replacement and the builder has established the owner's solution and costing to be disproportionate beyond the invoiced cost of the current remediation, which I accept.
5. If, contrary to my finding, a risk of failure is sufficient to justify ensuite replacement, then I accept the builder's expert's costing as more detailed and supported.

1. It was clear from the evidence before me that the builder did not accept any responsibility, after the conclusion of the earlier proceedings, for further work at the owners' home. In those circumstances the builder has not established that the owners acted unreasonably in not inviting the builder to return to remediate the further items and in engaging other contractors.
2. Accordingly, the owners would succeed on the merits only in respect of the first of the three claims in the current proceedings.

2.1 Any application in respect of costs with supporting evidence (beyond existing evidence) and written submissions to be filed and served on or before 24 June 2025.

2.2 Any evidence and written submissions in response to be filed and served on or before 8 July 2025.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.