The Residents Committee, The Landings v Sakkara Investment Holdings Pty Ltd ATF Sakkara Landings Trust

NCAT Consumer and Commercial|2014-08-20

Items 67, 149, 151, 152, 199 and 215 and provide certification that the rectification work is complete within 28 days of this order.

Items 41 and 87 and the common area lighting bollard paint defects within 28 days of this order. In relation to Stage 4 'Heritage' defects:- External Works by reference to "Exhibit R2 " items 55 to 62,item 67 and item 81 within 28 days of these orders; items 63 to 66,68,70 to 80 within 28 days of these orders. All roof framing and garage floor painting in stage 4 as identified in the Demlakian report within 21 days of the date of this order.

Sakkara Investment Holdings Pty Ltd is to pay to the Residents Committee, The Landings $55,000.00 within 28 days of this order.

Renewal of operations applications in relation to budgets and recurrent charges:-

In relation to the proposed budget for the financial year ended 2012 the Tribunal orders that

Pursuant to Section 108 of Retirement Villages Act 1999 recurrent charges be a monthly levy of $575.40.

Pursuant to Section 115 of the Act the approved budget be expenditure in a total amount of $1,325,721 in the form annexed as Annexure "A".

The operator is to undertake an audit of the approved budget and accounts for the 2011/2012 financial year within 28 days and, if there is a deficit, such deficit is not be carried forward to future years. The Tribunal notes that in Annexure "A" a line item of painting for pergolas in an amount of $41,747.00 has been removed and the dwelling divisor is 192.

In relation to the proposed budget for the financial year ended 2013:-

Pursuant to Section 108 of the Act recurrent charges for the financial year be a monthly levy of $504.23 Pursuant to Section 115 of the Act the approved budget be in the expenditure of a total $1,246,456 in the form of Annexure "B" in the column headed "Budget After CTTT Deductions". The operator is to undertake an audit of the approved budget by its current auditor and revised accounts for the 2012 financial year within 28 days and in the event the audit identifies any shortfall or deficit the operator is not to carry forward the deficit to future years and is to make good any deficit within 7 days following receipt of the audit report. Notation: The Tribunal notes that the budget in Annexure "B" contained in the column "Budget After CTTT Deductions" has had removed from it the item of painting for an amount of $104,488.00 and that the dwelling divisor is 206 unit entitlements

Submissions in relation to costs are to be filed and served by the applicants within 7days and the respondent within 14 days.

The applications by the residents for those orders which have not been disposed of relating to newly identified defects, reconnection of the water tank and irrigation system, compensation for failure to reconnect the system and other claims for compensation are adjourned to a date to be fixed for directions. Catchwords: Renewal of proceedings where consent orders in relation to rectification have not been complied with; whether following a costs order an agreement reached between the solicitor for the operator and residents is binding; relisting of audits in relation to yearly budgets and orders that any deficits that are not to be carried forward. Legislation Cited: Retirement Villages Act 1999 Civil and Administrative Tribunal Act 2013 Category: Principal judgment Parties: The Residents Committee, The Landings (applicants); Sakkara Investment Holdings Pty Ltd ATF Sakkara Landing Trust (respondents) Representation: Solicitors: Mr Peter Hill for the Residents of Hill & Co Lawyers File Number(s): RV 14/14827, RV 13/65446, RV 13/65436RV 13/65453, RV 11/29123, RV 12/32770 Publication restriction: Unrestricted

THE APPLICATIONS

The applications for orders with which this decision deals relate to proceedings RV 14/14827, RV 13/65446, RV 13/65436, RV 13/65453, RV 11/29123 and RV 12/32770.
The proceedings came before the Tribunal on 18 and 20 August 2014. However because of the limited time available on the days of the hearing and my future unavailability it was not possible to fully hear the evidence in relation all of the matters which are the subject of the applications.
The matters which are dealt with in this decision relate to renewals of rectification orders, which the residents claim had not been complied with, the renewal of a costs order and a relisting of the 11/12 and 12/13 budget and audit matters for final orders to be made.
In relation to rectification of building defects the specific orders sought are to be found in the amended notice to renew proceedings in RV 13/65453, itself a renewal of RV 12/12787.
The orders sought are that the operator comply with order 1 of the orders made by consent on 4 July 2012 (stage 1 and 2 defects), that certification be provided in relation to rectification work carried out pursuant to order 3 made by consent on 29 January 2013, that the operator complete stage 4 rectification work pursuant to order 1 made on 4 July 2012 and order 4 made on 29 January 2013, that the operator complete all rectification work arising from damage caused by stage 4 construction activities (and provide certification) pursuant to order 6 made on 4 July 2012 and order 5 made on 29 January 2013.
It does appear, as submitted on behalf of the applicants, that the respondent has overlooked the amended notice of renewal in RV 13/65453 dated 5 February 2014 in making the submissions at paragraphs 14, 16 and 17.

Stage 1 and 2 Defects

Rectification orders were made by consent on 28 June 2012 by the then Consumer Trader and Tenancy Tribunal by reference to the Tyrell's report. Other evidence considered is to be found in the statements of Mr Edward Ginty of 19 August 2014 and Mr D. Pritchett of 27 July 2014 .Oral evidence was also given. There was a summary list for the stage 1 and stage 2 defects and stage 4 heritage defects admitted into evidence. (Exhibits R1 and R2)
The applicants in their submissions usefully place in four categories the various Stage 1 and 2 defects by reference to the position taken by the parties.

Category 1

These are defects which are outstanding and admitted to be outstanding by the operator. The operator agrees that item 35 (install new spitter pipe to balcony), item 301 (defective concrete slab) and item 302 (trip hazard on the kerb adjacent to 4 Beaufort Close) of the Tyrell's report will be completed by the time that this decision is made. The operator also agrees that items, 35, 301, 302, 152, 185 should be completed. The residents however also ask that certification that such work has been completed in accordance with Building Code standards be provided. The issue of certification is considered separately below.

Category 2

This comprises Tyrell's item 67 (wall cracks in bathroom and laundry at 21/96 SN McN), item 149 (roof leak above balcony at the .A 1/1 BFC), item 151 (wall crack internally and externally at VA 4/1 BFC, item 152, item 199 (garage wall damp 4WPL) and 215 (bathroom and ensuite leaks, leaking toilet). The operator states that these have been completed. The residents' position is that if they had been rectified as is asserted by the operator, certification should be provided that they have been completed in accordance with the Building Code Standards.

Category 3

The operator now disputes items which were previously admitted. There is an assertion by Mr Ginty (in relation to item 41) that the control joint was a design issue and that the crack in the hallway was to be addressed as ordinary ongoing maintenance. In relation to item 87 (external masonry painting at 94 SN McN common property) and the powder coating of a hundred common area lighting bollards throughout the village which had completed failed, it is now disputed that these should be rectified at the operator's cost. In earlier proceedings RV 12/12787 the operator had conceded that defectively painted metal and masonry was its cost responsibility. In my decision of 19 April 2013 I noted that Sakkara had agreed that it was its responsibility to rectify the defectively painted metal and masonry surfaces in accordance with the Tyrell's and the Core report.
The previous order made by consent in relation to item 41 should stand. I do not accept that the painting of the surfaces is a matter of routine maintenance. The residents in my view are entitled to rely on previous orders made by consent or made following an admission (as in the case of the painting of masonry and the bollards). An appropriate order should be made that this be done.

Category 4

These are items 36, 40, 65, 71, 79, 203, 237, 242, 247, 295 and 296, identified under the Tyrell's report as requiring further investigation. Sakkara asserts that they have been investigated and the conclusion was that they are not defects. In relation to these items I agree with the position of the operator. I am not satisfied that an order that the operator obtain an expert report is justified. It has not been established that there has been non-compliance with the original order. The Tyrell's report only called for further investigation. There is evidence that this has been done. The operator's submissions address these matters in some detail. No order will be made.

Stage 4 Heritage Defects

The renewal application in relation to these defects arises from orders 6 and 7 of 28 June 2012 which read as follows: 6. The respondent is to complete all building rectification work arising from the construction of stage 4 dwellings at their costs by the end of defects liability period (anticipated to be the end of September 2012) as identified in the respondents stage 4 rectification list dated (20 June which is to be filed in these proceedings for identification purposes). 7. The respondent is to complete all rectification work arising from damage to the village caused by stage 4 construction activities which includes damage to the entry roadway to the village as well as landscaping and drainage at their costs by 31 December 2012 as identified in the respondents stage 4 rectification list dated 20 June 2012.
A list of these defects is contained in the affidavit of Mr Neil Smith dated 5 March 2014 at Annexure "H". The first category identified in the residents' submission are the villa defects which are outstanding. These are set out in Annexure B of Mr Ginty's statement.
These are conceded by Sakkara as being defects. The residents ask for an order that they be rectified and appropriate certification provided within 30 days from the date of the orders. Such an order should be made. Certification is discussed below.
The external works which relate to repairs to the roads and to the entry following stage 4 construction work (items 56 to 62) and item81 (external fence) are conceded in Mr Ginty's statement. An order that these be rectified within 28 days should also be made. I agree that the damage caused by Dasco (item 67) should also be repaired in the same time frame as other items. The residents should not have to wait for any settlement by the operator with Dasco.
Items 63 to 66, item 68, and items70 to 80 are now disputed by the operator. An order had been made by consent that these be rectified. The list of defects was originally referred to in the order which had been made on 28 June 2012 as "the respondent's Stage 4 rectification list" It is annexure "H" to Mr Smith's affidavit of 5 March 2014. A further order was made on 29 January 2013, in effect, extending time for this to be done.
These defects relate to gaps between retaining walls and fences, incomplete bush regeneration, cracks to kerbs, footpath damage, broken pavers, need for a fence around a storm water head wall, service trench repairs, fire trail not draining, a badly built fence, power outlets built below surface level and sundry other landscaping issues. Some items are again identified as defects in the more recent Demlakian report filed by the residents.
Mr Ginty in his affidavit states that these were either maintenance or design issues. The operator's position reflects this assertion. In relation to the fire trail the operator relies on what is referred to as certification to claim that it was appropriately prepared and established. I note however that the residents take issue with the claim that the document relied upon constitutes certification in relation to the fire trail. The Annual Fire Safety Statements do not certify the work which was identified as needing to be done. I note that the operator had previously taken responsibility for the specific items by agreeing for consent orders to be made.
I am not persuaded by this bald assertion that the operator should not be held to the order which had been made with its consent. I also note that 3 items (72, 81 and 83) appear as defects in the Demlakian report. An order will be made that these defects are to be addressed by the operator.
In Mr.Ginty's affidavit it is also conceded that roof framing, garage floor painting and the items in his annexure "B" are still outstanding. Orders that these are to be rectified within 21 days will be made.

The Certification of Rectification Works

The residents submit that the applications before the Tribunal are as much about the completion of incomplete rectification works at the cost of the operator as they are about the proper certification of works both completed and yet to be undertaken. The nature of this certification is to be to the effect of a statement by the relevant tradesperson that the work has been completed in a proper and workmanlike manner in accordance of any relevant standard. The work and the location as well as the time frame over which it was completed is to be contained in the certification.
The operator submits that the only orders which required certification to be provided were order 2 of 28 June 2012 (waterproofing, fire protection, external doors and ventilation systems) and orders 1 to 3 of the January 2013 orders (bathroom damp).
It is the operator's position that the residents have failed to put forward any evidence to establish that there are any defects other than those items admitted as not rectified. If it has been acknowledged that the work has been completed that the Tribunal should be satisfied that the works have been completed. Where there was no evidence to show that there were any defective works outstanding then the threshold had not been met by the residents. The only evidence provided to the Tribunal in relation to the status of defective works and the certificates was provided by the operator.
The operator points to the certification pertaining to the bathrooms, ventilation, painting, garage wall certifications and fire brigade with respect to the fire trail.
According to the operator the evidence of Mr Ginty indicated that he had been in constant communication since March 2014 to ensure that all defective works were carried out. Mr Smith and Mr Pritchett did not contradict this evidence.
In relation to Stage 4, Mr Ginty has identified that all defective works within apartments and villas had been attended to under the process of 'sign off' by residents. None of the defects referred to in stage 4 listed in Exhibit R2 remains outstanding other than those specifically referred to in his statement at paragraphs 30 and 36.
The operator submits that all items have been addressed by way of occupation certificates to be found at tab 68 of the joint bundle. This is not accepted by the residents.
In relation to the certification sought for acoustic works the operator submits that none of the 4 July 2012 or January 2013 orders required such certification and none of the matters listed in the Exhibits R1 or R2 go to that issue. At the relevant time of construction for stages 1 and 2 there was no acoustic specification which required certification. Furthermore Mr Smith had agreed that acoustic certification was listed as part of the occupation certificates sign off process for stage 4.
The latter was rejected in submissions in reply by the residents. However it is the case that for both building 1 and 2 the schedule 1 to the occupation certificate shows that Wood and Grieve Engineers had prepared a 'post construction acoustic commissioning report'
The operator also submits that, other than those matters that which had been specifically identified as remaining outstanding as set out in the statement of Mr Ginty, the Tribunal should be satisfied that all relevant certificates have been provided by third parties and to the extent that no certificates have been issued residents had by their absence of complaint accepted the works as been completed to a satisfactory standard. There was a process for the continuing identification and repair of outstanding defects. The certification process sought by the residents was otherwise undefined.
The residents' submissions stress the need for certification given the examples of the previous process where work which had been marked off by the previous project manager Mr Levitt as having been completed had to be redone. Mr Ginty had relied on Mr Levitt's 'sign off' and only inspected the fire protection bathrooms, ventilation work and dampness in the garage walls and not the bulk of other work undertaken in accordance with the Tyrell's report.
The residents' case is that certification is necessary to avoid further disputation as to whether the work had been done properly and to prevent further disputes over cost responsibility. Contrary to the position of the operator the residents claim that the Tribunal orders of 29 January 2013 did require certification beyond the bathrooms and the clear intent of the parties was that the Operator would provide certification for work completed by that time by 28 February 2014.
The documentation purporting to be certification in respect of painting of timber work, bathroom dampness, bathroom ventilation, fire protection and garage wall works was deficient. The certificates provided generalised certification at best; they did not indicate what work was done or assert the relevant Australian Standards. Some were simply invoices. All were unsigned and undated and had no indication of the nature of the work performed. The fire protection documentation was deficient as indicated above.
The certificates in relation to the garage wall works at tab 63 only asserted that waterproofing work was carried out in compliance with the recommended use of the product drizoro maxi flex. This was a certification for the product but not certification that the work was carried out in a proper and workmanlike manner or in accordance with any relevant Australian Building Code Standard. It specifically stated that it did not guarantee the work carried out. In short the documents received were largely perfunctory and inadequate.
What constituted maintenance and what constitutes capital replacement, had been a major issue of disputation. The operator had previously conceded that if an item was a defect then it was the operator's capital replacement cost. This had been the basis of the earlier consent orders. The residents express concern that the operator's position appears have changed and that many of these were now maintenance matters. It is this that the residents seek to prevent by having the defects fixed but also requiring certification.
The residents do have the onus justifying the need for certification. I agree however with the residents' position that certainly in the case where certification had been previously ordered adequate certification has to be provided which addresses the deficiencies outlined in the residents' submissions. I do not accept that mere absence of further complaint by residents in relation to any item, by itself, is to be taken as being sufficient. In particular I am satisfied that certification should be provided for all works which are the subject of the consent orders of 4 July 2012 and 29 January 2013. As to the latter I do not see that the operator's submission that the certification required was only in relation to bathrooms is warranted. I agree with the residents' submissions in this regard.
The residents have presented a strong case for certification to be provided that the work has been done to the appropriate standard with details of the work done which would indicate that the defect as described in the reports has been addressed. Where a defect has been identified and where orders whether by consent or otherwise have been made, certification should be provided to hopefully prevent future disputes as to whether the defect had been properly rectified or whether it was ordinary maintenance which was necessary.
I agree that the residents do carry the evidentiary burden of proof for any orders sought. They are however entitled to rely on previous orders for both rectification and certification. Even if certification for any rectification was not specifically ordered, orders for certification to be provided can be made as ancillary orders.
The operator does on the other hand have an arguable case that to require detailed certification for every item may be onerous and unnecessary.
Beyond making the following general remarks I do not propose to address each item indicating what level of certification is required.
Many of the stage 4 villa defects are cosmetic in nature. Some are minor. I agree that with such items it is sufficient that the project manager indicate in writing that the work has been attended to if accompanied by an acknowledgement by the residents. I also note that the process currently employed by the project manager in relation to the villa defects involves in some cases certification by Demlakian.
In the case of such items as structural building defects, water proofing, damp, fire protection (and, specifically, the fire trail), mechanical ventilation, and, given previous disputation, painting detailed certification which addresses the deficiencies complained of by the residents is to be obtained from those who have carried out the work and, where appropriate, the relevant authority and provided to the residents.
I am not persuaded to make any order in relation to the project manager's form of employment.

Costs orders previously made

Following my orders in relation to substantive proceedings in RV 12/12787, RV 12/32770 and RV 11/29123 it is the respondents' position that an agreement had been reached between the residents and the operator represented by Mr Bevan, solicitor.
The position of the operator is that Mr Bevan did not have the authority to enter into an agreement.
Mr Michael Barry Deery's evidence was that he could not recall having instructed Mr Bevan to enter into any agreement and had no knowledge of any other Sakkara employee who had done so.
On the other hand Mr Gordon William Bevan, who was called to give evidence by the residents, clearly stated on oath that he did have such authority and that this had been obtained from Mr Deery. His evidence was not shaken in cross examination. Mr Deery's lack of recollection notwithstanding I accept the evidence of Mr Bevan.
Mr Bevan was the solicitor acting for Sakkara at the time. He had the carriage of the substantive proceedings.
I had made a general costs order. I am satisfied that the parties have reached a clear and unequivocal agreement documented in correspondence between their legal representatives as to the amount of those costs. That amount was $55,000.
The original order made by me was pursuant to section 53 of the Consumer Trader and Tenancy Tribunal Act 2002 and subclause 20(4) of the Regulation. The matter comes before me as a renewal. I am satisfied that I have the power to make an order in relation to costs which could have been made when the original costs order was, in fact, made. I ordered that the operator pay 85% of the residents' costs in relation to RV 12/12787 and all the costs in RV 12/32770. It having been agreed between the legal representatives of the parties at the time that $55,000.00 was the appropriate amount, I see no reason for an order that costs be assessed. An order will be made that the operator pay the agreed amount.

Relisting Operator's applications RV 11/29123 and RV 12/32770 in relation to budget and recurrent charges

These relate respectively to the proposed budgets for the financial year end of 2012 and for the financial year end of 2013. I have considered all submissions filed including the supplementary submissions by the residents noting the undertaking that these were served on the operator.
On 14 June 2013 orders 24, 25, 26 and 27 and orders 20, 21 and 22 were made. On the relisting of these matters and taking into account the findings made in those proceedings I now to propose to make final orders for those years. It may be that there is little practical utility in now making budget orders; nevertheless for the sake of finality I shall do so.
The painting items which had been identified in the rulings have to be removed as submitted by the residents. I agree with the submission that it does not make sense to include charges for painting of woodwork to be included in the budgets.
I have accepted that an appropriate budget for the 2011/2012 financial year should have the line item 'pergola painting' removed. Similarly in the case of the 2012/13 the item 'painting' should be removed and the calculations appropriately corrected.
Noting section 120C of the Retirement Villages Act, deficits are not to be carried forward and are to be made good.
The residents also argue that the audit of both budgets in the revised accounts should be paid for by the operator. For the reasons put forward by the residents I am persuaded to make this ancillary order.
In proceedings RV 11/2923 in relation to the proposed budget for the financial year 2012 the following orders will be made:- 1. Pursuant to section 108 an order that the recurrent charges be the monthly levy of $574.40. 2. Pursuant to section 115 the Tribunal's approved budget be in the form of expenditure for a total amount of $1,325,721 in the form annexed as Annexure A. 3. The operator is to undertake an audit of the approved budget and accounts for the 2011/2012 financial year in accordance with these orders and earlier CTTT findings and is to fund the cost of this. 4. In the event that the audit identifies any shortfall or deficit in the village accounts the operator is not to carry forward this deficit in future years and is to make good any deficit amount in the village accounts within 7 days following the receipt of the audit report. 5. Notation: The Tribunal notes that the Tribunal ordered budget in Annexure A has had removed from it a line item of painting for pergolas for an amount of $41,747.00 and a dwelling divisor is 192.
In proceedings RV 12/32770 in relation to the proposed budgets for the financial year end of 2013 the Tribunal orders: 1. Pursuant to section 108 recurrent charges for the financial year be a monthly levy of $504.23. 2. Pursuant to section 115, the approved budget be in form of expenditure for the financial year for a total $1,246,456 in the form annexed B in the column headed "Budget after CTTT Deductions". 3. That the operator is to undertake an audit by its current auditor of the approved budget and revised accounts for the 2012/2013 financial year within 28 days in accordance with these orders and earlier CTTT findings and the operator is to fund this cost. 4. In the event that the audit identifies any shortfall or deficit in the village budget the operator is not to carry forward this deficit to future years and is to make good any deficit amount in the village accounts within 7 days following the receipt of the audited report. 5. The Tribunal notes that the budget in Annexure B headed contained in the column headed "Budget after CTTT Deductions" has had removed from it a line item of painting for an amount of $104,488.00 as shown in the adjustment for this amount and that the dwelling divisor is 206.

Costs in relation to these proceedings and matters still to be heard and determined.

In these renewal applications the residents have been mostly successful. It would be appropriate for costs to follow the event as it would appear that the provisions relating to costs which are applicable are those in the Consumer Trader and Tenancy Tribunal Act and Regulation. However I shall give the parties an opportunity to make submissions in relation to costs and whether or not the question of costs should be left to the conclusion of all proceedings.
There are a number of matters which could not be heard and determined by me given my unavailability. These are the applications for orders relating to newly identified defects, compensation to residents for interference with their peace, comfort and privacy and for use of staff for work which should have been at the operator's cost, the renewal of the application in relation to the water tank and irrigation system and the related application for compensation. These applications are to be listed for directions before another member on the earliest available date. J Bordon Senior Member Civil and Administrative Tribunal of New South Wales 14 November 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: 10 February 2015

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Judgment (24 paragraphs)

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