Compensation for defective works and diminished value

Mr Weinberger instructed by Messrs Moray and Agnew appeared for the applicants and Mr de Jong was unrepresented

Home Building Act 1989

Building levels; loss of value; diminished amenity.

1. Johannes de Jong is to pay Norbert Solondz and Karin Solondz $122,387.00 on or before 30 April 2008.

1. Johannes de Jong is to pay the costs of Norbert Solondz and Karin Solondz.

2. Order 2 stayed until 30 April 2008 pending submissions (if any).

This was an application by the homeowners alleging that works done by the builder were defective and that the defects had caused a diminution of the value of the property.

Mr Weinberger instructed by Messrs Moray and Agnew appeared for the applicants. Mr de Jong was unrepresented.

The jurisdiction of the Tribunal is to be found in the Consumer Claims Act 1998 and the Home Building Act 1989.

The matter was filed on 30 January 2007 and originally listed at Gosford on 5 March 2007 at which time directions were made. Several interlocutory hearings took place and final evidence was taken on 8 February 2008 at Gosford. The decision of the Tribunal was reserved.

There was quite a deal of documentary evidence. The statements of the applicants were given on affidavit .There was little cross-examination upon them. Among the important documents relied on at the hearing were a building inspection report from Tony Ransley (Tyrell's), a valuer's report of Todd Hadley, surveyor's report and a Scott Schedule. The respondent relied on a written statement which had previously been filed in the proceedings.

I think it is fair to say that there was not much disagreement about the background facts and circumstances. In October 1999 the applicants entered into a building contract with the respondent to construct a split level residence at "......". Approved drawings were submitted to the Council by the respondent and construction commenced in the early months of 2000. There was a proper written contract and Home Owners Warranty (HOW) insurance was in force. A certificate of practical completion was issued on 8 September 2000.

After that date the owners say that they found various defects in the works and several times made lists and called upon the builder to return to correct the faults. This never happened to their satisfaction.

The property is an absolute waterfrontage on the central coast where Gosford City Council has set building levels to minimise the risk of tidal inundation on the foreshores. Although there are numerous defects alleged the largest money value claim asserts that the building levels were ignored or misinterpreted and that the ground floor is 200mm below the minimum height for waterfront land.

Among the other defects alleged are inadequate structural steel in garage, cracking in render, no termite certification, inadequate sub-floor drainage, incorrect timber balcony supports and lack of correct glazing among others.

There was something of an imbalance in the way the cases of the parties were presented. Mr de Jong, the builder, was not represented. He presented little evidence to rebut the technical reports and costings proffered on behalf of the owners.

The principal contention advanced by Mr de Jong was that a surveyor had been commissioned by the owners to set levels and he had followed the data thus passed on to him. On the evidence before me I was satisfied that the surveyor was engaged and paid for by Mr de Jong. It follows that if there were any errors in the surveyor's specifications, the builder was unable to avoid liability. He might have his own action against the surveyor but it was the builder who had contractual and statutory responsibilities to the owner and these could not be displaced as alleged. And I was not satisfied that the builder had constructed the dwelling to the present levels on the express directions of the owners.

I found it necessary at the hearing to go through the Scott Schedule item by item. I have set out below the items I have allowed together with the relevant amount. Several instances of double claiming were encountered and some parts of the claim have been disallowed on that account.

The applicants claim that, as the construction of the property below the minimum flood levels cannot be remedied by demolition, they should be entitled to compensation for the reduction in value caused by the builder's error.

The only formal evidence before me on this point was a valuation of Todd Hadley dated 21 January 2005. Mr de Jong could have, but did not, obtain his own valuation to contest the amount estimated by Mr Hadley. Mr Hadley's formal valuation arrives at a figure of $110,000.00. In one sense this is uncontradicted, but my experience is that in cases such as this one, buyers are not dissuaded to the levels that valuers think they should be. On the basis of all the material before me I find that the owners are entitled to compensation of $85,000.00 for diminution of value. I note that the valuation takes account of the incorrect levels and the loss of amenity caused by a support post being required in garage.

The main evidence before me with respect to defects was a Scott Schedule prepared in the light of inspection reports by Tyrell's for the owners and two others obtained by the insurer. Figures set out in expert reports such as these give only a rough and usually high estimate as contractors who are engaged to correct all defects often give more realistic quotes when all the dust of litigation has settled. Nevertheless, I propose to use the items numbers and mostly to be guided by the figures as set out in the Scott Schedule for the defects I propose to allow.

I have not allowed item 24, the claim for the incorrect wind classification glazings, as the evidence is insufficiently compelling. In any case I would have allowed only a modest amount by way of solatium if the claim had been substantiated.

With regard to item 26 the HyBeam rafters, I was satisfied by the engineer's certification on the file and dismiss that part of the claim.

As the owners have achieved substantial success, it would normally follow that they should have their costs. As I was not addressed on these matters at the hearing I will stay the costs order pending submissions by the builder.

1. Johannes de Jong is to pay Norbert Solondz and Karin Solondz $122,387.00 on or before 30 April 2008.

1. Johannes de Jong is to pay the costs of Norbert Solondz and Karin Solondz.

2. Order 2 stayed until 30 April 2008 pending submissions (if any).

I have considered the various submissions made by the parties on costs and other matters. The costs orders foreshadowed seem to be appropriate.

I also decline to amend the reasons pursuant to s.50 Consumer Trader and Tenancy Tribunal Act 2001.