Roof Framework above Front Patio
42 There was no issue that the roof framework above the front patio did not comply with AS 1684.4-1999 for Residential Timber Frame Construction. The defect was that referred to in para 29(d). This was a structural defect. Some "roof spread" has occurred although it is concealed by panelling. The estimated cost of installing the requisite stabilising ties was between about $300 and $600.
Expansion Joints for Tiled Floor
43 Mr Hall and Mr Capaldi agreed that to meet the requirements of AS 3958.1-1991 for the installation of ceramic tiles, expansion joints should have been provided. They were not. The cost of rectification was estimated by Mr Capaldi to be about $300. Mr Ferro gave oral evidence that such expansion joints were not required because the tiles had been fitted with an expansive rubber based glue. That evidence was given in an unresponsive answer in cross-examination. The vendors did not assert at any earlier time, either in correspondence in response to Mr Hall's reports or in their affidavits, that such expansion joints were not required because of the type of glue used. No such proposition was put to Mr Hall. I accept the evidence of both the independent experts that there was a failure to comply with the relevant Australian Standard by not using expansion joints.
Departure from Approved Plans
44 The "terms and specifications as approved by the Campbelltown City Council" referred to in SC 15 included the plans approved by the Council. The Construction Certificate was issued by a private certifier, Pyramid Building Services. The Construction Certificate provided that the work would comply with the Environmental Planning and Assessment Regulations 2000 (NSW) if carried out in accordance with the approved plans and specifications. So far as the evidence reveals, the plans, and the requirements endorsed on them, were the only terms and specifications approved by the council.
45 There were three departures from the approved plans. They were as alleged in the statement of claim and the letter of GJ Byles & Associates of 7 April 2005 set out in [23]. The departure from the plans so far as landscaping was concerned was that the landscaping plans required the planting of two rows of kangaroo paw trees at the rear of the premises and two mint bushes at the front of the premises.
46 The vendors alleged that the first two variations were agreed to by the purchasers. No such contention was advanced in relation to the landscaping.
47 Although the allegation that the purchasers had agreed to the changes was not raised in the defences originally filed by the first to third defendants, the vendors' solicitor had alleged on 15 April 2005 that the variations were all carried out with the purchasers' knowledge and consent. There was no submission that the allegation was recent invention.
48 Mr Ayshan deposed that the variations to the construction of the kitchen and laundry/toilet were agreed upon at a meeting with the purchasers on 4 July 2004. Mr Vella said that the meeting took place on about 10 July 2004. On either view, the meeting took place before agreement was reached on the amendments to the contract. If the conversation occurred as deposed to by Mr Ayshan, that conversation cannot affect the interpretation of the written contract. However, the defendants also pleaded an estoppel. No submissions were developed in relation to this plea but counsel for the purchasers accepted that if the purchasers had agreed to the variations, they could not be heard to complain of them. Mr Ayshan deposed that he had a conversation with Mr Vella to the following effect:
" Ayshan: 'I'm sure Justin made you aware of the changes that we have made to the plans.'
Vella: 'He explained some things to us.'
We then walked into where the laundry would be. The conversation then continued:
Ayshan: 'On the plans, there is supposed to be two rooms here, one for the toilet and one for the laundry. If we do it that way, there will be two doors right next to each other, opening out into the kitchen. Also, the toilet will open out onto the kitchen. This will look odd and is not a very good look. What we are doing is swapping the places of the laundry and the toilet, and making them in the same room. That way there will only be one door opening out to the kitchen, and it will be the laundry and not the toilet. But there won't be any room between the toilet and laundry to have a door lead out to the back yard, so that's coming out.'
Vella: 'Is there anything else that is changing?'
We then walked to where the kitchen was to be. The conversation then continued:
Ayshan: 'The kitchen will have cupboards all around here ( I demonstrated where the cupboards would be by outlining them with my hand ). But this benchtop ( that went around the kitchen ) will be shortened on one side. If we don't shorten it, there will be a very narrow passageway between the kitchen and the laundry, about 900mm. By shortening one side, the walkway will only be narrow on one small part.'"
49 Mr Vella denied that such a conversation occurred. I accept Mr Vella's denial. Having heard Mr Ayshan give evidence, it is clear that this is not his mode of speech. In assessing Mr Ayshan's credibility, I make full allowance for the fact that English is not his first language. His solicitor submitted that Mr Ayshan had limited education and I am prepared to accept that that is so. Nonetheless, I do not consider his evidence to be reliable. The most important matter in reaching that conclusion was his sworn evidence that he and Mr Ferro had completed all of the requirements in Mr Hall's first report except for the termite control treatment issue. That evidence was not correct. Mr Vella gave his evidence in a straightforward manner and was not shaken in cross-examination. At the time of his meeting with Mr Ayshan, the building was a shell. The building was not so laid out that the matters could be demonstrated. Mr Vella readily made concessions that are potentially significant. While some changes and additions were requested by the purchasers and were agreed to, I find that there was no discussion about, let alone agreement to, the reconfiguration of the laundry and toilet, or the alteration to the kitchen benchtop.
50 That is not to say these changes were necessarily detrimental. Mr Vella was satisfied with the kitchen layout, and had no issue with the combining of the ground floor toilet and laundry into one room or the removal of the external door from the laundry. However, neither he nor his wife had given prior approval to the change.
51 Counsel for the second and third defendants submitted that there was no departure from the approved terms and specifications because the council had approved of the variations. I do not accept that submission. The vendors' position in respect of the reconfiguration of the laundry and toilet, and of the kitchen bench, was that council's approval to the reconfiguration was not required. Mr Ferro gave oral evidence that in 2004, before the purchasers turned up, he and Mr Ayshan visited the council's development office, asked if they needed to make any submissions for amendments to the plans for "these minor internal changes", and were told they did not. Mr Ferro did not say that the council had approved the changes. Had that been the case, I would expect the vendors to have pleaded such approval and to have given evidence by affidavit of it. The purchasers would then have had the opportunity to make inquiries of the council. I would not accept Mr Ferro's uncorroborated evidence to that effect. However, Mr Ferro did not give the evidence attributed to him by his counsel.
52 I conclude that the vendors breached SC 15 by not causing the residence to be erected in accordance with the plans and specifications approved by the council in each of the three respects alleged. Whether the breaches warranted termination of the contract is a different question to be dealt with later in these reasons.
Special Condition 16
53 The vendors relied on SC 16 in the following ways. First, it was submitted for the first defendant that the alleged defects in construction had not been notified under SC 16. That is simply wrong. The defects were notified in Mr Hall's first report delivered within the period of ninety days and the purchasers required the defects to be rectified.
54 Secondly, it was submitted that the purchasers could not complain of the variations from the approved plans because those variations were not notified to the vendors within ninety days of the purchasers taking occupation as matters to be rectified.
55 I do not accept that the deviations from the approved plans were defects or faults due to faulty materials or workmanship within the meaning of SC 16. Counsel for the second and third defendants submitted that not making the laundry and toilet or the kitchen bench in accordance with the approved plans was faulty workmanship. No authority was cited in support of this submission. I do not agree. The difference between the construction and the design was not a fault in materials or workmanship. The "fault" lay in not obtaining agreement to the change from the plans. There was no fault in the materials used or in the execution of the work. These matters did not come within SC 16. Moreover, even if it could be said that it was faulty workmanship to depart from the approved plans for the construction of the laundry, toilet and kitchen bench, the failure to complete the landscaping was not faulty workmanship. It was a failure to supply the materials, that is, the trees, required by the council. In my view, that was a breach of the obligation to erect the "residence" in accordance with the terms and specifications approved by the council. The "residence" included the land surrounding the building upon which landscaping work was to be done. It was part of the curtilage of the building and an integral part of the residence. In other words, the "residence" in SC 15 included the curtilage (Sinclair-Lockhart's Trustees v Central Land Board (1950) 1 P & CR 195 at 204; Steele v Midland Railway Co (1866) LR1 Ch App 275 at 289-290; Cole v The West London and Crystal Palace Railway Co (1859) 27 Beav 242; (1859) 54 ER 96).
56 In any event, SC 16 conferred rights on the purchasers. It did not limit their rights. The purchasers were entitled to have faults due to faulty materials or workmanship rectified if they gave notice within the prescribed time. If the purchasers did not notify the vendors of such faults, they were not thereby precluded from claiming damages or from refusing to complete the contract if they were otherwise entitled to do so. In every case it is a question of construction of the individual contract whether an express clause requiring a vendor to make good notified defects is exhaustive of the purchasers' rights. But clear words are necessary for that purpose (Hancock v BW Brazier (Anerley) Ltd at 1333-1334). Special Condition 16 is not exhaustive of the purchasers' rights.
57 Thirdly, it was submitted that there was no time limit under SC 16 by which the vendors were required to rectify notified defects. Therefore, it was submitted, the purchasers could not terminate on the ground that the notified defects had not been rectified. This submission could not apply to the departures from the approved plans. In any event, as no time was specified, the defects were required to be rectified within a reasonable time. That time had passed before the purchasers gave their notice to complete. The validity of that notice was admitted on the pleadings. Moreover, the vendors made it clear before the purchasers gave notice of termination of the contract that they considered they had done all that they were required to do. They cannot now be heard to say that the purchasers could not take them at their word.
58 It follows that SC 16 does not prevent the purchasers from terminating the contract.
Residence Not Erected in a Proper and Tradesmanlike Manner
59 There was no question but that the residence was fit for habitation, notwithstanding the defects in construction. The vendors submitted that it followed that the residence had been erected in a proper and tradesmanlike manner even though there were departures from applicable mandatory building standards. In support of this submission they relied on observations of Diplock LJ, sitting as a trial judge, in Hancock v BW Brazier (Anerley) Ltd. His Lordship said (at 1327):
" ... I think that it is clear from the judgments of the Court of Appeal in Perry v Sharon Development Co Ltd [1937] 4 All ER 390, which I have already cited, that there is no substantial or significant difference between the formulation of the warranty that the house should be built of materials suitable and fit and proper for the purpose and the work should be carried out in a proper, efficient and workmanlike manner, and the alternative way of stating it, that the house is habitable and fit for humans to live in. "
60 That passage was cited without apparent disapproval in Sterling Estates Development Corp Ltd v Malouf where McColl JA (at 695-696 [69]):
" Unlike Diplock LJ, Lord Denning MR did not elide the formulation of the warranty, but little turns on this. Even Diplock LJ acknowledged (at 1327) that the different ways in which the warranty was expressed were merely alternative formulations rather than reflecting any substantive difference. "
61 Whilst one would expect a house built of suitable and proper materials and in a proper and workmanlike manner to be fit for human habitation, it does not follow that if a house is fit for human habitation it has necessarily been constructed with proper materials and in a proper and workmanlike manner. There may be defects due to poor materials or workmanship that do not render the house uninhabitable.
62 In Perry v Sharon Development Co Ltd [1937] 4 All ER 390, the Court of Appeal did not equate such warranties. Lord Greene MR held (at 393) that on the facts as found by the trial judge in that case, the vendor of an uncompleted house who had promised to complete the construction was obliged to put it into "the contemplated condition of complete finish and readiness for occupation". Romer LJ said (at 395) that there was an implied obligation that the house be fit for human habitation. McKinnon LJ held (at 396) that there was an implied undertaking that the building work be done properly. As noted earlier in these reasons, in Miller v Cannon Hill Estates Ltd, the implied warranty was expressed as one that the residence be constructed using suitable, or fit, or proper materials, and in a proper, or efficient, or workmanlike manner. When Diplock LJ said in Hancock v BW Brazier (Anerley) Ltd that there was no substantial difference between the formulations of the judges forming the Court of Appeal in Perry v Sharon Development Co, or between those formulations and the formulations of the warranty in Miller v Cannon Hill Estates Ltd, I do not understand his Lordship to have said that all of the formulations of the warranty should be read down to the lowest standard: that the residence, when constructed, be fit for human habitation. To the contrary, I take his Lordship to be saying that the warranty as formulated by Romer LJ in Perry v Sharon Development Co Ltd was not intended to express a different standard from that formulated by the other judges in that case, or from that formulated in Miller v Cannon Hill Estates Ltd. Thus, Diplock LJ construed an express term that the house be erected in accordance with the plan and specification, which in turn referred to the use of "hardcore" material, to require that the hardcore selected be fit, proper and suitable for its purpose (at 1328). In any event, in the Court of Appeal, Lord Denning MR, with whom Danckwerts and Salmon LJJ agreed, formulated the implied warranty in cumulative terms (at 1332) as follows:
" ... when a purchaser buys a house from a builder who contracts to build it, there is a threefold implication: that the builder will do his work in a good and workmanlike manner; that he will supply good and proper materials; and that it will be reasonably fit for human habitation. "
63 The present case concerns the construction of an express term. In my view, the obligation to erect the residence in a proper and tradesmanlike manner is not to be read down as meaning merely to erect a residence which is fit for habitation.
64 The defendants claim support for their submission from the judgment of the Court of Appeal in Sterling Estates Development Corp v Malouf. There, the Court of Appeal had to construe a substantially different term, namely the definition of a "Special Fault" which was defined to mean:
" 'Special Fault' means a fault or defect in the property which: