Stud work to same wall as [previous alleged defect] above is contrary to good building practice, studs cut and noggins missing. This wall supports the main tile roof load. This needs to be complete.

1. Once again Mr Martin offered no comment. Mr Eichner referred to:

Stud work ... bowing in two different directions as it was cut through in a number of different locations, requiring the replacement of the studs and all associated noggins. By doing so whatever plumbing and electrical wire in those walls had to be stripped out to allow the work to be carried out.

1. Mr Arends conceded under cross-examination by Mr Symons that the photographs which had been taken by Mr Eichner and which were appended to Mr Arends' report did not depict the alleged defect. In the absence of any contrary expert evidence I accept the evidence of Mr Arends and find the defect established.
2. The next alleged defect is a related one. It is alleged:

There are more than 20 load bearing studs that have been cut through by more than 50% and a pleat overlap into one side only by a maximum of 150mm framing. The Code requires less than 50% cut and 600mm long pleat overlapping 300mm each way to both sides. These need to be replaced.

1. This alleged defect was observed by Mr Arends. Mr Martin was unable to comment. Mr Arends did not himself allege that more than 20 load bearing studs had been cut through by more than 50%. He was not prepared to advance beyond the three which were admitted to by Mr Symons in the course of his cross-examination of Mr Arends (T/S 294). In his report Mr Eichner referred to 'a number of studs had been cut through more than 60% with only a small pleat to one side'. Once again there was no actual evidence adduced on behalf of the respondents contradicting the observations made by Messrs Eichner and Arends; hence this defect is established.
2. The next alleged defect is:

Non-load bearing walls have double plates impeding trust movement as required.

1. Mr Martin agreed that more clearance was required. Mr Eichner agreed with the observation stating it was 'in breach of the design'. He said 'the entire wall needed to be let down to create the gap required'. So far as I can make out there was no challenge in cross-examination mounted by Mr Symons against Mr Arends' opinion. This defect is established.
2. The next defect alleged is:

Top plate wall junctions do not have gang plates across plate tying them together which would prevent the plaster cracking in corners which has occurred.

1. In his written report Mr Martin was unable to comment on this point. In cross-examining Mr Arends, Mr Symons indicated that Mr Martin would disagree with Mr Arends' opinion that this alleged defect existed. In the event Mr Martin was prepared to go beyond his written report on two points only which he described as 'the ply bracing versus packer and the way in which beams are stabilised by noggins' T/S 386 ll 10-11. In the absence of any evidence challenging Mr Arends' opinion that this defect exists I accept its existence and so find.
2. The next alleged defect is:

First floor, bedroom four party wall load bearing stud work is short by up to 15mm so plastic glass spaces were used to fill the gap. This needs to be rebuilt.

1. Once again Mr Martin gave no evidence on this point. Mr Symons did not so far as I can make out challenge Mr Arends on this point hence I accept that the defect is made out. Similarly the next alleged defect, namely:

Glazing spacer plastic packers have been used in various locations which is not in accordance with the Code.

1. This defect is therefore established.
2. Item 19:

Multiple load bearing stud work has not been nailed properly.

1. Once again Mr Martin makes no comment on this point. This alleged defect is left in an uncertain situation. In answer to questions by me referring to photo 68 attached to his report and responding to the question:

Does that mean that this work may not be defective?

Mr Arends replied 'correct'. In those circumstances I do not believe that this defect, Item 2.3.17 in the Arends' report has been made out.

Floor joists around lift well are not ply block to transfer roof load.

1. As I understood Mr Symons' cross-examination of Mr Arends (T/S 298) he conceded that work needed to be done but put to Mr Arends that this was a completion item rather than a defect. I accept that interpretation but note that in the events that have occurred the distinction is not material.
2. The next alleged defect is:

Load bearing stud work around window and door openings need to transfer load through floor joists to lower plates on each level as per details F3-F5 of installation manual, none of these have been done.

1. Mr Martin had no comment on this. Mr Symons was critical that Mr Arends was unable to produce photographs illustrating this point. Mr Arends however did not resile from the opinion which he had expressed and I do not understand that Mr Symons directly contradicted it. This defect is established.
2. The next alleged defect is:

Bracing ply to external faces above basement is not adequately nailed.

1. Mr Symons' point in cross-examination was that there was extensive plywood employed sometimes for packing and sometimes for bracing. Mr Symons put it to Mr Arends that from the inside he would not be able to distinguish which plywood was bracing and which was merely packing; hence one could not tell the difference from the inside, the point from which Mr Arends was making his observations. His response was 'fair enough' T/S 301 line 23.
2. This defect is not established.
3. The next alleged defect is:

Lightweight cladding is meant to be screwed at 300mm on studs this has not been done.

1. Mr Martin's comment appeared to agree with the observation but said it was a matter of completion. Again in his cross-examination at T/S 302 Mr Symons appeared to concede that the cladding was not 'screwed at 300mm on studs'. He said however this was a matter of completion. The work must be done.
2. The next alleged defect is:

Lightweight cladding missing from above bedroom 2 allowing weather to penetrate insulation and plasterwork which had been installed.

1. Mr Martin said this was a matter of completion. The work needs to be done. In the events that have occurred the distinction between defect and completion item is not material.
2. The next alleged defect is:

Door frame to laundry external door has been installed inside out.

1. This matter was the subject of lengthy cross-examination. Mr Symons alleged in the course of the cross-examination that the door depicted in the photograph referred to by Mr Arends had been installed by Mr Eichner following Mr Symons' departure from the site. Mr Gurr pointed out the alleged defect related not to the door itself but to the allegation that the door frame had been installed back to front. Mr Arends stuck to his guns on this point. Mr Symons said he would take the matter up through Mr Martin. As previously noted Mr Martin was unable to comment on this matter in his report and did not offer any supplementary viva voce evidence on this point. Accordingly I accept the evidence of Mr Arends and regard this defect as having been established.
2. The next alleged defect is:

Bulkhead framework was installed with only nail connections and not screws to prevent separation.

1. Mr Gurr contended that Mr Martin conceded that these items were defects. I am unable to follow his transcript reference said to establish this point. Mr Eichner said:

Once the condemned plasterwork was removed it was evident that all the bulkheads that had been created in the kitchen and family room were not constructed properly - there were no screws used in the connection of the bulkheads to the main structural frame above. As a consequence the 75mm nails that were used to fix the bulkhead framing were only piercing the timber frame above by some 15mm and in one section when I pulled the plaster off (the bulkhead above the island bench) it collapsed in one complete solid piece.

1. In the absence of evidence to the contrary I regard this defect as established.
2. The next alleged defect is:

Cavity sliders in master bedroom are not fixed into place.

1. Mr Arends observed the existence of this alleged defect. Mr Martin offered no comment on this. I accept that this alleged defect has been established though it may be that it could more properly be regarded as a completion item.
2. Next it is alleged that various walls are out of plumb. I will not stay to give details of each alleged irregularity. Mr Arends said that these irregularities were caused by defective work by the finishing carpenter. He said that this was not a matter of completion; it was a matter of defect. The finishing carpenter should have regularised these matters before plaster was attached T/S 307 ll 17-19. I accept Mr Arends' evidence on this point. These defects are established.
3. The next alleged defect is:

The floor in front of ground floor lift opening has a 15mm hump in floor. This needs to be levelled out.

1. Mr Martin made no comment on this alleged defect. During cross-examination of Mr Arends, Mr Symons said:

... what I am saying was the lift wall was poured 100ml higher than it should have been therefore that area around the lift had to come up or dug out, one or the other, but because we were going to put in flooring, then to bring it up was just as easy because we are going to have to batten it out anyway.

1. This seems to be an admission that the floor was not properly poured. This defect is made out.
2. The next alleged defect is as follows:

FB4 structural steel beam was designed to carry load through master bedroom wall above, but steel beam is 150mm too far west requiring additional timber beams to carry load.

1. Mr Martin was not inspecting for this item and so was unable to comment. In cross-examining Mr Arends at T/S 308 Mr Symons complained that:

We were [not] invited back in to take measurements and to just ascertain that this in fact was the case.

1. Mr Eichner made this observation. He said the remedial work was_:_

Significant and required chopping a number of beams through to get them in and to laminate them together in a manual fashion, where we were not able to use pneumatic equipment to connect them. So each beam had to be bolted and connected in order to achieve minimum structural integrity.

1. I accept the evidence of Messrs Arends and Eichner. This defect is established.
2. The next alleged defect was:

FJ1 floor joists are not installed as per design specifications from smart frame.

1. This alleged defect does not appear to have been contradicted by Mr Symons. Mr Arends' opinion as to its existence is backed up by a report from 'Smart Frame' which is an appendix to his report. This defect is established.
2. The next alleged defect is:

Dividing party wall at front balcony only goes up 1500mm, should go to roof line for fire rating and structural support of roof.

1. As I understood Mr Symons' contention T/S 308 ll 24-27 the upward portion of the wall was to include glass bricks hence a completion item. For reasons previously given a distinction between completion items and defect items is not material. This item is established as something which must be allowed for in the assessment of damages.
2. The next alleged defect is:

Roof rafters under tiled roof area should be blocked at 180mm to tie rafters together. 190mm min size blocking but 90 x 45 used only randomly.

1. In his written evidence Mr Martin made no comment. In cross-examining Mr Arends, Mr Symons put to him that Mr Martin would disagree with Mr Arends' opinion on the point in some manner. Mr Martin said in supplementary viva voce evidence at T/S 388 that:

The Building Code gives you options in building construction over many years has allowed you to raise this sort of scenario with herringbone braces in the old days, these days that has become uneconomical but it could be achieved with two members as long as they were in opposing positions at the time and the bottom of the rafter rather than one continuous piece but the photos do not help me insofar as identifying that.

1. Mr Symons had apparently told Mr Martin that he or his contractors had used 'two members' in opposing positions. Mr Martin did not observe these matters and it seems that the photographs do not give us an indication of what the fact was. In my view however, in light of all the irregularity in the framing work which I have already found established the more pessimistic view of Mr Arends is likely to be correct. I accept this defect as having been established.
2. The next alleged defect is:

Noggings in walls particularly in basement are fixed randomly. The Framing Code requires them to be placed either side of a centreline no more than twice their thickness apart.

1. This alleged defect was identified by Mr Arends. Mr Eichner made the same observation. Mr Martin said that based upon the photographs that Mr Arends referred to:

The spacing between these noggings would not exceed 1350mm and in my experience, in my opinion the noggins that are there would comply. It is not uncommon for there to be a break in that continuous line, particularly at door openings where it is recommended practice to put an extra noggin in beside and you just step and put one either side similar to what has occurred here. In this instance it has occurred for a different reason but I believe that that wall is structurally sound and in compliance with the relevant section of A1684. I only just have one final thing to say about that and I think the spacing of noggins, because they are nominally a lesser measurement than the frame, the location of the noggings does not need to be in line with or adjacent to the join in the plaster sheets. The joins are designed to float across between the studs and not be supported by the noggings, and that is all that I intended to say.

1. I must say I find Mr Martin's evidence on this point somewhat difficult to follow. I prefer the evidence of Mr Arends that the Code is breached. This defect is made out.
2. The next alleged defect is:

Bottom plates to most wall frames have only one nail randomly fixed not two nails at maximum 600mm centred.

1. Mr Symons observed that no photographs depicted this alleged defect. He did not however distinctly deny it as I understand him. The defect is made out.
2. The next alleged defect is:

Floor sheeting is required to be fixed as per AS 1684.1. A large number of sheets have only been tacked but not shot off. Flooring and top flange accounts for 53mm nails at 75mm approx 20mm of nails should be visible from underneath. This has not been completed.

1. This alleged defect was mentioned in passing by Mr Symons in his cross-examination of Mr Arends T/S 313 ll 6-7. He seems to have asked no question and directed no distinct challenge on the point. Presumably he would contend that this is a completion item. At any rate in the absence of contradictory evidence there is work that needs to be done and the need for this work to be done should be reflected in the damages assessment.
2. The next alleged defect is:

There is a hump in the roofline as viewed along the roof. The hump is at RB1. The RB1 is too high or at the top end of the roofline the wall is too low.

1. This is not commented upon by Mr Martin. It is observed by Mr Arends. Mr Symons put it to Mr Arends in cross-examination that the alleged hump could not be seen in the photograph which he had chosen to illustrate that point, something which Mr Arends conceded. Nevertheless Mr Symons did not distinctly assert that there was no hump. Neither I nor Mr Symons could observe the hump. Mr Arends gave evidence that he did. It seemed to me that at TS 313 ll 24-25 I gave Mr Symons the opportunity to make an outright denial which he failed to take up. This defect is therefore established on the basis of Mr Arends' evidence.
2. The next alleged defect is as follows:

There is a large deflection in the first floor. Floor joints will require additional joists to stiffen floor. Smart Frame design does not allow for spa bath in centre of spam with 100mm thick concrete base. Expanding foam should have been used to lessen load. This large amount of movement will cause wall and ceiling plaster joints to constantly open up creating an ongoing maintenance problem.

1. Again Mr Arends conceded that the photographs did not illustrate the deflection T/S 314 ll 39-31. Mr Symons said:

Anyway, it is very difficult to see the deflection and I suppose what I am saying here, sir, and Mr Arends is if there is a large deflection we would have seen it before the plaster. It wasn't ever mentioned before the plaster was removed.

1. Accepting that the photographs do not depict the deflection I nevertheless accept Mr Arends' evidence that he observed it. This defect is established.
2. The next alleged defect is:

All wall junctions are required to be tied together with strapping and overlapping plates. The wall joints are separating in a number of locations.

Under cross-examination at T/S 316 Mr Arends agreed that it was difficult by reference to the photographs to 'see what has been tied together [at] those junctions?' T/S 316 ll 25-26. The photographs that Mr Arends was taken to depicted a fairly jumbled set of framing with a number of members stuck together, packing and the like.

1. I accept that evidence and conclude therefore that this defect has been made out.
2. The next alleged defect is as follows:

Master bedroom window reveal over bath has been removed to allow window to fit into opening which is too small, some modifications will need to be made to give a proper finish.

1. This alleged defect is identified by Mr Arends. He does not seem to have been cross-examined on it. There is no contrary evidence from Mr Martin. I accept it as having been established.
2. The next alleged defect is:

Bedroom 2 roof main rafters run into dormer valley but are not connected and in some locations are 30mm short.

1. Mr Arends' evidence under cross-examination at T/S 317 to 318 was somewhat indefinite. He conceded for instance that one of the rafters if cut off would create no difficulty if it was a mere tail piece T/s 318 ll 1-3. I do not find that defect established.
2. The next alleged defect is:

A rafter over shower ensuite entry doorway sits on top plate non-load bearing head with a 20mm gap taking full roof load.

1. This alleged defect is identified with Mr Arends. It was not the subject of any comment by Mr Martin. So far as I can see Mr Arends was not challenged on this point by Mr Symons in cross-examination, hence I find that this defect has been established.
2. The next alleged defect is:

Rafters are lapped over RB I beam which is not as per engineer's detail. They are meant to but into beam from each side with a 100mm x 100mm x 6mm steel angle supporting them.

1. Once again this matter is not dealt with by Mr Martin nor was it the subject of any cross-examination by Mr Symons. It was identified by Mr Arends, hence I accept that this item has been established as a defect.
2. The next alleged defect is:

1. There was no comment on this matter by Mr Martin. At paragraph 41 of his report Mr Eichner said:

Further, the diagonal bracing on the two side walls [of the front bedroom on the second floor] was running the same direction as the rafters rather than in the opposite direction. The cross-bracing across the little window in the dorma (sic) only went halfway and then just stopped instead of running across from corner to corner. The same defect was evident in the ensuite. The diagonal facing was inadequately carried out as a consequence additional bracing throughout was required. The 45o return wall that divides the ensuite from the dorma (sic) had no connection across the corners on both sides and as a consequence additional structural work to ensure stability in that area was required.

1. In his cross-examination at pages 320 to 322 Mr Symons put to Mr Arends that a number of photographs which depicted inadequate speed bracing depicted walls which as a matter of design and structural integrity did not require such speed bracing. As I summed up what Mr Symons seemed to be putting, it was this:

That this bracing here is not, according to the strict requirement but since it is to make assurance doubly sure it doesn't matter?

1. Mr Arends' response at lines 11 to 15 was as follows:

It is not normal for a builder to start putting a lot of extra bracing in that isn't required. So seeing as I saw the basis there one would assume it is a requirement to stabilise the building in which case it should go from top plate to bottom plate.

1. Even although Mr Arends was unable to answer the challenges thrown down to him by Mr Symons, I think first, that he is correct in saying it is unlikely that Dependable added additional albeit defective speed bracing. Secondly, Mr Eichner whose evidence on this point does not seem to have been challenged in cross-examination in the passage quoted from page 41 of his report indicates that speed bracing did need to be carried out to ensure the structural integrity of the building. That being the case I reject the hypothesis that the speed bracing which was observed and found to be deficient was additional and unnecessary speed bracing. I regard this defect as having been established.
2. The next alleged defect is as follows:

The angle bracing in bedroom 2 does not span from top plate to bottom plate in opposite corners as required.

1. This was not an issue dealt with by Mr Martin. Mr Arends was not challenged in cross-examination on this point. Accordingly I accept that the defect has been made out.
2. The next alleged defect is as follows:

Common rafters at dormer valley intersection bear on independent stud in four plates are not connected to the main wall run on both sides as required.

1. Again this is a defect identified by Mr Arends, not commented upon by Mr Martin. In his cross-examination of Mr Arends, Mr Symons mentioned this item (paragraph 2.3.47 from the Scott Schedule) but then seemed to move on immediately to the next item. In the absence of a challenge to Mr Arends' evidence I regard this defect as having been made out.
2. The next item of alleged defect is:

Wall junctions are not tied together resulting in joints opening.

1. Again the alleged defect identified as such by Mr Arends and not commented upon by Mr Martin because the issue had not been raised when he carried out his inspections. Cross-examining Mr Arends, Mr Symons put the following to him:

So I just say, Mr Arends, that really from the photos, we can't say that this wall junction, and it's not really a wall junction, it's a wall abutting if you like because it is not a junction as such ...

1. Mr Arends response at lines 29-30 was 'even abutting is a junction'. It was then put to him by Mr Symons that 'it's one of these ones rather than one of those ones' (T/S 323 line 31). At line one of the following page, 324, Mr Arends said 'yes'. At line four on the same page he agreed that the photograph taken Mr Eichner which he had chosen to illustrate the point did not really illustrate it. He said 'you can't see'. As I understand Mr Arends' evidence he has conceded only that the photographs do not illustrate the observation which he made in his report. He did not accept that there was no defect or that there was for the purposes of considering this issue a distinction to be drawn between a wall junction and a mere abutment of two walls. In the absence of any evidence contradicting Mr Arends on this point I regard this defect as having been established.
2. Next, the Serongs allege:

RR2 rafters each side of the dormer are required to be doubles, they are singles only.

1. Again, this was a matter not raised when Mr Martin carried out his inspection and so he was unable to comment. The gravaman of Mr Symons attack upon the allegation that there was such a defect was that the plans required single rafters not double rafters (T/S 324 ll 29-31). Mr Arends concluded that the plans were as alleged by Mr Symons hence there was no defect (T/S 325 ll 12-14). In his report, Mr Eichner said that because they were single rather than double rafters:

A 150 x 100mm steel angle on either side of those rafters on both sides of the dorma (sic) had to be bolted in to carry that cantilever load.

1. In re-examination Mr Gurr on behalf of the Serongs appeared to be asking questions aimed at obtaining answers from Mr Arends that the structure as erected by Dependable included single rafters where there should have been double rafters according to the plans but simply misdescribed the location of the defect T/S 366 line 1 - 367 line 2. Ultimately however at line 7 on page 367 Mr Arends said 'I am unable to say'. In the result therefore this defect has not been made out.
2. Next, it is alleged:

Additional floor beams are required in bedroom 1 ceiling to distribute roof load from floor above.

1. Mr Symons criticised the formulation of this alleged defect as:

General statement, two general statements, not back. [ed] by any engineering.

1. Again this was not a matter that Mr Martin examined when he carried out his inspection and hence he made no comment. At pages 325 - 326 of the transcript Mr Arends said that the cross-joist between joists were not depicted on the plans hence it could not be said that there was any failure to follow the plans. At T/S 326 ll 24-29 Mr Arends said:

... the plans don't specify those - generally speaking engineers won't show cross-joists between joists. That is left up to the builder and depending on the floor structure. The Smart beams are posi-strats, solid beams will determine the actual cross-members.

1. At T/S 327 Mr Arends said 'there was probably need for an additional six cross-members'. At lines 19-22 Mr Arends said he was not sure:

But my memory says that the wall is just sitting on top of the floor and with nothing underneath it.

1. The matter remains uncertain. Even although Mr Arends' memory is not entirely certain and no photograph can be produced to illustrate the point I accept that he would not have included this allegation in his report without some appropriate basis. I am fortified in the view because the findings I have made relative to other defects indicate that the framework that we are dealing with now is in general far from perfect. I regard this defect as having been made out.
2. Next the Serongs allege:

Verandah roof edge beam was to cantilever out over the first C2 column to pick up front 190 x 45 fit rafter fascia beam. There is a cold joint over the first column requiring engineered steel connecting plate to both sides to bolt both beams together to allow a cantilevered work 75mm foam panel placed outside of that same beam means that level beam is 75mm out of alignment with the 180 PFC steel beam below which the first C2 column is meant to land. Additional angle iron and webbing will be required to allow a connection to work.

1. Once again this matter was not dealt with by Mr Martin. Mr Eichner at paragraph 26 of his report observed the same alleged defect. Mr Arends was not challenged on this matter in cross-examination hence I conclude that this defect has been made out.
2. Next it is said:

The 180 PFC beam is sitting on a steel bearing plate not pinned or fixed to anything, the PFC beam is welded to it but movement is allowing the column to shift alignment if knocked. Angle tie welded to edge and fixed to inside bottom plate as required.

1. Again this alleged defect was noted by Mr Arends but not commented upon by Mr Martin because it was not an issue when he carried out his inspection. Mr Eichner at paragraph 6 of his report observed the same alleged defect. Mr Arends was not cross-examined on this point. I accept that this defect has been made out.
2. The next alleged defect is:

RR2 rafters are meant to be doubles as per Kennedy Design (Drawing S2) design but only single rafter installed. This needs to be rectified.

1. In cross-examination I asked if in light of the earlier cross-examination relative to double rafters it would follow that Mr Arends would now concede there was no defect. He said at T/S 328 line 18 'I would think so'. At T/S 366-7 Mr Gurr sought to modify these answers in re-examination - unsuccessfully as best I could understand Mr Arends' evidence. This defect has not been made out.
2. The next alleged defect is as follows:

Tillings 'Smart Frame' floor joist system was used. There is a 10 page installation guide provided with the product. What has been constructed does not comply rendering a good number of long span joints useless, as top flanges have been drilled out, entire sections cut out, holes drilled too close to end of joists. A table is provided as to how large and how far from ends all these wholes can be above entry. The table was not followed.

1. This matter had been the subject of a report from Tillings indicating a need for certain rectification work. In cross-examining Mr Arends on this point, Mr Symons did not appear to challenge the existence of a defect, rather he was raising criticisms as to the mode by which the matter was being rectified suggesting that putting the work out to tender would have been more economical. Implicitly therefore he accepts the existence of the defect which I find to be established.
2. The next three defects alleged are as follows:

There are eight joists that do not comply with the installation guide on ground floor, and 16 joints in basement level that do not comply because joists are cut around bedroom 1 beam. All these need to be repaired.

Double floor joists are meant to be connected together, for load bearing, with a 250 x 45 continuous timber filler between them and nailed through web. This has not been done anywhere in the house.

No holes in web can be closer than two times the diameter of the largest hole. There are two joists which do not meet this criterion in master bedroom ceiling.

1. These three alleged defects were observed by Mr Arends. They were not challenged in cross-examination hence I accept their existence.
2. The next alleged defect is:

There are a number of I joists extensively weathered increasing possibility of glue de-laminating. This will need to be rectified.

1. In cross-examination at T/S 332 ll 26-29 Mr Arends agreed that there was no defect hence this defect as alleged has not been established.
2. The next three alleged defects relate to the lift shaft and are as follows:

Lift shaft internal dimensions currently do not meet the specifications for any lift companies to supply a lift that will fit inside the shaft. Further, the dimensions do not allow a wheelchair and one person in the lift at the same time. The slab set down is not deep enough for lift car or the head clearance at roof level not high enough.

Lift shaft roof will need to be extended by 300mm to allow for full travel of lift car and lift well will need to be lowered by 700mm to fit the hydraulic operation. The carriage will need to be shortened by 230mm in depth to fit.

Lift shaft wall at first floor level on shaft side is made of two panels double top plates are in the same location allowing wall to hinge back and forward.

1. These matters were not dealt with by Mr Martin in his report. At T/S 332 Mr Symons said that in the other half of the 'pair' which he constructed and lived in temporarily a lift had been installed and was operative. Mr Arends said at lines 26-27 that he could not really comment beyond saying:

I basically said it should comply with the drawings.

1. At T/S 334 Mr Gurr submitted that there was only a fairly small claim made for the lift. Ultimately the issue of the lift was left uncertain. In the circumstances I do not regard this defect as having been made out.
2. The next four items are structural and relate to roof trusses. They are as follows:

Roof trusses not installed PRYDA installation guide provided by Able Trusses, additional end bracing will need to be done so trusses do not rack.

Two roof trusses are damaged requiring repairs bottom cord cut out to allow plumbing pipe to pass through.

Three trusses directly over lift shaft are not fixed down to plate and UFT shaft front wall not tied to side walls as there is a 10-15mm gap to each side of lintel and side wall junction with six skew nails across corner to do job.

Roof joists over rear family room, adjacent to deck are 'Smart Frame'. One joist with LBL flanges. Perimeter trimmers put in for bulkheads were nailed through laminated bottom flange, separating the bottom flange, in at least six locations along the same flange.

1. Each of these alleged defects was observed and reported upon by Mr Arends. They were not the subject of any comment by Mr Martin because they were not issues at the time he carried out his inspections. Mr Arends was not challenged as to these items in cross-examination hence I accept them as having been made out.
2. The next six items alleged to be defective are structural and relate to the rear deck. They are as follows:

Rear deck floor joist, on sub-floor side, are within 75mm off the floor for more than 25% of floor area. It should be a minimum clearance of 250mm ground clearance.

Rear deck extreme west beam connected to two concrete pads via treated pine post cast in concrete. No clearance from ground as beam is hard down on earth and will rot quickly.

The same beam is spaning too far between posts, need extra stump installed.

Decking boards are only fixed via 2/50mm coil nails; minimum requirement for fixing into soft wood is 2/65mm nails 2.5mm thick, boards loose and lifting.

Timber floor beam directly under bi-fold rear doors is only fixed to steel beam via three Ramset nails no other bolting connections are evident hence squeaking when you step onto deck. This carries the distributed deck load. This needs rectification.

Insufficient noggings between floor joists to deck at ends causing joists to twist sideways.

1. The gravamen of Mr Symons cross-examination on these matters at T/S 342 and following is that these are properly to be characterised as completion items and not as defects. Mr Arends said that in his opinion when he carried out a second report the building was 'still partially through fixing stage' T/S 343 ll 24-25. At T/S 344 speaking of these matters Mr Arends said 'it can be completed at any time during the fixing stage'. In these circumstances I take Mr Symons not to be challenging the need to do the various pieces of work referred to in these alleged defects but contending merely that they were completion items not defects. In the view I have taken this is a distinction without a difference. The work needs to be done.
2. The next five defects alleged relate to tanking.
3. The first of those alleged defects is as follows:

The purported waterproofing to the outside of the northern and eastern walls of the residence below the ground lines does not comply with the Building Code of Australia (BCA). The garage is classified, under the BCA, as a Class 10 building. Under the BCA a masonry wall is not required to be waterproof. However as this area is attached to the entertainment area, which is classified under the BCA as Class 1 building and is therefore required to be waterproof, the garage must also be waterproofed externally. Part 3.3.4 of the BCA requires that every external wall of a Class 1 (residential) building be made waterproof. Class F2.2.1 of the BCA states 'a building is to be constructed to provide resistance to moisture from the outside and rising moisture from the ground'. Therefore, the east and north walls of the lower ground floor should have a proper waterproof membrane applied to the full height of the wall under the ground and have an agricultural drainage pipe (connected to stormwater) at the footing level to relieve any hydrostatic water pressure. This also accords with proper building practice.

1. This defect was observed by Mr Arends, not commented upon by Mr Martin. Mr Symons' cross-examination suggested that these matters were in truth completion matters and not defects at all. Moreover, he said that the building was left in the state in which Mr Arends reported upon it in circumstances where matters had been left deliberately unfinished because it was contemplated that a spa would be installed in the rear deck area. Mr Gurr noted that no variations had been put in writing and no variation relative to a spa had been pleaded in Dependable's counterclaim. Mr Symons observed that the spa was in contemplation rather than committed to. As I understood Mr Arends' evidence he did not disagree that the present state of affairs could not persist for some temporary period. The line of cross-examination leads me to conclude that Mr Arends' observations are not being denied, it is merely an argument being put as to whether the item is properly to be characterised as a defect or a completion item. In the view that I take this is a distinction without a difference.
2. The next alleged defect is as follows:

Only a single coat of bitumen has been applied and not completely in some area. It stops approx 20mm from bottom not painted behind stormwater stack at all and no tanking on slab behind agricultural pipe drain. A single layer of 0.2mm moisture barrier poly placed in front but not taped across poly joints. This will allow water to leach through the wall.

4.5mm fibro-cement sheet protection lay used, already broken down and cracked in numerous places and held in place via a timber block shot into brickwork penetrating membrane. This will allow water to leach through walls.

1. In cross-examination I did not understand Mr Symons to deny the accuracy of Mr Arends' observations. At T/S 361 he said of the photographs viewed:

If they are in the alfresco wall they would also establish that that tanking was only a temporary measure. It is now an item of completion.

1. For reasons previously given this is a distinction without a difference.
2. The next alleged defect is as follows:

Stormwater stack behind wall placed there to provide drainage from behind wall, but water would need to fill to 80mm before discharging as 'T' entry is 75mm above slab level. Salt leaking is evident at present from bottom three courses. This needs to be repaired.

1. The same considerations appear to apply to this defect and to the following alleged defect:

Back fill behind wall was predominately building rubbish and clay except to 300mm high x 200mm high wide layer of 7mm topping over A661. More than 2m3 of rubbish being drink bottles, timber, plastic wrappings from brick packets and brick bats removed.

1. Once again I do not understand that Mr Arends' observations were challenged, it was merely put that these were completion items rather than defects.
2. The next alleged defect relates to 'general electrical distribution'. The alleged defect is as follows:

The infrastructure in place in (sc is) inadequate. Three phase mains have been partially installed from the main switchboard (located at front porch) to basement garage but still remain on cable spool. From main switchboard there are single phase sub-mains to lower ground floor sub-board below storage. Single phase sub-mains to ground floor sub-board and two single phase sub-mains to sub-board on first floor.

There has been no pre-design carried out. Sub-board enclosures installed are not large enough to accommodate required control and protection hardware. Distribution of sub-mains in single phase will make the matter of balancing the total installation almost impossible.

1. This alleged defect is taken from an inspection report provided by Mr Giancino of Architectural Electronic Systems Pty Ltd following a report which he carried out on 17 September 2007. It is not a matter dealt with by Mr Martin on behalf of Dependable.
2. Mr Symons cross-examined Mr Giancino at some length. That cross-examination had a number of strands. He suggested to Mr Giancino for instance that to describe a building as a 'smart house' did not require the selection of a particular class of technology (as will appear later in the present case Clipsal C-bus technology) either at all or exclusively throughout the house. Next he suggested that even without a plan it would be relatively easy for a new electrician completing this house or rectifying defects to ascertain what had been done and what underlay the various installations that had been made before Dependable was removed from the site. Mr Symons challenged the picture that Mr Giancino appeared to be conveying that what was there by way of partially completed wiring when he inspected was so incomprehensible that the task had to be started anew and the existing installation scrapped. Mr Lika who was Dependable's sub-contracting electrician gave evidence on behalf of the respondent. In cross-examination he agreed that the appropriate way to approach the task of wiring a house such as the subject property, particularly with an obligation to provide some sort of 'smart' technology would be to 'develop a lighting and electrical plan' T/S 611 ll 11-15. In the present case Mr Lika conceded that he had no more than a rough draft 'nothing substantial' T/S 611 ll 28-29. At lines 30-31 he said he proceeded on the basis of simply doing what Mr Symons told him to do T/S 611 line 31. The particular observations made in this alleged defect by Mr Giancino appear to stand uncontradicted. This defect is established.
3. The next alleged defect relates to C-bus cabling. It is alleged:

Electrical wiring was initially installed as conventional 240v system. An attempt was made to convert C-bus by running C-bus cat 5e network to each light switch. Switch points had been relocated to switchboard at lower ground floor (by running additional twin active TPS for each switch). Whilst this conversion system will work, it would require an in-wall termination behind each light switch which would have enclosed in an approved insulated junction box. The box is required to provide insulation between 240v and the extra-low voltage C-bus network termination between each C-bus key input unit.

If the electrical installation was completed using the conversion system that has been put into place there would be an excessive amount of junctions within the installation which will be predominately concealed. These junctions will create weak points within the installation; (increase the likelihood of mechanical breakdown). Further, these junction boxes would be multiple earth and neutral connections, which would possibly need to be accessed if a major fault occurred in the system for testing purposes.

1. At T/S 615 Mr Lika said that he initially began wiring the ground and first floor with ordinary 240v cable and connection and commenced a retrospective conversion to C-bus. According to Mr Lika:

I was working as directed so I was wiring the house in what I thought was the smart way, the smart system, and basically the owners must have commented to the builder and the builder approached me to, yes, see what we could do to fix it.

1. Mr Lika at T/S 627 denied that a multiplicity of junctions as found in the installation work which he did constituted to design weaknesses. At lines 21-24 he said in answer to a question from me:

Let me say that electrical installation is made up of an array of connections. Those downlights above your head there sir, are all electrical connections.

So you say yes, there are connections there but they are okay, they are done all the time?

1. Mr Lika replied 'absolutely' T/S 627 ll 30-31. The following page saw Mr Lika assert that his installations would have been able to balance the phases 'within 5% per phase' T/S 628 line 26.
2. These inconsistent pieces of evidence create a difficulty in fact finding. Both witnesses impressed me as straight forward and frank. I had no reason to doubt the competence of either Mr Giancino or Mr Lika. The evidence of both inevitably was tinged with some self-interest. Mr Lika clearly had an interest in justifying the work which he had done and defending it from criticism. Similarly, Mr Giancino had an obvious interest in defending the correctness of the advice which he gave to the Serongs to remove the existing installation and start from scratch.
3. A constant theme of the examination and cross-examination pursued by Mr Symons relative to these electrical issues was a contention that there was a variety of approaches which might be followed to achieve a 'smart' house. The effect of the evidence on all hands was that there is no single meaning to the phrase 'smart house', it is a wide generic phrase with no fixed meaning. At this stage it is worth quoting in full the contract provisions as to wiring:

The house will be wired as a smart house. Clipsal bus or C-bus, is a fully programmable control and management system that is designed to transform energy savings into reduced power bills.

Clipsal C-bus is microprocessor controlled wiring system that offers complete control of lighting and other electrical services. Clipsal C-bus also provides the platform for a total building automation system that can be integrated with air-conditioning, security system, heating, communications and major appliances. It also advances features such as voice activated switching, movement control switching.

1. Mr Symons told me that most of this text was lifted from some Clipsal marketing material. If the wiring description ended with the first sentence Mr Symons' contentions that he and his contracting electrician were at liberty to adopt a number of possible solutions would be correct. In fact, however, the contract goes on to extol the C-bus system insofar as the contract describes C-bus as providing:

The platform for a total building automation system that can be integrated with air-conditioning, security system, heating, communications and major appliances.

It indicates the contemplation is that the C-bus treatment will be given to the entire wiring system of the house rather than merely introduced to particular areas as Mr Symons' initial approach would have done. The fact that Mr Symons directed Mr Lica to retrofit C-bus to some areas where it had not initially been fitted is to some degree supportive of this though generally the post-contractual acts of the parties are not admissible as to the true construction of the contract FAI Traders Insurance Co Limited v Savoy Plaza Pty Ltd [1993] VicRp 76; [1993] 2 VR 343. Dependable contracted to provide a fully integrated C-bus wiring system. What it delivered was a patchwork combination of C-bus and ordinary 240v connections without a master plan. Whilst I accept that it may have been possible for the Serongs' electrical contractor to establish what had been done, I believe Mr Giancino's advice to start anew was reasonable and proper advice and that the Serongs were entitled to accept that advice. This defect has been established.

1. The next alleged defect relates to 'starserve' cabling, it is as follows:

The starserve cabling should consist of data phone and TV cabling wired in star configuration from central enclosure. All phone and data should be minimum Cat 5e and TV should be minimum of tri-shielded RG6 coaxial cable. Typically a phone/data and TV point should be cabled to each bedroom and living space with additional phone and data for study or multi-purpose area.

While predominately cable has been run for the starserve system there are a few concerns. There is not adequate segregation between 240v cabling and starserve cabling especially where cabling is grouped, this is most crucial with 240v cables as large numbers of cables increases the likelihood of electromagnetic interference.

There are not adequate provisions for the minimum recommended number of points to each room there are some particular locations where what has been installed is at the very least questionable.

1. These criticisms are to be found in Mr Giancino's report and also in a report obtained by Mr Serong from an organisation known as Tech Safe Australia. They appear to stand uncontradicted or unchallenged in cross-examination. I accept these defects as having been established.
2. The next group of alleged defect to be found at Item 2.9.2 of the Scott Schedule filed on behalf of the Serongs consisting of some 34 items numbered for the purposes of Mr Gurr's final submission (a) to (ah). I will not bother to set out these defects seriatim. A plastering consultant Mr Kelson identified in his report these various alleged defects. Mr Kelson was cross-examined at some length about plastering techniques, the registration and status of plastering as a specialist trade and so forth. There was no expert evidence to contradict his evidence nor did there seem to be any direct attacks upon the various criticisms that he made of the plaster work. The Serongs in effect 'condemned' the plastering that had been done by Dependable or its contractors. On the basis of Mr Kelson's evidence I believe they were entitled to do so. Moreover, the findings which I have earlier made relative to the wiring necessitated the removal of the plastering which had already been done. Mr Martin in his report accepted that there were some defects in the plastering work. He did not however agree that these defects went the distance which Mr Kelson alleged, in particular for instance, he said:

It was alleged that backing metal angle or flashings had not been installed in showers or spa internal corners and that this breached the relevant Australian standard for wet areas being BCA Part 3.8.1. BCA Part 3.8.1.0 includes AS 3740 - waterproofing of wet areas in residential buildings, as an acceptable construction manual meeting performance requirement P 2.4.1. The 2004 version of the standard is adopted by reference in Part 1.4 of the BCA. Metal angles would only be required if the walls were not fully waterproof. They are used as a secondary moisture barrier from the surface as only water resistant. I inspected the waterproofing that had been completed to the bathrooms of the adjoining property and it has been carried out to the full height of the walls above any fixtures and exceeds the minimum requirement Clause 5.7.3 of AS 3740 2004 in relation to vertical flashing provides that it may be external or internal to the wall sheeting.

1. As Mr Symons brought out in cross-examination there are no formal established qualifications for plasterers, however Mr Kelson established himself as a lifelong expert in the field and as an instructor. I therefore prefer the evidence of Mr Kelson to the reservation expressed by Mr Martin.
2. Accordingly I regard the plastering defects as established.
3. The next alleged defects relate to brickwork.
4. The first of these is as follows:

External brickwork is meant to be laid using white cement which has not been done.

1. This alleged defect was identified by Mr Arends. It was not commented upon by Mr Martin nor was it the subject of any cross-examination by Mr Symons, hence I accept that this defect has been established.
2. I make the same finding for the same reason with respect to the next alleged defect, namely:

Brickwork around north boundary is raked but lower level brickwork is ruled. The brickwork on the verandah is extremely poor and requires removal and reinstatement by a competent tradesman.

1. The next alleged defect relates to drainage and is as follows:

The stormwater drain has been damaged in nature strip resulting in water rising to surface when it rains. This needs to be repaired.

1. This observation was made by Mr Arends. The correctness of his observation was not challenged by Mr Symons, Mr Symons observed however that Mr Arends was unable to say when or by whom the drain was damaged. Mr Arends according to the front sheet of his report inspected on 10 April 2007, 6 December 2007 and 7 March 2008. Those inspections occurred whilst Dependable still had control of the site. Regrettably no-one pursued the issue with Mr Arends to ascertain at which of his inspections he made the observation relative to the drain. If this was observed in April 2007 the inference that the damage was done by Dependable or its contractors would be fairly strong. On the other hand if the observation was made at one of the two later inspections the inference would equally be open that the damage was done by one of the Serongs' contractors. A further matter which was not explored was the history of the drain - was it a new drain established as part of the re-development project promoted by Dependable and Mr Symons or was it a stormwater drain that had pre-existed serving whatever was previously located on the site. If this latter were the case the damage may have pre-dated even the site's connection with Dependable and Mr Symons. In this state of uncertainty I do not regard the defect as having been made out.
2. There then follow some four alleged defects in glazing which are as follows:

The ceiling to floor windows have not been fitted with safety glass as required by AS1288.

Opening/windows around spa require safety glass to comply with AS1288.

Ground floor sliding glass doors should have a sub-sill to allow for water membrane or sub-sill reveals as required by AS2047.

Double glass doors installed in bedroom 4 and single glass doors installed in bedroom 2 and 3 are in breach of the existing town and building permits.

1. These alleged defects are identified by Mr Arends. As to some of these Mr Martin said that he was prepared to accept the alleged defect subject to verification. As to others he said they were not raised when he inspected and so he was unable to comment. In those circumstances I regard these defects as having been established.

1. I have already explained why in the events that have occurred the Serongs were entitled to terminate their contract with Dependable and validly did so. Clause 20.4 of the building contract provides:

If the Owner terminates this Contract in accordance with this Clause 20 the Owner may then engage another builder to complete the Works: and

• if the reasonable cost to complete the Works exceeds the unpaid balance of the Contract Price, then the excess amount shall be a debt due and payable by the Builder to the Owner; OR
• if the reasonable cost to complete the Works is less than the unpaid balance of the Contract Price, then the remaining amount of the unpaid balance shall be a debt due and payable by the Owner to the Builder.

1. Clause 19.5 authorises the owners where defects have not been rectified to employ others to rectify them and recover from the builder the reasonable costs of doing so. In my view the reference to the owner engaging another builder at Clause 20.4 is not intended to exclude the possibility the owner may do as the Serongs did here, namely complete the project as owner builders engaging sub-contractors. On the findings I have made therefore the distinction which Mr Symons frequently made in cross-examining expert witnesses between completion items and defects is a distinction without a difference. Dependable is liable for the cost of both.
2. Describing the situation in which the Serongs found themselves following termination, the learned editor of Hudsons Building and Engineering Contracts (11th Edition) (I.N. Duncan Wallace, QC) said:

An owner completing the contract after a determination, whether at common law or under a contractual clause, is not in the position of a mortgagee in possession whose actions are jealously scrutinised. Subject to the principles of mitigation of damage, whereby any obviously unreasonable conduct will serve to reduce the damages otherwise recoverable by an innocent party for breach of contract, the owner, though naturally bound to account to the contractor and those claiming under him (as, for example, assignees of the sums due under the contract) in computing the cost of completion and also in making any necessary allowances for differences between the final work and the originally contemplated contract work, will be allowed a reasonable discretion in the way in which he completes, whether this determination results from a decision at common law or under a contractual termination clause condition on default.

1. In the following paragraph 12-072 the learned editor quotes with approval two dicta of Williams J the Supreme Court of New Zealand in Fulton v Dornwell (1885) 4 NZLR 207 where the learned Judge said:

Now when a contractor gets into difficulties ... and the employers in consequence put to the extreme inconvenience and annoyance of having himself to complete the work I think the employers should be allowed a large discretion in the way in which he completes it, and that the contractor, in the absence of fraud or extreme negligence, cannot complain if the work be carried out in an uneconomical manner.

The contractor cannot, in the absence of fraud or extreme negligence complain if the work be carried on in an uneconomical manner .. every allowance should be made in considering the conduct of the employer for the position in which the default of the contractor has placed them.

1. I approach the assessment of the damages to which the Serongs are entitled as against Dependable in this spirit.

1. Mr Gurr on behalf of the Serongs relied upon costings made by Mr Douglas Buchanan, Quantity Surveyor in the sum of $935,234.00 representing his costing of the work that was actually done. Mr Buchanan said in his report that the completion cost was reasonable. Mr Gurr noted that Mr Buchanan in Appendix C to his report costed and excluded in Appendix C all additional works outside the original scope of the Serongs' contract with Dependable thereby excluding any element of betterment.
2. Mr Gurr further submitted that it was not practicable for his clients to have obtained a fixed price contract for completion from another builder. Mr Buchanan's evidence was that it was almost impossible to obtain a fixed lump sum price contract in a competitive market. He was cross-examined on this point by Mr Symons. This cross-examination to be found at T/S 426-9 had Mr Buchanan adhering to the view he expressed in his report that the costs incurred by the Serongs were in the circumstances reasonable. He conceded that there were alternative courses of action including the assembly of a group of experts and letting the matter out to tender. He did observe however that any new fixed price contract would include a clause excluding from the scope of the works covered by the fixed price, any further defects uncovered during the course of the rectification work. Mr Gurr observed that Mr Eichner who acted as project manager for the Serongs said that he continued finding further defects in the work until Christmas 2007. Mr Gurr referred to paragraphs 20 to 22 of Mr Eichner's report.
3. I accept Mr Gurr's submissions on these points. Doing so accords with the principles stated by Hudson and quoted above. Acceptance of Mr Symons' submissions to the contrary would be in the teeth of those principles.
4. Mr Symons obtained by a call on Mr Eichner a copy of a draft budget for the completion works. As it turned out the final cost was substantially above that budget. The fact is that Dependable and Mr Symons left the Serongs with a mess. It was a mess administratively. On the planning front, the site was subject to a stop order which had been in force for 12 months. Despite the letterhead graphics depicting Sherlock Holmes and Dependable's attention to detail the reality was quite different. What the Serongs did with the assistance of Mr Eichner was in my view reasonable. It does not lie in the mouth of Mr Symons or Dependable to subject their actions and costings to the minute criticism that was attempted here. So much appears from the principle stated by the learned editor of Hudson and quoted above. In particular I believe it was reasonable for the Serongs and Mr Eichner to engage bricklayers not merely to do actual bricklaying duties but also to carry out general work including labouring on the site.
5. Nevertheless, there remain issues which are yet to be resolved. Accepting in broad terms the costings for defect rectification and completion made by the Serongs, Mr Symons raises a number of valid points. He complains for instance about certain additions, contending for instance that:

George [that is Mr Eichner] has claimed $128,519.77 in invoices and yet if you add all these invoices they only total $123,277.94.

1. There is also the fact that I have not sustained all of the defects alleged by the Serongs. The number that I have not accepted have been relatively small and my present thought is that even excluding them from calculation, the scope of the completion and rectification works would not be materially affected. Nevertheless I believe that I should hear the parties on this point as upon the arithmetic issue raised by Mr Symons and quoted above.
2. Mr Symons was also critical of the fact that the various sub-contracting trades did not provide insurance warranties to the Serongs. That is a matter which is of concern to the relevant tradesmen and the Serongs not to Mr Symons or Dependable. In particular there is no reason to think that the absence of such warranties in any way inflated the cost of completion and rectification. Mr Symons also suggested in at least one case with some justification that there had been an overcharging or double charging of Goods and Services Tax. Mr Gurr conceded that the amount claimed by his client should be reduced by $21.58. This appears to be correct though in making this finding I would not necessarily exclude the possibility that some further reduction may be appropriate. I should note that I reject the contention put in cross-examination by Mr Symons that where a tradesman invoiced goods to the Serongs it was not incumbent upon that tradesman to add a further Goods and Services Tax to the cost of such goods even although the supplier to the tradesman had levied Goods and Services Tax.
3. Subject to the qualifications just mentioned, in broad terms I accept the evidence of Mr Buchanan that the cost of rectifying the works was $342,679.00 and completing them $592,645.00 making a total cost of $935,234.00. Hence in broad terms it would follow that $647,992.00 would be payable by Dependable to the Serongs subject to the adjustment issues to which I have referred above. There was no suggestion here that the cost of rectification of defects was other than the appropriate measure of damages. It was not suggested for instance as it is in some cases that the proper measure is the difference between what has been provided in comparison to what should have been provided cf Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613, 617-8. I accept the contention put by Mr Gurr that the actual cost of rectifying the defects is the proper measure of damage where those defects have been rectified Hyder Consulting (Aust) Pty Ltd v With Wilhelmsen Agency Pty Ltd {2001] NSWCA 313 [19].
4. Likewise I accept that the Serongs should be entitled to damages in the sum of $25,200.00, $700 x 36 weeks for liquidated damages. Similarly the claim for $35,544.00 representing rent paid for a residence in Southbank from 18 July 2007 the date of termination until 18 August 2008 should be allowed.
5. Mr Symons noted that at one stage the Serongs had agreed during the course of a meeting to waive any claim for liquidated damages; but that waiver was conditional on their receiving a firm date for completion. Dependable never completed the work nor promised a completion date.

1. The counterclaim filed on behalf of Dependable was on the premise that the Serongs and not Dependable had repudiated the building contract. Given that I have found that the Serongs were in the right and Dependable was in the wrong the counterclaim must be dismissed. I should also note insofar as the counterclaim asserts an entitlement to payment for variations, first there was no proper evidence to support claims for payment for those variations. Secondly since these variations alleged have not been reduced to writing it would only be if I were to find that there are exceptional circumstances or that the builder would suffer significant or exceptional hardship and it would not be unfair to the building owner for the builder to recover payments that any award could be made for these alleged variations. Domestic Building Contracts Act 1995 Section 37(3), 38(6). I am not aware of any exceptional circumstances. Having regard to the size of the breaches of contract by Dependable and its conduct relative to registration and insurance, not only am I unable to conclude that it would not be unfair to the Serongs to consider making an award in favour of Dependable on these matters I conclude that it would be unfair to make an award to Dependable for these alleged variations.
2. The counterclaim is dismissed.
3. Finally I turn to the claim against Mr Symons.

1. A claim against Mr Symons for an alleged breach of a duty of care was not proceeded with. The Serongs' points of claim allege that Mr Symons had engaged in misleading and deceptive conduct in trade and commerce contrary to Sections 7, 8, 9, 10 and/or 11 of the Fair Trading Act 1999 or alternatively that he aided or abetted such contraventions in breach of Section 145 of the Fair Trading Act. The Serongs sought to recover the same amounts from Mr Symons as they sought from Dependable. The misleading and deceptive conduct alleged against Mr Symons in the points of claim was as follows:

4.1 He would be the person primarily involved in the construction of the house to be built on the site;

4.2 He would do most of the physical construction himself including all the excavation and carpentry work and would also supervise any construction work performed by others;

4.3 He would personally project manage the construction of the house;

4.4 He had the necessary professional qualifications, skill and competence to project manage the performance of the building agreement and the proposed works;

4.5 The house would be designed by, and would be constructed in accordance with structural drawings and computations prepared or to be prepared by a qualified structural engineer;

4.6 Planning and building permits were in place or would be obtained for the house in compliance with all applicable laws;

4.7 He was a registered building practitioner under the Building Act in the appropriate category and therefore Dependable Developments was a registered builder under the Domestic Building Contracts Act 1995.

1. There was also alleged to be 'further conduct'.

11.1 Dependable Developments was permitted to start the work under the building agreement;

11.5 Payments would be claimed and should be made in accordance with the building agreement.

1. As to the first range of conduct it was said by the particulars to be partly in writing and partly oral and partly to be implied. Reference was made to Item 2 of the appendix to the building agreement quoting a domestic building, building practitioner's registration number. The representations were also said to have been made by word of mouth at a conference attended by the Serongs and Mr Symons at Brad Teal Real Estate Essendon on 16 August 2005 and at the offices of Riordans on 13 and 14 December 2005. The 'further conduct' was said to be false. On the basis it was said that 'no appropriate and lawful planning permit was in force upon the commencement of the works'. Further it was said that a stop work order was issued on 10 July 2006 but works continued until the Serongs terminated the contract. Next it was alleged that two instalments for the frame stage were rendered and paid when in accordance with the terms of the contract these instalments were not payable because no certificate had been given from the frame stage by the relevant building surveyor. The Serongs contended that as a result of the further conduct they allowed Dependable to commence work and continue work and made payments for the base frame and lock-up stages to Dependable. Somewhat surprisingly the points of claim do not so far as I can see, directly assert that the initial conduct defined at Clause 4 of the points of claim as 'the Symons' conduct' was false and incorrect. These issues were joined at trial however and the case was fought out on the basis as far as I can see that there was an obligation of falsity relative to some or all of the matters alleged to be Symons' conduct. In my view it is appropriate that I consider the points of claim as if they alleged falsity relative to these matters or at least some of them, most notably the matter alleged at 4.7 that Mr Symons was a registered building practitioner. I would if necessary give leave even at this late stage to the Serongs to amend their points of claim so that they would accord with the issues as fought out at trial.
2. Section 9 of the Fair Trading Act 1999 provides as follows:
   1. Misleading or deceptive conduct

(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in the succeeding provisions of this Part is to be taken as limiting by implication the generality of subsection (1).

1. Section 159 of the Act authorises the Tribunal to award in favour of a person who suffers loss and damage because of a contravention of a provision of the Act including Section 9, the amount of that loss or damage. Sections 9 and 159 therefore are the analogues in the Victorian Fair Trading Act of Sections 52 and 82 of the Commonwealth Trade Practices Act 1974, provisions which have created a vast jurisprudence in the Federal Court of Australia and to a lesser extent in cross-vested State Supreme Courts and on appeal in the High court of Australia. In contrast to the Commonwealth Trade Practices Act these provisions in the Victorian Fair Trading Act are not confined to corporations but apply alike to corporate and natural persons.
2. There is no doubt that to the extent that any of this alleged conduct was engaged in, it was engaged in in trade and commerce. The evidence shows that Dependable was a trading corporation seeking to make money by house building. Mr Symons was its directing mind and the body through which it acted. Accordingly his actions were also carried out in trade and commerce and to the extent that he is found to have engaged in any of the conduct alleged, that conduct would be in trade and commerce whether viewed as conduct by him or by Dependable. If as an individual officer or employee of a corporation he engages in misleading or deceptive conduct contrary to Section 9 of the Fair Trading Act he may be directly liable for that misleading and deceptive conduct despite engaging in it as a servant or agent of a corporation or as a corporate organ thereof. The liability is direct and not accessorial Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553. It is however important to note the distinctly different jurisprudential character of a claim for damages for misleading and deceptive conduct on the one hand and a claim for damages for breach of contract on the other. Under Section 82 of the Trade Practices Act and Section 159 of the Fair Trading Act the award of damages for misleading and deceptive conduct is aimed at placing a plaintiff or applicant in the same position as if he had not been misled or deceived. An award of Common Law damages for breach of contract aims at placing the plaintiff or applicant in the same position as if the contract had been properly performed in that party's favour. In Gould v Vaggelas (1984) 157 CLR 215, a case of misleading and deceptive conduct relative to a purchase of property, the High Court of Australia in considering how damages under Section 82 should be assessed commenced with a consideration of what damages would have been awarded in a Common Law action for deceit. Since then in a long line of cases the Court has been at pains to say that the award of damages in this area is not to be constrained by analogies derived from Common Law entitlements to damages in contract or tort. Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ said in H.T.W. Valuers v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640, 666 [52]:

The wide language of S.82 is compatible with a legislative desire to broaden the scope of recovery, not to keep it within the bounds of some comparison with the Common Law.

1. See also Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388, 407 [44].
2. An early illustration of the distinction between the award of damages under Section 82 of the Trade Practices Act or Section 159 of the Fair Trading Act is found in the judgment of Ormiston J (as he then was) in Futuretronics International Pty Ltd v Gadzhis [1992] VicRp 63; [1992] 2 VR 217. This claim was brought under the corresponding provisions of the Fair Trading Act 1985. Mr Gadzhis made a bid at a real estate auction sale which was the final bid and the property was knocked down to him. He declined to sign the contract. Despite demands and attempted persuasion by the auctioneer, Mr Gadzhis declined to sign. Despite Mr Gadzhis' denials, His Honour accepted that he should be treated as having made genuine bids, hence he agreed to purchase the property. Nevertheless, since he refused to sign the contract there was no note or memorandum in writing to satisfy Section 126 of the Instruments Act 1958 and the sale was not enforceable against him. A claim for damages under the Fair Trading Act for misleading and deceptive conduct failed because according to His Honour's finding the previous 11 bids were all 'dummy' or vendor bids. Hence since there was no competing genuine bidder or purchaser, no demonstrable loss flowed from the misleading and deceptive conduct. The refusal to award damages placed Futuretronics in the same position it would have been in had it not been misled and deceived, viz. with no bidders. His Honour was quite critical of the vendor's conduct in generating 'dummy bids'. This was perhaps the first step which led to the provisions now strictly regulating vendor bids under the Sale of Land Act.
3. I turn then to the facts of the present case. I accept the evidence which was given by Mr Serong and was not as I understood it denied by Mr Symons that the Serongs insisted on dealing with a registered builder. Mr Symons assured them that he would obtain registration. He propounded a contract that disclosed relative to Dependable a registered building practitioner number for an unlimited entitlement to do domestic building work. For reasons previously given the suggestion that Mr Gerd Jacquin was a director of Dependable at that time must be rejected. Propounding the contract quoting the number entailed an implicit representation that Mr Symons as sole director of Dependable was a registered building holding that registration and that accordingly Dependable was entitled to carry out the building work, obtain the appropriate insurance cover and so forth. My findings earlier demonstrate that these matters were false. Again Mr Serong said that he would not have entered into the building contract with an unregistered builder. Given that the contract was in the circumstances illegal this is readily believable.
4. Mr Symons contended that since the issue of registration could have been according to him, verified by reference to any one of no less than four internet web sites, I should not accept that the Serongs were misled at all or that that they relied in any way upon a representation as to registration. I can only say that in the circumstances the Serongs were most imprudent in signing up with Dependable without verifying the correctness of the implicit representation in the form of a contract. In contrast to the situation under the Trade Practices Act however, contributory negligence is not made a defence to a claim for damages for misleading and deceptive conduct. That Act includes no contributory negligence defence. The defence of contributory negligence provided in the Wrongs Act 1958, Section 26, applies by virtue of a definition of 'wrong' in Section 25 of the Act only to claims in tort at Common Law or breaches of contractual duty of care. The defence would not apply to the strict liability imposed by Section 9 of the Fair Trading Act. I accept the evidence of Mr Serong that he relied upon the assurances given by Mr Symons and would not have signed the contract had he known the truth, namely that Mr Symons was not a registered builder and therefore Dependable was not legally entitled to undertake the building work in question or enter into the contract. Mr Symons' representations as to his future registration were of course representations as to future conduct but in propounding the contract quoting the registration number matters moved to representations of presently existing fact and the complications relative to misleading and deceptive conduct where what is represented relates to future conduct do not arise.
5. What loss and damages therefore have the Serongs suffered as a result of Mr Symons' misleading conduct described above? They entered into the building contract, made payments under the building contract and allowed matters to reach the unhappy circumstance which they had reached by July 2007 with a building way overdue, riddled with defects and subject to a stop order (and also not covered by property warranty insurance). The points of claim allege that in making the progress claims which were paid, Mr Symons represented to the Serongs that these moneys were in fact payable. In fact since the frame stage had not been certified by the building surveyor.
6. Section 40(2) of the Domestic Building Contracts Act 1995 prohibits a builder from making progress claims except in accordance with the table attached. Fifteen percent of the contract price is the amount which may be demanded and recovered by the builder for the 'frame stage' but the frame stage is not according to the definition in sub-section (1) to be regarded as reached until the frame is 'completed and approved by a building surveyor'. It is common ground that the relevant building surveyor never approved the frame stage of this building. By making the claims for payment for the frame stage, Dependable and Mr Symons implicitly represented that the frame stage had been reached such that the claim was payable. This was not the case. The issues of warranty insurance as I have observed earlier in the narrative meant that no amounts were payable under the building contract at all. Though given that this matter has not been pleaded and relied upon by the Serongs apart from noting it I place no reliance upon it. More generally Mr Gurr submits that by a series of pieces of uncandid conduct Mr Symons on behalf of Dependable lulled the Serongs into a false sense of security whilst matters were unravelling with their project. He did not in terms inform them at all about the existence of the stop notice served in July 2006 until this emerged eventually and involuntarily. He referred to 'troubles with Council' in e-mails to the Serongs on their overseas holiday in September as if these were matters that had only just arisen rather than that they derived from a notice served some two months earlier. When these matters came to Mr Serong's attention he felt annoyed but felt he was 'too deep in' to change builders.
7. Mr Gurr made more elaborate reference to misleading and deceptive conduct by Mr Symons. It is my view unnecessary to go to the detail of those submissions. In broad terms by Mr Symons' misleading and deceptive conduct the Serongs were induced:

(a) to enter into the building contract with Dependable in circumstances where they would not otherwise have done so; and

(b) persist with Dependable with had they known the truth they may have moved to terminate the contract earlier.

1. The difficult issue in this proceeding is what is the measure of damages recoverable for the loss and damage which the Serongs have incurred? Their claim is that they are entitled to damages in the same sum against Mr Symons for misleading and deceptive conduct as they say they are entitled to for breach of contract by Dependable. Given that at least back in the days of Gould v Vaggalas it was customary to say that the damages awardable for misleading and deceptive conduct whether under the Trade Practices Act or the Fair Trading Act were the so called 'tort measure' rather than the 'contract measure', reliance rather than expectation damages, this claim is problematic. It is not inconceivable however as a variation of the facts in Gadzhis' case will demonstrate. Suppose that in contrast to the situation in Gadzhis' case there was a genuine under bidder who would have signed a contract had the property been knocked down to him at his highest bid. Suppose further that rather than immediately refusing to sign the contract as Mr Gadzhis did, the defendant prevaricated until the crowd from the auction had dispersed such that contract was lost with the under bidder and any other potential bidder. If a contract could not eventually be made with the under bidder either because for instance he had changed his mind or he had bought elsewhere, it would seem that the defendant would be liable for the equivalent of damages for the loss of the bargain, albeit relative not to the contract which he had made but refused to consummate by signing but in relation to a hypothetical contract with the under bidder.
2. The question of the proper quantum of damages allowable under Section 159 of the Fair Trading Act depends crucially on the issue of causation. The section allows damages to be recovered for loss and damage occurring 'because of' the relevant misleading and deceptive conduct. In Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627 the Travel Compensation Fund sought damages from an accountant or auditor on the basis that the accounts they prepared and audited for a licensed travel agent were misleading and deceptive with the result that the fund remained liable as guarantor whilst the agent traded on illegally in circumstances where this would not have occurred had the true state of accounts been made known to the fund. Gleeson CJ said:

Misrepresentation will rarely be the sole cause of loss. If, in reliance on information, a person acts, or fails to act, in a certain manner, the loss or damage may flow directly from the act oromission, and only indirectly from the making of the representation whether reliance involves undertaking a risk, and information is provided for the purpose of inducing such reliance then if misleading or deceptive conduct takes the form of participating in providing false information, and the very risk against which protection is sought materialises, it is consistent with the purpose of the statute to treat the loss as resulting from the misleading conduct.

[2005] HCA 69; (2005) 224 CLR 627, 640

1. Here, upon the facts which I have found, had the Serongs known the truth about Mr Symons and Dependable's registration status that they were not obliged to make payment for the frame stage and that as at July a stop work notice had been issued by the relevant building surveyor, they would not

(a) have entered into a building contract with Dependable at all; or

(b) allowed matters to proceed as long as they did.

1. It may be objected however that the principle stated by the learned Chief Justice in Tambree's case does not apply here. The problems with the Serongs' house do not derive at least directly from the registration status of Mr Symons and Dependable. It was not suggested however that there were not other properly registered, solvent and competent builders who could have undertaken the work that Dependable was commissioned to do. Indeed the criticisms made by Mr Symons on quantum issues suggested that such builders would be available even to take over the project in a half finished state with extensive defects. Logically therefore, such contractors must have been available to undertake this work as a clean job commencing from scratch. Again, it was not suggested that Dependable was offering some unusually attractive credit terms or a price which was lower than anybody elses. Indeed from time to time Mr Symons asserted that the price of the land component of the land and building package which the Serongs bought from Dependable had been artificially depressed, implying that the price for the building work was if not an overfull one, not an especially competitive one either. In Kenny & Good v MGICA (1992) Limited [1999] HCA 25; (1999) 199 CLR 413 a mortgage insurer sued a valuer for negligent misstatement arising out of a valuation which it prepared for mortgage purposes with respect to property against which a mortgage loan was made and insured by MGICA. The High Court held that had an accurate valuation been given no mortgage loan would have been insured by MGICA at all, hence MGICA was entitled to recover against the negligent valuer not merely the difference between the valuation as published by the valuer and the proper value of the property at the date of valuation but the whole amount paid under the insurance policy a large part of which loss was caused by a subsequent collapse in the real estate market. Gummow J said:

If the realised market value of the property had equalled or exceeded the sum secured, because the property had been sold into a buoyant property market, or as in this case, if the property market had only slightly fallen, no recoverable 'loss' would have arisen. The contingency would have fortuitously operated to the benefit of a valuer, the party at fault. ... The party which is not at fault should not carry the burden of a contingent [the collapse of the property market] when that party has no control over it, in circumstances where the contingency is not remote and is reasonably foreseeable by the party at fault and where the legal wrong, in this case careless representations, induces the faultless party to expose itself to the contingency.

[1999] HCA 25; (1999) 199 CLR 413, 449

1. The contingency here was that Dependable would erect a defective structure and fail to complete it in accordance with the contract. This contingency is outside the control of the Serongs, it was entirely within the control of Mr Symons as the controlling mind of Dependable.
2. Here, even if we do not conclude as would seem somewhat tempting that the lack of progress in building and the defective nature of the structure erected derived from the registration status of Mr Symons and Dependable it was a loss to which the Serongs were exposed to because they were misled and deceived by Mr Symons' conduct. Had they known the truth they would never have signed a building contract with Dependable and they would have never been exposed to or suffered the losses for which they had been held entitled to recover damages from Dependable. Of course Mr Symons' misleading and deceptive conduct was far from the sole cause of this loss and damage but the question in a claim for damages for misleading and deceptive conduct is not whether the misleading and deceptive conduct is the sole cause; merely whether it was a cause of the relevant loss and damage Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627, 644 [49] per Gummow and Hayne JJ. On the findings that I have made the misleading and deceptive conduct was for the reasons explained a cause of the same loss and damage for which the Serongs have been held entitled to damages against Dependable. The whole of that loss therefore is recoverable against Mr Symons for misleading and deceptive conduct.
3. The damages recoverable from Mr Symons for misleading and deceptive conduct are in effect the cost to the Serongs to extricate themselves from the situation into which Mr Symons led them. They were left not with a contract which was wholly executory and could simply be abandoned but rather having bought as part of a package a parcel of land that now had erected on it an incomplete and extensively defective structure for which they had already made major outlays. There was as a matter of practical reality no alternative to their taking matters into their own hands by one means or another and rectifying and completing the house. This was the loss and damage which they suffered and the cost of doing this was the quantum of the damages which they may recover under Section 159 of the Fair Trading Act.

WRONGS ACT 1958 PART IVAA

1. The Wrongs Act Part IVAA establishes a regime of proportionate liability. By virtue of Section 24AF(1) the part applies to:

A claim for damages for a contravention of Section 9 of the Fair Trading Act 1999.

A claim for economic loss or damage to property in an action for damages (whether in tort, in contract under statute or otherwise) arising from a failure to take reasonable care.

1. The result then is that Part IVAA applies to the claim for misleading and deceptive conduct. Section 24AI(2) provides:

(2) If the proceeding involves both an apportionable claim and a claim that is not an apportionable claim -

(a) liability for the apportionable claim is to be determined in accordance with this Part; and

(b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

1. The contractual claim against Dependable does not arise from a claim for misleading and deceptive conduct contrary to Section 9 of the Fair Trading Act nor does it arise from an alleged failure to take reasonable care. Rather it arises out of allegations that Dependable has failed to meet certain absolute standards arising out of the contract including the due completion of the works within a specified time and the employment of proper workmanship in the construction of those works. Dependable's liability under the contract is to perform its terms not to use reasonable care to perform them. Mr Gurr submits that the effect of Section 24AI is that there should be no apportionment as between the contractual claim against Dependable and the claims for misleading and deceptive conduct. I agree with this submission.
2. Section 24AH(1) of the Wrongs Act provides as follows:

(1) A concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.

1. In the circumstances and with respect to the claim for damages for misleading and deceptive conduct it would seem that Dependable and Mr Symons are concurrent wrongdoers. Section 24AI(1) provides:

(1) In any proceeding involving an apportionable claim -

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage; and

(b) judgment must not be given against the defendant for more than that amount in relation to that claim.

1. The result seems to be therefore that the liability for this part of the Serongs' claim must be apportioned as between Mr Symons and Dependable. Section 24AP states, inter alia:

(a) prevents a person from being held vicariously liable for a proportion of any apportionable claim for which another person is liable; or

1. In the present case the misleading and deceptive conduct that I have found was committed solely by Mr Symons. Dependable's liability for Mr Symons conduct is solely vicarious. Mr Symons personally did all the relevant acts and omitted all the relevant omissions. In those circumstances it is in my view just to apportion 100% of the liability to Mr Symons. By virtue of Section 24AP Dependable ought also be liable for 100% of the relevant loss and damage. Mr Symons was its controlling mind and the person through which it acted.

1. In summary the Serongs should be held entitled to the declaration they seek that they lawfully determined the building agreement and they should be entitled to damages against Dependable for breach of contract and/or repudiation and damages against Mr Symons under Section 159 of the Fair Trading Act. The prayer for relief also seeks interest and there would seem to be no reason why that interest should not be allowed.
2. The issue of costs has not been argued and so should be reserved. I have explained why in my view I should reserve for a further argument the quantum of damages allowable for rectification and completion of the works.
3. I will direct the parties within 14 days to bring in short minutes to give effect to these reasons.