Attachment Two
Item No. Item Finding Amount Allowed
At the hearing there were two issues with this item:
• the effect of the Guide to Standards & Tolerances; and
7.1 Internal Doors The builder was to install the internal doors in accordance with the National Construction Code (ie former BCA) • whether this item was defect apart from the Guide. $1,058.00
The Guide is merely a guide but in the absence of any statutory code, regulation or contractual provision (or any other provision governing this issue) the Guide suggests that a workmanlike builder would adopt the guides therein.
In any event, I am satisfied on the photographic evidence and the evidence of the applicant that these are defects. I allow the amount claimed.
7.2 Wall Tiling I find that the homeowner selected the manner in which the tiles were to be laid, and that was, in relation to the rectangular tiles, the long edge was to be horizontal, the short edge vertical. The rectangular tiles were not laid in accordance with the contract. $0.00
The builder was to install the wall tiling in accordance with the contract documents The issue then is, as submitted by the respondent, is it reasonable to find that this defect should be rectified? This would require stripping the relevant bathroom to the walls, and rebuilding, at a projected cost of almost $12,000.00. For the reasons set out above in relation to the Bellgrove v Eldridge submissions, I find that it is not reasonable to rectify this defect. The tiles otherwise are installed in a workmanlike fashion, indeed in my opinion to a high standard, and are fully effective in their function. I do not allow this claim.
7.3 Timber floating floor Both experts agree this is not a defect. $0.00
The builder was to install the timber floating floor in accordance with the contract documents
7.4 Hot Water System Both experts agree the builder is not responsible for this item. $0.00
The builder was to install the Hot Water Service in accordance with the contract documents.
7.5 Kerb & Gutter Lay backs The evidence in regard to this item is somewhat unclear. It is alleged the builder, in constructing the kerb and gutter layback, excavated a portion of the roadway immediately adjacent to the new kerb and layback, and left it unfinished in the sense that the area was not refilled and smoothed and the asphalt relaid. $1,090.91
The builder was to install the driveway laybacks in accordance with the variation to contract documents. The builder suggests that on the basis of the documentary evidence provided, this was not a cost to the builder or the owner, because of the ambiguity of the evidence which may suggest the Council would accept responsibility for this minor piece of work. I do not agree with that submission. In my opinion the evidence suggests that the owner was to contact the Council who would decide if the work was to be done. The Council offices would make the decision, not do the work themselves. I allow this item based on the tax invoice provided.
7.6 Builders Waste I agree with the owner's expert that if concrete waste was left on site this would be a breach by the builder. However, the evidence suggests both that the builder did remove at least some of that waste on the basis of the affidavits provided by the builder, there was no waste left on site. The makers of the affidavits were not required for cross-examination and I accept their evidence but I note that is not the end of the matter. The owner has provided evidence, including a reference in the Certificate of Practical Completion, that further concreting was to be done. This related to the kerbing and guttering work and the owner alleges waste was left on the site after that work. The builder does not refer to this evidence. I allow the claim. $250.00
As per the contract documents, all builders debris is to be removed from site at the time of practical completion.
7.7 Under Ground Water Tank The evidence provided by Mr. Worthington for the builder clearly demonstrates there is access into the water tank (which is the only defect mentioned by Mr. Sim for the owner). Not allowed. $0.00
The builder was to install the Under water tank in accordance with the contract documents.
7.8 Survey Both experts agree there should be no allowance for this item. $0.00
The builder was to install the drainage system in accordance with the contract documents.
Ensuite As explained by the owner in the hearing, this item refers to the original plans (about which there is no dispute) which show a fixed glass panel forming part of the "front" of the shower recess, and a hinged glass door forming the remainder of the front of the shower recess. As built, the builder has cut the fixed panel so that it is narrower than drawn, then installed the hinged door, then installed a further, narrower fixed panel on the other edge of the door and fixed to the tiled wall. There are thus two fixed panels, one on either edge of the door as compared to the drawings which show only one fixed panel.
7.9 Shower Screen The builder was to install the shower screen to the ensuite in accordance with the contract documents. Mr. Worthington for the builder suggested in cross-examination that the builder has reasonably altered these works as described and that the function of the door and front of the shower recess is fit for purpose and indeed is improved because the narrower "new" panel can be properly sealed against the tiled wall which, as always, will have some slight irregularities between tiles. $0.00
The owner criticised this work because, he suggested, the narrower fixed panel would allow more water to splash out of the shower recess into the rest of the room. He conceded he had no evidence for that submission which in any case appears to ignore the fact that there are now two fixed panels which may operate as well as one wider fixed panel in keeping water from splashing out. I do not allow this item as in my view the evidence suggests the current installation is fit for purpose and it would not be reasonable, pursuant again to the decision in Bellgrove v Eldridge, to allow the cost to remove a perfectly effective and competently installed door and fixed panels simply because the builder has installed the door in a different fashion to the drawings but in my opinion in a more effective fashion, as per Mr. Worthington's opinion.
Air Conditioning Duct This is another item in which the evidence is rather unclear. Mr. Sim for the owner suggests that the builder omitted to instal one air conditioning outlet. Mr. Worthington states that an extra air conditioning outlet was installed (albeit at a later time).
7.10 The builder was to install the Air Conditioning in accordance with the contract documents. The evidence provided by the applicant suggests indeed that an extra outlet was installed although there were complaints about that work and the disturbance to a tenant. $0.00
In any case, the claim is that an extra outlet was to be installed and I find it was. I do not allow this claim.
Powder Room Sink This item, similar to the rectangular tiling and the shower recess door, concerns a conceded failure by the builder to install the sink in the exact centre of the vanity surface (that is, midway along the length) but has installed it about 130mm off centre. The applicant claims this is
7.11 The builder was to install the Powder room sink in accordance with the contract documents The evidence of the builder's expert is that as installed the sink is unsymmetrical in relation to the cupboard doors underneath. The builder submits that what is unsymmetrical to one observer may be not unsymmetrical to another observer. $0.00
I have carefully viewed the photographic evidence in this regard. In my opinion the sink does not look defective or out of place or unsymmetrical. It sits naturally in relation to the cupboard doors beneath. Although the applicant suggested the lighting may be affected there is no evidence to this effect. The sink is otherwise quite fit for purpose. This is another item in which although it is conceded to be installed not as shown in the drawings, it would not be reasonable to order re-installation of a perfectly serviceable unit for that reason alone.
7.12 Granny Flat Kitchen Both experts agree there should be no allowance for this item. $0.00
The builder was to install the Kitchen in accordance with the contract documents
7.13 Bathroom Vanity It is agreed there is a defect in this item. The owner seeks an amount of $1,022.50 to replace the plinth, the builder offers to return and replace at no cost to the owner. $0.00
The builder was to install the Bathroom Vanity in accordance with the contract documents The owner's expert has allowed for the cost of removing and replacing tiles as part of the re-installation. The builder's expert suggests this is not required as the vanity was installed originally after the tiles were installed. He was not cross-examined on that point and I accept his evidence. In my opinion the most reasonable option and the only one I can decide on the evidence available is that the builder be ordered to return and replace the plinth at no cost to the owner at a mutually suitable time within 60 days of the date of these orders.
This is the single biggest item in the owner's claim by a considerable margin.
I have no doubt the owner had these two dwellings constructed for the purpose of renting them out. I accept the evidence of the two residential tenancy leases at face value, that is, that the two dwellings were leased for the periods and at the weekly rentals shown therein.
The issue is brought by the owner as a contractual issue: the period of the contract is 34 weeks, the works were not completed within 34 weeks or within any extended period calculated by reference to agreed extension of time claims, and therefore the owner is entitled to damages for such extra time, in this case being rent foregone.
However, just as the contract period of 34 weeks and the provisions for extensions of time to be claimed are contractual, so is the issue of damages. Clause 30 of the Contract states:
Clause 30 Liquidated Damages
30.1 If the building works do not reach practical completion by the end of the contract period the owner is entitled to liquidated damages in the sum specified in Item 13 of Schedule 1 for each working day after the end of the contract period to and including the earlier of:
(a) the date of practical completion;
(b) the date this contract is ended; or'
(c) the date the owner takes possession of the site or any part of the site.
Item 13 of Schedule 1 "Particulars of Contract" is struck through and initialled in the copies of the Contract before me.
As I noted above, I accept the owner had these dwellings constructed for the purpose of renting them out. It is not difficult to infer that Item 13 of Schedule 1 was struck through for that reason: the owner intended not to prevent a possible claim for loss of rent or rather to limit such a claim by inserting an amount in Item 13, in the possible circumstances of a delay in completion of the works. I find both parties agreed to this amendment of the contract.
Therefore, the owner is entitled to bring a claim for damages as part of this application. I further note it was not disputed by the builder that this was a valid claim under the contract although the method of calculation and the probative value of the evidence was disputed (at least in submissions in regard to the latter).
It remains to calculate the reasonable amount of such damages.
7.14 Loss of rent claim The owner starts by asserting a weekly loss of $2,040.00 based on the actual weekly rentals obtained from leases entered into on 03 January 2014 and 18 January 2014 respectively, on the assumption that similar leases and rentals could have been achieved at any time prior to those dates as soon as practical completion was reached. I interpret the owner's calculations and submissions in that way, as the owner commences calculating the delay from the date 34 weeks after the works commenced (being the contractual contract period, such date being defined as the date of practical completion in the Contract. $8,742.86
The owner then states that the period from the contract date of 16 November 2012 to the "disputed" date of practical completion, being 24 September 2013, is 45.5 weeks - but this period is not otherwise relevant to the calculations. The owner submits the relevant period is to the date the builder supplied certifications "required to achieve occupation", being 20 November 2013, which was 53.5 weeks. Completion of the works was therefore delayed by 19.5 weeks (being 53.5 weeks less 34 weeks). The builder claimed (and it appears the owner agrees was entitled to claim, under the contract) delays of 5.2 weeks which, subtracted from the actual delay of 19.5 weeks is 14.3 weeks (although the owner, or the owner's expert, it is not clear, calculated the resulting delay, using the same figures as those above, to be 13.8 weeks: see the scott schedule). On the owner's calculations, this amounts to a total of $2,040.00 x 13.8 = $28,152.00. On my calculations, this would be $2,040.00 x 14.3 = $29,172.00.
The builder refutes this claim by submitting that the completion date was calculated by it to be 09 October 2013, that practical completion was achieved prior to that date (being 24 September 2013) and therefore there was no delay.
Turning to consider the documentary evidence, I find as follows.
It is necessary, as always, to determine what the contract actually provides. Clause 8 of the contract states that the builder is to commence the building works within 20 working days after the builder receives all necessary approvals etc. or the owner has satisfied all the requirements of Clause 4. That clause is the "Essential Matters" clause and in its terms does not apply to these proceedings. The evidence discloses that the owner was to demolish the existing building on the site and that the demolition was accomplished on 14 December 2012. That is the date the builder has nominated as the "start of contract" in its start/completion date calculation used to calculate the completion date of the contract (described as the "contact obligation date for completion") and the date of practical completion of the contract.
The contract does not itself refer to the owner demolishing the existing building (or at least I was not taken to any such reference) but Clause 11, "Site Possession and Access" notes that the owner is to give the builder exclusive possession of the site to carry out the building works. In my opinion, that clause cannot be complied with until the owner has completed the demolition which did not occur until 14 December 2012 and therefore I accept that date as the start of the contract, not the date submitted by the owner, being 16 November 2012 (the date the contract was signed).
Next, applying the 20 working days period to that date of 14 December 2012 to give the date the builder must commence the building works, the builder has calculated that date to be 11 January 2013 which I accept is correct. Clause 8.2 of the contact specifies that that date is the date the contract period commences.
The next calculation is to apply the contract period of 34 weeks to the date the contract commences, which is 06 September 2013. The builder has claimed delays amounting to 24 working days, including 5 public holidays, 5 wet days and 14 days relating to the "industry shutdown" over the 2012/2013 Christmas period. I agree with the holidays and the wet days, but the shutdown days require further consideration. As I have noted, the contractual commencement date has been calculated to be 11 January 2013. 14 working days from and including that date is 04 February 2013 (allowing for the Australia Day public holidays).
Clause 9.1(j) of the Contract specifies that the industry shutdown is reason to request an extension and that is "a 5 week period commencing on or about 22 December in each year". On my calculations, for the 2012/2013 year that period would commence on Monday 24 December 2012 and finish on 25 January 2013. The public holidays for Christmas and Boxing Day in 2012 should not be double counted in the industry shutdown period, in my opinion. On that basis, I calculate the number of working days between 11 January 2013 and the end of the shutdown period, not including 25 January 2013 which was a public holiday for Australia Day, is 9 and the new working year should have started on 28 January 2013.
In my view, therefore, the builder is entitled to an extension of 9 days for the shutdown period, and a total of 18 days for that period, plus 5 wet days and 4 public holidays. Adding 18 working days to 06 September 2013 gives the date 02 October 2013. I find that is the contractual completion date.
The next issue concerns the actual date of practical completion. The builder's "Contract Start/Completion Date" document (which I should note was prepared on 04 August 2014 and is not contemporaneous with the contract) shows the practical completion date to be 24 September 2013 and of course is not a calculated date but is the actual date on which the builder claimed the works had reached practical completion and a Notice to that effect was given to the owner.
The owner states that practical completion should not be found to have occurred until the date the builder supplied certifications "required to achieve occupation", being 20 November 2013, as noted above. I do not agree with that submission. I find "practical completion" to be as defined in the contract:
"practical completion" means when the building works are complete except for minor omissions and defects that do not prevent the building works from being reasonably capable of being used for their usual purpose;"
In my view the dwellings are not capable of being used for their usual purpose without a hot water service. The evidence in that regard is not clear as to actual date the hot water service was ready to use. The owner's expert suggested it was installed on 01 November 2013 but was found to be "missing" (read "stolen") two days later. Both experts accept the builder was not responsible for that loss. I therefore find practical completion was not reached until 01 November 2013. The obligated completion date as calculated above was 02 October 2013, a delay therefore of 4.3 weeks. At a weekly loss of rent of $2.040.00, I calculate the total loss to be $8,742.86.
Total $11,141.77