Betta Build Group Pty Ltd v El Baba

Case •

[2019] NSWDC 331

•

17 July 2019

No judgment structure available for this case.

District Court


New South Wales

Medium Neutral Citation: Betta Build Group Pty Ltd v El Baba [2019] NSWDC 331
Hearing dates: 3 – 7, 11, 21 June 2019
Date of orders: 17 July 2019
Decision date: 17 July 2019
Jurisdiction:Civil
Before: Abadee DCJ
Decision:

See paragraph 328

Catchwords:

BUILDING AND CONSTRUCTION – construction works for residential dwelling – whether breach of statutory warranties under Home Building Act 1989 (NSW) – whether works defective or incomplete.

 

DAMAGES – whether Bellgrove v Elridge measure of damages applicable – relevance of sale of dwelling to purchaser – whether scope of rectification works as proposed by home owner’s building expert reasonable and appropriate.

  PRACTICE AND PROCEDURE – referral of issue of costs of rectification to referee.
Legislation Cited: Home Building Act 1989 (NSW)
Cases Cited: Bajic v Paraskevopoulo, (New South Wales Civil & Administrative Tribunal, Senior Member Charles, 22 May 2018)
Bellgrove v Elridge (1954) 90 CLR 613
Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248
Browne v Dunn (1893) 6 R 67
Director of War Services Home v Harris (1968) Qd R 275
Home Owners of Strata Plan 80458 v TQM Design & Construct Pty Ltd [2018] NSWSC 1304
Hyder Consulting (Australia) Pty Ltd v Wilh Wilhemsen Agency Pty Ltd [2001] NSWCA 313
Jones v Dunkel (1959) 101 CLR 298
P & M Kaye Ltd v Hosier & Dickinson Ltd [1972] 1 All ER 121
Pisano v Dandris [2014] NSWSC 1070
Tabcorp v Bowen Investments Pty Ltd (2009) 236 CLR 272
The Home owners – Strata Plan No. 66375 v King [2018] NSWCA 170
Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253
Wheeler v Ecroplot Pty Ltd [2010] NSWCA 61
Willshee v Westcourt Ltd [2009] WASCA 87
Category:Principal judgment
Parties: Betta Build Group Pty Ltd (Plaintiff)
Mr El Baba (Defendant)
Representation:

Counsel:
Mr D Thomas (Plaintiff)
Mr M Klooster (Defendant)

  Solicitors:
Sage Legal (Plaintiff)
G&S Law Group (Defendant)
File Number(s): 2018/256941
Publication restriction: Nil

index

THE BUILDER’S CLAIM

Mr Rahme’s primary affidavit

Mr El Baba’s affidavit in response

Expert evidence on quantum of works performed by the Builder

Expert evidence on delay damages

THE HOME OWNER’S CLAIM

Mr El Baba’s evidence

Mr Rahme’s evidence in response

Mr Rahme’s first affidavit

Mr Rahme’s second affidavit

Mr El Baba’s evidence in reply

Evidence of the sub-contractors

Moses Gea Gea

Simon Semaan

Chadi Bejjani

Rida Tawk

Jeffrey Azzi

Mansour Tarabay

EXPERT EVIDENCE ON DEFECTS & SCOPE OF RECTIFICATION WORKS

The experts

Overview of evidence on defects

Mr Shilson-Josling’s opinion on defects & recommended rectification

Mr Coombes’ response on defects

Concurrent evidence of Shilson-Josling & Coombes

CONSIDERATION

Credit

Mr Rahme

Mr El Baba

Messrs Bejjani, Tawk, Tarabay, Gea, Semaan, Azzi

Statutory provisions and principles relating to claims for damages for breach of statutory warranties

Summary of the statutory provisions

Agreed principles

Other principles regarding rectification

Analysis of builder’s claims

Quantum meruit

Delay damages claim

Analysis of home owner’s claim

Whose expert evidence should be preferred?

General findings

Jones v Dunkel inference for failure to call Mr Yassine?

Aspects of Bellgrove Principle

Defects & scope of rectified works

Quantifying costs of rectification of works

Home owner’s claim for overpayment to builder

SUMMARY & ORDERS

Judgment

INTRODUCTION

  1. By this proceeding, the plaintiff and cross-defendant (‘the builder’) brings two claims for damages against the defendant (the ‘home owner’), who at all material times, was the owner of property located at Bankstown (‘the property’). After entering into a contract with the home owner on 6 August 2015 for construction works, for the fixed price of $767,000, the builder performed works on the property from October 2015 to February 2017; for which it issued payment claims and received monies totalling $531,479. Essentially, the construction works comprised demolishing existing improvements and the construction of a new duplex on the property. The contract set out six stages for payment of the works including the 5% deposit payment. In March 2016, prior to completion of the works, and shortly before the commencement of stage 6, the builder was locked out of the site following the home owner’s termination of the contract.

  2. The builder’s first claim is a claim for work done, whose amount is to be assessed on the basis of a quantum meruit, being what is fair and reasonable. In this respect the builder claims the sum of $177,023.65. The builder’s second claim is for “delay damages” during the pendency of the contract prior to its termination. In this respect the builder claims the sum of approximately $31,020. The aggregate quantum of the plaintiff’s claim is thus $208,043.65, plus interest.

  3. The home owner brings a cross-claim against the plaintiff (cross-defendant) for the cost of rectification works which it says followed after the builder breached several statutory warranties implied in the contract by the Home Building Act 1989 (NSW) (the ‘Act’). He says, and it is not disputed, that he paid on account the sum of $513,890 under the contract.

  4. The home owner subsequently engaged a remedial builder to carry out some rectification works and paid that builder the sum of $223,500, for “defective works,” and $226,500 for “incomplete works”. In total, there are 29 items of alleged defective work, of which 15 have been rectified by the remedial builder.

  5. The home owner seeks, by way of damages for alleged breach of the statutory warranties, the costs of rectification. He also makes a claim for overpayment of monies paid to the builder.

  6. The home owner has identified the issues arising from its cross-claim as consisting of whether the home owner has established each of the 29 items of defective works; what is the reasonable and necessary rectification costs for each item of defective work that is established; what is the value of the works carried out by the builder under the contract and whether the builder was overpaid.

  7. In its defence to the cross-claim, the builder contends that the cross-claim does not reflect the fair and reasonable value of any damage suffered as a result of defects. There is also an anterior argument as to whether the defects were as asserted by the home owner and the scope of works alleged to be necessary to rectify them are compensable if they do not affect the value of the property.

  8. The property was eventually sub-divided into two dwellings. Both dwellings have subsequently been subject for contracts for sale. For one of those, the contract for sale has been completed (dwelling one) for a sale price of $1.048 million. For the other (dwelling two), completion of the sale (for a contract price of $1.1 million) is apparently imminent.

THE BUILDER’S CLAIMS

  1. The plaintiff called evidence from Mr Ray Rahme, sole director of the plaintiff, as well as several sub-contractors. Mr Rahme affirmed two affidavits (14 September 2017 and 23 February 2018), the latter one being in response to the home owner’s cross-claim.

  2. Much of what Mr Rahme said in his affidavits was not disputed. His cross-examination was relatively brief having regard to the scale of the issues (particularly the question of the defectiveness of the works) in question. What follows is his evidence that, to a large degree, was not contested.

Mr Rahme’s primary affidavit

  1. Mr Rahme is a licensed builder (and qualified carpenter) and has been in the construction industry for over 20 years. He has built over 100 houses plus over 200 residential units for other companies.

  2. The builder took possession of the site on or about 24 November 2015. Mr Rahme said that at the time that the builder took possession the home owner did not have a construction certificate. This was only granted on 3 March 2016.

  3. Mr Rahme explained that he makes payment claims on the basis of milestone payments; not monthly percentage payments. He said that in this case he submitted and received payment for milestones 1 to 4 inclusive. He said that the builder had not been able to submit a payment claim for milestone five because it had not yet reached completion of the milestone: it was necessary for him to complete a range of things including but not limited to: the installation of two internal staircases; waterproofing to wet areas, tiling, kitchen fitout, floor coverings, door jams, hydraulic services fitout, mechanical services fitout and electrical services fitout. He said that the builder had barely commenced work for milestone number six. There were also external works that needed to be completed for milestone five.

  4. Under cross examination, he was asked about waterproofing to wet areas being one of the things that had to be completed to achieve milestone five. Mr Rahme was referred to his supplementary affidavit which was (responsive to the cross-claim) where he said in a number of instances that waterproofing had been completed. Mr Rahme accepted that it was not entirely accurate to say in his first affidavit that waterproofing needed to be completed. In re-examination, however, Mr Rahme clarified that it was the external areas of waterproofing that needed to be completed and only one internal area.

  5. In relation to milestones 1 to 4 inclusive, Mr Rahme believed that work could be done for the defendant purely on verbal agreements. He referred to a number of verbal variations including the redirection of an easement under the property; and the front face of a balcony that was agreed to be tiled instead of rendered. In his evidence in chief, Mr Rahme explained that this particular matter arose because there was no drainage and the home owner did not wish to pay for an additional drain. The home owner agreed to the builder putting tiles on the front face. He said he was also required to install some cladding on the front-left-hand side of the dwelling.

  6. Under cross-examination, Mr Rahme was referred to the contract and, in particular clause 14, which stipulated that variations were to be in writing and signed by the home owner. Mr Rahme accepted that in relation to the variations referred to in his primary affidavit, none of them were at any time signed. In relation to the tiling of the front face of the balcony it was put that the home owner never requested him to change the front facade from the designs. Mr Rahme could not recall the date when he was supplied such instruction but thought it might have been after the lock-up stage (possibly in 2016). This was, Mr Rahme said, in a context where there were regular verbal communications. It was put that the reason the variation was not in writing was because it was not requested. It was put that in so far as the change to the front facade was concerned, the Council might be interested in such change. Mr Rahme responded that there was a problem in the plans and specifications which necessitated the change. In answer to that, it was put that if there was such a problem there was nothing to stop Mr Rahme recording it in writing. It was also put to him that he understood that the home owner’s complaint was that the bulkhead for the pipes was too low. Mr Rahme explained that there was a problem with the plans that had been prepared on the home owner’s behalf. But it was put that the reason he changed the cost of the bulkhead was that it was cheaper. It was also put that he did not have regard to the construction certificate when he changed it. Mr Rahme denied both propositions. Generally, it was put that for each and every oral variation that he claimed, the home owner had never agreed to any of them. It was put that the home owner ensured that most communications were put in writing. Mr Rahme said that only some of them were. It was put that all of the oral variations claimed by Mr Rahme were inserted only to explain the occurrence of non-compliance with plans and specifications. This was denied. In re-examination, he said that through his entire period of works there were a lot of verbal, or handshake agreements; and this applied also to all the subcontractors he had used.

  7. When he received a letter (a breach notice) on behalf of the home owner dated 23 November 2016, Mr Rahme said he became concerned about the home owner’s intentions, capacity and commitment to completing the project. When he considered the attachments to that letter, as well as the letter of 28 November 2016, he believed that all of the alleged defects were either incomplete works, simple fixes of which he had previously explained to the home owner, or something the home owner and he had discussed and had reached agreement about.

  8. On 30 November 2016, he sent claims for extension of time (EOT) and notices of dispute to the home owner. The claims for extension of time included a claim for delay costs.

  9. Although he made reference in his primary affidavit to no less than seven EOT claims (on 30 November, 13 & 21 December 2016 and 20 March 2017), ultimately the builder’s claim was limited to the period 6 August 2015 to 24 December 2015, a period of 141 days. The reason that was given for this EOT was a failure by the home owner to provide evidence of capacity to pay. In estimating the quantum of his EOT, Mr Rahme used the rate of $200 per day. No basis was given for this figure in his affidavit. The selection of this rate was challenged under cross-examination. Mr Rahme said it represented between $75-85 per hour, but it was put that there was no indication of expenses of $200 per day. He had not explained what work was done, and what types of costs were incurred, in the period from 6 August until 24 November 2015 when the builder took possession of the site. Further it was not until 30 November 2016 – nearly one year later - that the builder brought this claim to the notice of the home owner. Mr Rahme said that although he believed that he had a right to bring such a claim as at 24 December 2015, he had no intention of bringing such a claim at that point. There was no documentation, up until 30 November 2016, which asserted or proved such claim. Mr Rahme said that, as a builder, he tried to work with the client. It was put that this claim was fabricated. Mr Rahme denied this. In re-examination, Mr Rahme reiterated that he did not bring his first EOT because he wanted to keep good relations with the client.

  10. Mr Rahme also makes claim in respect to the unpaid costs of engaging subcontractors in relation to the completion of milestone five. The detail is set out in paragraph 50 of Mr Rahme’s primary affidavit. These total approximately $177,023.65 (incl GST). They were notified to the home owner in a letter dated 20 March 2017. Mr Rahme was not challenged in relation to these amounts.

Mr El Baba’s affidavit in response

  1. Amongst other things, in his first affidavit sworn on 16 November 2017, the home owner, Mr El Baba, responded to certain matters in Mr Rahme’s primary affidavit. He said that payments made by him were on account only. He denied entering into any verbal agreements; or instructing the builder to divert from the plan specifications. He denied ever discussing or agreeing to the builder fixing defects at a later stage; indeed he asked the builder repeatedly to fix the defects immediately and to comply with its obligations under the contract. Since the contract documents he prepared were designed to be a complete set of instructions, he said there was no need for him to provide any oral instructions at any time. He says that at all times he had been fully funded and able to pay the entire contract price.

  2. Under cross-examination, it emerged that the sub-divided dwellings at the Bankston property were both the subject of contracts of sale; and, in both cases, the sale price was more than $1 million. Curiously, although a contract was entered for the sale of dwelling two in February 2018, completion had still not occurred by the time of the trial. It was also curious that the purchaser for this property was Mr Yassine, who performed the remedial works after the builders contract had been terminated in March 2017. Mr El Baba accepted that it was always his intention to sell these properties for profit. Other features of his cross-examination included his evidence that:

  1. for the duration of the contract, he attended the site regularly, every 3 to 4 weeks and sometimes had his interior designer attend;

  2. he often spoke to Mr Rahme and when he was not happy with the general progress, his practice was to discuss things and then put them in writing;

  3. although he did not consider having agreed to any verbal variations, he had in fact made two payments in relation to verbal variations. Mr El Baba believed he had no real choice but to do so;

  4. although he had now completed or (in relation to dwelling two) exchanged contracts for sale, he had not rectified many of the items of defective work claimed on his behalf. His explanation for this was that he did not have the funds; although he accepted that he did not explain this incapacity in his earlier evidence;

  5. he was challenged on his compliance with a notice to produce when, at the point of informally producing documents, he withheld production of the contract for sale in relation to dwelling two whilst, at the same time, informally producing a letter from his real estate agent, Mayflower Real Estate, which letter suggested that the property was still on the market. The contract for sale was only produced at the point when the notice to produce was formally called upon during the trial.

  6. the reason for the current non-completion of the sale of one of the two dwellings was a financial arrangement with his bank. It was put to Mr El Baba (and denied by him) that the reason for the delayed completion of the sale was to try to ensure that the transaction would not come to light at trial;

  7. it was put to Mr El Baba, and he denied, that he failed to complete the rectification works in relation to the project because he considered them uneconomical or unnecessary to fix;

  8. it was put to him that his evidence that he did not enter into two verbal variations (beyond the agreed scope) was untrue because he had paid monies, on at least two separate occasions arising from verbal variations. Mr El Baba explained that he paid these amounts so as to avoid legal dispute.

Expert evidence on quantum of works performed by the Builder

  1. The builder relied upon the evidence of Mr Peter Lee, in his report dated 9 May 2018 (Ex G). Mr Lee is a quantity surveyor of the firm JRQS Pty Ltd. Having graduated with a Bachelor of Building degree (UNSW) in 1989 he has had approximately 30 years of postgraduate experience in building construction. He is an Associate member of the Australian Institute of Quantity Surveyors. He has provided numerous expert reports on rectification works and cost estimation. He is experienced in residential building construction, including duplexes.

  2. Mr Lee’s report is divided into two sections. The first concerns his quantification of the builders’ claim for unpaid money. The second section concerns his response to the home owner’s expert evidence (from Mr Shilson-Josling) relating to the costs of rectification works.

  3. Mr Lee inspected the site on 16 February 2018. He observed that the buildings were already completed, including the external works, landscaping and driveways. Except for the brickwork, most other alleged defects were not visible; having been either concealed or addressed.

  4. Mr Lee’s indicative cost estimate of the value of the outstanding works to be completed by the builder was in the order of $271,092 (incl GST). The remedial builder’s (Mr Yassine) actual cost to complete the outstanding works was $226,500 (incl GST). Mr Lee regarded the remedial builder’s actual cost to complete the outstanding works was ‘not unreasonable’.

  5. Taking that sum of $226,500 away from the amount of the contract price ($767,000) yields the sum of $26,500 (Ex G, Section H, par 3).

Expert evidence on delay damages

  1. Mr Lee noted that there was no agreed rate for holding costs. He regarded the $200 daily figure selected by Mr Rahme as being not unreasonable. Having regard to a project of this nature he thought that a daily holding cost of $200-$500 was not uncommon and would not be unreasonable. Beyond that, Mr Lee did not have sufficient information to provide further comment on the delayed damages claim.

THE HOME OWNER’S CLAIMS

Mr El Baba’s evidence

  1. Mr El Baba swore two affidavits (16 November 2017 and 6 May 2019). In his first affidavit, he explained that he had not previously renovated or constructed a property; or worked in the building industry. He said he purchased the subject property in 2014 and had made no improvements to it.

  2. He obtained development consent from Bankstown Council for alterations and additions on 16 April 2015. Construction plans were prepared by his architect in May 2015.

  3. The home owner entered a contract with the builder on 6 August 2015. Mr El Baba recalls that the builder took control of the site in or about October 2015. He believes that home warranty insurance was obtained by 28 January 2016. On 1 February 2016, a construction certificate was issued. He said that he, and his interior designer, attended the site on numerous occasions. For his part, Mr El Baba said that he attended to inspect the progress and works being carried out every three to four weeks.

  4. Mr El Baba denies any written document agreeing to variations.

  5. From July 2016, Mr El Baba says he became concerned with various aspects of the works, including both progress and quality. He sent correspondence to Mr Rahme in early August and early September 2016. He says that most of the time, most of his dealings were with Mr Moses Gea Gea, Mr Rahme’s nephew. By November 2016, he had retained lawyers. On 23 November 2016, his lawyer issued a breach notice to the builder on the home owner’s behalf.

  6. Several important inspections occurred between November 2016 and March 2017:

  1. A report prepared by ‘Vital Building and Pest Inspection’, dated 24 November 2016 (the report being not admissible for the opinions contained within it);

  2. A report prepared by Criterion Building (Mr Shilson-Josling), an independent building consultant, dated 2 March 2017. This was the report which the home owner primarily relied upon at the trial.

  1. The ‘Criterion’ report was sent to the builder on or about 7 March 2017. On 10 March 2017, after receiving correspondence from the builder, the home owner terminated the contract.

  2. After having taken possession, Mr El Baba set about finding builders to carry out rectification works. On 20 March 2017 the home owner entered into a contract with JHK Civil Pty Ltd to carry out those works. They commenced around early April 2017. The total amount payable under the contract was $450,000.

Mr Rahme’s evidence in response

  1. Mr Rahme’s response to the home owner’s claim came in two instalments: it was briefly touched upon in his first affidavit and was then more fully developed in his supplementary affidavit of 23 February 2018.

Mr Rahme’s first affidavit

  1. On 7 March 2017, Mr Rahme was served with a report prepared by Mr Shilson-Josling (dated 2 March 2017). The report had been prepared by Mr Shilson-Josling based upon his inspections of the site on 12 December 2016 and 25 January 2017. Approximately 25 defects had been identified. A response was demanded within 3 days. In the next three days Mr Rahme says he prepared a detailed and considered response.

  2. That response is contained in his letter of 10 March 2017. Mr Rahme says that, for each response, he gave proper reasons to each item as to why he considered it to be or not to be a defective or incomplete item - because the works were under suspension pursuant to the contract. The contents of that letter were not before me.

Mr Rahme’s second affidavit

  1. The main point of Mr Rahme’s affidavit evidence was to provide further commentary on the status of the works on various dwellings as at the date when the home owner took possession, on 10 March 2017. Mr Rahme’s evidence in this respect may be summarised as follows.

(a)   Ground floor works

  1. As to the ground floor on dwelling one (left-hand side, facing from the street), in relation to the ‘front entry’/’lounge’, he says that the gyprock was installed on all walls and the ceiling; the windows were installed; the window sills, heads, jams and architraves were all installed, the carpet was not installed, the skirting was not installed, the electricals were installed but only to a rough stage and needed to be fitted with some general power outlets, light switches and light fittings. In relation to the “staircase”, he had possession of it at his personal residence and the home owner was welcome to have it once he had paid for it. In relation to the “laundry”, the waterproofing and tiling was complete; but neither the laundry tub nor the tapware was purchased or installed. In relation to the “main bath”, the internal door, between the garage and the rest of the house, was installed and lockable; the internal finishes to the walls and ceiling were completed; the garage doors were not installed; the stairs from the garage to the rest of the house were installed. In relation to the “bed/study”, he said that: the gyprock was installed on all walls and the ceiling; the windows, window sills, heads, jams and architraves were all installed; the carpet and skirting were not installed; the electricals were installed to a rough stage and needed to be fitted with some power points. In relation to the “kitchen”, the gyprock was installed on all walls and the ceiling; the windows, window sills, heads, jams and architraves were all installed; the kitchen benches had been manufactured and were waiting to be installed. They are in a warehouse. The tapware, the other and the dishwasher had not yet been purchased to be installed. In relation to the “family room”, the gyprock was installed on the walls and the ceiling; the windows, window sills, heads, jams and architraves, and sliding door, were installed. In relation to the “hallway”, the gyprock was installed on the walls and the ceiling, the gyprock was painted, the electrical rough in was completed; the step and carpet was installed. Lights and power points were not installed; however these did not need to be completed before 10 March 2017.

(b)    First Floor works

  1. In relation to the first bedroom, Mr Rahme said that the gyprock was installed on all walls and the ceiling; the electrical rough in was completed; the carpet and skirting were not installed; the lights and power points were not installed however that did not need to be completed prior to 10 March 2017. In relation to the “robe/his”, the wardrobe was not installed; the gyprock was completed and the installation of metal railings and a shelf was a minor task to be completed. The doors to install the wardrobe had not been purchased. In relation to the “robe/hers”, the same position applied as per the ‘robe/his’. In relation to the ‘ensuite’, Mr Rahme says that the waterproofing was completed, the screed for the tiling installed. However the tiling was not completed and the toilet, vanities and basins were not purchased. In relation to each of the second, third and fourth bedrooms, the position was the same as per the first bedroom. In relation to the ‘hallway’, Mr Rahme said that the gyprock was installed on all walls and the ceiling; the gyprock was painted, the electrical rough in was completed. Although lights and power points had not been installed, these did not need to be completed before 10 March 2017. In relation to the ‘bathroom’, the gyprock was installed on all walls and the ceiling, the exhaust fan was roughed in; the waterproofing was completed and the tiles were installed (although Mr Rahme had been since advised that these had been removed at Mr El Baba’s direction with a new design of tile to be installed.) Vanities were not completed because Mr El Baba could not decide what size vanity he wanted to have the builder construct for him. In relation to the ‘linen cupboard’, the linen cupboard had been formed by the gyprocker, but the doors had not been purchased or installed.

(c)    External works

  1. In relation to the ‘ground floor front patio’, Mr Rahme said that the front door was fitted and the concrete patio was laid. In relation to the ‘first floor front patio’, the waterproofing and the screed for the tiles had been completed; the tiles had been laid, the lighting rough in had been completed. The ceiling had been lined with incorrect sheeting. Mr Rahme says he was prepared to have his sub-contractors fix this at their cost as they agreed that they had installed the wrong ceiling lining (this hearsay evidence was not objected to on the home owner’s behalf). In relation to the external tiling, the vertical surface that was formed by the balcony slab was supposed to be tiled. Mr Rahme agrees that this front tiling requirement was required by the DA. In relation to the external painting/rendering, Mr Rahme says that all external painting and rendering was completed. In relation to the pouring of the concrete driveway, Mr Rahme says that this work had not been commenced and had not needed to be commenced as at 10 March 2017. In relation to each of the ‘ground floor rear patio’ and ‘first floor rear patio’, Mr Rahme says that the roof was erected and the electrical works were roughed in. In relation to the ‘rear landscaping’, this was due to commence very shortly after 10 March 2017. Mr Rahme also recalled that the status of the construction of the works on the ground floor of dwelling two was the same as for dwelling one as at 10 March 2017.

  2. In his second affidavit, Mr Rahme also alluded to other development projects that Mr El Baba had entered into in April 2015. These were in respect to properties at Harold Street, Mount Lewis and Dargan Street, Yagoona.

Mr El Baba’s evidence in reply

  1. In his affidavit dated 6 May 2019, Mr El Baba responded to Mr Rahme’s affidavit of 23 February 2018. His main point was that he relied upon the expert report of Mr Shilson-Josling, dated 2 March 2017. He did however, set out line-by-line responses to all of the evidence of Mr Rahme’s description of the works that had been performed and which had not yet been performed. In view of his reliance upon his expert (and particularly in circumstances where that report was produced over 2 years before Mr El Baba’s affidavit of 6 May 2019), it is unnecessary to list these line by line responses. It suffices to say that Mr El Baba contested virtually every aspect of the evidence that Mr Rahme had adduced.

  2. I generally note that Counsel for the builder and home owner did not put to their adversaries that either party’s recollections of what was complete and not complete was wrong and infer that no point is to be taken about the application of the rule in Browne v Dunn (1893) 6 R 67. As I note in my findings below, although I have had regard to what both the builder and home owner had to say, it is the independent and objective evidence of third parties which carries (much) more weight.

Evidence of the sub-contractors

  1. In this section I refer to the evidence of Mr Rahme’s sub-contractors. Sometimes reference is made to paragraph numbering in Mr Shilson-Josling’s 25 October report.

Moses Gea Gea

  1. Mr Gea is the nephew of Mr Rahme. At the time he affirmed his affidavit of 14 December 2017 he had worked as a finishes foreman for one of the subcontractors to the builder in this case, but at the material time for this case he was employed as a general hand by the builder.

  2. Mr Gea was not required for cross-examination on his affidavit. The material part of his evidence was as follows. He disputed being the only worker on site from eight October to 15 November 2016. In response to the home owners concern about a lack of supervision and construction inexperience, Mr Gea said that he did not need to be licensed as he was not a project manager or construction manager. As to his experience, he had been working in the construction industry since 2013 on various projects. Specifically, he did not require a license for the subject works; nor any supervisor’s license. He received instructions directly from Mr Rahme, by telephone and in person.

  3. He described his duties in the subject works as including calling various subcontractors to come on the site, double-checking that works were completed on the site and reporting to Mr Rahme as to the status works; site cleaning; general site labouring and signing delivery dockets for the couriers and suppliers who had supplied goods and building materials to the site. He denied engaging in activities of the kind that a project manager or a licensed builder/supervisor was responsible for, including such things as deciding which subcontractors to use and meeting with subcontractors regarding their performance. He said the works that he did he did not need to have a builder’s licence or supervisors license. On the subject works he worked under Mr Rahme’s builder’s license.

  4. In response to Mr El Baba’s assertion as to his lack of building-related qualifications or experience, Mr Gea recalled a conversation with Mr El Baba in which the latter described himself as being an electrical engineer and who could have done all the electrical works on the site.

Simon Semaan

  1. Mr Semaan is the director of SSE Roofing Pty Ltd. the company was a (roofing) subcontractor who worked on the project at the Bankstown property. It had had a good association with the builder and had said that it had never had the payment problems with the builder that it had in relation to this project.

  2. Mr Semaan said that from an agreed price of $30,000 (incl GST), a sum of $5000 remained unpaid.

  3. Mr Semaan was asked to provide commentary in response to certain parts of the home owners expert builders reports, being the: standard property report dated 24 November 2016; Mr Shilson-Josling’s building inspection and defect report dated 2 March 2017 and the second Shilson-Josling report of 25 October 2017. It was really on the last report in respect to which he had anything relevant to say.

  4. In response to paragraphs 12.434 to 12.474 (Item 16: Brickwork and Roof Abutment), Mr Semaan said that he had never been asked by the home owner to come back and complete the flashings – something which he says was an easy task to complete and capable of being done straight way.

  5. In response to paragraphs 12.782 to 12.808 (Item 26: roofing, flashing and capping), he characterised the works as being incomplete, and appropriately finalised at the end of the project. For example, in relation to the rusted silicon, additional screws, screws to be tightened; these could all be fixed very easily. He could replace the 40mm capping with a 50mm capping if required; he had never been asked by the home owner to complete the flashings; and the excess silicon (identified in photo 1.177) was at the top of the building and not generally visible.

  6. Mr Semaan says he could have completed these works at no additional cost to the builder.

  7. Mr Semaan was not required for cross-examination.

Chadi Bejjani

  1. Mr Bejjani is director of the bricklaying company, The Phoenician Services Pty Ltd.

  2. He says that he would happily have organised for his company to return to the site at the Bankstown property if it was allowed back on site, to fix the defects that were truly ‘defects’ (Items 9-17).

  3. Mr Bejjani was not required for cross-examination.

Rida Tawk

  1. Mr Tawk is the director of Pro View Plumbing Pty Ltd. He has known Mr Rahme since he was a child. He is a licensed plumber.

  2. For the subject project, Mr Tawk’s company carried out the hydraulic services for the builder. It did so without a written project. Out of a contract price of $33,000 (incl GST) all but $11,500 has been paid.

  3. Mr Tawk says that had he been permitted to return to the property to complete the works (after the builder had been locked out) he would have done so and done so at his company’s expense.

  4. He also reviewed the Standard Property Report, the First Shilson-Josling Report and Second Shilson-Josling Report. His commentary was material to the last of these reports.

  5. In response to paragraphs 12.28 to 12.52 (Item 2), he said, first, that for all projects he works on, he needed to comply with AS3500, the requirements of the Office of Fair Trading and the local council. He also ensures that when setting out a layout for sewer design, he contacted the Office of Fair Trading to register the lay out and book an inspection. He says that, in this instance, the Office of Fair Trading did not attend the site. He did, however, later submit the design.

  6. Mr Tawk described as proper practice for the layout for sewer design to be done before the concrete slab is poured. It was at this stage that Mr Tawk said that he noticed that (a) the garage on the property had sunk below the rest of the house; and (b) there was a 540mm difference between the two sewer stacks.

  7. He explained that he thought it practical to put all of the stack points in the garage, since the whole trench would need to be lowered about 700mm to allow for the requisite fall and allow gravity to make the waste water flow from the lowest point at the front of the property to the back.

  8. He said that when he needed to eliminate the stack point in the garage, he raised the issue with Mr Rahme. Mr Rahme indicated to him the need to make the home owner aware of that. He heard Mr Rahme speak to Mr El Baba. He thereafter received permission from Mr Rahme to do what he had proposed.

  9. Under cross-examination it was suggested that the ‘practical’ solution he had chosen was simply the cheaper solution. It was put there was no reason why the plans could not been complied with. Mr Tawk disagreed with this.

  10. He said that he had been on the site on numerous occasions when Mr El Baba was on site. At no time had Mr El Baba complained about the overhead pipework or request a meeting to discuss how to change the design.

  11. In one of his answers in cross-examination Mr Tawk mentioned, with reference to his relations with Mr Rahme that often there were verbal ‘handshake’ agreements.

Jeffrey Azzi

  1. Mr Azzi is a licenced electrician and licenced carpenter and is the director of A & T Electrical Services Pty Ltd. his company was engaged to carry out the electrical services. There was no written contract specifically for this project. He had known Mr Rahme and had had no payment problems with him of the kind encountered on the subject project. He said that $7700 had remained unpaid.

  2. Mr Azzi recalled that on or about 10 June 2016 he received an email directly from Mr El Baba. This was about some extra wall lights being supplied by him (Mr El Baba) and installed by Mr Azzi.

  3. He said that the cost of rectification of electrical defects would have been included in his contract sum and that he would not have charged the builder any more money for this.

  4. He said that he had completed all of the scope of his works except for the installation of lights, the installation of kitchen appliances (as the kitchen was not installed) and the installation of some of the general power outlets. He says he had completed the usual testing and commissioning.

  5. Mr Azzi was not required for cross-examination.

Mansour Tarabay

  1. Mr Tarabay is a pest technician, being the director of Delta Pest Management and Maintenance Pty Ltd. Mr Faraday has known Mr Rahme for 10 years.

  2. Mr Tarabay reviewed Mr Shilson-Josling’s report dated 2 March 2017 and specifically, Part 6.6, titled “Termite Management System” (TMS). He also reviewed Mr Shilson-Josling’s report dated 25 October 2017, and, specifically, Part 12.130 (Item 6).

  3. He said that a system of termite protection was designed and installed at the project. He interpreted the reference to the ‘rear patio’ as being to an internal wall and that this did not need termite protection: termite protection was only needed to all external walls.

  1. In response to paragraphs 12.143-12.145, the TMS installed did have a “codemark” the proprietary system produced by ‘HomeGuard’. He provided Mr Rahme a certificate of compliance on the day that his firm had finished.

  2. In response to paragraph 12.146, he said that even where there was no tag which was visible, the blue HomeGuard termite mesh was personally installed by him.

  3. He said that there was no cavity to protect and the subsequent trades cut down the termite mesh, to install their components of the building. That meant that there was either an entry point, being a doorway, or the full height window itself as a physical barrier to termites. Under cross-examination, Mr Tarabay indicated that he did not see this occur and that the subsequent trades had been engaged by Mr Rahme.

EXPERT EVIDENCE ON DEFECTS & SCOPE OF RECTIFICATION WORKS

The experts

  1. The home owner relied upon the evidence of Eric Shilson-Josling, in a report dated 25 October 2017 (Ex 3). Mr Shilson-Josling is a senior building surveyor of the firm Criterion Building Codes and Access Pty Ltd. He is a member of the Australian Institute of Building Surveyors and an accredited building surveyor. He has previously provided expert reports of existing, proposed and completed building works against current statutory and other applicable standards. The subject report followed inspections by him on 12 December 2016, 25 January 3 June and 17-19 September 2017. These inspections occurred in the presence of Mr Rahme.

  2. The builder relied upon the evidence of Doug Coombes, of Doug Coombes & Associates, in a report dated 16 October 2017 (Ex E). Mr Coombes is a building consultant, with a Bachelor of Building degree and a Joinery Trade certificate. Mr Coombes is currently a Chartered Builder and Fellow of the Australian Institute of Building. He has 55 years of experience in the building industry. He conducted a site inspection on 5 October 2017.

Overview of evidence on defects

  1. The defects identified by Mr Shilson-Josling, the home owner’s contentions (based on the Shilson-Josling report) as to whether they have presently been rectified and the builder’s contentions (based on Coombes report) as to whether they were defects at all are essentially set out in the following table:

Item

Issue [1]

Building defects according to Shilson-Josling report [2]

Whether home owner says defect rectified

Building defects according to Doug Coombes report [3]

1

Tiles used on front façade

Defect

Yes

Neither defect nor incomplete work

2

Low section to hall ceiling

Defect

No

Neither defect nor incomplete work

3

External soffit linings

Defect

Yes

Neither defect nor incomplete work

4

Garage ceiling lining

Defect

Yes

No defect

5

Exposed Concrete to walls

Defect

Yes

Incomplete work

6

Termite treatment system

Defect

No

No defect

7

Discontinuity of concrete slab

Defect

Yes

No defect

8

easement restrictions

Defect

No

No defect

9

Brickwork- staining

Defect

No

Incomplete work

10

Brickwork- mortar filling & cleaning

Defect

No

Incomplete work

11

Brickwork - Bed joints

Defect

No

No defect

12

Brickwork - Perpends

Defect

No

No defect

13

Brickworks - window sills/thresholds

Defect

No

No defect

14

Brickwork – weep holes

Defect

No

Partial defect

15

Brickwork - flashing & damp-proof course (DPC)

Defect

No

No defect

16

Brickwork & roof abutment - cavity and roof flashing

Defect

No

No defect

17

Brickwork - articulation joints and other control joints

Defect

No

No opinion

18

Brickwork - global scope of work

Defect

No

No defect

19

Rear patios - fixing of roof beams

Defect

Yes

No opinion

20

Rear patios - spacing of ceiling supports

Defect

Yes

No defect

21

Waterproofing internal

Defect

Yes

No defect

22

Waterproofing external

Defect

Yes

No defect

23

Stone tiles - internal

Defect

Yes

No defect

24

Stone tiles - external

Defect

Yes

No defect

25

Steel being and Joists - first floor veranda

Defect

Yes

No opinion

26

Roofing, flashing and capping

Defect

Yes

No opinion

27

Internal stairs

Defect

Yes

No opinion

28

Timber framing roof void first floor

Defect

Yes

No defect

29

Glazing

Defect

Yes

No opinion

1. I have used here the item description adopted by Mr Lee in his 9 May 2018 report (Ex G)

2. Ex 3

3. Ex F

Mr Shilson-Josling’s opinion on defects & recommended rectification

  1. A concise, overly-simplified summary description of Mr Shilson-Josling’s views in respect to each items, as to (a) the defects and (b) the suggested rectification, as set out in his report of 25 October 2017 (Ex 3) is as follows:

  1. Item 1: tiles are applied to the front facade of the building which are supposed to be of the rendered brickwork. The finishes to the vertical faces of the first floor balconies have not been installed as specified.

  2. Suggested rectification: allow for provision of a finish that resembles rendered brickwork to the front elevation of both dwellings one and two, without significant demolition and reconstruction of the facades; and allow face brickwork to be reinstated on the west elevation of dwelling one.

  3. Item 2: the work concerning the sewerage stack work and bulkheads across the lower level hallways are not in accordance with the approved drawings.

  4. Suggested rectification: ensure pipework is correctly tested and that there is no loss of amenity through water sounds of effluent in the pipes being heard in the entrance hallways.

  5. Item 3: the plasterboard ceilings to the porch and balconies are not in accordance with the manufacturer’s installation manual (which required gyprock).

  6. Suggested rectification: remove the existing ceiling/soffit linings and supply and install Merbau on treated pine to ceilings/soffits and finish with Dulux into grain exterior natural stone; and install the ceilings that are suitable for use in the external locations.

  7. Item 4: plasterboard ceiling in the garage is not a suitable material; and normal gyprock should have been used.

  8. Suggested rectification: this is to be specified by the engineer.

  9. Item 5: concrete is exposed in the wall surfaces of the hallway and ground floor bathroom of dwelling one.

  10. Suggested rectification: after removal of concrete, make good the surface to allow interior finishes to be provided or make good or complete the internal wall framing and lining then provide waterproofing to the repaired or completed wall section in the bathroom (the expert noted that this had been completed by September 2017).

  11. Item 6: the TMS is not installed in accordance with the BCA.

  12. Suggested rectification: re-install and revise a complete TMS as installed in accordance with the manufacturer’s specifications, certificate of conformity and/or other approval conditions.

  13. Item 7: there is an unformed construction joint in the concrete slab beneath the brick wall, separating the front ground floor patio and garage.

  14. Suggested rectification: a practising structural engineer should assess the unformed construction joint, to determine the extent of the unformed construction joint and to determine if the performance of the concrete slab and/or edge beams had been affected.

  15. Item 8: works are not in accordance with the approved architectural drawings and there is a possible encroachment to the easement.

  16. Suggested rectification: engage a qualified land surveyor to determine if the works have encroached within the easement (which, if it has arisen, may necessitate an application to amend the easement).

  17. Item 9: the face brickwork is stained and not clean from the mortar.

  18. Suggested rectification: treat and clean the whole of the masonry exterior to ensure all areas of acid staining and remaining mortar marks are rectified.

  19. Item 10: the external brickwork to both dwellings has improperly filled mortar joints.

  20. Suggested rectification: filling of blow outs, voids and cracking to meet mortar joint requirements.

  21. Item 11: bed joints to both dwellings have inconsistent horizontal alignment and joint thickness.

  22. Suggested rectification: replacing the external face of masonry walls at the same time as rectification works for the perpends.

  23. Item 12: perpend joints to both dwellings have inconsistent vertical alignment and joint thickness.

  24. Suggested rectification: replacing the external face of masonry walls at the same time as rectification works for the bed joints.

  25. Item 13: various defects associated with the brick window sills to both dwellings.

  26. Suggested rectification: removal of existing window sills and re-lay windowsills in conjunction with the provision of weep holes at all window sill flashings.

  27. Item 14: several defects associated with the weepholes, including blockages and missing weepholes.

  28. Suggested rectification: removal of existing window sills and re-lay windowsills in conjunction with the provision of weep holes at all window sill flashings.

  29. Item 15: several defects associated with the damp-proof course, including that it does not project to the outer face of the external brickwork.

  30. Suggested rectification: reinstall and provide a complete damp proof course, in conjunction with rectification of the termite Management system at ground floor level.

  31. Item 16: several defects associated with cavity flashing.

  32. Suggested rectification: provide a cavity flashing that extends beyond the external face of the masonry wall above the roof line of the ground floor groups, in conjunction with the provision of an over flashing extending over the existing apron flashing.

  33. Item 17: some articulation and control joints have not been provided as per the engineering plans.

  34. Suggested rectification: the control joints, articulation joints, contraction and expansion joints, wall ties are to be in accordance with specifications and relevant Australian Standards.

  35. Item 18: due to the range of issues concerning the masonry work demolition and reconstruction is recommended.

  36. Suggested rectification: remove and replace the external face of masonry with the same masonry units and lay strictly in accordance with provisions of part 3.3 of the BCA and Australian Standard.

  37. Item 19: fasteners to the joint hangers and multi-grips are not in accordance with the manufacturer’s specifications.

  38. Suggested rectification: provide fasteners to the framing brackets and multi-grips, in accordance with the manufacturer’s specifications (the expert noting that ceiling linings had been provided to the rear patios of both dwellings).

  39. Item 20: spacing of furring channels to the rear patios is not in accordance with the manufacturer’s specification.

  40. Suggested rectification: provide support to ceiling lining in accordance with the relevant standard of construction and/or the manufacturer’s specification (the expert noting that ceiling linings had been provided to the rear patios of both dwellings).

  41. Item 21: defects associated with internal waterproofing are not in accordance with Part 3.8.1.2 of the BCA and AS 3740-2010.

  42. Suggested rectification: removal of relevant tiles, water stops and mortar beds and provide waterproofing in accordance with BCA (3.8.1) and Australian standard (AS 3740).

  43. Item 22: defects associated with external waterproofing are not in accordance with Part 3.8.1.3 of the BCA and AS 4654 Part 2.

  44. Suggested rectification: remove existing masonry in stages to the wall between the verandahs; ensure that minimum lapse of flashings are provided in accordance with AS 3700 and ensure that a suitable interface is achieved between the through flashing and the verandahs waterproofing.

  45. Item 23: tiling to the bathrooms and ensuites is incomplete, and wall tiles have only been spot fixed.

  46. Suggested rectification: remove tiling to affected floors and wall panels; waterproof as required and install tiles in accordance with manufacture’s specifications.

  47. Item 24: defects associated with the stone tiling to the front balconies, as well as to the sheet flooring system.

  48. Suggested rectification: remove the tiling; where necessary replace wall tiling; supply and install tiles in accordance with the manufacturer’s specification.

  49. Item 25: no engineering details provided for the steel beams that support the leading edge of the front balconies on both dwellings.

  50. Suggested rectification: to be specified by an engineer (the expert noted that works had been undertaken to the front verandahs).

  51. Item 26: defects associated with the upper level roof.

  52. Suggested rectification: provide and install parapet flashing that has a minimum 50mm downturn and anti-capillary breaks; provide an over flashing with anti-capillary breaks.

  53. () Item 27: the steps between the garage in the hallway of both dwellings do not comply with the requirements of Part 3.9.1.b(b) of the BCA.

  54. Suggested rectification: ensure that the stairs riser and going dimensions are constant and that the slope relationship quantity is in accordance with the BCA by applying a topping surface finish to the treads and risers after term determining the height of the select finish.

  55. () Item 28: parts of the roof structure do not comply with the provisions of AS 1684 – Timber Framing Code.

  56. Suggested rectification: engineer access and report on roof/ ceiling framework with rectification as specified by engineer.

  57. () Item 29: not all window units have been legibly labelled in accordance with AS 1288.

  58. Suggested rectification: access compliance of glazing to BCA provisions; such assessment being undertaken by qualified glazier or engineer.

Mr Coombes’ response on defects

  1. A summary of Mr Coombes’ stated differences from the Shilson-Josling report, as set out in the former’s report of 23 February 2018 (Ex F), is as follows:

  1. Item 1: any tiles applied to the front façade had been removed. The beams and columns to each dwelling now have a white painted finish. Any tiling use would only represent a departure from the contract, rather than a defect in construction.

  2. Item 2: the distance between the finished floor level and the underside of the bulkhead is compliant with the requirements of the BCA.

  3. Item 3: if the specification and selection schedule specifies timber ceilings to the porch and balconies, there has been a non-compliance with the contract.

  4. Item 4: agrees with Mr Shilson-Josling.

  5. Item 5: the issue has been rectified at both locations. The work was incomplete at the time of termination.

  6. Item 6: at some locations the edge of the termite barrier may not be visible at the outer edge of the brickwork.

  7. Item 7: the concrete driveway and adjacent paving had concealed the edge of the concrete slab.

  8. Item 8: the brickwork was continuous to form the external corner at the family room. The drawings indicated the brickwork was to be omitted at this corner.

  9. Item 9: the brickwork was clean and fit for purpose. It was incomplete at the time of termination.

  10. Item 10: the current condition of the brickwork was acceptable and fit for purpose. It was incomplete at the time of termination

  11. Item 11: there was minor isolated evidence of bed joint thickness, but the external brickwork was fit for purpose. The work is not a defect in construction

  12. Item 12: there was minor isolated evidence of perpend joint thickness but the external brickwork was fit for purpose. The work was not a defect in construction

  13. Item 13: the brick sills and tiled thresholds are fit for purpose. This is not a defect in construction.

  14. Item 14: agrees generally with Shilson-Josling, but considers AS 4773.2 is the more appropriate standard. This means he is only an agreement where Mr Shilson-Josling’s report refers to a lack of weepholes in areas other than at sill flashings.

  15. Item 15: the paving alongside the garage of the dwelling has been poured since the termination. It is no longer possible to view some of the alleged defects. Nevertheless at some locations the damp proof course does not project to the outer edge of the brickwork.

  16. Item 16: the weep holes have not been provided to allow water from the cavity flashing to escape and the cavity flashing does not extends to the outer edge of the brickwork. There is no evidence of water penetration to the interior of the building.

  17. Item 17: because this is a new issue, no opinion is offered.

  18. Item 18: disagrees with recommendations for demolition and reconstruction of masonry work.

  19. Item 19: not possible to inspect the condition of the joist hangers and multi-groups used to connect the patio roof timbers.

  20. Item 20: no evidence of distress to the lining boards. No defect in construction.

  21. Item 21: tiling completed to all internal wet areas. No defect in construction identified.

  22. Item 22: tiling completed to all internal wet areas. No defect in construction identified.

  23. Item 23: all bathroom and ensuite tiling, including waterproofing has been replaced. Unable to identify any defect in construction.

  24. Item 24: some of the defects assumed may not be correct as some of the issues are concealed and unable to be inspected (ie those labelled at b, c and d of paragraph 12.739).

  25. Item 25: Not able to comment without being provided with engineering drawings or details.

  26. Item 26: not able to comment since on day of inspection the expert was unable to gain access to the upper roof level.

  27. () Item 27: not able to comment.

  28. () Item 28: only a limited inspection of the roof structure can be carried out, due to the low clearance within the roof void. Roof structure has not exhibited any form of structural failure.

  29. () Item 29: This is a new issue. No opportunity to inspect the issue.

  1. Mr Coombes did not provide for any alternative recommendations for rectification for items 8-29 (inclusive).

Concurrent evidence of Shilson-Josling & Coombes

  1. Mr Shilson-Josling and Mr Coombes gave evidence concurrently. Their evidence was principally centred upon Mr Shilson-Josling’s report dated 25 October 2017 (Ex 3) and Mr Coombes’ report of 23 February 2018 (Ex F). The evidence they gave may be summarised as follows:

Item 1

  1. After some hesitation, Mr Coombes accepted that the plans did not require tiling on the front façade. Absent some variation, Mr Coombes agreed that this amounted to a defect. He also accepted that he provided no alternative recommended form of rectification to that which had been proposed by Mr Shilson-Josling, despite having the opportunity to express such recommendation.

Item 2

  1. The home owner’s complaint here is that the bulkheads in the ground floor hallways are too big and the sewer was redirected from where it should have been (stack located in the garages), based upon the plans. This was contrary to the construction certificate plan. Mr Shilson-Josling said in his report (paragraph 12.39) that the wall and bulkhead width dimensioned on the CC approved plan had a frame size of 90mm and the depth of the approved bulkhead was not dimensioned or represented on the drawings. But bulkheads were not as per the approved plans and the inclusion of the sanitary drainage pipework resulted in wider bulkheads constructed in the ground floor hallways.

  2. Mr Coombes’ response was that the distance between the finished floor level and the underside of the bulkheads was greater than 2 metres and therefore complied with the BCA. He said that the plan did not show where the routed pipes were. Mr Coombes did not see anything wrong with the bulkhead, although he acknowledged that he did not set out any test to determine the width of the bulkhead, nor did any testing. He maintained that it was not necessary to measure the width of the bulkhead, even though he had the opportunity of doing so. He agreed that he had not provided any alternative recommended scope for any defect, in this respect, in his report.

  3. Mr Coombes said that he would not have been surprised if the bulkhead had not subsequently been reduced. In respect to the routing of the pipes, he had not suggested any re-routing. That was not necessary for safety or living. He added that routing of the hydraulic pipes was a matter for the plumber on site; and that at the end of the job, the plumber would certify the work in a compliance certificate. Mr Shilson-Josling said that no hydraulic plans had been provided to him regarding sewerage.

  1. Having heard the evidence of both experts, it seemed to me that there was a consensus that neither of them considered that any individual defect warranted the removal or demolition of the walls. I also considered that, although he scarcely mentioned them in his own report, Mr Coombes’ suggestions for works, as they emerged when he gave evidence concurrently with Mr Shilson-Josling, did not meet with much disagreement from the latter.

  2. I am also not persuaded that rectification of the individual defects would, collectively, warrant knocking down, or removal of the walls in their entirety.

  3. For the individual items I have identified, in my view, the appropriate scope of works are as follows:

  1. Item 13, 14 & 16: Mr Shilson-Josling opined, and I accept, that rectification of the defect relating to item 13 be undertaken at the same time as rectification of item 14. Rectification of the latter item, in turn, would be undertaken at the same time as item 16. Mr Shilson-Josling’s suggested works for items 13 & 14, involving removal and re-laying of the existing window sills, in conjunction with the provision of weepholes, are appropriate. Further, and largely upon the basis of Mr Coombes’ concession, referable to item 16, that weepholes had not been provided, and that pressure flashings were not as good as flashings to the wall, I find that rectification of this work is warranted as well. I do not, however, consider that it would be appropriate to knock down walls for the purpose of these rectifications. Mr Shilson-Josling did not raise this as his primary recommendation. In relation to item 16, I find that his primary recommendation, being to provide a cavity flashing extending beyond the face of the walls above the roof line of the ground floor roofs, to be in conjunction with the provision of an overflashing extending over the existing apron flashing, to be the appropriate scope of works in relation to this item.

  2. Item 15: in circumstances where an occupation certificate had been issued in relation to both dwellings, and the home owner had sold both of them, I prefer the evidence of Mr Coombes that the defects relating to this item do not warrant removal of the masonry walls to provide a complete damp-proof course.

  3. Item 17: I have addressed this at paragraph 281, above.

  4. Item 22: I regard it as decisive that Mr Shilson-Josling accepted that the removal of skirting tiles and the extension of waterproofing and flashings can be done to the external walls without removal of the walls. Subject to that, I find that the balance of his recommended works is appropriate.

  1. Item 23: Mr Coombes did not dispute Mr Shilson-Josling’s findings that:

  1. The wrong type of tiles for wall and floor were used for the ensuite and main bedrooms. This I consider was a breach of the s 18(1)(a) warranty for failure to comply with specifications;

  2. There was spot staining on the tiling. This was a breach of the s 18(1)(a) warranty for want of due care and skill;

  1. I consider that the erroneous choice of tiling (upstairs, but not downstairs) to be a defect; although, I would have regarded the staining on the tiling, by itself, as indicative of an item that was incomplete.

  2. In relation to this item – and item 21, I accept Mr Shilson-Josling’s evidence, which was primarily directed to the works upstairs and find that remedial works he had recommended (involving the removal of tiling to the affected floors and wall panels, provide waterproofing as required and install appropriate tiles) was appropriate. This did not require the ripping up of floors downstairs.

  3. Item 24: Mr Coombes generally agreed with Mr Shilson-Josling’s findings concerning:

  1. an absence of movement joints on the floor. I find that this amounted to a non-compliance with the s 18B(1)(a) warranty, indicating a lack of compliance with contract specifications;

  2. the installation of tiles not being consistent with the guidelines for flooring. I find that this also amounted to a non-compliance with the s 18B(1)(a) warranty indicating a want of due care and skill

  1. Mr Rahme considered that the works were complete. I find that they were defective; and not incomplete.

  2. As to rectification of this item, and also item 22, Mr Shilson-Josling considered that rectification for this item would be affected by my findings relating to the scope of works for item 22. An important feature of those earlier findings was that I did not consider that the removal of walls was justified. Otherwise, I accept Mr Shilson-Josling’s suggestion for this item summarised at paragraph 87 above.

  3. Item 25: Mr Shilson-Josling’s view that the wrong type of beam was used was not disputed by Mr Coombes, although the former was challenged, in cross-examination on his view that the beams did not comply with the specification. It was not clear to me what the basis for such challenge was in circumstances where Mr Coombes had not advanced the view and Mr Shilson-Josling had referred, as the basis for his opinion in this regard, the content of the engineering drawings. At any rate, I accept Mr Shilson-Josling’s view and find that the works for this item did not comply with the warranty in s 18(1)(a), for the failure to comply with specification. Although it is not necessary to so decide, I would also have been inclined to find a lack of compliance with the warranty in s 18(1)(b).

  4. Mr Rahme’s evidence confirmed that the garage ceiling was sheeted and, so far as he was concerned, complete. I consider that this item of work is defective.

  5. As to rectification, I find that it would be appropriate for a structural engineer to assess the installation of steel beams and floor joists and to specify any further requirement for specification. However, Mr Shilson-Josling noted that works had been undertaken to the front verandahs. Even taking into account that circumstance, I remain of the view that an engineer should review the position, and provide such advice as is appropriate, as I have indicated.

  6. Item 26: Mr Coombes agreed with many of the defects that Mr Shilson-Josling had identified with the flashings and roof capping on the roof level of the veranda on dwelling two. Mr Coombes did not have the same advantage of seeing the roof. The most he could do was comment on certain photographs appended to Mr Shilson-Josling’s report. On the basis of Mr Shilson-Josling’s opinion, which I accept, there was an absence of due care and skill in failing to take the necessary steps to make the flashing sit flush with the top of the roof and extend to the parapet cover flashing.

  7. Mr Rahme considered that the roof was complete for being erected. I consider that that item was defective.

  8. As to rectification, Mr Shilson-Josling was not challenged on his suggested rectification, comprising the provision and installation of parapet flashing that has a minimum 50mm downturn and anti-capillary breaks, providing an overflashing with anti-capillary breaks, re-aligning the flashings and re-making them so that all joints were lapped and sealed. I find that those recommended works are reasonable and appropriate.

  9. Item 27: I accept Mr Shilson-Josling’s evidence that the riser dimensions for heights on the internal stairs from the garage were inconsistent and not compliant with the BCA. I find that this defect amounts to a non-compliance with each of the warranties in s 18B(1)(a)-(c) inclusive.

  10. Mr Rahme said that steps from the garage to the hallway were complete. The photos showed that the concrete stairs were completed. I consider that this item is a defect.

  11. As to rectification works, Mr Combes did not disagree with Mr Shilson-Josling’s recommendation to ensure stair riser and going dimensions were constant and the slope relationship quantity in accordance with the BCA. I so find that such recommendation should be implemented, and note that this defect had been subsequently rectified.

  12. Item 28: Mr Coombes did not take issue with Mr Shilson-Josling’s identified defects in relation to this item, comprising:

  1. Rafters underneath the roof;

  2. The erroneous method of face fixing rafters to the wall plate;

  3. The erroneous method of fixing wall plates to the brick wall.

  1. I am satisfied that these circumstances establish the builder’s non-compliance with the statutory warranties in s 18B(1)(a) and (c) (as to the latter, the builder’s Counsel appeared, by his questioning of Mr Shilson-Josling, to accept there were breaches of the BCA).

  2. As with item 26, Mr Rahme considered that the roof was erected. There was also a safety question about the item. I consider that the item constitutes a defect.

  3. As to rectification, I accept Mr Shilson-Josling’s evidence that engagement of an engineer be undertaken to access and report upon the roof and ceiling framework. In forming this view, I accept his view that it cannot be discounted that there may be structural implications associated with the above defects.

  4. Item 29: There was no dispute that the omission to affix labels on the glazing did not comply with BCA requirements. To this extent, there was a breach of the warranty in s 18B(1)(b) of the Act.

  5. These doors were installed with glass and Mr Rahme opined that the works was incomplete. I consider that the works were defective and amounted to a defect.

  6. I consider that such rectification as had occurred, involving the assessment by a glazier to assess the compliance of the glazing with the BCA provisions was reasonable and appropriate in relation to this defect, and note that this recommendation was subsequently implemented.

Quantifying costs of rectification of works

  1. In my view, it is appropriate for the general question of the quantification of costs rectification items be referred to a referee in accordance with the provisions of Division 3 of Part 20 of the Uniform Civil Procedure Rules. Counsel for each party did not object to this course when the suggestion was proffered during the trial.

  2. My reasoning for this is that it became apparent during the trial that:

  1. Evidence is appropriate for technical assessment: Such differences as have emerged in the reports of the quantity surveyors, at the level of detail, include (but are not limited to) the appropriate costs of labour for rectified works; the appropriate level of builder’s margin, where supervision costs claimed were necessary, whether it would be appropriate, or even possible, in the circumstances to deploy mobile scaffolding works to rectify the works on the subject property. These are technical questions upon which the quantity surveyors currently offer very different views and upon which a referee would be more likely to render more accurate findings than the Court;

  2. Evidence requires reconsideration: There were some important differences in principle, between the two quantity surveyors as to costs, based upon what findings I made as to the defects and the appropriate scope of the rectified works; which are likely to require reconsideration of their respective reports. The questions of costs of rectification, generally or even in relation to individual defects, may be seen as separable to the other issues determined by the Court in these reasons; and do not depend upon findings of credibility of the witnesses;

  3. Some evidence is incomplete: The evidence of the builder’s quantity surveyor, Mr Lee, is, incomplete and, in some respects not costed; pending such determination of the scope of the rectification works; and, further, he relied upon source material (apparently, from Rawlinson’s Australian Construction handbook) not placed before the Court. Although on one view that simply goes to the weight to be placed upon existing views in this expert’s report, a referee with technical expertise is likely to be able to form a more accurate view of Mr Lee’s evidence in this regard;

  4. I acknowledge that there will be some further delay, and expense, to the parties in implementing this procedure, but I also take into account that with the Court having made findings on the questions of defects and true scope of rectification works, the scope for long delay has been reduced and, further, consider that overall, the desirability in having qualified technicians arriving at a more accurate result than would otherwise be the case indicates that the interests of justice weigh in favour of the use of this procedure.

  1. This course naturally does not preclude the parties from engaging consensually in other forms of alternative dispute resolution, principally mediation, on the quantification of costs of rectification works in the light of these findings should they wish to.

Home owner’s claim for overpayment to builder

  1. The home owner’s claim in this regard is for $29,961.36. It is substantially based (ironically) upon the evidence of the builder’s quantity surveyor, reflecting the circumstance that he valued the cost of the works. The home owner’s qualification to this evidence was to allow for a builder’s margin of 20% and deducting the cost of any defects from the value of works carried out.

  2. The difference between the contract price and the value of the works (with a 20% margin) was $483,928.64. The amount paid by the home owner was $513,890.

  3. The builder did not make any submissions to the contrary on this topic. I accept the home owner’s claim as it has been put.

SUMMARY & ORDERS

  1. For the above reasons, the Court has;

  1. Rejected the builder’s claims on quantum meruit and for delay damages;

  2. Very substantially upheld the home owner’s case on defects and the scope of actual and proposed rectification works and claim for overpayment to the builder.

  1. I direct the defendant/cross-claimant to bring in short minutes to give effect to these reasons within 14 days.

  2. In addition, and pursuant to r 20.14 of the UCPR, the general question of the cost of the rectification works for the defects I have found is referred to a referee. The parties should confer as to who is the appropriate referee, and pursuant to r 20.15, if not, upon an appropriate mechanism (such as a referral from someone nominated by a professional association) if they cannot agree. When the matter comes back to me, I will make the order for the appointment.

  3. I direct the cross-claimant to serve upon the cross-defendant (and copy my Associate in to) a proposed order for reference within 14 days of these reasons. For that purpose, Form 2, District Court Forms may be used as a template, to be varied as appropriate; particularly in relation to the documentation to be supplied to the referee. The cross-defendant is to notify the cross-claimant (copying my Associate) to any objections to the terms of the proposed reference (and reasons for such objections) within a further 7 days. Thereafter, subject to the scope of any objections to the terms of the reference, I will make the order for reference in Chambers.

  4. I would hope that the parties could agree upon short minutes so that orders can be made in chambers. If not, liberty to apply is granted on 3 days’ notice, through notifying my Associate for a date to be fixed for any further hearing on orders.

  5. Costs of the proceedings to date are reserved, pending the completion of the quantification exercise.

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Endnotes

Decision last updated: 18 July 2019

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Cases Citing This Decision

2

Betta Build Group Pty Ltd v El Baba (No. 3) [2020] NSWDC 272
Betta Build Group Pty Ltd v El Baba (No. 2) [2020] NSWDC 238
Cases Cited

12

Statutory Material Cited

1

Bellgrove v Eldridge [1954] HCA 36
Bellgrove v Eldridge [1954] HCA 36
Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248