Urban Constructions (NSW) Pty Ltd v Brett Shearer and Bronwyn Shearer

Section 92 (4)(1) of the Act

1. In paragraph 15 of the owners' Amended Points of Defence they rely upon a failure by the builder to insure the work performed in contravention of section 92 of the Act to enliven section 94(1)(a) of the Act so that the builder is not entitled to be paid on the basis of a cost plus or fixed price building contract for the work it carried out at the residence.
2. The owners further allege that it is not just and equitable for the builder to recover any amount from them under section 94(1A) of the Act.
3. Section 92 (2) of the Act states as follows: 'A person must not demand or receive a payment under a contract for residential building work (whether as a deposit or other payment and whether or not work under the contract has commenced) from any other party to the contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name of the person who contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract.'
4. Section 94(1) of the Act states as follows: '(1) If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the uninsured work), the contractor who did the work: (a) is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and (b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit).'
5. Section 94(1A) of the Act states as follows in connection with the above sections: '(1A) Despite section 92 (2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis.'
6. The effect of the above sections is that the builder is not entitled to recover on its claim for money due under the contract it alleges was entered into with the owners. Further, the builder will not be entitled to recover on a quantum meruit for the work it alleges that it has carried out for the owners and not been paid for, unless I consider recovery to be just and equitable.
7. The particulars to paragraph 15 of the Amended Points of Defence particularise the circumstances relied upon by the owners in support of their contention that it is not just and equitable for the builder to recover any amount from them. There are eight grounds relied upon which I do not intend to repeat at this point.
8. Section 94(1A) of the Act was considered by Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd [2004] NSWSC 273. At paragraphs 43 - 61 of his judgement his honour considered the 'just and equitable criterion under section 94(1A)' of the Act and the factors bearing upon the just and equitable assessment.
9. In considering the just and equitable criterion Barrett J. referred to a number of authorities which establish that the words just and equitable are of wide significance. His honour referred to a passage of the judgement of Sheller JA in Stephenson v State Bank of New South Wales (1996) 39 NSWLR 101 where his honour quoted from a decision of the High Court in Talga v MBC International Limited (1976) 133 CLR 622.
10. The passage quoted was: 'Stephen, Mason and Jacobs JJ dealing with the issue raised for the Court by the Banking Act 1974 of whether it was just and equitable that a transaction should be treated as valid, said: 'The court will have before it an existing transaction replete with all its surrounding facts and circumstances and in their light will determine what is just and equitable. In doing so it will certainly be exercising a wide discretion that this is a commonplace of the curial process; the court will be bound to act judicially, exercising its discretion by reference only to such considerations affecting the transaction as, on an examination of the legislation, may be seen to be material to the decision which it is called on to make. Irrelevant matters, matters such as the plaintiffs instanced in the course of argument, which have no rational connection with the policy of the regulations but would be expressive only of the personal predilections of the Court, cannot be allowed by it to play any part in its decision.'
11. Barrett J. observed that this approach was endorsed by Campbell J in Sullman v Sullman [2002] NSWSC 169.
12. At paragraph 49 of his judgement Barrett J. stated in connection with section 94(1A) of the Act: 'The inquiry directed by the statute is therefore, in effect, whether the surrounding circumstances are such as to justify the creation of a right and an obligation as to the payment of the sum separately determined to represent fair remuneration. The Act, as I see it, does not attempt to control quantification. That is left to the general principle imported by the expression "quantum meruit". The Act is concerned with factors influencing a decision whether, in the particular circumstances in which the court finds the parties, it is fair that one receive the quantum meruit sum and the other pay it.'
13. The builder has referred me to the decision of Hall J. in Pender v Robwenphi Pty Limited & Anor [2008] NSWSC 1144. In that case Hall J. stated, commencing at paragraph 41, in connection with the decision of Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd: 'In relation to the analysis undertaken by Barrett J in Eddy Lau Constructions (supra), the following propositions may be derived from the judgment:- (1) The words "just and equitable" are of the widest significance and involve evaluations of questions of fact. (2) In exercising the wide discretion under the provision, a Court or Tribunal is to have regard to considerations affecting the particular transaction as are material to the decision to be made. Irrelevant matters are those that have no rational connection with the policy of the statutory requirement. (3) The statutory discretion under s.94(1A) must be exercised judicially in light of the whole of the circumstances surrounding the relevant subject matter. (4) Inquiry is directed to ascertaining whether the surrounding circumstances are such as to justify the creation of a right and an obligation as to the payment of the sum separately determined to represent fair remuneration. (5) The Act is concerned with factors influencing a decision whether, in the particular circumstances in which the Court finds the parties, it is fair that one receive the quantum meruit sum and the other pay it. It is apparent from the analysis by Barrett J in Eddy Lau Constructions (supra) that the conduct of the party in breach is an important matter for consideration. In that respect, ignorance or oversight of the statutory requirement under the Act stands in marked contrast to a contravention that is wilful or deliberate. In the present case, the determination of the Tribunal was, in effect, that the first defendant's contravention was an inadvertent one, it being a company accustomed to undertaking commercial and industrial work and not home building or renovation work. The Tribunal accepted, as it was entitled to, the evidence given which explained the first defendant's ignorance or inadvertence. These were matters of fact for the Tribunal's determination. In the circumstances of the present matter, on the evidence there was no identification of any particular form of disqualifying conduct by or on behalf of the first defendant that was material to be taken into account in determining what was "just and equitable". The Tribunal was also entitled to have regard, as Barrett J did in Eddy Lau Constructions (supra) to the fact that, if the first defendant was not granted relief under s.94(1A), the plaintiff would receive the benefit of the work undertaken by the first defendant without having to pay for that work and for the materials supplied. I will return to this issue of "benefit" below. Finally, there was no factor establish(ed) that resulted in any detriment flowing to the plaintiff by reason of the particular breaches or contraventions by the first defendant. Again, such matters involve a factual determination for the Tribunal.'
14. I will have regard to the above passages from the relevant authorities in considering the issue of whether or not the builder will be entitled to recover on a quantum meruit for the work it alleges that it has carried out for the owners and not been paid for. I will also have regard to the parties written submissions on the issue.
15. I am of the view that the builder bears the onus of persuading me that it is just and equitable that it recover on a quantum meriut. The owners' submissions recognize this to be the case insofar as they state that the builder has not demonstrated circumstances which I should consider as giving rise to a quantum meruit.
16. The relevant principles in relation to discharging the burden of proof in civil cases were recently summarised by McDougall J. in the New South Wales Court of Appeal in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55] as follows: 1. A finding that a fact exists (or existed) requires that the evidence induce, in the mind of the fact-finder, an actual persuasion that the fact does (or at the relevant time did) exist; 2. where on the whole of the evidence such a feeling of actual persuasion is induced, so that the fact-finder finds that the probabilities of the fact's existence are greater than the possibilities of its non-existence, the burden of proof on the balance of probabilities may be satisfied; 3. where circumstantial evidence is relied upon, it is not in general necessary that all reasonable hypotheses consistent with the non-existence of a fact, or inconsistent with its existence, be excluded before the fact can be found; and 4. a rational choice between competing hypotheses, informed by a sense of actual persuasion in favour of the choice made, will support a finding, on the balance of probabilities, as to the existence of the fact in issue.
17. There has been a great deal of lay evidence in these proceedings. I have not reached the conclusion that the lay evidence of one party should be preferred over the lay evidence of the other. In fact I have formed the view that the evidence of the owners and the evidence of Mr A Cosco should be treated with caution, particularly when their evidence is self-serving. Whenever I can have regard to a contemporaneous document or independently established facts in preference to, or in confirmation of a witness statement or affidavit, I will do so.
18. In order to deal with the matters identified by the above authorities, it is necessary to have regard to the evidence relating to the establishment of contractual relations between the builder and the owners which led to the builder carrying out building work at the residence.
19. The builder's submissions helpfully set out a chronology of the building work. I accept paragraphs 5 - 12, 14, 17, 18, 20, 21 as statements of factual matters.
20. The builder submits at paragraph 43 of it submissions that it advised the owners from an early stage that they needed to do various things leading to the submission of a Development Application and until that was done it was appropriate for them to apply to proceed as owner/builders and take out their own Home Owners Warranty Insurance (HOWI).
21. This submission is based upon paragraph 15 of Mr Anthony Cosco's affidavit of 28 February 2011. Paragraph 15 indicates that this conversation took place on or about 28 October 2009. Paragraph 21 of the builder's submissions is that work commenced on 21 October 2009. I find that approximately one week after the builder commenced work, the issue of HOWI was being discussed with the owners. Mr Cosco did not explain the relevance of HOWI to the owners on the 28 October 2009. Mr Cosco also states that he told the owners that he couldn't get HOWI until the D/A was approved and a building contract was signed. Mr Cosco's evidence was that he agreed with the owners to continue working on interior renovations until the plans were finalised.
22. I have accepted paragraph 15 of Mr Cosco's affidavit in connection with the issue concerning the nature of the contract entered into between the parties. It follows from my acceptance of that evidence that I also accept that Mr Cosco suggested to the owners on 28 October 2009 that they obtain an owner builder's licence and take out their own HOWI.
23. Whatever might have been the position regarding the submission of a Development Application, the builder was obliged to have taken out HOWI at the commencement of the work. Mr Cosco seems to have misunderstood the requirement that he obtain HOWI at the commencement of work, or regarded it as something that he could attend to at a later time, or assumed that there would be an application for an owner builder's licence in which event the owners would obtain a HOWI policy.
24. The builder also submits that it advised the owners of taking these steps on 2 November 2009. Paragraph 72 of Mr Cosco's affidavit sworn 16 August 2012 is the basis for this submission. That paragraph records a conversation with Mrs Shearer in which Mr Cosco asks her if she was going to be the owner/builder because 'we have to sort out the insurance'. Mrs Shearer is stated to have said that she would discuss the issue with her husband and let Mr Cosco know the position at a later time.
25. It is notable that Mr Cosco refers to insurance generally. He did not raise HOWI specifically, or treat it as an important matter, as he did not emphasize it to the owners. More importantly, I infer from the evidence that he did not regard it as a matter of great importance to the builder at that time.
26. The builder also relies upon a fee proposal from the architect that shows that the services the architect proposed to perform included assisting with site handover to the contractor to ensure all insurances are in place. This sentence must be viewed as appearing in a six page letter. It does not refer to HOWI. I do not place any weight on this passage in my consideration of the factual matters relating to the just and equitable considerations.
27. The builder's submissions at paragraphs 45 - 47 raise matters relating to the architect, a meeting that is relevant to advice the architect offered to the owners regarding a building contract, the termination of the architect's services and the engagement of a draughtsman to prepare final plans and a development application. These matters may be relevant to the issue of the failure of the builder to enter into a contract with the owners which complied with the requirements of section 7 of the Act. However those matters are not in my view wholly relevant to the failure of the builder to comply with section 92 of the Act. The only matter of relevance is in my view, the advice the architect offered to the owners regarding a building contract. I will refer to that subject later in these reasons in context of the owners' submission that they were 'vulnerable'.
28. The owners' submissions are that Mr Cosco who was a director of the builder was aware of the obligation to obtain HOWI and that a failure to obtain HOWI was an offence under the Act. It is also submitted that the builder failed to provide the owners with a written building contract and that Mr Cosco was aware of this requirement under the Act.
29. The significance of the failure to provide a written building contract and that being a requirement under the Act, is in my view that a contract that complies with the Act must include the consumer information referred to in section 7AA of the Act and also a checklist in the form set out in schedule 3 of the Home Building Regulation 2004, the most relevant part of which is: 'Do you understand that the contractor must have a policy of home warranty insurance under the Home Building Act 1989 and provide you with a certificate of insurance before receiving any money under the contract (including a deposit) or before doing any work for more than $20,000'
30. It is clear that the builder did not comply with section 7 of the Act. However I have not taken that into account in connection with the just and equitable consideration under section 94(1A) of the Act. The reason for this is that non-compliance with section 7 of the Act does not attract a provision similar to section 94(1)(b) of the Act. Non-compliance with section 7 of the Act will not prevent an action for quantum meruit or restitution. In those circumstances it would be inappropriate, in my view, for non-compliance with section 7 of the Act to prevent recovery on a quantum meruit where there has been a failure to obtain a policy of insurance required by section 92 of the Act.
31. The owners' counsel has submitted that a range of other matters going to Mr Cosco's evidence and certain aspects of his conduct bear upon the issue of whether I consider it just and equitable that the builder should be permitted to recover on a quantum meruit basis.
32. The matters referred to include the following, allegations regarding the quality of work carried out by the builder, authorisation of work, the role of Mr John Cosco, the demeanour of Mr A Cosco, the evidence of other witnesses, taxation issues, the expertise of the builder, cash and GST, licensing issues and eligibility for HOWI.
33. I do not consider those matters to be relevant to HOWI matters. As stated by Hall J. in Pender v Robwenphi Pty Limited & Anor supra, irrelevant matters are those that have no rational connection with the policy of the statutory requirement.
34. The submission is made on behalf of the owners that they were vulnerable consumers who were too trusting of the assurances and experience represented to them by the builder and Mr Cosco. I reject this submission. The owners were advised by an architectural firm experienced in domestic building work. Had they followed their architect's advice to enter into a lump sum contract, I have no doubt that many of the difficulties they have faced in connection with their renovation and quite probably the issue of HOWI would have been avoided. In any event a complying contract would have raised the issue of HOWI, in the terms set out above. The owners in my view of the evidence, in declining to follow their architect's advice to enter into a lump sum contract took the course that best suited their interests at the time.
35. In their submissions titled 'Respondents' Submissions on the Claim' undated but filed on 9 September 2014, at paragraph 2 (b) of the introduction, the owners submit that the builder falsely represented to them that insurance was 'all arranged'. The submissions refer to the source of this evidence as the 'First Bronwyn Shearer Affidavit, [41]'. I assume reference is being made to Mrs Shearer's affidavit affirmed 26 February 2012. At paragraph 41, Mrs Shearer alleges that on 19 or 20 October a conversation took place in which she stated that 'Patricia has advised us that some sort of insurance must be in place before the work begins. Has the insurance been taken out yet?' The response from Mr Cosco on behalf of the builder is alleged to be 'Yes, it's all arranged. Don't worry.'
36. At paragraph 46 of his 16 August 2012 statement, Mr A. Cosco states that on Monday morning 19 October he attended site and met the architect. He further states that she did not ask him for confirmation that he had a 'written contract or Home Warranty Insurance'. At paragraph 165 Mr Cosco denies the conversation alleged by Mrs Shearer, as alleged above.
37. This evidence from Mrs Shearer, which I accept, lacks the specificity to establish that HOWI was specifically raised with the builder. There are many types of insurance that a builder will require before commencing work. Contract works insurance, public liability insurance and workers compensation insurances are all required.
38. However the evidence that I have referred to so far establishes that the builder was aware of the requirement for HOWI. In my view the builder's failure to take out HOWI may be characterized as knowing, or deliberate. Mr Cosco's evidence regarding raising HOWI as part of the owners obtaining an owner builder's licence took place some eight or nine days after the commencement of work on site and Mrs Shearer's question regarding insurance. It is the only factor which mitigates the builder's failure to take out HOWI.
39. The parties' submissions do not raise the issue of whether any detriment to the owners arises because of the fact that they will not have HOWI. Since the parties have not raised this submission, I will not embark upon a consideration of it, except to note that Barrett J considered a related issue in paragraph 52 of his decision in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd when he stated : 'Item 10 of the agreed statement of issues at paragraph 11 above sets out at (a) to (i) factors considered by the parties as bearing upon the "just and equitable" question. The first such factor is that the plaintiff breached the Act. I do not consider that to be a relevant consideration. Section 94 as a whole is, after all, predicated on the existence of a contravention by the builder. The contravention is the simple and clear-cut one of contracting to perform building work without the pre-condition as to insurance having been satisfied. The circumstances in which the insurance was not obtained and the pre-condition was not satisfied are relevant, but the objective fact of absence of insurance itself cannot be a consideration that s.94(1A) requires or permits the court to entertain.'
40. Having regard to the review of evidence and consideration of the relevant authorities, the conclusions that I have drawn from the evidence is that the builder may be criticized as not treating the issue of HOWI in a serious way. The issue of the owners being responsible for HOWI was left hanging in the air. There is no evidence of the builder treating the issue as a serious matter and taking action to finalise the question of which party would be responsible to obtain HOWI. As a secondary matter there is evidence that the builder held the erroneous belief that it needed Development Consent and a signed building contract to obtain HOWI.
41. In my view while the builder knew that HOWI was required, its conduct may be described as inept or careless leading to a breach of the Act, rather than being tantamount to a deliberate contravention of the requirements of section 92 of the Act.
42. There is also evidence that the builder did attempt to take advantage of section 94(3) of the Act by seeking to obtain retrospective HOWI, albeit belatedly on 9 May 2010. On 2 June 2010 the application was refused.
43. I have to take into account the fact that if the builder is not granted relief under section 94 (1A) of the Act, it is possible that the owners will have the benefit of work carried out and materials supplied by the builder without having to pay for that work, although I note that their expert Mr Daniels takes a different view. In my view this is a serious factor of some weight to be taken into account.
44. The owners have referred me to the decision of the Tribunal in Selling v C & C Design and Construct Pty Ltd [2006] NSWCTTT 725 in which a builder was unable to recover for building work carried out because of a lack of HOWI. The amount in issue in that case was less than $2,300.00. While what was stated by Member Smith is not in doubt, the case was for a small amount and was heard in less than 2 hours. I do not consider myself as bound to apply what was said in this case where the amount in issue is claimed to be $217,600.00.
45. In considering the just and equitable factors stated in section 94 of the Act, having regard to the relevant evidence and conclusions as referred to above, I have reached the conclusion that it will be just and equitable to allow the builder to recover on a quantum meruit. I have reached this conclusion on the basis that if the builder is not granted relief under section 94 (1A) of the Act, there is a strong possibility, on the builder's case, that the owners will have the benefit of work carried out and materials supplied by the builder without having to pay for that work. This is an issue of some importance in my view. I have taken into account that the builder knew that HOWI was required but there was some question about whether the owners would obtain the insurance. I have also taken into account the action of the builder to seek to obtain retroactive insurance, although that is not a significant factor.
46. In coming to the conclusion referred to I have formed the view that the owners were not, as submitted, vulnerable consumers. They received advice that they should enter into a lump sum building contract from their architect. As I have pointed out above, a complying written contract would have contained information about HOWI and the builder's obligations in connection with such insurance.
47. Overall, I have formed the view that it will be just and equitable to allow the builder to proceed on a quantum meruit claim.

The builder's quantum meruit case

1. The builder's quantum meruit case is described as being a claim in the amount of $217,600.00 which is the balance outstanding after the deduction of progress payments made by the owners, $235,000.00, from the total value of the building work $452,600.17 (inclusive of GST) which was calculated by the builder's expert Mr Zakos.
2. The builder addresses the substance of its claim at paragraphs 54 - 58 of its undated written submissions received in the Tribunal on 8 August 2014.
3. The evidence of Mr Zakos is relied upon by the builder, such evidence being contained in Mr Zakos' report dated 1 March 2011.
4. I accept Mr Zakos as an expert qualified to give opinion evidence in the Tribunal on the issue of building costs.
5. The owners address this issue at paragraphs 46 - 53 of their written submissions undated but filed in the Tribunal on 9 September 2014. Their primary position is that the amount paid by the owners, $235,000.00 exceeds the value of the work performed, after taking into account the cost of rectification of defects and uncompleted work.
6. The owners rely upon the evidence of Mr Daniels, such evidence being contained in his report dated 20 March 2013. Mr Daniels stated that in his opinion the fair and reasonable cost of the works was $248,853.00 on a fixed price basis and $242,133 on a cost plus basis. I accept Mr Daniels as an expert qualified to give opinion evidence in the Tribunal on the issue of building costs.
7. The parties have not cited applicable authorities on the question of how a quantum meruit claim is to be established. In the absence of any authorities I have had regard to the judgement of Bryne J. in Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 summarised in Dorter & Sharkey Building and Construction Contracts in Australia as setting out the following principles: 1. 'The courts task is not to assess damages for breach of contract, but to ascertain what is fair and reasonable compensation for the benefit of the services performed, and accepted actually or constructively by the recipient; 2. The enquiry is not primarily directed to the cost to the plaintiff of performing the work since the law is not compensating that party for loss suffered; however, the actual cost should not be ignored; 3. Any price or commission agreed between the parties may be received as evidence of the value the parties themselves put on the services performed, even where the services have not been totally performed, but the agreed amount is not determinative of the matter.'
8. Principles relevant to how a quantum meruit is assessed were also discussed by Barrett J in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd. I do not intend to reproduce large sections of that judgement in these reasons. However, his Honour's discussion of the 'Relevance of evidence of actual cost of certain elements', and 'The relevance of defects' and his conclusions in connection with these subject are relevant.
9. It is useful to set out what Barrett J said at paragraph 84 in connection with 'The onus in relation to defects': 'Consistently with what was said by O'Bryan and Martin JJ in Riverside Motors v Abrahams (above), I consider the onus of proof to be upon the plaintiff, in that it is for the plaintiff to prove the value of the work done.'

The scope of the work

1. The owners criticize Mr Zakos' evidence on the basis that he has only valued the work that he was instructed to. It is said that Mr Zakos has been instructed as to the quantities and materials alleged to have been provided and has done no more than to provide rates.
2. At paragraph 1.3.1 of his report Mr Zakos lists the documents which have been provided to him, or which he has had access to for the purposes of his report. Appendix D to his report was a schedule which outlined the scope of work carried out by the builder.
3. At paragraph 3.1 of his report Mr Zakos states that in coming to an opinion on what work the builder carried out, he was assisted by two sets of documents provided to him. First, a set of photographs taken by the architect. Secondly, a set of instructions provided by the builder as to the work he carried out in each area, Appendix D.
4. Appendix D, to the report is a schedule prepared by the builder. It has five columns. The first is the identification of the room or area, the second is a description of the work carried out. The third is a description of the trade involved. The fourth column is the builder's comment. The fifth column is a description of the original condition. In some cases in the fourth column, the builder provides a measurement.
5. The owners also attack the instructions provided by the builder as to the work carried out in each area, which are contained in Appendix D of Mr Zakos' report. The owners submissions about this are contained in paragraphs 31 - 33 of their undated submissions filed on 9 September 2014.
6. In paragraph 8 of his affidavit sworn 16 August 2012, Mr Cosco stated that he had prepared a schedule of works at Tab E to his affidavit in 'room by room' order. He states that he gave the schedule and other documents to Mr Zakos for the purposes of the preparation of his report. The documents at Tab E of Mr Cosco's affidavit were the same documents as those contained in Appendix D to Mr Zakos' report.
7. In paragraph 3.2 of his report Mr Zakos sets out the methodology that he followed. He states that among other things, he carried out measurements off the plans to determine areas and quantities 'applicable to work having been carried out'.
8. Mr Zakos' evidence in Appendix E to his report makes it clear that he calculated quantities, not the builder.
9. Having regard to the details of Mr Zakos' report, the criticism made by the owners cannot be sustained. It is incorrect to state that the builder provided all quantities or that all materials used were stipulated by the builder. It is true that some quantities and materials are described by the builder. However I do not regard the identification of those quantities or materials to be anything more than the builder being specific, where possible, in order to document its case.
10. I do not regard the method employed by the builder of assessing the value of the work that it carried out to be wrong in principle or otherwise infected by error in principle or logic such as to entitle me to disregard Mr Zakos' evidence. However where Mr Zakos relies upon evidence from the builder as a basis for his opinion, he does so on the basis that such evidence will be accepted by the Tribunal and that it will form a solid factual foundation for his opinion. It follows that if such evidence is not accepted by the Tribunal, the factual foundation for his report will have been removed and the opinions expressed by him in his report must be treated with extreme caution, or not accepted at all.
11. At paragraph 31 of the owners' submissions they state that the documents at Tab E, of Mr Cosco's 16 August 2012 affidavit were prepared by his father, and that Mr John Cosco would not have known about the matters referred to in the Table. There is no reference to the evidence relied upon to sustain this submission. At paragraph 41(bb) this submission was changed to be that Mr Cosco had admitted in cross examination that Mr John Cosco had assisted him in in preparing the document which is in Tab E and which was provided to Mr Zakos.
12. The owners make much of the fact that Mr Cosco was assisted by his father in the preparation of the document which is at Tab E, of his 16 August 2012 and at Appendix D to Mr Zakos' report.
13. The criticisms made by the owners in connection with the builder's room by room statement of the work carried out are too wide in my view. First, the criticism was made without reference to any evidence to support the submission. The criticism was then reduced to the fact that Mr Cosco received assistance in preparing the document in question. I do not regard the fact that Mr Cosco received assistance in preparing the schedule which is at Tab E to be a factor which justifies the rejection of that document.
14. If the owners were able to establish that the content of Tab E was wrong in whole or part that would, in my view, be a far more effective attack on the document. It is common ground that at all material times the owners resided at the residence despite the fact that work was being undertaken. By reason of such residence they were in a position to know what work was being undertaken and also to be in a position to comment on the content of Tab E if they say it is wrong, inaccurate or misleading in any sense.
15. In support of Mr Zakos 's report, the builder points out that the documents relied upon by him included a bundle of receipts supplied by the builder which in my view is appropriate having regard to the judgement of Byrne J. in Brenner v First Artists' Management Pty Ltd that actual costs should not be ignored. Importantly, the builder submits that there was no challenge to Mr Cosco's evidence in 'relation to the expenditure on materials or the schedule of work carried out.'
16. Mr Daniels report of 20 March 2013 was relied upon by the owners as well as reports dated 15 and 16 June 2011 from Swarts Consulting Engineers in connection with air conditioning and electrical works.
17. In connection with quantum meruit, Mr Daniels responded to instructions from WKA Legal Pty Limited as set out by him at section 4.3.1 - 4.3.3 of his report and in doing so responded to Appendix D of the Zakos report in Schedule 1 of his report. Generally speaking Mr Daniels agrees with Appendix D to Mr Zakos' report. Exceptions to this, as stated in schedule 1, are in connection with electrical and air conditioning items where Mr Daniel's defers comment to the Swarts electrical or air conditioning reports or where the owners have instructed Mr Daniels that a different state of affairs existed. Mr Daniels states that the owners are to provide the relevant evidence in those circumstances.
18. In connection with electrical and air conditioning issues which arose out of Appendix D to the Zakos report, Mr Daniels did not comment on those items. As stated he deferred comment to the Swarts' reports. The author of the reports, Mr Swarts, comments on Mr Zakos' report. He addresses valuation of the air conditioning and electrical work, the identification of defective work and the cost of rectification.
19. In circumstances where the owners' expert has carried out an exercise of the type that Mr Daniels was instructed to and did carry out, the owners submissions regarding the schedule of works at Tab E to Mr Cosco's affidavit cannot be sustained because their own expert has in large part confirmed the content of the schedule at Tab E. Moreover, submissions of the type made waste the Tribunal's time in considering them and the basis on which they are made when ultimately, it becomes clear that they cannot be sustained. The real issue, ignored by the owners are the instances where Mr Daniels does not agree with Appendix D of Mr Zakos' report.
20. Having regard to the evidence and to the parties submissions I find that the scope of the work carried out by the builder at the residence at the owners request and accepted actually and constructively by them was as set out in Tab E to Mr Cosco's affidavit and in Appendix D to Mr Mr Zakos' report. If the owners assert a different state of affairs, it is set out in Schedule 1 to Mr Daniels report subject to substantiating evidence from the owners.

The valuation of the work carried out

1. In connection with this assessment, Barrett J stated in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd. under the heading of 'Relevance of evidence of actual cost of certain elements' that 'while evidence of actual expenditure may be relevant to an assessment of what is a reasonable reward for work done and expenditure incurred, the amount of such actual expenditure as may be proved does not operate in any way as a controlling factor. The quantum meruit sum is the reasonable cost of the work done and expenditure incurred, with the assessment of reasonableness being undertaken by reference to the results produced and evidence of what it would in the ordinary course of things be necessary to outlay in order to produce those results'.
2. Also connection with this assessment, Barrett J stated under the heading of 'The relevance of defects', 'The quality of the work and matters such as its correspondence with specification and fitness for its intended purpose are thus elements of the process of valuation of work for quantum meruit purposes. It follows that the referee was correct in applying a deduction for defects rectification in determining the quantum meruit sum.'
3. By reason of the finding in Eddy Lau Constructions Pty Ltd v Transdevelopment Enterprise Pty Ltd that the proper valuation of work carried out on a quantum meruit basis will take into account any deduction for defects, I will consider the owners' defective work case as part of the builder's quantum meruit case.
4. However before the defects case is considered, it will be necessary to consider the competing experts' valuations of the work carried out. Mr Zakos valued the work referred to in Appendix D of his report at $452,600.17. His calculations are at Appendix E of his report. Mr Daniels values the work referred to in Appendix D of Mr Zakos' report at $248,853.00. His calculations are at Schedule 2 of his report. However Mr Daniels valuation was amended at the hearing by his concession that he had not included an amount for materials in item 1.12 of schedule 2 of his report. He stated that an amount of $8,000.00 ought to be included for materials. The owners state in submissions that the effect of this amendment is that Mr Daniels' valuation of the cost of the works on a cost plus basis is $250,133.00 and on a fixed price basis is $256,854.00. The parties' experts are therefore $202,467.17 apart on the cost plus basis.
5. Mr Daniels has not valued the air conditioning or electrical work, accepting Mr Zakos' net total for those items, as he has stated in paragraph 4.3.2 of his report. Although Mr Daniels is not clear on the issue, I think that the owners' true position is that they rely on Mr Swarts evidence in connection with the valuation of the electrical and air conditioning work carried out by the builder.
6. Mr Daniels sets out the differences between his valuation and Mr Zakos'. He allows 15% for preliminaries as does Mr Zakos. Mr Zakos allows 20% for overhead and profit while Mr Daniels allows 15%. The main difference between the experts regarding overhead and profit is that while both experts take a net total and add 15% preliminaries, Mr Zakos adds the net total and the preliminaries amount to achieve a sub total to which he adds the overhead and profit percentage. Mr Daniels takes a net total and adds separately 15% for preliminaries and then 15% for overhead and profit.
7. To put it another way Mr Zakos calculates the overhead and profit on a sub total which includes the preliminaries amount. This will increase the grand total.
8. I find that the method adopted by Mr Zakos is to be preferred as it is reasonable to allow overhead and profit on the preliminaries expenses. Moreover this method of calculating overhead and profit is commonly adopted by experts giving evidence on quantum issues in the Tribunal.
9. Mr Daniels states that he has adopted the method of costing used by Mr Zakos and is in general agreement with the hourly labour rate as used by Mr Zakos. However he does not agree with every assessment of the time spent by Mr Zakos and where he disagrees he has adjusted the time spent and in some cases the material component to 'reflect the reasonable amount charged for each task in the building industry'.
10. Counsel for the builder has made submissions in connection with the valuation of the quantum meruit and in particular the differences between the experts where there is a disagreement on the time taken to carry out each item of work. I refer to paragraphs 17 - 25 of the builder's Submissions in Reply dated 5 September 2014 which I have had regard to.
11. One issue between the experts relates to materials used in the work. At Tab A to his affidavit of 16 August 2012, Mr Cosco annexes receipts and invoices that he received from suppliers of goods and services. These documents are referred to by Mr Zakos at paragraph 1.3.1.4 of his report. In Appendix E, Mr Zakos has allowed $66,180.00 as a total for materials. The total allowed by Mr Daniels for materials is not stated in his report. The builder submits that Mr Daniels has allowed $29,991.00 for materials and in that regard relies upon a table attached to its submissions in chief. The experts are therefore $36,189.00 apart in connection with materials.
12. While the authorities referred to above make it clear that in calculating a quantum meruit claim actual costs are not a controlling factor, they are to be taken into account. As stated in Brenner v First Artists' Management Pty Ltd, actual costs are not to be ignored.
13. Mr Daniels evidence was that he did not calculate materials used on the job because he had not been asked to do so. Instead he took a ratio approach of between 15 - 25 % of materials to labour.
14. The builder's submissions seek to establish that in any event the value of materials actually used, which is submitted to be $70,100.00, is greater than the 15-25% ratio referred to by Mr Daniels.
15. The builder's submissions do not state how the figure of $70,100.00 for materials is calculated, by whom or where in the evidence it is to be found. However if one refers to the annexures to the supplementary affidavit of Bronwyn Shearer affirmed 26 February 2012, or to the annexures to Mr Cosco's affidavit of 28 February 2011, one will find invoices rendered by the builder to the owners many of which specifically identify the materials which the builder asserts were purchased for the amounts stated. I have taken the trouble of searching through the annexures to Mrs Shearer's and Mr Cosco's affidavits and calculated the total claimed by the builder for building materials. I have calculated a total which exceeds the sum of $70,100.00 referred to in submissions by the builder's counsel.
16. Mr Zakos' report does not expressly state how he dealt with materials. All that can be extracted from his report is that he was supplied with a bundle of receipts produced by the builder. Having regard to Appendix E to his report, I note that Mr Zakos allowances for materials are without exception in round figures. From this I infer that amounts allowed for materials have been assessed by Mr Zakos, rather than extracted from the receipts.
17. Based on the evidence of the amount charged for materials by the builder which is approximately $70,100.00, the amount of $66,180.00 assessed for materials by Mr Zakos and the fact that Mr Daniels did not calculate the value of materials charged for by the builder, or assess materials used on a task by task basis, but instead used a ratio of materials to labour, I prefer Mr Zakos' assessment of the value of materials. The preferred assessment is closer to the actual state of affairs regarding the purchase of materials, so far as that can be ascertained, and also addresses the issue on an item by item basis rather than by use of a ratio as has Mr Daniels. There is also the possibility that Mr Daniels ratio may well have produced an incorrect figure according to the builder's counsel's submissions.
18. I have had regard to the Swarts reports on air conditioning and electrical, as referred to above for the purposes of the quantum meruit calculation. Mr Swarts disagrees with Mr Zakos' valuation of the air conditioning works. His report provides at least two valuations of the air conditioning. First at paragraph 4.02 the sum of $8,565.00 which relies on Mr Zakos' valuation and then deducts rectification work, which seems to me to be incorrectly calculated. Secondly, at paragraph 4.05 in the sum of $26,250.00. However this seems to be a budget for air conditioning the upper floor and the attic and has no obvious connection with the work performed. Finally Mr Swarts states that the air conditioning work carried out by the builder has no value because in his opinion the cost of rectification exceeds Mr Zakos' valuation. That analysis will be correct if one accepts all of his defects and his rectification costs.
19. I have come to the conclusion that Mr Swarts' estimation of $26,250.00 for air conditioning cannot be accepted. I can have no confidence that it is a valuation of the work actually carried out. In addition it is not detailed or broken down to permit an understanding of the work and supply items it allows for. It is more likely a separate budget for air conditioning. Otherwise, Mr Swarts' valuation of the work carried out relies upon the view I take of defective work. I have stated that I will carry out that exercise. However Mr Swarts evidence on the valuation of the air conditioning work does not cause me to reject Mr Zakos' valuation.
20. Mr Swarts report of 16 June 2011 deals with electrical works. Mr Swarts analyses Mr Zakos' report to conclude that he (MR Zakos) has calculated electrical work at $57,602.00, inclusive of GST. For reasons expressed in paragraph 3.10 (a) - (d) of his report Mr Swarts disagrees with the approach taken by Mr Zakos.
21. Mr Swarts assesses the value of the electrical work at $33,500.00. He states that this estimate is based on his experience and partially on Rawlinsons' Construction Cost Guide updated to December 2010. Mr Swarts has not produced a break-up of this valuation .The builder's submits that in the absence of this detail it is impossible to ascertain what part of Mr Zakos' assessment is incorrect.
22. I agree with the builder's submission that in order for Mr Swarts assessment to be accepted in preference to Mr Zakos' assessment , a detailed break-down of the cost should be provided. It is not sufficient in my view that Mr Swarts assessment is not supported by the necessary detailed cost beak down which renders it susceptible to understanding and testing. Later in these reasons I refer to the cases of Makita (Australia) Pty Ltd v Sprowles and Pownall v Conlon Management Pty Ltd. Those cases and the extracts from them apply to the evidence of Mr Swarts that the value of the electrical work is $33,500.00. I reject that evidence but will take his evidence of defective work into account.
23. Overall, I prefer the evidence of Mr Zakos in connection with the quantum meruit calculation. I have referred to the question of the cost of materials above where Mr Zakos' approach was found to be acceptable as well as his approach regarding the application of overhead and profit. I have stated that I prefer Mr Zakos' evidence on air conditioning and electrical work to Mr Swarts' evidence. Or to put it another way, I cannot rely on Mr Swarts evidence in preference to Mr Zakos'. I have also had regard to the builder's submissions at paragraphs 13 - 25 of its Submissions in Reply dated 5 September 2014 which I accept.

Defects and /or Incomplete Works

1. The owners' expert Mr Daniels deals with defects and incomplete works at section 4.4 of his report. The owners also rely on the Swarts reports as to air conditioning and electrics as referred to earlier in these reasons.
2. Mr Brincat deals with defects on behalf of the builder. Insofar as Mr Brincat refers to a previous report prepared by Mr Zakos as he does on a number of occasions, I understand that such an approach is not objected to by the owners. In that sense Mr Brincat in certain instances adopts and agrees with the material previously stated by Mr Zakos, in a scott schedule dated 17 May 2013, as referred to by Mr Brincat at paragraph 1.5.1.6 of his report. In certain instances Mr Brincat does not agree with Mr Zakos and in those instances he states his opinion which is relied upon by the builder. In any event the owners had every opportunity to cross examine Mr Brincat on that material if they thought it relevant to do so. No objection was made to Mr Brincat's evidence by reason of his reference to previous material from Mr Zakos.

Incomplete work

1. So far as incomplete works are concerned, Mr Daniel deals with this subject in paragraph 4.4.1 and Schedule 3 of his report. In connection with certain items, Mr Daniels refers to them as both incomplete and defective.
2. So far as incomplete work is concerned, a builder will ordinarily be liable to an owner in connection with incomplete work where the contract has been terminated due to the fault of the builder and the cost to the owner to complete incomplete work exceeds the amount allowed for that work under the contract. In those circumstances the builder will be liable to the owner for such excess.
3. It can readily be seen that where the builder's claim is based on a quantum meruit the concept of uncompleted work will have no significance. The builder's right to a quantum meruit arises because of the provisions of section 94 of the Act that both prevent action on the contract by the builder and, subject to the exercise of discretion in its favour, allows the builder to recover on a quantum meruit basis.
4. However it is necessary to take section 94 (2) of the Act into account. That section provides: 'However, the contractor remains liable for damages and subject to any other remedy in respect of any breach of the contract committed by the contractor.'
5. As a result of sub-section 94 (2) of the Act I will consider the owners incomplete work claim in their cross application.

Defective work

1. The owners' defective works claim is based on section 18B of the Act, The builder admits that the warranties in section 18B apply. The position on the pleadings is that the builder denies the owners defective works case.
2. An experts' conclave was held on 20 August 2013 which was attended by Mr Brincat on behalf of the builder and Mr Daniels on behalf of the owner. The conclave proceeded on a scott schedule of 28 pages which had been completed by the parties experts. Each page of the scott schedule had been initialled by the experts.
3. File eleven of the agreed bundle which forms part of Volume 4, contains Additional Conclave Minutes dated 21 January 2014 which have been signed by Messrs Brincat and Daniels. This document has not been paginated. If there is any doubt that the document formed part of the Agreed Bundle, I will nonetheless take it and the Joint Memoranda of Conclave dated 20 August 2013 into account under sections 28(2) (3) and (5)(a) and (b) of the Consumer, Trader and Tenancy Tribunal Act. In my view where the parties' experts have attended at conclaves and reached agreements regarding technical matters in dispute, the Tribunal should take any agreements reached into account. The Joint Memoranda of Conclave dated 20 August 2013 and the Additional Conclave Minutes dated 21 January 2014 are important documents which should have been in the agreed bundle. I will take them into account wherever possible, particularly any agreements reached by the experts.
4. The owners' submissions state that the amount in issue in relation to defects is $84,579.00. The tribunal is requested to accept Mr Daniels evidence in preference to Mr Brincat's and Mr Zakos'. The owners' submissions also state where factual material underlying Mr Daniels' report is to be found in connection with a number of identified defects.
5. Submissions are also made in connection with the way that Mr Daniels has quantified defects.
6. The Additional Conclave Minutes dated 21 January 2014 disclose that a number of defects have been categorised as 'Liability Denied Quantum Accepted'. I accept that the agreement on quantum is on an, 'if found' basis. There are also a number of defects which have been categorised as 'Liability and quantum denied'. There are two defects where liability and quantum is agreed.
7. The Tribunal has no choice but to deal with each defect where liability has not been agreed by the experts on an individual basis. I note that the owners provide no submissions on those defect items except to identify in relation to certain defects, the source of underlying factual evidence.
8. The builder's submissions regarding defects and disputed items are contained in paragraphs 26 - 110 of its reply submissions dated 5 September 2014.

Scope of Work

1. Before I deal with the question of defects it will be appropriate briefly to consider the scope of work upon which the parties contracted.
2. The builder's scope of work can be gleaned from four possible sources: 1. The owners telling the builder what work they wanted performed; 2. The builder telling the owner what work he was quoting or estimating to perform; 3. The drawings or other documents prepared by the Architect on behalf of the owners and given to the builder; and 4. The drawings prepared by the architectural draughtsman engaged by the owners after the architect ceased providing architectural services.
3. The builder's evidence of the work that it was proposing to be carried out is contained in its documents dated 23 August and 3 November 2009. The document dated 23 August is described in its covering email as a scope of work. The document is itself described as an 'Estimation'. It describes a number of items of work and in connection with electrical and plumbing is not specific and states that the scope of the work cannot be stated with certainty. The document dated 3 November 2009 is titled "Quotation'. It describes 14 items of work and allows for materials.
4. The architect's evidence was that a 'return brief' version B was provided to the builder and the following drawings were provided to the builder, drawings AFC 005 01, AFC 006 02, AFC 007 03, AFC 011 - 00, AFC 012 - 00, AFC 013 - 00, AFC 014 - 00, and AFC 030 - 00. Sketches ASK 091029 - 001 and 002 were also provided to the builder. Drawings AFC 030 -01, AFC 031 - 00 and AFC 032 - 00 and Phase 1 Schedule of Room Fittings and Phase 1 Schedule of Room finishes were also provided to the builder on 4 November 2009. Drawing AFC 011-011 dated 9 November 2009 - new ceiling and lighting layout for ground and first floor was also provided to the builder on the same date.
5. If there is any dispute about the scope of the work that the builder was to carry out, in my view the documents referred to above are a guide to the scope.
6. In connection with the architect's evidence, Mr Cosco has replied to that evidence in his affidavit of 16 August 2012. If there is any conflict in the evidence of Mr Cosco and Ms Sissons, I prefer the evidence of Ms Sissons. Ms Sissons was the owners' architect. I accept her evidence and in particular that when she states that she sent an email or provided a document, that she did do so. I also accept that the documents that she exhibits to her affidavit are true copies of the documents described in her affidavit. To the extent that Mr Cosco disputes receiving a document referred to by Ms Sissons or states that a document exhibited to Ms Sissons affidavit is not a true copy, I am of the view that such evidence is self-serving and lacking in credibility.
7. The owners have the onus of proof in connection with defects. Earlier in these reasons I referred to Nguyen v Cosmopolitan Homes in connection with the relevant principles to be relied upon so far as what is required to discharge the onus.
8. The relevant principles in relation to expert evidence were discussed in the case of Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 where Heydon JA ( as he was then) makes it clear that a reasoning process is to be stated by an expert when giving opinion evidence. In the course of his judgement, commencing at paragraph 80, Heydon JA referred to a number of decisions of Anderson J. in the Supreme Court of Western Australia. In Pownall v Conlon Management Pty Ltd (1995) 12 WAR 370 at 389-90 his Honour Anderson J. stated: 'Expert opinion is to be judged like any other evidence. It must be comprehensible and reach conclusions that are rationally based. The process of inference that leads to the conclusions must be stated or revealed in a way that enables the conclusions to be tested and a judgment made about the reliability of them.'
9. Having stated some relevant considerations to be applied to the expert's evidence I will now proceed to consider each defect item in turn. I will use the Additional Conclave Minutes dated 21 January 2014 as the basis for the order in which defects are dealt with. All references to the 'scott schedule' in this defects section of my reasons refer to the scott schedule which is the basis for the Additional Conclave Minutes dated 21 January 2014.

B1, B2 & B3 These items are referred to later in these reasons in the same order as contained in the Additional Conclave Minutes.

B4 Attic floor frame certificate - amount claimed $3,512.00

1. This item relates to a claim by the owners for $3,512.00 based on the fact that the attic floor frame was not certified by the builder. At the conclave it was agreed that this item would not be pressed if an appropriate certificate was supplied.
2. No such certificate has been supplied.
3. This claim rests upon an assumption that an appropriate certificate from the builder or some other suitably qualified person is required to be provided to the owners or a relevant authority. The owners have not provided any evidence of such a requirement or the basis for such a requirement. All that Mr Daniels states is "any future certification by an engineer shall require invasive investigation'.
4. In order to establish an entitlement to the amount claimed or any lesser amount, it is necessary for the owners to persuade me that certification of the attic floor is required, but has not been provided.
5. They have failed to establish the basis for that requirement. Their claim is dismissed on that ground.

B5 New Attic stairs - amount claimed $11,413.00

1. Before considering this claimed defect I have had regard to the fact that the builder's scope of work dated 23 August 2009 included the installation of the attic ladder or stairs, as per design. Its quotation dated 3 November 2009 included the attic but did not refer specifically to the attic stairs. It is not disputed that this work was carried out by the builder.
2. The owners' expert claims that the staircase to the attic is constructed in contravention of Part 3.9.1 of the Building Code of Australia ('BCA') in that the risers and treads are inconsistent. It is said that the stairs cannot be certified by the Principal Certifying Authority. Demolition of the stairs is stated to be necessary.
3. The builder's expert concedes general non-compliance with Part 3.9.1 of the BCA. He assessed the costs at $500.00 which are stated to be for a grab rail to the left hand wall.
4. The evidence disclosed that a quote was received from a supplier, Budget Stairs Pty Limited in connection with the supply of these stairs. The order is contained at page 1033 of File Four of Volume 2(iii) being the annexures to Mr Cosco's affidavit of 16 August 2012. The order is addressed to the builder. It states, as submitted by the builder, that riser heights exceed the building code and that is the client's responsibility. Page 1035 of this bundle confirms that the builder was the client, as does page 1036 which is signed by Mr Cosco on 27 October 2009.
5. In written submissions the builder states that the architect decided to install the stairs the subject of the quote and the builder is not responsible for the defect.
6. I reject this submission. The order document that I have been referred to was entered into by the builder with the supplier Budget Stairs Pty Limited. I find that the stairs were installed by the builder through it subcontractor Budget Stairs Pty Limited. On that basis I find that the builder was responsible for ensuring that the attic stairs were supplied and installed in accordance with section 18B of the Act. The builder has breached section 18B (a) and (c) of the Act due to non-compliance with the BCA.
7. So far as quantum is concerned Mr Daniels' evidence is that the cost of rectification will be $11,413.00. The breakdown for this costing.is in schedule 3 of Mr Daniels report. He states that the net cost of rectification is $7,686.00. Mr Brincat has assessed the cost of rectification at $500.00 which does not go to rectification, but to installing a grab rail.
8. The builder does not challenge Mr Daniels' detailed costing. Since that costing is the only rectification cost that I have in connection with this item, I will allow it.
9. I will allow the owners the net sum of $7,686.00 in connection with this defect item. I will make allowances for preliminaries and overheads later in these reasons.

B6 Master Bedroom Floorboards - amount claimed $2,103.00

1. The owners claim that the polished timber floorboards have been damaged by the builder. Mr Daniels states that the staining is consistent with cement based materials having penetrated the surface grain of the boards.
2. This item depends upon the lay evidence. Mrs Shearer refers to this at paragraph 94 (c), sic, of her 26 February 2012 affidavit as being the state of the residence she encountered on her return from vacation on 4 December 2009. Reference is also made to paragraphs 115 - 119 of that affidavit, although I do not find those paragraphs to be of assistance in connection with the Master bedroom.
3. Mr Shearer also gives evidence regarding this damage at paragraphs 56 (e) and 74 of his affidavit of 26 February 2012.
4. Mrs Shearer states that the timber polished floors in bedrooms 1 and 2 were damaged and stained. Both of the owners state that there was concrete spilled on floorboard in each room of the house.
5. Mr Cosco denies that the works were in the condition described by Mrs Shearer on her return from holiday. He states that some of the conditions existed before commencement of the works and some occurred after 3 December 2009. In response to Mr Shearer, Mr Cosco denies that the works referred to by Mr Shearer were carried out in the period of Mr Shearer's absence and states that the work referred to was carried out before and after such absence.
6. I accept the owners' evidence in connection with this item. The evidence of Mr Cosco does not persuade me that the facts deposed to by the owners are incorrect. In fact I have formed the conclusion that in relation to this issue Mr Cosco denies the factual material only for the purpose of putting the owners to proof on it.
7. Mr Brincat for the builder states that the marks to the floor boards are not damage to the surface but exist under the protective coating and therefore a pre-existing condition. I do not accept this evidence in the face of the owners' evidence and Mr Daniels' evidence that the damage and staining is consistent with cement based materials having penetrated the surface grain of the floorboards.
8. So far as quantum is concerned the experts' figures are approximately the same. I will find for the owners in the net amount stated by Mr Daniels in schedule 3 of his report, $1,416.00. I will make allowances for preliminaries and overheads later in these reasons.

B7 Cornice installation - amount claimed $1,075.00

1. The experts agree that this item is a defect. There is a contest between the experts as regards the cost of rectification. The builder's expert estimates the cost of removal and replacement of a cornice to be $370.51. This estimate allows for a tradesman for five hours, plus materials, mark up and GST.
2. The difference between the estimates is that Mr Daniels has allowed for painting of the whole room.
3. I accept the builder's submissions on this issue on the basis that it is excessive to allow painting of the entire room because of cornices.
4. I will find for the owners in the net amount stated by Mr Brincat, $259.10. I will make allowances for preliminaries and overheads later in these reasons.

B8 Damage to existing fire place in main bedroom - amount claimed $386.00

1. The owners allege that original Victorian fire places in the master bedroom had been damaged.
2. Mr Shearer described the damage as being that the fireplace tiles were cracked and stained and that there was concrete splattered over the hearth. Mrs Shearer states that tiles were damaged or went missing.
3. Mr Daniels has produced a photograph of the fireplace in his report. It shows some tiles being cracked and some are missing. There is no evidence of concrete splattered over the hearth.
4. Mr Cosco's response is that described in connection with the Master Bedroom Floor boards.
5. The builder's position is that there is no evidence that the builder damaged the tiles in question.
6. I accept the owners' evidence in connection with this issue. Mr Cosco's evidence in relation to this item, which is no more than a denial, does not persuade me that he owners' evidence should not be accepted.
7. The extent of the damaged tiles does not seem particularly extensive based on the photograph in Mr Daniels' report. On this basis, I accept Mr Brincat's net calculation of $200.00 as the appropriate rectification cost.
8. I will make allowances for preliminaries and overheads later in these reasons.

B9 Missing support and anchor to Ceiling Rosette for all bedroom and hallway chandeliers - amount claimed $ 3,815.00

1. The evidence in relation to these items is not particularly clear. It does not disclose whether the ceiling rosette referred to in the photograph to Mr Daniels' report was pre-existing or installed by the builder.
2. In either case the complaint is that there is no metal support installed or braced to the ceiling frame to support a chandelier or light fitting.
3. Mrs Shearer's evidence is that the support and anchor to the ceiling rosette in hallways and bedrooms had been removed and not replaced or returned.
4. Mr Cosco's response is, again, that described in connection with the Master Bedroom Floor boards, namely one of blanket denial.
5. The builder in submissions states that its position is that anchor points have been provided. It omits to point to the evidence to support this proposition. Mr Cosco's evidence falls short of persuading me that there is no issue with anchor supports or that the support anchor is installed within the centre of the rosette. If this was the case it would be a complete answer to the owners' complaint. I would expect there to be clear evidence on the point and referred to in submissions..
6. Mr Brincat refers to the drawings in general stating that there is no provision in the drawings for anchors and that in any event anchors may be retro fitted if required. No evidence is offered in connection with the procedure of retro fitting or the costs involved. Mr Brincat does not refer to any specific drawing regarding the provision for anchors or the lack thereof.
7. As stated the evidence in connection with this item is far from satisfactory.
8. However I am satisfied that the evidence disclosed that anchor supports were either removed or not installed. The work was therefore either not fit for purpose or not carried out in a proper and workmanlike manner, both in breach of clause 18B of the Act.
9. Mr Daniels states that the cost to rectify is $514 00 per rosette. Details in support are provided in schedule 3 to his report. Mr Brincat's evidence on quantum was 'If found $300.00 incl GST & Margin'. Mr Brincat does not state whether that amount is on a per rosette basis or whether it is for all rosettes.
10. In the circumstances, I find that the only reliable evidence in connection with quantum is Mr Daniels'. I will find for the owners in the net amount stated by Mr Daniels for five rosettes, $2,570.00. I will make allowances for preliminaries and overheads later in these reasons.

B10 Damage to existing mantel piece - amount claimed $ 1, 213.00

1. This item relates to a rust stain to an existing marble mantelpiece over the fireplace.
2. The only evidence is support of this item is from Mrs Shearer. Mr Daniels has taken a photograph of the rust stain.
3. The builder states in submissions that there is no evidence that the stain was caused by the builder.
4. In the circumstances I am prepared to accept the evidence of Mrs Shearer. I also accept Mr Daniels' evidence that the rust stain is consistent with a corrosive residue from the base of a metal container stored or placed on a porous stone mantle.
5. Mr Cosco's evidence is as stated, again, that described in connection with the Master Bedroom Floor boards, namely one of blanket denial. Mr Cosco's denial does not cause me to reject Mrs Shearer's evidence which I view as being more probable than Mr Cosco's blanket denial of a range of matters.
6. Mr Daniels quantum evidence is at schedule 3 to his report. Mr Brincat's opinion of quantum reached at the conclave is $600.00 inclusive of GST and margin. Mr Brincat does not break up the cost to identify each element in the work. I accept Mr Daniels' estimate in preference to Mr Brincat's because of the fact that he has broken down his costs whereas Mr Brincat has not. On that basis Mr Daniels' costs are more reliable.
7. In the circumstances, I find that the only reliable evidence in connection with quantum is Mr Daniels'. I will find for the owners in the net amount stated by Mr Daniels, $817.00. I will make allowances for preliminaries and overheads later in these reasons.

B11 General damage, Paint and Plaster falling away - amount claimed $1,515.00

1. The basis for this defect item is contained in Mr Daniels' report. He states that cracks formed due to the failure to stitch cracks to the masonry walls and that paint failure is due to poor surface preparation before painting.
2. Mr Brincat states that he agrees with Mr Zakos' prior comments and states that there are areas where paint has come free from the walls.
3. The owners do not address this item in their written submissions. In its submissions the builder states that Mr Daniels has conceded that there is no evidence that the cracks are as a result of a failure to stitch cracks to the masonry walls. It is also submitted that Mr Daniels agreed that the cracks are due to building movement. In that regard the report of Mr Natoli is relied upon as annexed to Mr Cosco's statement at N13.
4. Mr Natoli's report states that future cracking following repairs is to be monitored, suggesting that future cracking due to the footing issues and ground condition issues referred to on page 1 of his report.
5. I accept the builder's submissions. However there remains the issue that Mr Brincat has identified flaky paint. He assesses the net cost of repair of flaky paint at $242.28.
6. I will find for the owners in the amount stated by Mr Brincat, $242.28. I will make allowances for preliminaries and overheads later in these reasons.

B12 En suite Bathroom - amount claimed $ 1,800.00

1. The complaint is that the internal sliding door is 'fouling' against the inbuilt wall frame.
2. Mr Daniels states that the sliding door and the inbuilt frame were poorly installed and aligned and that there has been a failure to carry out work in a proper and workmanlike manner and that the sliding door and sliding inbuilt frame were poorly installed and aligned. He does not provide any specific evidence of the manner in which the builder has failed to carry out work in a proper and workmanlike manner
3. The builder's expert Mr Brincat does not address the issue. He makes observations as to the fact that the builder would have been entitled to charge under a cost plus contract if it had completed the work. I do not find these comments to be useful.
4. The builder's expert has failed to address the issues raised by Mr Daniels as stated above.
5. Despite the fact that Mr Daniels admitted that he missed this item in his first visit to the site, I accept his evidence that the door and sliding inbuilt frame were poorly installed and aligned. That evidence is not contradicted by the builder's expert.
6. Mr Daniels quantum evidence is at schedule 3 to his report where the amount of $1,800.00 is broken down into component parts. All told Mr Daniels estimates that there are 21 hours of tradesmen's time involved in rectifying this defect. Mr Brincat's opinion is that it would take a carpenter 4 hours to carry out the rectification work at a net cost of $167.28 as stated at the conclave.
7. I prefer Mr Brincat's evidence. I find that Mr Daniels's estimate is grossly excessive. He has not explained the necessity for plaster's, tilers and painters in this rectification work.
8. I will find for the owners in the amount stated by Mr Brincat, $167.28. I will make allowances for preliminaries and overheads later in these reasons.

B13 En suite bathroom in Master Bedroom - amount claimed $7,161.00

1. Mr Daniels has made detailed comments regarding this item in the scott schedule. Among other things he states that there is no effective fall to the tiled bathroom, that water flows away from shower drain, there is no water stop at the shower recess and at the entry door, the grated drain has an end missing and the waterproof membrane has failed.
2. Mr Brincat states that a water stop bead can be installed once a shower screen is installed by the owners. On an 'if found' basis Mr Brincat states that the shower floor tiles can be rectified to drain to the waste at a cost of $634.56 which allows for 8 hours work by a tiler.
3. The builder's submissions state that Mr Daniels evidence should be rejected because he failed to measure the floor of the ensuite.
4. To be fair to Mr Daniels he did state that he measured the floor. However, he could not produce the details of his measurements and when pressed for details of his measurements he provided a non -responsive reply to the effect that if he were to justify each item, the case would take 3 weeks.
5. On the basis of Mr Daniels inability to provide measurement details, the builder submits that there is no evidence that the fall in the ensuite floor is unsatisfactory or that the tile installation is unsatisfactory. While I agree that the absence of detail on measurements does cast some doubt on Mr Daniels evidence, the issue is whether his evidence is sufficient to discharge the owners' burden on this item.
6. As stated in Nguyen v Cosmopolitan Homes, for the owners to discharge the burden it will require on the whole of the evidence such a feeling of actual persuasion to be induced, so that I can find that the probabilities of the existence of the matters stated by Mr Daniels to be greater than the possibilities of their non-existence.
7. I have had regard to the whole of the evidence. I have been referred to Mr Daniels' cross examination. The builder's expert has little to say on the matters raised by Mr Daniels, as I have briefly referred to.
8. There is the fact that Mr Daniels refers to, namely that water flows forward away from the strip floor drain at the rear of the shower and flows into the bathroom and adjoining bedroom. Despite the absence of measurements this fact is in my view capable of supporting an inference that the falls are not fit for purpose. I have taken notice of the commonplace fact in technical building matters that a fall is a slope in a surface which is designed to cause water to flow in a pre-determined direction, usually to a place where it can be drained away. In context of a shower recess, a fall will direct water to a drain that has been provided. In this case Mr Daniels has provided a photograph that shows, in conjunction with the fact that he asserts in his report, that water actually flows away from the strip floor drain in the shower recess that has been provided to collect that water.
9. In these circumstances, the lack of measurement of the fall does not cause serious concern.
10. So far as the shower recess is concerned, Mr Daniels also states that there is a defect to the grated end drain in that an end is missing and has been replaced with silicone.
11. The description of this defect in Mr Daniels report is that the tiled floor does not fall to the strip drains. I have proceeded on the basis that strip drains and grated end drains are one and the same.
12. I have had regard to drawing AFC 030 revision 01, annexure 28 to the architect's affidavit which provides a layout of the ensuite bathroom. I note that there are only 2 floor drains in that space. First, the stainless steel channel grate at the rear of the shower and secondly, a floor waste under the wall mounted basin.
13. Mr Daniels' evidence relating to the shower area is as referred to above. I accept that evidence for the reasons set out above.
14. In so far as Mr Daniels report goes to the tiling outside the shower area, if indeed it relates to that tiling, his evidence is unclear on that point. I do not accept it because of the vagueness of the evidence and the fact that no measurements of the falls have been provided for that area.
15. I also reject his evidence that the waterproof membrane has failed. That evidence is really a conclusion with no supporting material.
16. It was necessary to make the above matters clear in order to deal with quantum in a proper manner.
17. Mr Daniels has assessed rectification work in the sum of $4,822.00 excluding margins and GST. Mr Brincat states that the shower floor tiles can be rectified to drain to the waste at a cost of $634.56 which allows for a tiler for 8 hours work with $300.00 of materials.
18. I note from the photograph in Mr Daniels report that there are 15 tiles which are to be removed and replaced in the shower recess being the floor tiles and the bottom row wall tiles.
19. I have formed the view that Mr Daniels' rectification methodology is excessive and most probably entails demolishing and replacing the floor tiles in the whole ensuite area. In that regard he allows for 6m² of tiles to be supplied, which is a much larger area than the shower recess.
20. For these reasons, I will find for the owners in the net amount stated by Mr Brincat, $634.56 which I find is a reasonable amount to rectify the defective fall in the tiles in the shower area. I will make allowances for preliminaries and overheads later in these reasons.

B14 En suite to Master bedroom - amount claimed $1,764.00

1. This item relates to the French doors to the balcony.
2. Mrs Shearer's evidence is that the coloured glass pane to the eastern door leaf of the French doors to the balcony was broken by the builder.
3. Mr Daniels provides an explanation for this item. Mr Brincat does not address the issue. He concerns himself with contractual matters.
4. Neither Mr Daniels nor the owners have established what it was that the builder did that was in breach of section 18B of the Act in connection with this item.
5. The builder submits that the doors were existing and that the 'wind in the eastern leaf of the doors was an existing defect'. There is no evidence cited to establish that proposition, although I accept that the doors existed in the residence and were not supplied by the builder.
6. I find that Mr Daniels' evidence does not support a finding of breach of statutory warranty by the builder. However, I accept Mrs Shearer's evidence that the coloured glass pane to the eastern door leaf of the French doors to the balcony was broken by the builder.
7. Mr Cosco denies that the builder broke the glass panes. I prefer Mrs Shearer's evidence regarding this issue.
8. Mr Daniels has estimated the net cost of the glazier's work to repair at $480.00. This cost is not contested. The builder's expert does not provide an alternative cost.
9. I will find for the owners in the net amount stated by Mr Daniels, $480.00. I will make allowances for preliminaries and overheads later in these reasons.

B15 Hot water Flow - amount claimed $3,843.00

1. This item relates to the hot water plumbing to the ensuite bathroom.
2. Mr Daniels states that there is a continuous surcharge of hot water from the hot water heater installed in the attic. He further states that there is no continuous hot water supply to the ensuite and that the installation of hot water pipes to the ensuite was inadequate.
3. Mr Daniels states that the hot water plumbing to the ensuite bathroom is not fit for purpose for the reasons stated in the preceding paragraph.
4. The builder's submissions criticize Mr Daniels as he doesn't know the reasons for the performance issues that he has identified. The warranty at section 18B(f) of the Act is relied upon by Mr Daniels. The cost of rectification is to replace the hot water unit
5. I accept Mr Daniels' evidence concerning the performance characteristics of the hot water heater installed in the attic which serves the ensuite. Although Mr Daniels cannot state the technical reasons for the performance failure of the hot water heater, that is not in my view relevant to a breach of section 18B(f) of the Act. That section provides that work and materials will be reasonably fit for the specified purpose or result. In my view the requirement to install an ensuite to the front bathroom makes it known to the builder that the installation of services for the provision of hot water will require the necessary work and supply items to supply continuous water to the ensuite.
6. Mr Brincat on behalf of the builder does not contradict Mr Daniels evidence as it relates to the issues he raises with the hot water supply.
7. The builder has not referred me to any evidence which concerns the manner in which this aspect of the building works was carried out.
8. I accept Mr Daniels evidence concerning the hot water supply to the ensuite. As a result, I find that the builder is in breach of section 18B(f) of the Act as the supply of water from the hot water system is not fit for purpose.
9. I will accept Mr Daniels' estimation of the cost to rectify this issue. There is no other evidence of rectification cost before the Tribunal.
10. I will find for the owners in the net amount stated by Mr Daniels, $2,588.00. I will make allowances for preliminaries and overheads later in these reasons.

B16 Damage to existing surface bedroom 1 - amount claimed $606.00

1. This item relates to bedroom 1. Mrs Shearer provides evidence of a general nature that tiles were damaged and went missing in relation to 'the existing fireplace'. Mr Shearer does not give evidence in relation to bedroom 1, contrary to the owners' written submissions. Mrs Shearer's evidence relates to 'the existing fireplace'. It has been cited in connection with the master bedroom and now bedroom 1.
2. Mr Daniels has provided a photograph of the fireplace in bedroom 1 which shows that tiles are missing from the hearth of the fireplace. Mr Daniels' evidence relies upon his instructions.
3. The builder's submissions are that there is no evidence about the cause of the damage.
4. Mr Cosco's evidence is denial that the builder caused the damaged as stated in paragraph 206 of his 16 August 2012 affidavit.
5. In circumstances where the owners make allegation regarding numerous areas of the residence, their evidence should relate to those areas. I am not persuaded by Mrs Shearer's evidence that there was damage to more than one fireplace. However, Mr Daniels photograph does establish that there are tiles missing from the hearth in bedroom 1. Be that as it may, there is no evidence that the builder has caused those tiles to be missing.
6. This item of the owners' claim is dismissed on the basis that there is insufficient evidence to persuade me that the builder was responsible for the damage complained of.

B17 Damage to existing Floor in bedroom 1 - amount claimed $2,005.00

1. This item of claim is similar to that stated in item B6 which relates to the master bedroom.
2. As with item B6, this item depends upon the evidence of the owners. Mrs Shearer refers to this at paragraph 94 (c), sic, of her 26 February 2012 affidavit as being the state of the residence she encountered on her return from vacation on 4 December 2009. Reference is also made in the owners' submissions to paragraphs 115 - 119 of that affidavit, although I do not find those paragraphs to be of assistance in connection with the bedroom 1.
3. Mr Shearer also gives evidence regarding this damage at paragraphs 56 (e) and 74 of his affidavit of 26 February 2012.
4. Mrs Shearer states that the timber polished floors in bedrooms 1 and 2 were damaged and stained. Both of the owners state that there was concrete spilled on floorboards in each room of the house.
5. Mr Cosco denies that the works were in the condition described by Mrs Shearer on her return from holiday. He states that some of the conditions existed before commencement of the works and some occurred after 3 December 2009. In response to Mr Shearer, Mr Cosco denies that the works referred to by Mr Shearer were carried out in the period of Mr Shearer's absence and states that the work referred to was carried out before and after such absence.
6. The owners' expert states that the staining is consistent with cement based materials having penetrated the surface grain of the floorboards.
7. The builder's expert states that the marks to the floor boards are not damage to the surface but exist under the protective coating and are therefore a pre-existing condition.
8. I prefer the combined evidence of the owners and their expert to establish that this defect was the responsibility of the builder.
9. The owners' expert has estimated net rectification costs to be $1,350.00. He provides a break up of costs. The builder's expert has stated, on an 'if found basis', that the cost of rectification will be $1,800.00 inclusive of margin and GST. There is no break-up of the builder's cost, or commentary on the owners' expert's cost.
10. I prefer the owners' expert's net estimate for the reason that it is broken down into component parts, which can be scrutinized.
11. I will find in the owners' favour in the net amount of $1,350.00. I will make allowances for preliminaries and overheads later in these reasons.

B19 Damage to existing floor hallway etc - amount claimed $1,324.00

1. This item relates to the polished floorboards adjacent to the main staircase. The item depends upon the evidence of the owners.
2. Mrs Shearer refers to this specifically at paragraph 118 of her 26 February 2012 affidavit when she states that on 31 December 2009 she saw that staining and damage to the timber floor adjacent to the main staircase that she says had occurred during the demolition and rendering of walls had not been rectified by the sanding and polishing of the floors.
3. Mr Shearer's evidence is that he states that concrete, water and building chemicals had been left on the original timber floor boards in a number of rooms.
4. Mr Cosco denies these matters.
5. I prefer Mrs Shearer's evidence because it specifically deals with the subject of the defect indicating that she actually observed the physical characteristics of the floorboards. As a result of accepting Mrs Shearer's evidence, I find that the builder was in breach of section 18B(a) of the Act by reason of the staining and damaging of the floorboards.
6. Mr Brincat's evidence on this item is dependent on Mr Zakos' defects report. Mr Brincat has estimated rectification costs on an 'if found' basis at $1,000.00 which includes margin and GST thereby reducing the real rectification cost.
7. On the basis that Mrs Shearer's evidence is accepted, I accept Mr Daniels' rectification methodology and his net estimate of rectification costs on the basis that being a slightly larger amount, it will allow for any increases in the cost of carrying out the work. It also has the benefit of being itemised.
8. I will find for the owners in the net amount stated by Mr Daniels, $892.00. I will make allowances for preliminaries and overheads later in these reasons.

B20 Hallway remedial work to crack in common wall - amount claimed $3,891.00

1. This item relates to remedial work carried out by the builder which the owners' expert says has failed.
2. The owners' expert Mr Daniels states that the new plaster to the existing wall has delaminated and the wall has cracked along the masonry substrate.
3. The builder submits that this defect is to be treated in an identical fashion to item B11, which is similar to this item. However this item does not rely on a failure to stich cracks to the masonry walls. Item B11 was found in the builder's favour based on Mr Natoli's evidence which suggested that future cracking was due to footing and ground condition issues.
4. I will find for the builder in connection with this defect item on the same basis as in item B11, namely building movement.

B21 Downstairs Bathroom - amount claimed $400.00

1. This item relates to damage caused to a new bathtub supplied and installed by the builder which on the owners' case was damaged during the period of construction.
2. It is clear from his report that the owners' expert has not viewed the bath tub in question. He relies upon the owners' evidence.
3. Mrs Shearer's evidence is that a new bathtub was placed in the in the dining area and filled with building debris. Mr Cosco does not deny this in paragraph 205 of his 16 August 2012 affidavit.
4. Neither Mrs Shearer nor the builder has identified the damage to the bathtub or the alleged repairs attempted by the builder in connection with this item.
5. In the absence of the identification of the alleged damage, there is in my view no basis for allowing the amount claimed to remedy an unidentified defect.
6. This item of the owners' claim is dismissed.

B22 Faulty Installation of sliding door to ground floor bathroom - amount claimed $1,925.00

1. The owners' expert states that the installation of the sliding door is defective.
2. In final submissions the builder states that there is no suggestion that the defect arises as a result of the work carried out by the builder.
3. There is also no evidence from the builder that it did not carry out the work in question.
4. There is a real issue about whether the builder carried out this work. The owners have not provided a factual basis for this defect item as they have with other defects as referred to in paragraph 44 of their submissions.
5. On the basis that the owners have not produced any evidence at all to establish that the builder carried out the work to install a sliding door to the ground floor bathroom and have not referred me to any such evidence, I will dismiss this item of their defects claim. The owners have not discharged their burden of proof in relation to this item.

B23 Laundry Sub Floor drainage - amount claimed $2,587.00

1. The owners' expert raises issues concerning water draining through the floor waste in the laundry. This is a plumbing issue. Mr Daniels does not raise any provision of the BCA or a relevant standard to set out what is required in the sub floor drainage work and what if anything the builder has failed to provide.
2. Nor has he established what work a builder would ordinarily perform in the provision of the relevant work in a proper and workmanlike manner.
3. I find that the owners have not discharged their burden of proof in establishing that the builder was in breach of section 18B of the Act in connection with this item.
4. This item of the owners' defects claim is dismissed.

B24 Roofing & Guttering - amount claimed $4,100.00

1. This issue relates to work carried out in the installation of the air conditioning condenser unit on the roof of the premises. Mr Daniels states that the installation of the air conditioning condenser unit on the roof has caused the roof flashings to fail. Mr Brincat states that he did not have the opportunity to consider this item. Mr Daniels' evidence regarding the failure of the roof flashings is therefore un-contradicted.
2. The builder states in its final written submissions that the work which the owners' expert alleges to be defective was carried out when he had suspended the work.
3. The issue is who was responsible for carrying out the defective work. The onus is on the owners to establish that the builder or its contractors were responsible for performing the defective work.
4. The owners do not address this issue in their final submissions. However, despite this lack of assistance, the evidence is straight forward.
5. At paragraph 142 of her 26 February 2012 statement, Mrs Shearer states that on 28 or 29 January 2010 she noticed that an air conditioning unit had been installed on the roof of the house. She further states that Mr Cosco was performing work relating to the connections between the unit and the ducting. Her evidence is not contradicted by Mr Cosco, who does however take issue with a conversation she alleges and refers to in paragraph 142.
6. Mrs Shearer's evidence is contrary to Mr Cosco's evidence that the defective work was carried out when the builder suspended the works.
7. In fact I find that Mr Cosco's evidence and the builder's final submissions cannot be sustained in the face of the evidence.
8. The evidence to which I refer is that of that of Mrs Shearer at paragraph 142 referred to above. In addition page 202 of Volume Two (i) of the bundle is one of Mr Cosco's own documents which shows that Mr Cosco and his workers were working on 28 and 29 of January 2010, thus corroborating Mrs Shearer's evidence. Further, Mr Cosco's document which was used to brief Mr Zakos in connection with the builder's quantum meruit claim, at page 34 of volume 11 of the bundle, shows that the builder installed air conditioning compressors on a skillion roof ducted to the attic and bedrooms. Mr Zakos later values the work at a sub contract cost of $12,500.00. I have also had regard to the evidence relating to the air conditioning installation which establishes that Keeley Air Conditioning Pty Ltd was sub contracted to the builder for the supply and installation of the air conditioning system.
9. I am satisfied that the evidence discloses that the builder and its subcontractor were responsible for the installation of the air conditioning condenser on the roof of the premises and were responsible for causing the roof flashings to fail. I accept Mr Daniels' evidence in this regard. I find that the work performed by the builder in installing the air conditioning condenser was carried out in breach of section 18B of the Act.
10. There is in my view no evidence of the cost to rectify the defect.
11. Mr Daniels refers to the builder's 3 November 2009 quotation as referring to 'Roofing and guttering' at a sum of $4,100.00. However I do not accept that as a cost to rectify the defective work. In my view the owners have established a breach of the Act as referred to. However they have not established the cost to rectify the defect, namely the cost to remedy the roof flashings. There is no evidence before me of such cost. Accordingly I will award the owners nominal damages of $200.00 in connection with this breach of contract.

Air Conditioning and electrical

1. The owners claim that the builder has carried out incomplete and defective work in relation to the air conditioning installation and electrical work.
2. These items are referred to in items A1 and A2 and B1 and B2 of the scott schedule.
3. The total amount claimed by the owners is the sum of $38,502.00.
4. The owners rely upon the evidence of Mr Swarts of Swarts Consulting Engineers which is contained in reports dated 15 and 16 June 2011. Mr Swarts report of 15 June 2011 relating to the air conditioning installation was amended by letter dated 9 September 2011 which amends the figures in paragraphs 6.06 and 6.08.
5. The owners' final written submissions do not address these defects or the substance of these claims. The builder's submissions dated 5 September 2014 address these matters at paragraphs 99 - 110.
6. I accept Mr Swarts as an expert suitably qualified and experienced in air conditioning and electrical matters to give opinion evidence in the Tribunal. The builder has not tendered a response to Mr Swarts' reports from a similarly qualified specialist air conditioning or electrical expert.
7. In the absence of owners written submissions which deal specifically with these items of their claim, I have had reference to their Amended Point of Claim dated 28 February 2012. Paragraph 14 at particulars 1 - 3 deal with the defective work claim.

Item B1 Installation of air conditioning system - amount claimed $21,692.00

1. This item of the owners claim relies upon Mr Swarts' report dated 15 June 2011.
2. Mr Swarts identifies the defective work that in his opinion was carried out by the builder, and the rectification cost, as follows: 1. The mounting of the outside condenser, rectification cost $9,000.00; 2. Provide a filtered outside fresh air ducted system to the internal evaporator, rectification cost $2,840.00; 3. Re-locate the fan/coil unit in the roof space to allow for 'slower bends' to be fitted, rectification cost $4,000.00.
3. Mr Swarts has allowed for a builder's overhead and profit of 25% bringing the total rectification cost to $19,800.00.
4. The information reviewed by Mr Swarts for the purposes of his report is set out in section 2.0 of his report. There is no specific reference to the documents which are relevant to the supply and installation of the air conditioning system.
5. The builder's expert, Mr Brincat, in his 15 August 2013 report agrees with Mr Swarts that the mounting of the roof top condenser requires a proper mounting. Mr Brincat values the necessary work at $920.00.
6. In considering a claim for a breach of statutory warranties in relation to the supply and installation of the air conditioning system, it is necessary, in my view, to ascertain what, if anything, the parties agreed in connection with the relevant work. I have not had the benefit of specific submissions on this matter, although the builder's written submissions state that the system was installed by Keeley Air Conditioning.
7. In considering the evidence relation to the supply and installation of the air conditioning system, I think that the first place to start is the architect's drawing AFC 011 which was provided to the builder on 26 October 2009. The drawing contains the note 'Gas powered A/C and Heating to be ducted to all rooms on the first floor'. Next is the builder's document of 3 November 2009 which was provided to the owners. It refers to 'Air conditioning & heating' at a cost of $13,200.00. At the same time, Keeley Air Conditioning Pty Ltd submitted a quote to the builder for the supply and installation of the air conditioning system. The quote related to the attic and first floor of the premises.
8. At paragraph 76 of his 16 August 2012 affidavit, Mr Cosco states that he took the Keeley Air Conditioning Pty Ltd quote to the premises on 4 November 2009 and discussed its content with Mrs Shearer. I have no reason to disbelieve this evidence. I note that this aspect of his evidence has not been contradicted by Mrs Shearer.
9. The scope of the air conditioning work that the builder was to perform was not specified by the architect in any detail. On the evidence available I find that the parties agreed that the builder would supply and install air conditioning. I find that the owners effectively agreed to the builder installing air conditioning based on the Keeley Air Conditioning Pty Ltd quotation, such agreement being reached between Mr Cosco and Mrs Shearer on 4 November 2009.
10. I will now consider the owners breach of statutory warranty claim in context of the findings that I have made regarding the parties agreement in relation to the air conditioning.
11. Mr Swarts report at paragraph 5.2 states that 'Had the existing air conditioning system been properly installed it could have serviced the upper level of the house together with the attic.' He also states that the air conditioning unit does not have the capacity, and is inadequate to service the entire residence. While this opinion may well be correct, I have not had regard to it as in my view the air conditioning system was only intended to service the attic and the first floor.
12. Under the heading the mounting of the outside condenser, apart from the issue of the mounting of the condenser, Mr Swarts advocates one of two approaches. The first is to remove and replace the unit by mounting it on a solid base and re-piping the refrigeration lines and reconnecting the electrical wiring. The second is to replace the existing unit with two single fan configured condensers to match the thermal load of the system with a proper roof mounting.
13. Mr Swarts report does not provide any basis to justify removing the condenser which has been provided and replacing it with two single fan configured condensers. I reject that approach on that basis and accept his opinion that 'Had the existing air conditioning system been properly installed it could have serviced the upper level of the house together with the attic'. I find that it is agreed between the experts that it is necessary to provide a new and proper mounting base. I also find that to do this work it will be necessary to 'remove the condenser cap off piping and disconnect electrics' at a cost of $940.00 as stated by Mr Swarts. I will also allow the sum of $840.00 to wire up the electrical power and controls as stated by Mr Swarts. I will allow the owners the net sum of $3,240.00 in relation this item. This sum is made up of $940.00, condenser cap off piping and disconnect electrics, $750.00, new and proper mounting base, $840.00, wire up the electrical power and controls, materials $500.00 and $210.00 test.
14. The sum of $2,840.00 is also claimed on the basis of a failure to provide a filtered outside fresh air ducted system to the internal evaporator/fan coil unit. The relevant paragraphs of the observations and findings in section 3 of Mr Swarts report, which are relied upon are not referred to in section 4.03 of the report which raises this issue. However, the statement in paragraph 3.06 that Mr Swarts was 'not able to locate a fresh air inlet to the fan/coil unit , it is a requirement under the ventilation code AS1668, that fresh air be provided to a closed circuit system' would appear to be that basis for the alleged defect.
15. On the basis that paragraph 3.06 of Mr Swarts' report provides the basis for the opinion in paragraph 4.03 of the report, I accept such evidence and Mr Swarts estimate of rectification costs.
16. I will find for the owners in the net sum of $2,840.00 in connection with this item.
17. The sum of $4,000.00 is claimed to re-locate the fan/coil unit in the roof space to allow for 'slower bends' to be fitted. As with the preceding defect item, the relevant paragraph of the observations and findings in section 3 of Mr Swarts report which is relied upon is not referred to in section 4.04 of the report which raises this issue. However it seems that paragraph 3.04 is the relevant paragraph which underpins this defect as referred to in paragraph 4.04. Paragraph 3.04 raises issues of the poor and unsatisfactory connection of the air conditioning ducting from the fan/coil unit and that extremely tight bends and partially reduced air flow capacities are breaches of standard codes of industry practice. While paragraph 3.04 could have been expressed in a more reasoned manner with appropriate and specific references to the codes which are said to have been breached, I nonetheless accept Mr Swarts evidence as being sufficient to persuade me that the probabilities of there being a breach of the statutory warranties in connection with this item are greater than the possibilities of its non-existence.
18. I will find in the owners favour in the amount of $4,000.00 as estimated by Mr Swarts.
19. All told I will allow $10,080.00 in the owners favour in connection with defect item B1.

Item B2 Electrical Installation -amount claimed- $5,854.00

1. This item of the owners claim relies upon Mr Swarts' report dated 16 June 2011.
2. At section 3.0 of his report Mr Swarts states that his report assesses electrical works installed and working, or partially installed and the electrical works shown on the architects drawings, but not installed.
3. In section 4 of his report, Mr Swarts states that he estimates the cost of rectification work at $4,275.00 excluding GST.
4. The section of the report headed 'Observations and Findings' addresses a number of matters in an unstructured way. Mr Swarts deals with partially installed cables, temporary cables, previous wiring work, work that was completed, damage to a fireplace and surrounding tiling in an unidentified room and a commentary on Mr Zakos' valuation of the electrical work carried out.
5. The defective work identified by Mr Swarts is: 1. Rebuild heritage fire place and tiling and floor repairs; 2. Removal of kitchen lighting and replacement with final wiring and switching; and 3. Final rewiring of the external laundry and toilet.
6. As regards the heritage fireplace I have made allowances in favour of the owners in connection with fireplaces and tiling. There is no identification of the room that Mr Swarts is referring to. However as the photograph that is in Mr Swart's report is not in the photographs to Mr Daniels' report, and since the photograph shows wiring through the fireplace, I am prepared to infer that the work was carried out by the builder and the associated damage was caused by the builder.
7. Mr Swarts has only made passing references to the kitchen areas and the external laundry and toilet. In relation to these areas the report suggests that work is required to complete the electrical work, rather than the electrical work that has been carried out being defective. For example Mr Swarts refers to 'final rewiring of the external laundry and toilet'.
8. Apart from the defective work referred to in connection with the heritage fire place, the issues that Mr Swarts refers to in paragraph 326 (b) and (c) above relate to unfinished work.
9. In addition Mr Swarts has not broken down the rectification cost of $4,275.00 between the defective items that he has referred to.
10. I would be prepared to find for the owners in connection with the heritage fire place. However as Mr Swarts does not provide an assessment of the cost of the rectification work in relation to that item, I am unable to do so as that would descend to making a guess as to the appropriate rectification cost.
11. For the reasons set out above I dismiss this item of the owners' defective work claim.

Agreed Defects

1. The parties have agreed defects B3 and B18 as regards liability and quantum. The amount of defective work in this category is $375.00.

Defective work found in the owners favour

1. In the reasons set out above the owners have been successful in obtaining orders in their favour that the builder has carried out defective work and the rectification cost is $31,212.22. I have assessed the net rectification costs exclusive of preliminaries, overhead profit and GST. I have then added those amounts on the same basis as Mr Zakos has in his quantum meruit assessment. In that way the deduction for defects will be calculated on the same basis as the quantum meruit calculation.
2. The details are as follows: Item Number Description Amount found B1 Installation of air conditioning system $10,080.00 B2 Electrical Installation Nil B3 Attic area : insulation not secured $250.00 B4 Attic Floor frame not certified Nil B5 Attic Stairs breach BCA $7,686.00. B6 Master Bedroom - damaged floorboards $1,416.00 B7 Cornice installation not aligned $259.10 B8 Damage to existing fireplace in Master bedroom $200.00 B9 Missing support and anchor to ceiling Rosetta for bedroom and hallway chandeliers $2,570.00 B10 Damage to existing mantle piece $817.00 B11 Paint and plaster failing $242.28 B12 En suite bathroom sliding door not plumb $167.28 B13 En suite bathroom to master bedroom $634.56 B14 En suite bathroom to master bedroom - French doors $480.00 B15 Hot water flow not acceptable $3,843.00 B16 Damage to existing surface to Bedroom 1 - fireplace tiles and hearth Nil B17 Damage to existing floor in Bedroom 1 $1,350.00 B18 Bedroom 2 - ceiling cornice $125.00 B19 Damage to existing floor in hallway and stair landing $892.00 B20 Hallway remedial work to crack in common wall Nil B21 Downstairs Bathroom Nil B22 Installation of sliding door Nil B23 Laundry sub floor drainage Nil B24 Roof and Guttering $200.00 Total $31,212.22 Preliminaries 15% $4,681.83 Sub- total $35,894.05 Overhead and Margin 20% $7,178.81 Sub- total $43,072.86 GST 10% $4,307.28 Grand Total $47,380.14

1. As referred to above, I have accepted Mr Zakos' valuation of the value of work carried out by the builder as $452,600.17. It is necessary to deduct the value of defective work and the amount paid by the owners from that sum. The balance owing by the owners to the builder is therefore $452,600.17 - $235,000.00 = $217,600.00 - $47,380.14 =$170,220.03.
2. I will make an order that the owners must pay the builder the sum of $170,220.03 within 14 days of the date of these reasons for decision.

Costs

1. Either party is at liberty to make a costs application in these proceedings.
2. Any costs application pursuant to section 53 of the Consumer, Trader and Tenancy Tribunal Act 2001 or regulation 20 of the Consumer, Trader and Tenancy Tribunal Regulation 2009 must be lodged in the Tribunal and served on the costs respondent within 21 days of the date of this order either attaching or referring to the documents relied upon in support of the application.
3. The costs respondent will have 21 days after the date of receipt of the costs application referred to above, to lodge in the Tribunal and serve on the costs applicant the submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.
4. The cost applicant will have 14 days after the date of receipt of the cost respondent's submissions to lodge in the Tribunal and serve on the costs respondent the submissions, if any, in reply, such submissions either attaching or referring to the documents relied upon.
5. The Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal D Goldstein Senior Member Civil and Administrative Tribunal of New South Wales 10 February 2015 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: 26 March 2015