Stern v C & E Critharis Constructions Pty Limited - [2021] NSWLC 8 - NSWLC 2021 case summary — Zoe

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Stern v C & E Critharis Constructions Pty Limited

[2021] NSWLC 8

Local Court of NSW|2021-04-12

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At a glance

Source facts

Court

Local Court of NSW

Decision date

2021-04-12

Source

Original judgment source is linked above.

Judgment (14 paragraphs)

[1]

A. Central issue and uncontested background facts

The central issue in these proceedings is whether the first defendant, a builder, is liable to the plaintiffs for carrying out defective residential building work at the plaintiffs' property in Bellevue Hill, which I will refer to in these reasons as the 'property', during the course of 2015 - 2016.
To assist in understanding these reasons, I will refer to the plaintiffs as the 'owners' and the first defendant, C & E Critharis Constructions Pty Limited, as the 'builder'. The second defendant, Alex Popov Architects Pty Limited, was the owners' architect, but prior to the hearing of this matter, the proceedings against the second defendant were settled and have been dismissed. It remains necessary, however, to refer to the second defendant in these reasons, and so I will refer to that corporate entity as the 'architects'.
The uncontroversial background facts are as follows.
The plaintiffs are the registered proprietors of the property. On or about 4 February 2015, the owners entered into a building contract with the builder pursuant to which the builder was to carry out certain residential building works, including the construction of a new dwelling on the property. In these reasons, I will refer to this as the 'contract', and I will refer to the construction of the dwelling as the 'building works'.
The contract contained express terms as to the quality of the building works. Those terms included that all building works done under the contract would comply with: 1. The Building Code of Australia (to the extent required under the Environmental Planning and Assessment Act 1979, including any regulation or other instrument made under that Act); 2. All other relevant codes, standards and specifications that the work is required to comply with under any law; and 3. The conditions of any relevant development consent or complying development certificates.
The building works under the contract were completed in or about May 2016.

[4]

(a) Introduction

I will now outline my findings. Before doing so, I will outline the builder's defence to the owners' claim.
The builder's defence is as follows: 1. The eave gutters and vertical downpipes were constructed by the builder pursuant to the hydraulic design and specification provided by the architects and hydraulic engineer (being ITM Design) retained by the owners; and 2. The stormwater system was approved and certified by the architects and ITM Design pursuant to the certification provided on 8 June 2016
The builder says that if the Court finds that the building works contained defects, the consequences are as follows: 1. If the building works complied with the designs from the architects and ITM Design, the builder pleads contributory negligence of 100% against the architects; 2. If the building works complied with the designs from the architects and ITM Design, but that the builder bears some responsibility for the defective works, the builder pleads apportionable contributory negligence against the architects; and 3. If the building works did not comply with the designs of the architects and ITM Design, the Court should order the builder to carry out rectification works in respect of the defects pursuant to s 48MA of the Home Building Act 1989.
In the builder's opening address to the Court, the builder also asserted that the owners' claim was time barred under s 18E of the Home Building Act 1989, because the alleged breach of statutory warranties was not in respect of a major defect, and the breaches occurred more than 2 years after the warranty period ended. The builder, however, did not plead a time bar in its defence. No application was made at the hearing to amend the builder's defence. A time bar defence must be specifically pleaded (see Pt 14.4 of the Uniform Civil Procedure Rules 2005). Accordingly, I have not further considered this issue, and I have only addressed the issues and questions identified above, consistent with the pleaded case.
With the above understanding of the background facts, I now turn to answer the 7 questions identified above. In this respect, I have been assisted by the parties' written closing submissions, being those of the owners dated 26 April 2021, those of the builder dated 10 May 2021 and those of the owners, in reply, dated 17 May 2021.
At the conclusion of the hearing on 12 April 2021, the parties agreed that the Court determine the owners' claim based on the written submissions and without the need for any further oral hearing. Accordingly, I have addressed the agreed issues, as defined by the parties, based on the closing written submissions.

[5]

(b) First Question

Were the building works performed by the builder defective in that the vertical downpipes of the new dwelling were deficiently sized and not constructed and/or installed in accordance with the minimum requirements in AS3500.3?
I have considered all of the evidence, and the parties' respective submissions, and I am satisfied, for the following reasons, that this question should be answered in the affirmative.
I make this finding based on the following: 1. On the builder's own expert evidence, the building work deviated from the hydraulic design because: 1. The slopes of the gutters do not fall to the downpipes as required; 2. The cross-sectional area of the gutter is 18,000mm2 which exceeds the minimum cross section area required by the hydraulic engineer of 9,000m2; and 3. An additional downpipe has been added; 1. Under the contract, the builder agreed that the building works would: 1. Comply with:
The Building Code of Australia (to the extent required under the Environmental Planning and Assessment Act 1979, including any regulation or other instrument made under that Act);
All other relevant codes, standards and specifications that the work is required to comply with under any law; and
The conditions of any relevant development consent or complying development certificates; 1. Be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract documents; 1. In those circumstances, the builder is not entitled to choose to comply with part of the building contract and not with other parts. The builder has warranted and promised both that the work will be carried out in accordance with the plans and specifications and that it will comply with the law and the other warranties to which I have referred; 2. In the present case, the owners argue a breach of the contract, rather than a breach of the statutory warranties under the Home Building Act 1989, however the express contractual warranties are in identical terms to the Home Building Act 1989 warranties. Accordingly, I consider that the findings in The Owners - Strata Plan No. 66375 v King [2018] NSWCA 170 per Ward JA at [325] and [332] and White JA at [388] - [408] are apposite. That is, the building works must be carried out not only in accordance with the plans and specifications, but also that the works will comply with the law and the other warranties and promises to which I have referred; 3. Mr Ingegneri opines, and I accept, that an insufficient number of downpipes were installed to meet the requirements of AS3500.3 (being the relevant standard specified on the hydraulic services drawings for the works); 4. Dr Cunniffe, in his report and in cross examination, agreed that there were insufficient downpipes, being a breach of the Building Code of Australia; and 5. Mr Ell opines, and I accept, that additional downpipes will need to be added, particularly in the front portion of the house and a new design with additional downpipes needs to be carried out.
Accordingly, for these reasons, I answer the First Question in the affirmative, and it necessarily follows that I must therefore answer the remaining questions 2 - 7.

[6]

The defective works include not only the vertical downpipes being deficiently sized and not constructed and/or installed in accordance with the minimum requirements in AS3500.3, but also that the eave gutters of the dwelling were not constructed or installed with sufficient falls as required by AS3500.3. The builder admits this latter defect.
For completeness, insofar as concerns the eave gutters: 1. Mr Ingegneri opines that the gutters were not installed with sufficient gradient (as required by AS3500.3) which is causing permanent water ponding and, as a direct consequence, resulted in premature corrosion of the gutters. Mr Ingegneri did not admit in cross examination that he had not examined the guttering to identify if it had corroded more than an equivalent gutter with the correct fall. Rather, Mr Ingegneri admitted that he did not test to see if the guttering had corroded more than what was expected for a property near the ocean. Given Mr Ingegneri's unchallenged opinion that the insufficient gradient of the gutters has caused the corrosion, there was no need for any such test to be conducted; 2. Mr Ingegneri did not admit in cross examination that the current gutter as constructed was sufficient to move the volume of water the site was subject to. Rather, Mr Ingegneri admitted that the gutters had a sufficient cross sectional size to move the volume of water the site was subjected to. Mr Ingegneri's unchallenged opinion is that the deficiency with the gutters is not their cross section size, but rather their insufficient gradient; 3. The fact that there was no evidence of the guttering over-topping is not relevant, as this is not a defective the subject of these proceedings; 4. The unchallenged evidence of the owners was that water appears in the middle of the driveway for days and leaks from the eave gutter at the front of the new dwelling onto the driveway; 5. Dr Cunniffe said in his report and in cross examination that the falls of the installed gutters are insufficient and causing significant ponding, which he witnessed when he inspected the property; and 6. Mr Ell opined that the slopes of the gutters do not fall to the downpipes as required.
I am satisfied that, having regard to the above matters, the method of rectifying the defective works is as follows: 1. Remove all of the eave gutters; 2. Replace the eave gutters with new eave gutters with a minimum gradient of 1:500 towards each downpipe and a minimum cross-sectional area of 8,000m2; 3. Provide 6 additional downpipes and connect the same into the existing stormwater system; 4. Remove the 2 redundant downpipes and cap and seal the existing stormwater connections to those downpipes; and 5. Remove and replace facia and/or roof sheeting as required.
I make this finding based on the following: 1. These are the recommendations of Mr Ingegneri; 2. Mr Ingegneri was cross examined about the necessary rectification works and did not waiver from the evidence he gave in his expert report; 3. No evidence was proffered in contradiction to Mr Ingegneri's recommendations; 4. Mr Ell opined in his report and agreed in cross examination that Mr Ingeneri's design solution would resolve the problems with the downpipes; and 5. Mr Ell opined in his oral evidence on alternative rectification works but did not identify any proposal in his expert report.
Accordingly, the only evidence that provides me with any comfort as to the proper solution to the defective works is that set out in Mr Ingegneri's evidence. It is therefore necessary to determine the next question, being the cost of the rectification works and hence the quantum of damages that should be awarded to the owners.

[8]

(e) Fourth Question

As to whether there is contributory negligence on the part of the architects for the purposes of s 5S of the Civil Liability Act 2002, I make the following findings: 1. In relation to the eave gutters of the dwelling not being constructed and/or installed in accordance with the minimum requirements in Australian Standard AS3500.3, there is no evidence that any act or omission of the architects caused or contributed to the loss and damage suffered by the owners; and 2. Likewise, in relation to the vertical downpipes of the new dwelling being deficiently sized and not constructed and/or installed in accordance with the minimum requirements in AS3500.3, likewise, there is no evidence that any act or omission of the architects caused or contributed to the loss and damage suffered by the owners.
I also note, for completeness, the following 3 matters.
First, the hydraulic drawings and specifications were prepared by a hydraulic engineer, being ITM Design. This is clear from: 1. The express terms of the contract; 2. The unchallenged evidence of the owners; 3. The lay evidence of the building which refers to and attaches the hydraulic drawings and specifications; 4. The drawings and specifications which appear at appendix C to Mr Ingegneri's report; 5. The drawings and specifications which appear at document D6 of Dr Cunniffe's report; and 6. The express instructions given to both the builder's experts, namely, 'did our client's work on site comply with the hydraulic engineer's original plans?'
Secondly, if there is some difficulty which arises from the hydraulic specification, that is not a matter which has anything to do with the architects. The hydraulic specification and drawings were prepared by ITM.
Thirdly, even if there was compliance with the hydraulic drawings and specifications, this would not relieve the builder of any responsibility for insufficient downpipes. The builder's failure to comply with AS3500.3 is a breach of the express terms of the contract and the builder is not entitled to choose to comply with part of the contract and not with another part of the contract.
Further, I find: 1. The builder's reliance on the decision in Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 is misplaced. The builder is not relieved from any liability for any of the warranties in the contract. The builder is required to comply with all warranties, as the decision in King makes clear; 2. The builder's reliance on the decision in Cable v Hutcherson Bros (1969) 123 CLR 143 is misplaced. In that case, the Court was required to determine whether the relevant builder was subject to a fitness for purpose obligation. That is not the present case. The contract requires that the builder expressly warrant, inter alia, that the works will be fit for purpose; 3. That the terms of settlement between the owners and the architect are not relevant to the determination of the issues in dispute between the owners and the builder. The claim against the architects was in respect of a single defect regarding an outdoor kitchen unit. The defects the subject of the dispute between the owners and the builder were different; and 4. Third-party certification of the stormwater system's compliance with relevant legislation, building codes and the development consent is not evidence as to whether there has been compliance by the builder with the contractual warranties it agreed with the owners.
For these reasons, I do not find that there was any contributory negligence on the part of the architects, nor any other basis which absolves the builder from liability for the defective building work.