DAVIES v Capital Homes Pty Ltd (Civil Dispute)

[2017] ACAT 111

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

DAVIES & ANOR v CAPITAL HOMES PTY LTD (Civil Dispute) [2017] ACAT 111

XD 358/2017

Catchwords:              CIVIL DISPUTE – home building contract and statutory warranties – cause of defects – statutory warranty for structural works breached – damages to rectify

Legislation cited:      Building Act2004 ss 38, 84, 88

Subordinate
Legislation:               Building Code of Australia 2016 ss 3.5.2.3, 3.5.2.4

Building (General) Regulation 2008 ss 31, 38

Cases cited:Belgrove v Eldridge (1954) 90 CLR 618

Dunn v Hanson Australasia Pty Ltd [2017] ACTSC 169
Kirkby v Coote [2006] QCA 61

Tribunal:                   Senior Member L Beacroft

Date of Orders:  22 December 2017

Date of Reasons for Decision:         22 December 2017

AUSTRALIAN CAPITAL TERRITORY  )

CIVIL & ADMINISTRATIVE TRIBUNAL       )          XD 358/2017

BETWEEN:

PRUE DAVIES and BENJAMIN JOHN DAVIES

Applicants

AND:

CAPITAL HOMES PTY LTD

Respondent

TRIBUNAL:Senior Member L Beacroft

DATE:22 December 2017

ORDER

The Tribunal orders that:

1.Prue Davies is joined as an applicant

2.The respondent is to pay the applicants the sum of $9,964 by COB 9 February 2018.

………………………………..

Senior Member L Beacroft

REASONS FOR DECISION

1.Benjamin John Davies and Prue Davies (the applicants) signed a ACT Home Building Contract[1] (the contract) on 2 March 2014 with Capital Homes Pty Ltd (the respondent) to build a home at Coombs, ACT. The applicants filed an initial application with the ACT Civil and Administrative Tribunal dated 30 March 2017, seeking $9,964 to rectify certain works to an area described in the floor plan as the “alfresco” area[2], and for re-imbursement of filing and search fees. The respondent filed a response dated 1 May 2017 seeking that the application be dismissed. The Tribunal’s final orders are set out above, and the reasons for these orders are set out below.

Conduct of the hearing

[1] Exhibit A2, initial hearing, dated 9 August 2017

[2] AO2, floor plan, Dray Drafting, submitted to the Tribunal by the applicant on 15 August 2017 

2.While Mr Davies was initially the only applicant, given Ms Davies was also a party to the contract she has been joined as an applicant in these proceedings. No party opposed this order by the Tribunal. 

3.An initial hearing was held on 9 August 2017, and the hearing was adjourned to 1 September 2017 (the hearing) to allow key witnesses to be available and further evidence to be filed and served. Prior to and after the hearing the parties exchanged and filed various documents setting out their contentions and supporting evidence. During the hearing the following persons gave oral evidence: the applicant, Mr Benjamin Davies; Mr Josh Veliscek who is a director of the respondent company and the builder for the works; Mr Adam Mokotupu from Laser Plumbing who was the author of a roof inspection report, dated 5 August 2016[3]; Vince Buonopane from 1800 Tap Fix who was the author of a report about the roof (undated) submitted by the respondent on 21 July 2017[4] following an inspection on 14 July 2017.[5]

[3] Submitted to the Tribunal by applicant on 24 May 2017 

[4] Report attached to respondent’s submissions dated 21 July 2017

[5] Email from respondent, dated 1 December 2017

4.Following the hearing, the applicants made a further submission with various photographs of the roof and gutter attached. However, the respondent objected to all but the first two photos in this submission, which were of the gutter. Also, the respondent objected to a view of the site on the basis that the roof or gutter may have been altered, among other reasons.[6] Given these submissions, the Tribunal only accepted into evidence the first two photos of the applicants’ submission dated 8 September – the latter two photos were uncontested in regard their admissibility by the respondent. No view was conducted.

[6] Email from respondent, dated 8 December 2017

5.The contested issues at the hearing were:

(a)Is the respondent liable for any defects in the alfresco area of the applicants’ property that cause it to leak?

(b)If so, what is the appropriate remedy?

Applicants’ contentions

6.The applicants have the burden of proving their case on the balance of probabilities. Their contentions on the two contested issues in paragraph 5 above are summarised below.

7.Considering liability, the applicants contended that the respondent was liable because the alfresco area was part of the contract, and is defective in that it leaks, and is unsafe due to the water likely affecting the electrics. The applicants had emailed the respondent on 7 March 2015 about a range of “defects”, including “alfresco gyprock sagging and paint peeling and bubbling.”[7] While the respondent had attempted to fix the problem, the applicants contended that this had not been successful and “made the issue worse”[8], and the modifications looked unsightly. The modifications by the respondent included lifting a corner of the alfresco to change the fall of the gutter, and the applicant contended that this changed the slope of the alfresco roof such that it is not compliant with requirements.[9] Since then, despite numerous requests from the applicants for the respondent to return to fix the problem, the respondent did not. The applicants “contacted the Master Builders Association… to attempt to mediate…but [was] unsuccessful…” [10]

[7] Exhibit A1, hearing 9 August 2017, email from applicant to respondent, dated 7 March 2017

[8] Applicants’ civil dispute application, dated 30 March 2017, page 2

[9] Witness statement of Benjamin Davies, submitted 14 August 2017; applicants’ timeline of events, dated 29 June 2017, with photos attached of alfresco roof levels

[10] Applicants’ civil dispute application, dated 30 March 2017, page 2

8.At one stage when the alfresco area leaked significantly, the applicants made a claim for storm damage under their home insurance. The roof inspection report for this insurance claim, done by Laser Plumbing, dated 5 August 2016, concluded that “damage…is due to gutter having no fall and only being 25mm deep so in heavy rain gutter cannot keep up”[11]. In his oral evidence, the author of the Laser Plumbing Report, Mr Adam Mokotupu, confirmed that he had used a level to measure the gutter fall. When questioned he said that he remembered that the gutter fell the wrong way in the corner – he described this as an “exceptional” situation which is why he recalled it. Mr Mokotupu said in his oral evidence that an added problem for the gutter was that he measured the placement of weep holes and they were too high, about 25mms which is the ceiling height, and so water escaping would go into the ceiling rather than through weep holes. In his oral evidence he said that he observed no damage to the roofing or gutters, and that he would have noted such damage in his report if he had. He also said that he didn’t do a flow test because it was unnecessary given the latter problems. He confirmed that he is a licensed plumber, and that he did not damage the roofing or the gutters when he inspected them.

[11] Laser Plumbing Report, final page, submitted to Tribunal by applicant on 24 May 2017 

9.Considering the appropriate remedy, the applicants sought damages to have the works rectified, plus re-imbursement of their filing fee ($145) and search fee ($19). The applicants provided a written quote to rectify the problems, from Ideal Roofing and Maintenance Pty Ltd, dated 21 March 2017, for $9,800.[12]

Respondent’s contentions

[12] Attachment to applicants’ civil dispute application, dated 30 March 2017

10.The respondent contended that the application should be wholly dismissed. The respondent’s contentions against the two contested issues listed in paragraph 5 above are summarised below.

11.Considering liability, the respondent contended that it was not the cause of the leak in the alfresco area. The respondent contended that the private certifiers had “cleared [the respondent] of any ill constructed workmanship”[13]. Also the respondent contended that the alfresco area is a “class 10a structure…[and] according to the Building Code of Australia…these structures are allowed to leak as long as it isn’t affecting the Class 1a structure.”[14] The respondent referred to the respondent’s expert report, by 1800 Tap Fix, which stated “the damage was to the sheets, not the gutter, and was done some time after completion.”[15] Furthermore, the applicants had not notified the respondent of any issue about the alfresco area within various time limits under the contract including the ‘Maintenance Liability Period’ under the contact[16], and so the respondent contended that they had no contractual liability to fix it.

[13] Letter from Joshua Veliscek, dated 20 August 2017, attached to submission by respondent dated 22 August 2017

[14] Letter from Joshua Veliscek, dated 20 August 2017, attached to submission by respondent dated 22 August 2017

[15] Letter from Joshua Veliscek, dated 20 August 2017, attached to submission by respondent dated 22 August 2017

[16] Clause H, home building contract, dated 2 March 2017, being 90 days from the practical completion date – the latter date was notified by the respondent in a ‘Notice of Practical Completion’, dated 11 November 2014, see notice attached to submission by respondent dated 22 August 2017

12.The respondent’s witness, the builder, Mr Josh Veliscek, in his oral evidence said that he had built the box gutter in dispute. He is a licensed builder and carpenter, and as such could undertake this work. He confirmed that the respondent had attended to make alterations twice in 2015 and then 2016, as a courtesy. On one attendance in 2015 the builder, Mr Josh Veliscek, put in weep holes as a precaution. On another attendance in 2016 a licensed plumber engaged by the respondent changed the roofing and guttering by inserting a block into a support pillar to raise the gutter at that point, and also inserted overflow pipes into the gutter.  In his oral evidence Mr Josh Veliscek said that he had not personally measured the fall of the alfresco area’s roof or gutter, and relied on the evidence of the respondent’s expert, Mr Buonopane.

13.Considering remedies, the respondent contended that the application should be dismissed. The respondent also contended that the amount of damages sought by the applicants was excessive, and provided a quotation of $3,630 by JTS Building Group, dated 24 April 2016.

Findings

14.The applicants bear the onus of proof. The Tribunal’s findings on the two contested issues listed in paragraph 5 above are summarised below.

15.Considering liability, the Tribunal accepts the contentions of the respondent that the applicant failed to notify the respondent of the defect in the alfresco area within the Maintenance Liability Period (see paragraph 11 above). However, the respondent is subject to statutory warranties under the Building Act2004 (the Act), specifically that the work “will be carried out in a proper and skilful way and in accordance with the approved plans” (section 88(2)(b) of the Act). The statutory warranties expire at the end of the warranty period, that is, two years from completion for non-structural defects and six years for structural defects (regulation 38, Building (General) Regulation 2008 (the Regulations)). The Tribunal finds that the defects raised by the applicants are structural, in that they concern a “component (including weatherproofing) forming part of the external walls or roof of the building” (section 38(2)(b) and section 84 the Act). The alfresco area is part of the ‘building’ for the purposes of this warranty. The ‘Certificate of Occupancy and Use’ was issued 3 December 2014.[17] The applicants filed their application with the Tribunal on 30 March 2017. Therefore, the applicants filed his application well within the six year statutory warranty period.

[17] Certificate of Occupancy and Use, dated 3 December 2014, attached to submission by respondent dated 22 August 2017; sections 85, 88(4) the Act

16.The Tribunal finds that the respondent has not carried out the works in a proper and skilful way and in accordance with the approved plans, and has therefore breached the statutory warranty (section 88 of the Act). Considerations include “whether a product or system is being, or has been, used in a way that a reasonable person would expect is contrary to the intended use of the product or system” (regulation 31 of the Regulations). The Tribunal accepts the expert evidence of Mr Adam Mokotupu from Laser Plumbing who was the author of a roof inspection report, dated 5 August 2016, as the most reliable about the state of the alfresco gutter and roof upon completion. The Tribunal accepts that the gutter fell the wrong way when it was installed, that the weep holes were ineptly installed and some are unsightly, that the attempt by the respondent to fix the problems was inadequate in that the gutter continued to have problems that caused drainage problems which was exacerbated by alfresco roof’s fall being non-compliant with requirements after the attempted rectification by the respondent. On this basis, the Tribunal concludes that the guttering was ineptly installed, and not in a proper and skillful way. While there are different requirements that apply to the alfresco area being a class 10a building, the alfresco area was built with a finish, including a painted ceiling with electrics installed, that demonstrates it was meant to be comfortably used in more circumstances than fine weather. However this is not the case, and it leaks when it rains.

17.Considering all the evidence, the Tribunal does not accept that the applicants are the cause of any damage to the roofing, or that this is the cause of the ceiling leaking. The issue of damaged roofing due to foot traffic was not raised by tradespersons, including the respondent’s builder and plumber who attended in 2015 and 2016, and this issue was only raised by the respondent during these proceedings by the respondent’s expert.

18.The respondent’s expert evidence, by Mr Vince Buonopane, was not as reliable as that of the applicants’ expert, Mr Adam Mokotupu. Mr Mokotupu’s report and evidence was about the guttering before the second alteration to the guttering and roofing by the respondent in 2016, so it is the best evidence of the situation with the fall of the gutter at installation. This evidence is that it fell the wrong way in some areas which is clearly a defect.

19.Mr Buonopane undertook his assessment after the respondent had made two alterations to the roof and gutter. The Tribunal accepts that the second alteration by the respondent given the nature of the alterations would likely have improved the fall of the gutter in that it would then not fall the wrong way – the roof and gutter were raised by inserting a block into the corner pillar. However, there remained the question of whether this was an adequate rectification to the problem with the gutter, and also the applicants provided evidence that in doing the second alteration the fall of the alfresco roof was then changed such that it was non-complaint with requirements – the roof has a fall of .6 nearest the gutter which is less than required.[18]

[18] Witness statement of Benjamin Davies, submitted 14 August 2017; applicants’ timeline of events, dated 29 June 2017, with photos attached of alfresco roof levels

20.Mr Buonopane concluded that the gutter was “installed correctly”, and the cause of leaking is damage to the roof sheets which leads to “capillary action” -  he estimated $600 to correct this problem. However, his evidence did not provide specific information about the fall of the gutter or roof, or the height of the weep holes, to refute the applicants’ expert’s evidence or the applicants’ evidence about problems with these as set out earlier. Indeed, Mr Buonopane’s oral evidence, like that of the builder who installed the gutter, was that he didn’t measure the fall of the alfresco roof or the gutter using a level. Mr Buonopane based his conclusion on a test involving filling the gutter with water (the flow test), and he said in his oral evidence that he simulated “medium-range rain”. His evidence was too vague for the Tribunal to establish whether the flow test he conducted met the requirements under the Code.[19] In any case, when doing this test the applicants contended that the ceiling of the alfresco area leaked, and provided a video showing this. However, in his oral evidence Mr Buonpane denied that this occurred and stated that the only leak was from a small hole in the gutter which he fixed. The Tribunal has viewed the video submitted by the applicants, showing Mr Buonpane conducting the flow test on 14 July 2017,and accepts the applicants” evidence that the alfresco ceiling leaked as Mr Buonpane conducted his flow test and afterwards.

[19] Paragraph 3.5.2.3, Building Code of Australia 2016

21.On 8 September 2017 the applicants submitted two photos of measurements of the gutter. These photos confirm their contentions that that the inner height of the gutter is only approximately 25 mms deep.[20] They also show a weep hole that is well above the inner height of the gutter, in addition to an unsightly overflow pipe at the base of the gutter.

[20] Applicants’ submission, dated 8 September 2017; paragraph 3.5.2.4, Building Code of Australia 2016

22.Given all the evidence, the Tribunal finds that the respondent is liable for leaking in the alfresco area and has breached the statutory warranty (section 88(2)(b) of the Act). The Tribunal finds that while the respondent did two alterations to try to rectify the defects, neither has been satisfactory and indeed have in some respects made the situation worse, for example the roof now has an inadequate fall. Also, the Tribunal finds that these alterations were less than professional given a reasonable person’s expectations for these alterations to match the high level of finish that the alfresco area otherwise has that is it has a ceiling and installed lighting.

23.Considering the appropriate remedy, the Tribunal relies on case law which prefers the most reliable remedy of restoring the applicants to the position but for the breach. In this case this is awarding the applicants damages. If the Tribunal in this case ordered the respondent to fully rectify the problems with the alfresco area, having failed in two prior attempts, this would be a very doubtful remedy and so not preferred here.[21]

[21] Belgrove v Eldridge (1954) 90 CLR 618 and Kirkby v Coote [2006] QCA 61, as cited in Dunn v Hanson Australasia Pty Ltd [2017] ACTSC 169

24.Considering the quantum of damages, the Tribunal finds that the applicants’ quotation by Ideal Roofing Maintenance is the most reliable estimate of the cost of rectifying the problem of the leak to the alfresco area. The applicants’ quotation is more detailed for example to replace the roofing with “new Topdeck 700 roofing”, and also it more comprehensive, for example it includes “fit 90mm downpipe and connect to storm water”.[22] A significant advantage of the applicants’ quotation is that it is current, dated 21 March 2017, whereas the respondent’s quotation by JTS Building Group is dated 24 April 2016 and its validity expired on 1 May 2016. On this basis the Tribunal accepts the applicants’ claim for damages and re-imbursement of costs, in the sum of $9.964.

[22] Quotation Ideal Roofing and maintenance Pty Ltd, dated 21 March 2017, attached to applicants’ civil dispute application, dated 30 March 2017

25.The Tribunal orders that:

1.   Prue Davies is joined as an applicant

2.   The respondent is to pay the applicants the sum of $9,964 by COB 9 February 2018.

………………………………..

Senior Member L Beacroft

HEARING DETAILS

FILE NUMBER:	XD 358/2017
PARTIES, APPLICANT:	Benjamin John Davies
PARTIES, RESPONDENT:	Capital Homes Pty Ltd
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	N/A
SOLICITORS FOR RESPONDENT	Chamberlains Law Firm
TRIBUNAL MEMBER:	Senior Member L Beacroft
DATES OF FINAL HEARING:	1 September 2017