The Owners - Strata Plan No 66595 v Suncorp Metway Insurance Ltd and B S and J H Bailey Pty Ltd

BACKGROUND FACTS 3The builder was engaged in the construction of the subject premises between 2000 and 2001 pursuant to a contract with the developer Mr BS Bailey (BSB) who was also one of its directors. 4The subject premises are a two storey townhouse development which is constructed on an irregular shaped block. The development comprises 11 residential units with a basement level carpark. 5On about 11 September 2000 the builder obtained relevant Home Warranty Insurance with the insurer in respect to the works which were to be conducted by it pursuant to its contract in respect of the development. 6The builder completed the works at the site in around September 2001 and an Occupation Certificate dated 21 September 2001 was issued. 7The structural engineering design drawings and specifications for the development were provided by A L Wood Structural Engineers and are dated 24 May 2000. The engineering details specify "450mm mass concrete piers to extend to sandstone foundation.... At max. 2 metre centres" to support the external walls of the proposed structure. 8During the course of the works being conducted the engineering requirements as specified were varied and a strip beam footing was constructed instead of mass concrete piers as originally specified. 9Although the original May 2000 engineering drawings formed the basis for the issuance of the Sutherland Council Construction Certificate ( the CC ) no formal written amended documentation of the as built footing design was provided to it. 10Subsequent to completion of the development, the applicant Owners Corporation was established as the owner of the common property of the subject premises. The individual townhouses were sold to the various unit owners although the developer has retained ownership of unit 11. 11Around early 2006 unit owners became aware of leakage of water with flooding of the rear courtyards and blocked toilets of some units. The leakages were associated with sewerage like smells and dampness was evident on the garage walls of a number of units. At around the same time varying degrees of cracking to the internal walls of a number of units also became evident. The cracking was noted to be severe in units I and 2. 12During the period between when the foregoing issues became evident and August 2006, some ad hoc measures were undertaken by individual unit owners and by the builder to address them. 13In around August 2006 the owners retained Acumen Consulting Group Pty Ltd (Acumen) to investigate and report on the problems, following upon which Acumen produced a report dated 30 September 2006 which identified specifically various problems/defects which it determined as defects which it regarded as the responsibility of the builder to rectify. It prepared also a detailed scope of works with respect to the recommended work. 14During the period between September 2006 and the time proceedings were commenced in late 2007 both the insurer and the builder were made aware of Acumen's findings and discussions took place through a series of correspondence as to what steps would be taken by either of them to remedy such defects. The insurer made a determination that it accepted a substantial number of the defects identified by Acumen were the responsibility of the builder and notified the builder that he was to contact the owners with a view to meeting with them and make arrangements to carry out rectification of the identified defects. 15The builder did not accept responsibility for all the defects nominated by Acumen, which the Insurer agreed should be rectified. The builder offered to conduct essentially the superficial rectification, but not any work of a structural nature involving stabilisation of the walls. 16The owners adopted the position that unless the builder was prepared to carry out all the rectification work that the insurer had accepted as reasonable, which included the stabilisation of certain walls then it was not prepared to permit the builder to come back to do any work at all. 17The owners requested the Insurer to review its position and appoint another builder to carry out the rectification works it considered reasonable without qualification. The insurer did not agree and the owners issued the application against it in November 2007. 18The further proceeding against the builder was issued by the owners in September 2008. 19The proceedings against the insurer were the subject of a determination of preliminary questions by Senior Member Durie on 9 March 2009. Of some relevance was the determination that "it could (not) be said that the refusal by the applicant (the owners) to accept the return of Bailey (the builder) was unreasonable". The matter was then listed for hearing eventually on the substantive issue in May 2012 when it proceeded for three days on agreement of the parties limited to liability only. During that hearing a limitation issue was raised and submissions limited to that were received and this further preliminary point was determined on 22 January 2013. Submissions relating to the liability issue were delayed as a result of health issues involving one of the practitioners involved and not finally received by the Tribunal until late March 2014. The delay since then in delivering this determination is in no small measure attributable to the considerable bulk of material that required careful review including some 90 pages of legal submissions , the 350 page transcript of evidence heard and 28 exhibits including the lengthy and detailed expert reports and many witness statements.

THE ISSUES 20What was the cause of the building movement that gave rise to the significant cracking of varying degree to the internal walls of some of the units? 21If the cracking was caused by foundation movement was such movement attributable to the change in footing design from pier and beam to a strip beam type. 22To what extent was the foundation undermined by adverse moisture conditions. 23To what extent were such adverse moisture conditions attributable to the builder? 24If adverse moisture conditions were the likely initiating cause of the movement in the footing which has occurred, would such movement have occurred regardless of whether the footing was a pier and beam or a strip footing? 25Did the failure to formally amend the Sutherland Council approved plans in relation to the changed footing design amount to a failure to comply with the law such as would be sufficient to establish a breach of the statutory warranty under s 18B(c) by the builder. 26In the event that it is determined that the cause of the movement and cracking is attributable to any failure on the part of the builder is it reasonable to find that the appropriate rectification method requires underpinning the existing footing with piles and if so how many. 27In so far as the claim against the insurer is concerned has there been a failure to mitigate by the owners refusal to have the builder return to rectify the general defects. 28Whether or not the builder should be permitted to return to conduct such rectification works as are deemed appropriate.

THE EVIDENCE 29Much evidence has been filed and served in these proceedings all of which has been reviewed and considered. Such evidence as is relevant to this determination which I am proposing is somewhat more limited and therefore I will only address in this outline that which is critical to an understanding of the reasons for this decision. 30Firstly, the owners lay witnesses. Of the eleven units in the complex statements are in evidence from Leo Lennon (5 separate statements marked OE 8.1-8.5) and Jennifer Lennon of lot 3 (OE 7), Sandra Byrne of lot 4 (OE 6), Anthony Little of lot 9 (OE 4) and Natalie Anderson of lot 10 (OE 5). All of the latter exhibits were read without objection with the exception of some paragraphs from OE 6 and OE7. Notably there are no statements in evidence from the owners of units 1 and 2 whose townhouses have been affected by the most serious cracking. Only the Lennons gave oral evidence at the hearing. 30 Mr Little in his statement, OE 4, makes reference to first becoming aware of defects in his unit in February 2006. He refers to cracking of the internal walls of the townhouse and "leakage of what smelt like sewerage down the back wall of our garage". Soon afterwards he reported these problems to the strata manager. He says that following this in March 2006, BSB and his son David Bailey (DB) came and inspected their unit and afterwards the leak in the garage. Mr Little told them that he was more concerned with the foul smell from the leak which he thought to be sewerage than with the cracks. He says that BSB indicated the leak was not sewerage but rather an overflow from a blocked drain or from the pavers in Lot 10's back courtyard which BSB said were sloped the wrong way. After this inspection Mr Little said that he heard nothing from BSB. 31Mr Little further indicated that he sought and obtained an independent report from a building consultant which he subsequently directed to the builder together with photos of the water leaks but received no response. He says that subsequently broken sewer pipes were discovered to be causing serious flooding into townhouses 7 and 8. BSB and DB inspected the damage to those premises and during their inspection Mr Little asserts that he had overheard DB talking on his mobile phone in front of their premises and saying words as follows: "You stuffed up the plumbing on this property." 32Additionally Mr Little refers to BSB's response to various unit owners at an EGM of the Owners Corporation in September 2007 when he records BSB saying "I am not liable for the sewerage and I have no knowledge of any sewer problem." To which Mr Little's response was "We gave you a report and a DVD of the problem after you inspected our unit in April 2006." At a further EGM on 20 May 2008 he recalled that BSB indicated in response to motions being put at that meeting that he or the builder had no liability "for the subsidence of the footings." 33The statements of both the Lennons and Ms Anderson all convey the same theme of evidence relating to BSB's expressed view that the structural problems causing the cracking were not the builder's responsibility. These statements also convey the seemingly shared view of the unit owners as conveyed by these witnesses that they do not wish to have the builder back to conduct any rectification of defects because they do not trust that it will be done properly. 34As indicated above only the Lennons gave oral evidence both at significant length. The import of such oral evidence is largely unremarkable as much of the questioning did not address the critical issues that are relevant to the outcome of this determination. I found them both to be truthful witnesses. Jennifer Lennon would not concede that the builder would have the capacity to complete the rectification work properly. Leo Lennon on the other did make this concession. 35Leo Lennon was questioned considerably about the cracking. He confirmed that he had assisted with measuring cracks and monitoring their progress. 36His evidence was that cracks had not widened between 2006 and the date of hearing in May 2012. 37Leo Lennon affirmed the position regarding why the owners did not want the builder back to perform any rectification work, nominating the reason as being because of BSB's indication that the builder would not do any of the stabilisation work. 38BSB also gave evidence. His two statements BE 12 and BE 13 are in evidence. His position from the outset when these problems first arose has been that the builder has no responsibility for the cause of the serious movement of the foundation which caused the severe cracking to some of the units. He says that proper procedure in suggesting to the engineer Mr Wood that because of the nature of the site once it was opened up that it would be more suitable to the strip footing that was used rather than the piers. He provides evidence of the conversation he had with Alan Wood, the engineer, regarding it, in which he indicates that Wood agreed with his suggestion. In cross examination by Ms Kennedy it was put to BSB that he had made the change himself and after doing so had then sought for Wood to sign off on it. BSB did not concede this, indicating that he had definitely spoken to Wood by telephone about a change beforehand. 39Additional to the design issue BSB asserted from the outset that the builder was not responsible for underpinning and that the provisions of the Australian Standard AS2870 provided the support for such contention. With respect to the plumbing issues that became evident prior to and during 2006 BSB attributes to the unusual dry conditions as well as some aspects being related to maintenance issues. The following passages from his evidence are apt: 39.1 "Ms Kennedy. Q. At that time ....the extent of the sewer leakage to unit 8, you agreed was very extensive. 39.2 BSB. A. ....The sewer was broken, yes, and I saw it ...The roof guttering had been overflowing, it subsided the land...None of the drainage was working how it was meant to work because it's all been mucked around with. I spent a lot of money getting Alan Wood, getting the landscaping , getting all the levels, all the pitch right so that all the drainage works properly and I have to get it passed off and then it gets modified , and then things happen and it comes back to me, like I've done something. People have got to be responsible for their maintenance". 40Although the cross examination of BSB relating to the interrelationship with the other unit owners and the manner in which the complaints and problems were communicated assessed and handled, took up a considerable proportion of the time that evidence does little to assist with the issues requiring determination and I do not propose to comment in relation to it.

THE EXPERT EVIDENCE 41The detailed reports of Mr J Allsopp OE 2 and OE 3 and of Mr R Baxendale BE 1, BE 2 and BE 3 are all in evidence and each of them gave oral evidence during which time they were comprehensively cross examined. They had also both in 2011 participated in the conclave process. Each of the expert reports referenced above are discussed briefly in the following paragraphs.

OE 2 42Mr Allsopp's first report of 30 September 2009 is very detailed one. In preparing it he arranged for an independent geotechnical investigation of the property by Jeffery and Katauskas Pty Ltd (J&K), consulting geotechnical and environmental engineers. The detailed J&K report in relation to their investigation dated 20 August 2009 forms part of OE 2. Additionally Mr Allsopp prepared a series of twelve detailed drawings to assist with explaining the nature of the site, the problems which arose and his recommendations for resolving them. Mr Allsopp's own Executive Summary provides the best outline of his findings and opinion both as to cause and rectification and is as follows: 42.1 "Cause of Masonry Cracking in Units 1, 2, 3, 4 & 5 42.2 Cracking has occurred in the inter-tenancy walls in the above units, in the northern end wall (northern external wall of Unit 1) and in some cross-walls connected to the inter-tencacy walls. The occurrence of cracking is limited to the easter side of the units, between the rear (eastern) wall of the basement garages and the rear (eastern external) walls of the units. 42.3 From the configuration of the cracking there can be little reasonable doubt that it has been caused by settlement in the footings of the rear (eastern external walls) of the units. 42.4 Whilst the construction certificate structural engineering drawings approved for the project call for the footings of the eastern external walls of the units to be piled to bedrock, the builder ignored this requirement and founded the strip footing on a clay stratum overlying the bedrock. 42.5 In the light of the history of leakage in the service pipes located along the eastern side of the northern group of units in the complex and along the southern side of the southern group of units, it is in my opinion that the backfill in the footing tranches of the eastern external walls of the northern group of units became flooded for a considerable length of time, before repairs were carried out to the leaking pipes, and that this cased softening of the clay subgrade soil, which in turn directly caused the settlement movements to occur. This opinion is corroborated by the findings of geotechnical engineers Jeffery & Katauskas, who inspected the footings on behalf of the owners and issued a report dated 4 August 2009 (refer to subsection 6.3 of this report for a summary of the Jeffery & Karauskas report) 42.6 Prognosis for Further Cracking Damage to Occur 42.7 According to the reports of the owners, the cracking stabilised after a period of one to two years following the 2006 repair of the most recent leakage incident. Jeffery & Karauskas have likewise reported that the soil subgrade at the test pit locations inspected by them has dried out following the 2006 groundwater flooding, and that it has regained its former bearing strength. 42.8 Notwithstanding this, it is my opinion that the footings remain vulnerable to further flooding from a number of potential sources From further failure in the sewer and storm water pipes serving the complex, which an independent plumbing inspection carried out in 2006 has shown conclusively to contain defective workmanship 42.9 From the upstream section of the Water Board sewer main, which passes underneath the eastern wall footings 42.10 From stormwater concentrating from overland flow in the uncompacted backfill placed in the excavation voids by the builder at the time of construction of the complex. 42.11 From other sources currently unknown 42.12 In my opinion there is no practicable way of ensuring that groundwater can be excluded from the footings as they presently exist. Any further entry of groundwater would be inevitable initiate a further cycle of foundation settlement 42.13 There would be no point in carrying out permanent cosmetic repairs to the cracked masonry until such time that the footings have been stabilised in an effective and permanent manner 42.14 Prognosis for Further Cracking Damage to Occur 42.15 In my opinion the only acceptable way that the repairs can be achieved is by underpinning the eastern wall footings of the northern group of townhouses, including the northern and southern return walls to the basement retaining wall structure, to bedrock, in the manner that was originally prescribed in the building contract documents".

BE 1 43Mr Baxendale following his own inspection of the subject premises on 18 September 2009 and following review of all material briefed to him including OE 2 provided this first report dated 29 October 2009. In it Mr Baxendale disagrees with the opinion of Mr Allsopp as to the mechanism of the cause of the settlement of the building foundation. His opinion is that Mr Allsopp's opinion was based on a false premise because until it was established that "the footings of the basement bear on bedrock" the opinion that "the footings for the eastern external walls of the units (were) to be piled to bedrock" the same as for the basement footing, as it was described on the drawings of Mr Alan Wood, the project engineer, could not be justified. Further Mr Baxendale was of the view that it was common for footing designs to be amended once a site is "opened up" and he did not consider that the circumstances established that the builder had ignored a specific requirement. 44Mr Baxendale considered the significant cracking at the junction of units 1 and 2 and to a lesser extent adjacent areas was due to drainage issues. He also was of the view that a tree adjacent to the area of maximum settlement had been a contributing factor also. Further he considered that the underpinning method of rectification adopted by Mr Allsopp and the injection grouting proposed by Acumen were both not warranted on the basis that having regard to the site conditions such treatment could involve the effect of "over strengthening".

BE 2 45This report of 23 November 2010 was commissioned following the receipt by the owners of the further geotechnical report of Douglas Partners dated 14 October 2010. Mr Baxendale collated the test results from the latter report and with those in the J&K report and concluded that "the footings at both the higher (courtyard level) and the lower (basement carpark) level bear on strata that have the same classification and properties". On the basis of these findings he indicated his view that Mr Allsopp's conclusion that the settlement was due to differential foundation conditions was wrong. His conclusion therefore was therefore that the cracking could not be attributed to any failure of the builder "to meet the structural engineer's design intent".

BE 3 46This final report from Mr Baxendale dated 9 March 2011 was prepared in response from the owners solicitors to clarify certain points. 46.1 In relation to why cracking had occurred he considered that the local failure of the support strata in the area of units I and 2 was initiated by leakage from a drainage line even though he had no evidence as to the cause of such leakage . He considers the effect of this leakage would have been greatly increased by the potential tree root invasion. 46.2 He considered that generally pipework failures are commonly the result of ground movements or the failure to joint materials correctly or a combination of both. 46.3 Although Mr Baxendale conceded that lack of proper compaction of backfill in areas where services are laid can result in pipe failures, and even though such contravened accepted practice, it was not clear that Mr Allsopp had actually observed areas of poor compaction and significant excavation would be required for this to be established. 46.4 Mr Baxendale further confirmed his opinion that underpinning as recommended by Mr Allsopp both as to its nature and its extent was unnecessary. He conceded that if it was established that the site after extensive investigation was determined to be not stabilised then some underpinning as recommended would only be required under units 1 and 2. Even if found to be necessary at all its extent should be more limited.

OE 3 47The supplementary report of Mr Allsopp dated 27 July 2011 was requested by the owner's solicitors to respond to the three reports of Mr Baxendale discussed above. 48In this very extensive report Mr Allsopp explains that from the J&K report "the subgrade materials covered by Mr Wood's certification were vulnerable to losing their strength if affected by water." He asserts that the certification should have had a proviso to account for that fact as the evidence supports that this occurred. 49Although the J&K report indicated that at the time of inspection the soil subgrade had dried and returned to its normal strength Mr Allsopp considered it remained likely that it would be similarly affected again in the future. 50Mr Allsopp agreed that he had expressed the opinion initially as to the builder ignoring the structural drawings but acknowledged that in light of the further evidence from Mr Wood this statement should be withdrawn. 51He explained in relation to the geotechnical consensus as to the absence of readily accessible bedrock that his assumption with regard to it was based on the reference in the Wood drawings. However he contended that the basis of his thesis was not dependent on bedrock, but simply that one part of the foundation material became saturated and lost its bearing strength relative to the other part which remained dry and firm and retained its bearing strength and it was irrelevant whether that other material was bedrock or otherwise. The differential stiffness between the two was what was relevant. 52Further calculations as to bearing capacity of piers had they been constructed along the Northern wall footing in accordance with the original design, using the J&K findings and adding 10% of the bearing capacity for skin friction to the sides of each pier resulted in a working design load in his view which would have been sufficient to support the structure in a manner that "could not have been adversely affected by water into the footing trenches as has occurred". 53Mr Allsopp totally discounted the theory propounded by Mr Baxendale regarding the presence of the tree in proximity to units 1 and 2 having a drying shrinking effect which contributed in any way to the settlement of the foundations. Once again Mr Allsopp relies on support from the J&K view that the settlement movement resulted from settlement of the soil due to water flooding not drying out. 54OE 3 is repetitive in its reference to the cause of the settlement being the saturation of the footing beam trench. Mr Allsopp indicated it is unlikely that he could agree on the remedial works that he considers appropriate with Mr Baxendale because Mr Baxendale does not acknowledge the risk of future flooding.

EXPERT ORAL EVIDENCE 55Both Mr Allsopp and Mr Baxendale were each extensively cross examined. At the conclusion of same they were substantially ad idem in relation to matters set out below: 55.1 It is not unusual for change in design to occur once a site has been excavated. 55.2 In as much as Mr Wood agreed with the strip footing as proposed by BSB it was acceptable for the builder to so proceed on the basis of this change. All things being equal (the absence of moisture) strip beam footings are generally stronger than piers. 55.4 That the cracking would not have occurred at units 1 and 2 if piers had been used. (Subject to Mr Baxendale's proviso that such piers were to a depth of 1.5 metres.) 55.5 In spite of some semantic differences as to the meaning of groundwater there was agreement that water in the ground at the relevant time had caused weakness in the foundation. 55.6 That AS 2870 only applied where normal site conditions prevail and where abnormal site conditions exist, assuming an accepted risk of moisture from plumbing failures, then the footing design shall be by engineering principles. 56The major areas of disagreement between Mr Allsopp and Mr Baxendale are : 56.1 The relevance of the tree to the cause of the foundation movement. 56.2 The nature and extent of underpinning which is to ensure ongoing appropriate stability of the premises.

THE PROJECT ENGINEER 57It is noted that there are a number of documents and engineering drawings in evidence from A L Wood Consulting Engineers the most relevant of which are as follows: 57.1 Letter dated 15 June 2000 to Sutherland Council - OCB83 57.2 Structural Certificate for Inspections 26 October 2000 - BE4 57.3 Engineer's Certificate 24 August 2001 -OCB84 57.4 Fax letter 23 May 2006 to Strata Manager - BE8 57.5 Structural engineers Report 20 August 2010- BE9 57.6 Statement of Alan Wood 1 December 2011- BE10 57.7 Engineering drawing 1319949/S1 24 May 2000 - OE1 58Alan Wood who gave oral evidence is a principal of that business. In his statement BE 10 he confirmed he had prepared the engineering plans for the builder in respect of the subject premises. His statement further records an alleged verbatim account of a telephone conversation concerning deletion of the piers, which occurred in around June 2000 with BSB. He also agreed, having read the statement of BSB dated 28 November 2011, that paragraphs 7.1 to 7.10 of that statement "accurately record the conversations and discussions I had with him in 2000." 59Ms Kennedy's cross examination of Mr Wood focused on trying to have him concede that there was a non disclosure to the Council of the changed footing design, which non disclosure amounted to a breach of the law. Although he conceded that OE 1 was the only drawing that went to Council for the construction certificate, which contained the original piered footings , in answer to such assertions Mr Wood explained: "The council do their own inspections, footing inspections are mandatory...So I am not the only one ...that has seen the footings ....this is only a preliminary drawing (referring to OE1) ...When we get the sewer diagram from Sydney Water, then they're pegged out on site that accurately locates where the sewer is, then we produce a working drawing which would indicate ....what subsequently occurred". 60He claimed there were other drawings apart from OE1 which would have gone to Sydney Water for approval. 61Ms Kennedy questioned Mr Wood also about the notation on OE 1 of the requirement for "mass concrete piers to extend to sandstone foundation, the same as...to basement footing..." suggesting to him that there had already been investigation of the basement footings. His response was that as at 24 May 2000 there had been no investigation of the site. What was meant by the notation was that "piers have to extend to the same as what is encountered ....in the basement footings ....at the time of excavation for the footings." In other words "whatever you do for one footing has got to be the same as the other." He indicated that the reference to bedrock was an error and seemed to be suggesting it was a reference from another unrelated project document that was used as a pro forma. 62It was further put to Mr Wood that BE 4 on 26 October 2000 was saying to council that the works were compliant with drawing OE 1 when in fact it was not correct as it did not disclose the absence of piers. Mr Wood indicated that neither council nor Sydney Water wanted the drawings changed so the certification was done on the basis that the work "was correctly done" as inspected, as they took notes on it and knew there were no piers there. This point was re-iterated later by Ms Kennedy and the following record of the cross examination is apt: 62.1 " Ms Kennedy; Q. And by the terms of the development consent you are expected to construct in accordance with those drawings, unless you notify council otherwise, you agree with that don't you sir? 62.2 Mr Wood; A. Things change during the construction. The drawings are issued for the CC, discussions take place on the job, council inspectors come and have a look as well, there's discussion on site, maybe they ask for a certificate and maybe they don't. Maybe they ask for the drawings to change, maybe they don't, or if it's executed drawings we're referring to, of the stormwater only, nothing to do with the building. If you read it properly (referring to OCB84) they are talking about the accredited engineer. The accredited engineer was the person appointed to be the supervisor of the stormwater that is why I got my brother to countersign the certificate. He was the one that was going to do the stormwater, not to do with the building. 62.3 Q. I suggest to you sir, that the certificate that you've provided certifies ....the engineering work.... 62.4 A. It's the civil works. It's the civil works. 62.5 Q. Can you indicate on that document sir, where it's for civil works only ..... 62.6 A. Paragraph 2 62.7 Q....So after the CC plans had been approved, is it your general view sir , that it is open to the builder , during construction , to vary those plans without taking any new plans back to council....? 62.8 A. Yes " 63Mr Wood was also challenged in relation to the fact that he was not himself personally responsible for drawing them. He conceded that he had not drawn it himself but that he adopted and signed off on it as if he had done so. 64In re-examination by Mr Howlin, Mr Wood was asked whether he took responsibility for the change in design of the footings from piers to strip beams, which he confirmed.

DOCUMENTARY EVIDENCE 65Such documents that are relevant to this determination and have been admitted into evidence I do not propose to summarise but will simply include reference to pertinent extracts where it is relevant to do so in the factual analysis and reasoning sections below .

FACTUAL ANALYSIS 66The direct cause of the internal cracking in units 1 to 5 of the complex is more probably than not the movement in the foundation. Such movement in the foundation is likely to have occurred not because it was intrinsically unsound. In a normal site (i.e. one where the foundations were not exposed to abnormal moisture) the as built footings it is agreed by both experts would have been adequate to support the structure without problem. 67The consensus of opinion , of both Mr Allsopp and Mr Baxendale, is that the strip beam was undermined by the presence of moisture in the supporting clay which softened and it gave way because of this fact. In other words even though the consensus was that a strip beam was generally stronger than piers, that was only so when all things were equal, i.e. a normal site unaffected by moisture problems. 68The primary although the indirect cause of the cracking was moisture entering the trench (in which the strip beam sat) and remaining there for some time, resulting in a softening of the clay which consequently gave way causing the movement of the beam. 69There was also agreement that piers would not have been so affected by the presence of water as they are not only supported by their base but there is also support from the "skin friction" on the sides of the pier. If the piers were to a depth of 1.5 metres then Mr Baxendale agrees that they would not have been affected by the presence of water. Mr Allsopp's view is that the piers as designed/required by the original specification would have been sufficient without any qualification as to their length. The evidence does not address the specification as to required length of the piers in the original design, but only the requirement that they be taken to a depth where they reach a bearing level of 300Kpa. 70I have concluded that in so far as units I and 2 are concerned, the presence of piers on balance would have more probably than not prevented the severe cracking which occurred to those units. Mr Baxendale in his oral evidence conceded this on at least two occasions before finally changing his view and indicating the proviso relating to the depth of the piers being at least 1.5 metres. 71The evidence of Mr Wood confirms that he agreed with the change in design and adopted it, even though there is no later drawing than OE 1 in evidence. He also admitted responsibility in respect of that change in design. Both experts agreed that it was appropriate for the builder to have followed this course having regard to the change in design which had been adopted by the engineer and therefore it was not the builder's responsibility even though BSB, in his capacity as the builder, may have been the person at whose suggestion the design change had been instigated. 72The foundation movement was not attributable to the change in design of itself because such movement was unlikely to have occurred with such changed design absent the moisture event. Mr Alsopp's view is that it was the absence of piers which caused the movement given the presence of moisture. It is not the change of design of itself because of itself without the moisture event the strip beam would have been stronger as both experts agreed. He also expressed the view that because the Eastern wall footing tracked the sewer line trench the change in design was inadvisable because of the sewer's proximity to the foundation. Mr Allsopp used the expression "the sewer line trench communicates with the footing trench at this building". It is by reason of the latter situation that he says there is a continuing likelihood of future flooding. 73In terms of the moisture event for which there is consensus that it undermined the strip beam footing, was this attributable to natural groundwater, water in ground from an extraneous source such as the sewer or overflow from drains, or from the combined action of the drought which prevailed in those years preceding and/or a tree, which were denuding the moisture from the surrounding material and causing what is referred to as a shrink/swell effect? Mr Baxendale conceded that he was not a tree expert. Further, he could not say how big the tree would have been at the relevant time some four years at least before he inspected the site. Having regard to same, I must conclude on the balance of probabilities that the tree had no relevance in the cause of the movement. Mr Baxendale's theory that it had contributed to the cause of the movement given his concession as to his lack of expertise with respect to trees his expressed opinion can carry no more weight than that of any lay person. Neither Mr Allsopp nor Mr Baxendale specifically forms any conclusion with respect to the drought as a contributing factor although the J&K report seemingly discounts this in the following extract: "I have discounted reactive shrink/swell movements as being a contributing factor to the reported damage as I would have expected that cracks would tend to close during the recent seasonal wet period". 74The evidence relevant to the alleged plumbing failures which occurred on this site is expressed in the unchallenged evidence of Mr Little in his statement OE 4 outlined above at paragraphs 30-32. Additionally the Jeremy Macpherson Plumbing (JMP) job sheet dated 10 July 2006 (OCB20) corroborated by the supporting DVD sets out and illustrates in detail evidence of the defects which required repair. I do not propose to refer specifically to any of the defects outlined or illustrated as no plumbing expert was called to comment in relation to any of these findings. What the JMP job sheet does establish is that there were extensive plumbing issues relating to the sewer connections within about five years of this new premises being constructed. The expression res ipsa loquitur could be somewhat apt to such a situation. 75The J&K report is also relevant evidence with respect to the plumbing issue as per the following extracts from that report dated 20 August 2009 the following extracts are significant: "An encased sewer line runs below the building between the basement and the Eastern perimeter wall ... There is a large 'sinkhole' in the ground adjacent to the Western side of the sewer towards the centre of unit 5 an area which appears to have subsided about 0.3m between the sewer and the basement wall at the boundary of units 2 and 3. I understand that pipes running into the sewer ruptured and repairs were completed some time ago.... . the leaking water may have resulted in the formation of the 'sink hole' and ground subsidence ....The fill appears to be of various thickness and compaction....Note the presence of uncontrolled fill may have been one of the contributing factors that lead to the reported rupturing of the service pipes". 76It is noteworthy that Mr Allsopp conceded that the subject tree relied upon by Mr Baxendale, could only have contributed to the cause if it were established that its roots blocked pipes and caused the leak. Mr Baxendale said that he had not looked at nor considered any of the plumbing evidence prior to being questioned about it in cross examination. In any event he conceded that he was not a plumbing expert and did not seek to express any opinion in relation to those issues further. 77The probable and logical conclusion having regard to the foregoing outline is that the moisture event which saturated the footing trench and caused the softening of the clay which undermined the beam's support was a consequence of failed plumbing attributable to either poorly completed plumbing connections or a failure to properly compact the fill surrounding the sewer line. 78It is therefore more probable than not that such plumbing failures which have occurred so soon after the construction of such a relatively new development could not simply be attributable to the factors raised by BSB and were more likely to be the consequence of the work performed by the builder in relation to the sewer and drainage connections and/or the laying of the fill, not having been performed in a proper and workmanlike manner. 79I turn now to the alleged failure to notify Sutherland Council of the changed footing design and the subsequent certification of compliance. The evidence of Mr Wood clearly states that the Council inspectors were well aware that there were no piers as referred to at paragraphs 59 and 61 above. He also asserts that there would have been other drawings that would have gone to Sydney Water. The Structural Certificate BE 4 is clearly provided on a qualified basis in referring to "the structural works...(being) ...deemed to comply with relevant SAA Codes and the structural details on the drawings listed....", one of which drawings referred to being OE 1. Given the use of the word 'deemed' and having regard to the evidence regarding the council's direct involvement with its inspections and hence clear knowledge of the state of the as built works which accepting Mr Wood's evidence I find must be imputed to it, a factual finding that the failure to provide the council with an as built drawing amounted to breach of the EPA on the part of the builder in the absence of any evidence from council or its relevant inspectors cannot be substantiated to the required standard of proof. In any event on this issue it could be said that the builder has relied on the engineer to provide appropriate certification and simply submitted it. The council has accepted the certification seemingly without requisition on Mr Wood's evidence in full knowledge of the actual footing constructed. 80As the factual conclusions outlined above clearly implicate the builder in the cause of alleged defects having regard at least to the plumbing failures , I now turn to the relevant considerations with respect what is appropriate in terms of rectification. The owners position is that extensive underpinning to install 22 piers is required to stabilise the foundations to ensure no further movement so that no deterioration in the extent of cracking can occur. The latter position is supported by the opinion of Mr Allsopp, which is based on his view that because the sewer trench communicates with the footing trench there is a likelihood of further flooding attributable to the same reason, namely , some future plumbing failure. Mr Baxendale to the contrary says that if there is a fear of future plumbing problems that will give rise to similar flooding as caused the previous movement that led to cracking, then the way to prevent a similar event is to take precautionary measures to fix the deficiencies in the plumbing. 81Further consideration needs to be given to the fact that since the moisture event in or prior to 2006 which led to repairs detailed by JMP there has been no evidence submitted of any further moisture events occurring. Similarly in spite of ongoing monitoring of the cracking since it appeared in and around 2006 there has been no evidence submitted of any significant deterioration in such cracking since that time. In terms of classification of the cracking according to Table C1 in AS 2870-1996 most of the cracks measured fall into categories 0 and 1, that is, less than 1mm in width except for those cracks in units I and 2. In units 1 and 2 clearly there are a number of significantly wider cracks with associated delamination. The photographic evidence does suggest that some of the cracking in units 1 and 2 is even greater than 5mm and therefore falls within category 3. 82The relevant standard AS 2870-1996, is of assistance in addressing the extent and type of rectification measures to be applied to the different categories of damage which are therein recommended, which are noted as follows: 82.1 "B3 Performance Criteria for Walls It is acknowledged that minor foundation movements occur on nearly all sites and that it is impossible to design a footing system that will protect the house from movement under all circumstances ... Crack width is used as the major criterion for damage assessment ...In the classification of damage, account should be taken also of the history of the cracking. For most situations Category 0 or 1 should be the limit. However under adverse conditions, category 2 should be expected although such damage should be rare. Significant damage is defined as Category 3 or worse. 82.2 For Category 1 or 2 damage, remedial action should consist of stabilising the moisture conditions of the clay and paying attention to repairing or disguising the visual damage. This should be regarded as part of the normal maintenance of houses on reactive clays. 82.3 Even significant masonry cracking with crack widths over 5mm often has no influence on the function of the wall and only presents an aesthetic problem ...In many cases the treatment should consist of stabilizing moisture conditions ...This can be followed by repair of masonry and wherever possible added articulation should be included ....Structural repairs to the footing system such as deep underpinning should only be considered as a last resort. Underpinning should generally be avoided where the problem is related to reactive clays ..." 83Mr Allsopp conceded that it would be a prudent course undertake cosmetic repair first to see if it remained in situ before doing major underpinning. 84It seems clear having regard to the foregoing that the circumstances of this matter are clearly contemplated by the provisions of AS 2870 and having regard to that being so, the major underpinning recommended as the first resort rectification, assuming liability is established for it , would not be the preferred course to adopt. This is particularly apt having regard to the category 3 damage being limited to units 1 and 2. It must also be considered that there could be a risk of over strengthening if more than necessary underpinning is installed. In looking at the history of the cracking as recommended by the standard, it must be remembered that the significant cracking only occurred in units 1 and 2. Mr Allsopp did touch on the relevant route of the sewer noting that it fell from uphill at the South. This would indicate that units 1 and 2 at the North east of the property are at a lower point. The relevance of this to the saturation of the trench was not explored in evidence and one could only speculate on its significance in relation to whether that may be the reason for the significant damage being limited to those units in the North at the lower point of the land. 85The issues raised at paragraphs 27 and 28 above relating to mitigation and the appropriateness of the builder returning to perform rectification respectively are considered more appropriate to discussion under the heading below.

The claim against the insurer 86It is submitted that the HOW policy in this instance being a policy of first resort entitles the owners to indemnity for such rectification as is required in respect of the rectification of defective work which was performed by the builder in breach of the statutory warranties under s 18B of the HBA. It is asserted by the owners that the Insurer has refused to indemnify the owners for its loss and damage even though it has admitted the defective works, notwithstanding the owners assertion that the cost of same has been quantified on a number of previous occasions. Further, the owners assert that the only liability issue outstanding is to what extent any underpinning is required. 87The insurer in answer to the owners claim for indemnity seeks to rely on provisions of the policy as follows: "EXCLUSIONS The insurer shall not be liable for any claim for loss or damage: (3) due to or made worse by the failure of the building owner to take reasonable and timely action to minimize the loss or damage." "CLAIMS PROCEDURES The building owner must.... 1(b) comply with the reasonable directions of the insurer in relation to the completion or rectification of the work. 2 The building owner shall take reasonable precautions to avoid or minimize the loss or damage covered by this policy." 88The insurer has largely adopted the builder's submissions in relation to the liability aspect relating to the cause of the cracking. It asserts that Mr Allsopp's opinion did not support the proposition that failure to pier in isolation had caused the cracking and on that basis the insurer says that the owners have not discharged their onus of proof. 89The insurer notes that the owners have refused access to the builder to rectify defects and that the builder has not up until the May 2012 hearing agreed to rectify the defects including the stabilisation of the footings. 90The insurer says that to the extent that the builder had previously offered to rectify defects (even though the offer was not comprehensive) and the owners rejected it, it is entitled to exclude liability under the insurance in reliance on the above quoted provisions. 91The insurer further submits it took all reasonable steps to have the builder return and rectify the defects and to direct the owners to provide access. The builder having failed to take such opportunities should as a consequence bear the liability for the defects itself. 92The Insurer further says that in the first instance any order if one is appropriate in respect of the defective works should be made against the builder and only in the event of the builder not complying with it should there be any order against the insurer. It says however that the Insurer's liability should be limited further in that event to such "defects as the builder had not previously offered to rectify" relying on the exclusion referred to above. 93The Insurer also responds to the submission headed "Allegations made by the owners against Suncorp", although none of this response is of relevant significance to the question of indemnity but rather to alleged procedural transgressions. Whilst these may be relevant to the issue of costs, they are not relevant to the liability/indemnity issue and I do not propose to discuss them here. 94As to whether the owners have failed to mitigate their loss in refusing access to the builder to rectify such defects for which it accepted liability, Senior Member Durie in determining preliminary questions posed to him , indicated at paragraph X of his decision on 17 March 2009 as follows: 94.1 "Allianz has proposed a scope of works in relation to the claim made by the applicant. The applicant accepts the scope; Bailey does not. In those circumstances, I do not consider that it could be said that the refusal by the applicant to accept the return of Bailey was unreasonable. Accordingly, I answer Question 2, Yes." 95It is noted that there was no rehearing or appeal from the latter decision and the finding of Senior Member Durie on 17 March 2009 was that it was not unreasonable for the owners to refuse access to the Builder to perform any rectification work unless it was comprehensive and included all the work for which the Insurer had accepted liability as set out in its letter and scope of work dated 7 August 2007. 96The owners submit in reply to the Insurer's submission that what it is seeking to do is to reagitate the issues in respect to which the Tribunal has already made a determination. I find that the owners' submission in this regard is apt and I do not propose to look behind the findings expressed in Senior Member Durie's earlier determination. In light of it, the builder's refusal to carry out the work completely in respect to which the insurer had accepted liability must be accepted, should have been a trigger for it to accept the claim and indemnify the owners for the cost to have another contractor carry out that work in full. Since it was given notice of the builder's alleged refusal prior to the application herein being issued against it, I find that the owners' action to commence these proceedings was not unreasonable. 97I do not accept that the position as determined by Senior Member Durie has changed. There is no evidence that the failure by the owners to permit the work in respect to the general defects to be carried out, has caused any deterioration in the level or extent of damage and therefore the cost of remediation whether performed by the builder or a third party contractor should be the same as it would have been when the damage first arose subject to an allowance for price inflation. However the allowance for inflation would be offset by the fact that the Insurer has throughout the time retained the benefit of the money which it would have otherwise expended on the work if it had engaged another contractor initially following the builder's refusal. 98The insurer's letter of 1 November 2007, in reply to the owner's solicitor's notice of intention to commence proceedings, left no doubt as to the insurer's position, namely that it was relying on the builder's assertions that it was being "frustrated from carrying out the rectification works ...in the schedule dated 9 August 2007." 99I find that the insurer failed to appoint another builder to carry out the comprehensive list of rectification work including the structural stabilisation for which it had accepted liability as per its 9 August 2007 letter. The failure to do so in effect amounted to a "de facto" adoption of the builder's denial of liability for the structural stabilisation contrary to the terms of its prior offer letter which had considered such work appropriate. 100The breach of the policy conditions asserted by the insurer both in its letter of 1 November 2007 and in its submissions in these proceedings has not been made out to the required standard of proof, having regard to Senior Member Durie's finding of the builder's refusal from the outset to accept liability for the structural stabilisation and to perform such work. 101The offer by the builder at the May 2012 hearing to carry out the work in respect to the general defects as well as the structural stabilisation work, provided that a liability was found against it for such work, does nothing other than confirm the entrenched position taken by the builder from the outset. The builder's submission to the Tribunal in effect is that it should make a work order against it in respect to such work for which it is found to have a liability. I find that it would be unreasonable for the Tribunal to make a work order that gave the builder the opportunity to carry out the work including the structural stabilisation for which in respect to the latter at least until this decision it had refused to acknowledge any responsibility. 102The issues/questions posed in paragraphs 27 and 28 above for the foregoing reasons should both be answered "No".

THE PROCEEDINGS AGAINST THE BUILDER 103The owner's submissions against the builder seek to establish breaches of the warranties under s 18 (a), (b) and (c) of the HBA. The alleged breach in respect of which attention was mostly focused is that under subsection (c). The owners assert that clauses 51 and 52 of the development consent for the subject premises specifically required that an accredited certifier confirm that ,inter alia, "all engineering works have been carried out in accordance with the terms of the development consent, the approved engineering drawings and council's standards and specifications." 104Since it is not disputed that the only CC endorsed drawing in respect of the footing design was OE 1, and since the latter drawing only made reference to piered footings, then the construction of the footings by the builder without piers must constitute a breach of the conditions of the development consent. The owners submit that such constitutes a failure pure and simple which is sufficient to establish the breach by the builder with respect to the warranty under s 18B(c) to "comply with this and any other law", since it was a legal requirement to comply with the terms of the development consent in respect to the type of footings constructed and the failure to do so in breaching such consent amounted to a breach of the Environmental Planning and Assessment Act 1979 (the EPA). The submission does not articulate the provision of the EPA which it asserts has been breached or specify with particularity the nature of the alleged breach of the law. 105The owners lengthy submissions with respect to this issue both initially and in reply proceed on the premise that the fact that no section 96 amendment drawing was submitted in respect to the changed design, precludes the builder from relying on the fact of a change of design even existing whether or not it had been certified . 106The evidence of Mr Wood, referred to by the owners, quoted at paragraphs 62.7 and 62.8 above, that a variation to plans is permissible by the builder without providing new plans to Council, must be viewed in the context of the paragraphs preceding it. The attempt to discredit Mr Wood on the basis that he himself did not draw OE 1 although his evidence is framed in terms that he did so I do not find to be a basis to impugn his evidence . He clearly claimed it as his drawing as he was ultimately responsible as the person who signed off on it . As a fact, the agreed change of design of the piers, was a change that on the evidence I have accepted was agreed before the piers were laid. If there was a contract between the builder and the developer as alleged, such agreed change must be taken to have applied to such contract. BSB was a director of the builder and was himself the developer. His consent to the variation upon approval from the engineer must be imputed to the terms of any arrangement between the builder and BSB as developer. 107The evidence clearly establishes that Mr Wood did agree to the change in footing design and the builder constructed the footing in accordance with that changed design. This issue has been dealt with in paragraph 79 above in the factual analysis. Mr Wood as certifier provided the Structural Certificate OCB84 on the basis that the "structural works were deemed to comply with the SAA Codes and the structural details on the drawings listed." 108The reference to "deemed to comply" qualifies the certification. The evidence of Mr Wood as to what had occurred in full knowledge of council inspectors purports to explain the basis of such qualification. In the absence of evidence to support a contention that there was some irregularity in this "deemed to comply" certification, the owners contention as to illegality falls short of being established. It is further noted that the Council Compliance Certificate dated 10 September 2001(OE 14) has an endorsement by the certifying council officer which includes the following statement: "the above described building work has been completed and substantially complies with the plans and specifications approved with the nominated construction certificate..." The use of the words "substantially complies" I find is clearly consistent with permitting variation of the kind alleged. 109The submission is also lacking with respect to the respective responsibilities of the builder as distinct from the developer and even if it were established that the as built footing constituted a beach of the development consent, was such a breach in that event the builder's or the developer's given that the consent was issued to BSB as owner or developer. The development consent was addressed to BSB on the basis that he was the person responsible for making the application. In the absence of evidence or submissions clarifying the respective roles of the parties it is impossible to determine on the evidence presently before me, whether it would have been the corporate entity builder or BSB the developer/owner which would have had responsibility to apply for a Section 96 amendment to the drawings in the event that such an application was held to be necessary. In any event BSB is not a party to these proceedings as an individual. 110I find that notwithstanding the absence of a subsequent as built drawing being supplied to Council there was a certified change to the design by the project engineer Mr Wood who was the accredited certifier, and it was to that changed design that the builder constructed the footings with a strip beam instead of concrete piers. Whilst it has been submitted for the owners that the conclusion must be drawn that what occurred, namely the construction of the footings without piers when the only drawing with Council was OE 1, constituted a failure by the builder, that is, the corporate entity respondent, to abide the provisions of the EPA on the basis that the conduct breached the consent conditions, I find that such is not a conclusion that the evidence establishes to the required standard. The application must therefore fail with respect to an alleged breach of s 18B(c) of the HBA. 111In relation to the alleged breach of warranty under s 18B (a) of the HBA surprisingly little attention is given to it in the submissions. The owners case rests on the assertion that it was defective plumbing work that caused the leak which gave rise to the movement of the footing as a consequence of softening the clay supporting the footing beam. The factual findings and the basis for them are outlined at paragraphs 72 to 77 above. BSB's evidence was that all plumbing problems were essentially due to maintenance issues and the drought. I note however Mr Baxendale opined that such plumbing failures are often attributable to poor jointing which is consistent with the JMP evidence. The legal submissions for the builder do not direct attention to or further these assertions. For the reasons indicated I am satisfied that the failed plumbing was more probably than not due to such not having been performed in a proper and workmanlike manner as required by the terms of subsection (a). The breach of warranty in respect of it I find is therefore established. 112The alleged breach of subsection (c) requires little if any mention. It was never formally raised at the hearing nor in the owners' initial submissions. It is raised briefly in the owners' reply submissions on the basis that the JMP job sheet OCB20 and the JMP DVD illustrate the conclusion that multiple instances of use of unsuitable materials is established. Once again in the absence of expert evidence in relation to these JMP findings I am not satisfied that any inference can be drawn from them which would establish to the required standard of proof the use of non suitable materials per se , sufficient to establish a breach under subsection (c). 113The breach of warranty under subsection (a) as determined above is sufficient to establish liability in the builder and the only remaining issue apart from the cost of rectification, which in the event required has been agreed to be determined later, is the extent of the piering /underpinning required .

The extent to which rectification is required 114Liability has been admitted in respect of the general defects which are to a large degree of a cosmetic nature. This determination only needs to address the extent to which the premises requires structural stabilisation following the foundation movement that led to the cracking and the like within the relevant units. The question is therefore how many if any piers are required to underpin and stabilise it. 115The builder asserts that the extensive method of rectification involving underpinning with 22 piers involves a betterment on the basis that what has been proposed is a deeper and better system than what was designed by Mr Wood and Mr Allsopp in his oral evidence agreed with that position. In support of its argument that a finding by the Tribunal that such a more extensive system is required would contravene well established legal authorities , it cites Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54 where Mason CJ and Dawson J said: 115.1 "The corollary of the principle in Robinson v Harman is that a plaintiff is not entitled by an award of damages, upon breach , to be placed in a superior position to that which he or she would have been in had the contract been performed." 115.2 The builder then submits that the decision of the High Court in Bellgrove v Ellridge (1954) 90 CLR 613 where it was stated that the qualification to the usual rule as to measure of damages is that "not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt", provides support on the basis that it asserts that none of the piering suggested by Mr Allsopp is a reasonable course to adopt. 116The owners say the builder' submission is flawed because in effect what the owners are seeking is what was contracted for in the first place, namely the original design in accordance with OE 1 including the requisite piers. It is therefore argued by the owners that there can be no additional benefit because what is sought is simply that for which it was originally contracted. 117The owners reasoning seemingly continues to fail to acknowledge the fact that the original design was changed whether or not there is an amended drawing in evidence, the fact is the changed design was agreed and the builder constructed the footings in accordance with the changed design. Certification by the engineer subsequently occurred even if that certification was on a deeming basis. 118Whilst the reasoning expressed in relation to the authorities relied upon by both parties is correct, they each rely on a different factual matrix. The authorities cited in that event are only relevant to the extent that they can be applied to the factual findings that I have made as indicated earlier. The rejection of Mr Allsopp's recommended 22 piers is not on the basis of the Amann Aviation principle .Similarly having regard to the finding that the design change to a strip beam footing occurred then there is no issue that the builder conformed with such amended design and rejection of the 22 piers as being necessary does not contravene the Bellgrove v Ellridge rule cited. 119If as the evidence of both experts now concedes, the design change in view of the placement of the sewer is inappropriate, such may have been a basis to pursue the party ultimately responsible with respect to such a change, namely the engineer. The project engineer is not a party to these proceedings. 120I have accepted that there was a change to the design and that what was built was consistent with that namely a strip beam footing. This change however meant that the footing as constructed was more vulnerable than it would have been if constructed with piers given that it was in such proximity to the sewer. The owners' submission that they were entitled to the 22 piers because they were entitled to construction in accordance with the OE1 design is simply not established against the builder. In so far as the owners say that the absence of piers establishes their right to have Mr Allsopp's recommended underpinning "to be placed in the same position, with respect to damages, as if the contract had been performed" consistent with the High Court's restatement of the "ruling principle" in Tabcorp Holdings v Bowen Investments Pty Ltd [2009] HCA 8, the breach upon which I have held they are entitled to succeed, namely the breach of the Section 18B(a) warranty with respect to the failed plumbing does not bring such principle into operation. 121In forming the view as to what is the reasonable measure of damages to compensate the owners for the breach as established, I am more mindful of the terms of AS 2870 set out at paragraph 82 above than of the competing views of Mr Allsopp and Mr Baxendale. On such basis a preferred expert view having regard to the credibility issues canvassed in submissions by the owners is not an essential ingredient to this determination. I have determined that the cause of the subsidence was the moisture resulting from failed plumbing undermining the clay support for a foundation which but for that moisture would have been adequate. On the premise that a future moisture event, the risk of which Mr Allsopp says cannot be discounted, would have a similar effect, I am not satisfied that there would be any different result namely subsidence to units 1 and 2 because of the route of the sewer as stated by Mr Allsopp. 122The standard recommends the controlling of moisture conditions in preference to extensive underpinning. Mr Baxendale says ensure the plumbing is in order which is consistent with the standard. Mr Allsopp says to extensively underpin even in areas where there has only ever been superficial cracking evident which is not consistent with the standard. 123Given there has been no evidence of deterioration since moisture levels were controlled and the surrounding material of the footings resumed former strength I am not satisfied that there is any basis to underpin other than those areas which were previously subjected to the more serious damage. I find therefore that the three piers conceded by Mr Baxendale at the conclave remains appropriate as the prudent course for rectification and not the more extensive underpinning of areas where there has only ever been superficial cracking evident. 124The extent of rectification costs for which the respondents are liable is to be assessed on the basis of the general defects already admitted and structural stabilisation costs involving three piers only underpinning units 1 and 2 where indicated by Mr Baxendale.

QUANTUM AND COSTS 125The matter should be listed for directions as soon as possible to set a timetable to have the parties produce an agreed costing for such work to be performed by an independent contractor or in the absence of agreement to make orders appropriate to enable this Tribunal to determine the quantum preferably on the papers. 126Directions for submissions on costs will be made after the decision on quantum has been determined. N Correy Senior Member Civil and Administrative Tribunal of New South Wales 19 September 2014 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: 20 November 2014