Taraschi v Jessop Constructions Pty Limited

NCAT Consumer and Commercial|2023-10-05|Before: Mr J

REASONS FOR DECISION

In these proceedings the respondent carried out residential building work at a property in Caringbah South. The property was sold to the applicant soon after the final occupation certificate was issued. Despite not being in a contractual relationship with the respondent, the applicant has a cause of action against it pursuant to s18D of the Home Building Act 1989 ('HBA').
These proceedings arise primarily because of the collapse of a retaining wall at the property. The applicant originally claimed damages of $220,076.86 against the respondent which have been or will be sustained in the rectification of the retaining wall and other allegedly defective work.
The parties accept that the Tribunal has the jurisdiction under the HBA to hear and determine the applicant's claim.
In these Reasons I will refer to the applicant as the 'owner' and to the respondent as the 'builder',
The proceedings were heard on 5 October 2023. At the hearing the evidence was: 1. Exhibit A, Tender Bundle of Documents; and 2. Exhibit B, Joint Memorandum of Conclave.
The parties commissioned a number of expert reports. Expert evidence was provided on behalf of the owner by Mr A Cordeschi, an engineer in a report dated 25 April 2022, Mr J Ovidi, a building consultant in reports dated 27 May and 17 August 2023 and Mr L. Tram an engineer in reports dated 24 May and 18 August 2023. Mr Holbrook, an engineer provided a report dated 26 July 2023 on behalf of the builder. There was no challenge to the expertise of any of these witnesses. I accept them all as appropriately qualified witnesses able to give opinion evidence in the Tribunal.
Mr Holbrook was not present at the hearing for cross examination. Mr Tran was present and was cross examined.
The Joint Memorandum of Conclave ('JMC') which is exhibit B was prepared by Mr Tram for the owner and Mr Holbrook for the builder. It was based on Mr Holbrook's report dated 26 July 2023 and Mr Tram's Supplementary report dated 18 August 2023 which was in response to Mr Holbrook's report. Reference is also made to the builder's director's document of 27 July 2023 which is stated to be titled 'Response to expert report, Lucas Tran'. There is no document that I am aware of that is in evidence and which has that title. That document was filed in the Tribunal by the builder, although it was not included in the trial bundle, exhibit A. Nonetheless, I will have regard to it in accordance with s38(6)(a) of the Civil and Administrative Tribunal Act 2013.

Section 18D of the HBA

Section 18D states: 'A person who is a successor in title to a person entitled to the benefit of a statutory warranty under this Act is entitled to the same rights as the person's predecessor in title in respect of the statutory warranty.'
To ascertain whether a person will be entitled to the benefit of a statutory warranty it is necessary to consider s18B(1) of the HBA which states: 'The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work'(emphasis added)
The statutory warranties referred to are: '(a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.'
I interpret s18D of the HBA to mean that the owner is entitled to the same rights in respect of statutory warranties as the predecessor in title had under the contract with the builder. It is important to know what work that the builder was required to carry out under the contract with the predecessor in title, as the statutory warranties apply to that work. Generally speaking, it is my view that the builder cannot be liable under a statutory warranty in connection with work that it never carried out.
The contract pursuant to which the builder carried out the residential building work for the owner's predecessor in title is not in evidence. As a result the precise scope of the residential building work carried out by the builder is not in evidence. To the extent that such scope is outlined in the documents referred to in condition 1 of DA19/0013, page 103 of exhibit A, I will have regard to those documents as setting out the builder's scope of works to the extent that such documents are in evidence and legible.
It was also a condition of the Development Consent obtained by the predecessor in title, at page 114 of exhibit A, that all work carried out would be in accordance with the requirements of the Building Code of Australia ('BCA'). Such a requirement is relevant to the implied warranty set out in s18B(1)(c) of the HBA as extracted above. The National Construction Code ('NCC') includes the BCA.

Issues in contention

In opening the applicant's case his solicitor stated that there were 3 matters in issue in the proceedings. The first issue related to the 'western wall' of the property as depicted at pages 134, 137, 143 and 401 of exhibit A. The second issue relates to the north - eastern corner of the property. The third issue concerns the north fence of the property.
I was informed that the amount claimed in connection with the western wall was $91,608.00, for the north eastern corner, $85,800.00 and $900.00 for the north fence, total $178,308.00.

Material facts

The owner has provided 2 affidavits. The director of the builder did not provide evidence by way of affidavit or statement. He did prepare Points of Defence. Letters or documents written by him were in exhibit A.
The owner's evidence is that on 26 February 2022 the swimming pool on the property flooded with muddy water and debris. He states that he noticed dirt flowing into the pool in February, March and early April 2022.
On 7 April 2022 the owner received a call from a neighbour who told him that he thought a wall on the boundary of the property was falling down. This wall is described as the western wall. The director of the builder arrived at the property and carried out propping work and cored holes in the bottom of the wall to let water flow through the wall. A temporary pipe was installed from a drain on top of the pool down to the street. (the '7 April incident')
The development consent is annexed to the owner's affidavit. So are the architectural plans referred to in the Development consent. However they are copies of such poor quality that they are of little or no evidential use to me.
The owner stated that he has undertaken remedial work since the 7 April incident. The remedial work is described as: 1. Shotcrete on the eastern boundary; and 2. To improve drainage digging up lawn, putting in new ag lines and paving a small area.
In an affidavit dated 18 August 2023 the owner sets out to establish that the builder altered the slope of the land in the north east corner of his property by annexing photographs and a plan with isotope lines. I do not accept that the photographs and plan annexed by the owner establish that the builder altered the slope of the land on the north east corner of the property. I am not experienced in reading a plan with isotope lines. There is nothing to suggest that the owner has expertise in that area.
The use that is to be made of photographs were discussed by an Appeal Panel in X-Build Construction Services Pty Ltd v O'Rourke [2020] NSWCATAP 181. At [57] the Appeal Panel stated: 'Further, how a court or tribunal may use photographs is the subject of restraint, although there is some uncertainty as to precisely how much restraint.'
Referring to Blacktown City Council v Hocking [2008] NSWCA 144, the Appeal Panel cited the following passages from the judgement of Tobias JA which I consider to be relevant: Tobias JA, with whom Giles JA agreed, said at [167]: "[167] The use of photographic evidence has been the subject of discussion in this Court. Its admissibility as a visual reproduction is beyond doubt: R v Travers (1958) 58 SR (NSW) 85 at 108. However, in Short v Barrett, Court of Appeal, 5 October 1990 (unreported), Meagher JA, with the concurrence of Clarke and Handley JJA, observed that in relying on his own interpretation of photographic evidence, the trial judge had overlooked the "sage advice" of Lord Reid in C Van der Lely NV v Bamfords Ltd [1963] RPC 61 at 71. His Lordship said: 'Lawyers are expected to be experts in the use of the English language, but we are not experts in the reading or interpretation of photographs. The question is what the eye of the man with appropriate engineering skill and experience would see in the photograph, and that appears to me to be a matter for evidence. Where the evidence is contradictory the judge must decide. But the judge ought not, in my opinion, to attempt to read or construe the photograph himself; he looks at the photograph in determining which of the explanations given by the witnesses appears to be most worthy of acceptance.'" And at [169]: "It should be noted that the use by a trial judge of photographs is nothing new. They can, as the authorities to which I have referred confirm, be descriptive of what a witness says he or she saw, being a representation of the witness' knowledge and observations. But they should not be used by a judge to make findings of fact which are otherwise unsupported."
Based on the above authorities I decline to make a finding that that the builder altered the slope of the land on the north east corner of the property based on the photos and the plan annexed to the owner's 18 August 2023 affidavit, when the findings sought by the owner reliant on photographs and a plan are unsupported by the opinion of an appropriately qualified or experienced person.

The western wall

The first thing to be determined is what work did the builder carry out in connection with the western wall.
There is no dispute that before the builder commenced work for the predecessor in title there was a pre-existing retaining wall on the western side of the property.
In its Points of Claim the owner states that the work the builder carried on the western side of the property was: 1. Removing the top metre of the retaining wall, including removing horizontal and vertical ribs supporting the retaining wall; 2. Placing sandstone bricks in the area on top of the remaining retaining wall; 3. Building a new brick wall adjacent to the retaining wall; 4. Removing perpendicular supporting ribs from the old retaining wall; and 5. Removing a section of the old retaining wall perpendicular to the existing retaining wall.
The builder in its Points of Defence stated that: 1. the age of the pre existing retaining wall was 40 - 50 years old; 2. the new sandstone wall was 1000mm high; 3. the new sandstone wall was 1000mm back from the property boundary; and 4. a reinforced strip footing 300mm x 300mm with 300 diameter piers at approx 1000mm centres drilled to rock has been installed directly under the sandstone wall.

The expert evidence relating to the western wall

I will proceed on the basis that the applicant relies primarily on Mr Tran's evidence since he appeared at the hearing and participated in the JMC. Mr Tran's evidence was based on assumptions at 1.6 of his 24 May 2023 report. Observations are made at 2.1.1 of his report which do not contain an opinion as to the cause of the events as they related to the 7 April incident and the failure of the western wall. At 2.1.2 of his report Mr Tran states that the deflection of the western wall exceeds the allowances stated in AS1170.0, Table C1. At 2.1.3 Mr Tran list 10 instances in which he states the western wall after the 7 April incident breached the National Construction Code and AS 4678-2002.
Mr Holbrook for the builder in the conclusion section of his report states, among other things, that the cause of the 7 April incident was hydrostatic pressure applied to the back of the western wall with the expansion joint appearing to have failed leading to the wall being overloaded, ultimately resulting in failure. The cause of the hydrostatic pressure was stated at 8.1.5 to be: 'Item 5: Agreed that the wall failure was likely due to the recent rainfall events, with the water being concentrated to a single point due to the temporary pool bypass, it appears that the water was unable to evenly spread through the length of wall and sock away, this local failure has compromised the wall causing rotation about the base and shear failure at what appears to be an expansion joint.'
Mr Tran replied to this report in his Supplementary report of 18 August 2023. He also responded to the builder's director's document of 27 July 2023 titled 'Response to expert report, Lucas Tran'. While there were some areas of agreement, in the main and in connection with its critical findings and conclusions Mr Tran disagreed with Mr Holbrook. I will not set out every detail of Mr Tran's Supplementary report for the reason that Messrs Tran and Holbrook did attend at the conclave. They prepared and signed the JMC.
At the conclave the experts worked off Mr Tran's Supplementary report. They agreed paragraphs 7.1.1 and 7.1.3. That is they agreed the physical properties of the western wall and importantly, that the failure of the western wall occurred to the entire wall not just at the location of the expansion joint. They also agreed that the wall had failed in its Serviceability Limit State (SLS) due to excessive leaning. This amounts to a breach of AS 1170.0 - 2002 and AS 4678 - 2002 Section 3.1 as referred to at 2.1.3 d. and e. of Mr Tran's first report.
In connection with paragraphs 7.1.5 and 7.8, they agreed that the overland flow had been redirected.
As to paragraph 7.4, there was no measure of agreement between the experts, although they did agree that surcharge from the sandstone wall was not increasing the load to the lower retaining wall.
The experts agreed with paragraphs 7.5.2, 7.5.3, 7.5.4, and 7.5.5 of the supplementary report.
The experts did not arrive at any joint conclusions regarding the cause of the failure of the western wall. Nonetheless the issues that they did agree on may assist in reaching findings on the cause of the failure of the western wall.
Following the exchange of the experts' evidence, the production of the JMC and the evidence of Mr Tran when being cross examined, I understand Mr Tran's evidence to be that the western wall failed in the 7 April incident because it had been structurally modified by the builder and that it was structurally unsound. His reports indicate, by a comment below a photograph, that the structural modifications were that engaged piers in the pre-existing retaining wall were removed by the builder as pleaded refer [28(d)]. At item 8.1.2 of Mr Tran's supplementary report he stated that structural elements (piers) had been removed from the pre-existing western wall, which he illustrated by reference to a photograph. In the JMC Mr Holbrook agreed that there were piers.
In his document dated 27 July 2023, Mr Jessop responded to 2.1.1 of Mr Tran's first report. He agrees that the builder modified a segment of the western wall. He stated: 'The segment of retaining wall was modified by Jessop Constructions. This was remedial works with no structural works undertaken.'
Mr Tran did concede that there was some hydrostatic pressure, but stated that the western wall did not fail because of hydrostatic pressure. Mr Tran also stated that the failure was caused by the impact of the water that flowed to the western wall and the modification of the wall which led to the situation where the wall could not resist the impact of the water because it was unfit for the purpose of a retaining wall after the modification. In answer to a question as what the builder did to cause the problem, Mr Tran responded that the builder reduced the thickness of the engaged pier stiffener by cutting it to 110 mm and reduced its strength. In addition it removed the top of the retaining wall. In re-examination Mr Tran pointed out that the wall failed along a 14 metre length which is at odds with Mr Holbrook's opinion that the wall failed at an expansion joint.
I prefer Mr Tran's evidence. I find that the western wall failed because of the factors that he has identified, in the main the modification of the wall, which Mr Jessop conceded, which led to at the least the breaches as agreed by the experts as referred to at [33] above. As he stated in cross examination, when the builder modified the wall it was not fit for purpose.
I find that the owner has established that the builder was in breach of the statutory warranties, especially s18B(1)(f) that work to the western wall would be reasonably fit for purpose. I find that the wall was not fit for purpose because the experts agreed that the wall had failed in its Serviceability Limit State due to excessive leaning. I also find out the particular purpose for which the work was required was made known to the builder by reason of the notation on the ground floor plan, drawing 1.3, as referred to in the conditions of consent, and also as a construction certificate drawing, that the existing retaining wall was to be lowered and made good. I find that this notation informed the builder that the retaining wall was to be used in the construction works and clearly should have been fit for the purpose of a retaining wall once completed. I would also find that there is no dispute that the builder knew that it had to modify the pre-existing western wall and in fact did so.
I find that the owner is successful in connection with this item.

The north east corner

In its written submissions the owner's solicitor states that the builder altered the slope of the land in the north east corner. In his Points of Claim the owner states that: 'The respondent has removed a dirt hill at the North East boundary of the Property and subsequently failed to provide adequate retainment on the North East corner of the site and inadequate drainage catering for water and debris flows from the adjacent properties to the rear courtyard.'
In its Points of Defence and in connection with the north east corner the builder states: 'The works conducted by Jessop Constructions inside …… have not altered the lay of the land in this area. The heights of the reserve behind the property and neighbouring property have remained the same. The stepped landscaping walls built inside the subject property were built up to the same height as prior to any works being carried out. These sandstone walls have not failed and were adequately planted out and retained. These walls had weep holes built in for drainage. These garden beds were never designed to meet the height of the reserve behind or the neighbouring property (21 Cabarita). There was an existing sandstone wall that retained the neighbouring property's elevated yard, this was original and has never been altered. National Construction Codes Performance Requirements P2.1.1 have been meet with these retaining walls and there is no breach. Being at the bottom of the hill it is expected that water will ingress the property. Hence, the agricultural pipe (Agg line) at the base of the shaped rock/ seat and the inclusion of the 100mm strip drain at the edge of the pool shell. This was included to catch any surface water before entering the pool.'
I have considered and rejected the owner's evidence in his 18 August affidavit that the builder altered the slope of the land in the north east corner of the property.
Condition 1 of DA19/0013 lists 2 landscape plans prepared by Zenith Landscape Designs, sheets 1 and 2 dated 24 July 2019 as documents that must be followed which, I infer, would have set out the requirements for the builder to follow in the North East corner of the property. They are not in evidence which makes it difficult for me to ascertain from the plans what work the builder was required to carry out in the North East corner. The builder has indicated in its Points of Defence the work that was carried out. I accept the builder's description of the work carried out as it had a close understanding of what work was actually performed.
Mr Cordeschi's report states: 'The stepped landscape retaining structure appears to have inadequate provision to prevent soil, erosion and collect and divert seepage water away from the pool area to a retention pit and/or underground drainage system.'
Mr Tran makes observations about this area at 2.2.1 of his report. He also refers to NCC 2019 Performance Provisions for stormwater drainage which he has set out and highlighted. At 2.2.1(2) Mr Tran stated: 'The home owner has attempted to retain the soil and rainwater from higher ground on the North/North-Eastern boundary by carrying out shotcreting and installing strip drain and agg pipes along the pool deck, but the retaining and stormwater drainage pipes seems in adequate.'
At 2.2.4 Mr Tran states under the heading Opinions and Recommendations: 'I hold the opinion that the existing drainage serving at the pool and rear courtyard is not adequate for rainwater drainage in this location considering that a huge amount of rainwater or even overland flooding from upstream properties is conveying through the rear section of the subject property. The shortcrete embankment being temporarily done by the homeowner is inadequate to withhold water and soil pressure. It is therefore recommended that a proper retaining wall should be constructed on the North and Eastern boundary of the site so that a proper subsoil drainage system will be installed. The metal fences on the north and eastern boundary should he reinstalled with proper footings once the retaining wall constructed. An overland flow flood study and analysis should be carried out to know the flood impact from the flows to the property and upgrade the subsoil drainage system accordingly.'
Mr Holbrook's report does not address the opinion of Mr Tran as extracted above, nor the opinion of Mr Cordeschi as extracted above.
The document prepared by Mr Jessop of the builder as referred to at [8] comments on Mr Tran's opinions as set out above. Mr Jessop does not challenge the opinion given in the first paragraph extracted above which is a critical item of evidence in the owner's case as regards the north east corner. Mr Jessop's comments following the paragraph sequence of Mr Trans are: 'The overland flood path from the North East corner needs to be maintained external of the property. This will most likely eliminate such large amounts of ingress from happening again. As per the AS3500.3-2015 section 5.4.2 this needs to be actioned by the property owners that the overland flood paths exists within. This would be Laguna Street Primary school or the Sutherland Shire Council. Agreed. Jessop Constructions requested who had advised on these works being undertaken as this may very well be detrimental to this area by surcharging the neighbouring property allowing excessive hydrostatic pressure to build up behind due to slowing down the rate of the natural absorption of ground water. Jessop Constructions is unclear the need for an additional retaining wall to be built here as the current wall has not failed and is fully compliant. Metal fence to the northern boundary was stable and compliant at time of practical completion. Metal fence to the eastern boundary was also stable and complaint at the time of practical completion. Jessop Constructions fail to see the need to replace these fences if they are intact and in good working order. Agreed. Any findings from this study should be presented to the neighbouring properties and their obligations to maintain and develop flow paths should be meet.'
All of these comments were addressed by Mr Tran in his supplementary report. There was no agreement with any of these statements by Mr Jessop.
The JMC did not address Mr Jessop's comments on Mr Tran's first report or Mr Tran's response in his supplementary report to Mr Jessop's comments.
The absence of the landscaping drawings makes it difficult to make findings about the exact nature of the work that the builder was required to carry out. Mr Tran was cross examined, but not on the north east corner issue. Mr Jessop was also cross examined on the builder's Points of Defence and answered questions on the north eastern corner.
The evidence indicates that water from land above the property the subject of these proceedings flowed into the north east corner of the property. This water was an overland water flow. The photographs on pages 77 -79 of exhibit A illustrate this water and the sandbagging the owner placed to prevent water entering the pool.
There is a conflict or an ambiguity in the evidence, in that the builder states in its Points of defence: 'Being at the bottom of the hill it is expected that water will ingress the property. Hence, the agricultural pipe (Agg line) at the base of the shaped rock/ seat and the inclusion of the 100mm strip drain at the edge of the pool shell. This was included to catch any surface water before entering the pool.'
Mr Tran has stated: 'The home owner has attempted to retain the soil and rainwater from higher ground on the North/North-Eastern boundary by carrying out shotcreting and installing strip drain and agg pipes along the pool deck, but the retaining and stormwater drainage pipes seems in adequate.'
Mr Jessop in his 27 July 2023 document clarifies this. He states: '1 x agg line and 1 x 100mm strip drain were installed at time of construction and had dealt with all surface water until this one extreme rain event. The applicant have installed 1 x strip drain running north-south at the base of the planter box here and 1 x strip drain running east- west in front of the pool fencing. It is not known if a qualified hydraulic engineer has deigned this and it is not known where these lines run to.'
I accept Mr Jessop's evidence as to what drainage was installed by the builder and what the owner installed at a later date. The builder's video also shows the strip drain that it had installed.
The photo at page 151 of exhibit A shows the strip drains installed by the builder and the owner. I find that the drains in the foreground were those installed by the owner and the strip drain that is parallel with the wooden seat built on rock was the drain built by the builder.
The photos at 205, 370 and 511 of exhibit A show the strip drain and agg line the builder installed. A photograph at page 206 shows the erosion of sand and soil into the pool caused by the overland flow after the 7 April event. The builder's photo evidence at 516 of exhibit A shows the agg line with weeds in it. It is asserted that 517 of exhibit A indicates that the strip drains were blocked, although the photographic evidence does not make that plain.
The USB with videos filed in the Tribunal by the builder were not tendered into evidence. Nonetheless I have had regard to the USB pursuant to s38(6)(a) of the Civil and Administrative Tribunal Act. Video 1 on the USB shows the strip drain with the grate removed. There is no indication that the strip drains were blocked. I decline to make a finding that they were. The inference to be drawn from the video is that the agg line and the strip drain installed by the builder were unable to cope with the volume of water that entered into the property via the overland water flow on 7 April.
The main item of evidence for the owner is in my view Mr Tran's opinion that: 'the existing drainage serving at the pool and rear courtyard is not adequate for rainwater drainage in this location considering that a huge amount of rainwater or even overland flooding from upstream properties is conveying through the rear section of the subject property.'
I find that the drainage serving the pool and rear courtyard referred to by Mr Tram is the agg line and strip drain that I have found was installed by the builder.
I find that Mr Tram's opinion has not been contradicted by the builder's expert or in the JMC. I find that Mr Jessop does not in his 27 July document address this opinion in a meaningful way. Instead he refers to the overland path, suggesting that the obligation lies with neighbouring owners. In final submissions Mr Jessop again referred to the overland flow stating that too much water came down from the neighbouring primary school. He stated that the graded wall in the north eastern corner did not fail and that the event in this area could be explained as a maintenance issue. He pointed out that drainage was in place and worked well until the 7 April incident. I accept that the builder has shown a photograph of weeds at the top of the agg line. However there is no evidence to persuade me that the agg line would have been ineffective because of weeds. I have rejected the suggestion that the strip drain was blocked or ineffective.
I accept Mr Tran's uncontradicted evidence that the drainage was inadequate. As a result I find that the builder was in breach of the implied warranty in s18B(1)(c) and (f) being that that the drainage did not comply with the NCC. Refer [49]. The breach of s18B(1)(f) being that the drainage was not fit for purpose.
I do not accept that the breach of the implied warranty by the builder justifies remedial work of building a 'proper retaining wall' on the north and eastern boundary of the site, as recommended by Mr Tran. There is no evidence that the wall or structures in this area as described by the builder in its Points of Defence breached the implied warranties.

The north fence

The owner's case in connection with the north fence relies on the opinion expressed by Mr Ovidi at page 288 of exhibit A. Mr Ovidi stated: 'The metal fence was visually inspected, and I noticed the post exposed. In my opinion this reveals that the post should have been inserted in the soil deeper as the fence has dropped in level. The rectification in my expert opinion is to install a deeper post to allow for any soil substance due to water washing the soil away. ….I form the opinion that the work to the metal fence is substandard and requires rectification works.'
Mr Ovidi states that in his opinion is not a major defect. I agree with Mr Ovidi's opinion. I find that the fence is not a 'major element' of a building. Based on the fact that the construction of the building was completed and an occupation certificate was issued on 14 September 2021, the owner had two years from that date to commence proceedings, that is by 13 September 2023. These proceedings were commenced on 16 March 2023, within the two year period.
I find that Mr Holbrook the builder's expert does not address this issue. Nor does Mr Jessop.
I find in connection with this item that the owner has established a breach of the implied warranty that the builder would carry out this aspect of the works with due care and skill.

Section 48 of the HBA

This section of the HBA requires the Tribunal to consider the principle that rectification of defective work by the builder is the preferred outcome. The builder made no submission that it was prepared to and should be allowed to return to site to carry out any rectification work that the Tribunal might order.
In the absence of the builder stating its preparedness to, and requesting the right to rectify defective work, and providing evidence of its licensing status and ability to carry out the defective work, I am not persuaded that it is appropriate to make orders giving effect to s48MA of the HBA.

Disposition of the proceedings

I have made orders in the owner's favour in connection with the western wall, the north eastern corner and the north fence.
The amount claimed by the owner relies on the assessments made by Mr Ovidi of the cost involved in carrying out the rectification work. Mr Holbrook for the builder does not address the costings which are contained in Mr Ovidi's report. Mr Jessop for the builder also did not address Mr Ovidi's costings except in his response to the scott schedule and in his final submissions to the Tribunal.
The builder's response to the scott schedule valued the cost of the rectification work to be $44,469.81 including preliminaries, margin and GST. I do not accept the builder's costings primarily because they have not been provided by an independent person and as a result are given in the builder's own interest to minimise the rectification cost if it is found liable. I prefer costings provided by an independent expert whose evidence is more likely to reflect industry wide costing practice. In addition Mr Ovidi's costings are broken up in detail in his report. The builder's costings do not have that detail.
In connection with the western retaining wall, Mr Ovidi's report under the heading 'Western Boundary wall retaining wall' estimates costs of $43,600 and $11,920.00, which total $55,520.00. In Mr Ovidi's opinion he adds preliminaries of 15%, a contingency of 10% and a builder's margin of 30%. GST should then be added to the total.
In closing submissions Mr Jessop stated that the preliminaries and margins sought were too high. He said that the preliminaries ought to be 5% and that the contingency was not appropriate because the costs in the scott schedule were too high. While I accept that Mr Jessop no doubt has experience in costing building work, his submissions were more in the nature of giving evidence for the first time. There is also the fact that his comments are made in his own interest and there is no basis to find that his comments reflect industry wide practice. I do not accept Mr Jessop's submissions which were more in the nature of him giving evidence for the first time from the bar table and in his own interest.
I accept the preliminaries figure of 15% as being in line with amounts for preliminaries generally sought and allowed in this Tribunal. In Mr Ovidi's opinion an appropriate profit and overhead percentage ('margin') would be in the range of 15 - 30%. He has allowed margin at the higher rate. There is no evidence to contradict this margin. He has then allowed an allowance of 10% for unforeseen circumstances.
The approach that I find is appropriate in quantifying rectification costs is that the owner should be allowed the amount for rectification costs stated by Mr Ovidi. An amount of 10% should be added to that amount for unforeseen circumstances, or contingency. Those 2 elements constitute the construction cost. I will allow preliminaries of 15% on that amount. An amount representing profit must then be added. I have decided that the profit margin should not be 30% as suggested by Mr Ovidi and that the profit should be reduced to 25% to take account of the fact that a contingency has been included. It must be acknowledged that if unforeseen circumstances do not eventuate, the 10% margin becomes profit to the contractor undertaking the remedial work. This factor in my view justifies the decrease in the margin.
The amount found in favour of the owner in connection with the western wall, north east corner and fence is as follows: 1. Rectification costs western wall, $55,000.00; 2. Rectification costs drainage upgrade, $20,000.00; 3. Rectification costs, north fence, $940.00, total rectification cost $75,940.00; 4. Contingency 10%,= $7,594.00, total $83,534.00; 5. Preliminaries, 15% = $12,530.10, total $96,064.10; 6. Profit/margin 25% = $24,016.02, total $110,984.77; and 7. GST 10% = $11,098.47, total $122,083.24.
I find that it necessary to add $1,600.00 for Home Owners Warranty insurance, a cost that the owner must pay in a new contract for rectification work. The total amount is therefore $123,683.25.
Mr Ovidi has stated that he estimates that the owners should receive an additional $10,000.00 for reimbursement of cost to the owner to mitigate the water to the pool area and surrounds. There is no evidence referred to by Mr Ovidi or the owner which substantiates the expenditure of the $10,000.00 to which Mr Ovidi refers. I reject this claim which has not been supported by evidence of actual loss.
I will make an order in the owner's favour in the sum of $123,683.25.

Costs

In the event that a party is minded to make an application for costs, such application must be lodged in the Tribunal and served on/given to the costs respondent within 14 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.
The costs respondent will have 14 days after the date it or he receives the application to lodge in the Tribunal and serve on/give to the costs applicant his or its submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.
The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.
Subject to the parties' submissions, the Tribunal will determine any costs application made on the basis of the submissions and papers filed in the Tribunal.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 December 2024

At a glance

Court

Decision date

Before

Source

Judgment (12 paragraphs)

Parties

Cases Cited (2)