Donald Gregory Everson and Jo Anne Everson v Robert James Mackley

[2014] NSWCATCD 252

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Donald Gregory Everson and Jo Anne Everson v Robert James Mackley [2014] NSWCATCD 252
Hearing dates:	24 September 2014
Date of orders:	16 October 2014
Decision date:	16 October 2014
Jurisdiction:	Consumer and Commercial Division
Before:	N Correy, Senior Member
Decision:	That the Respondent builder pay to the applicant homeowners the sum of $10,000.00 within 28 days of the date of this order
Legislation Cited:	Home Building Act 1989 (HBA)
Category:	Principal judgment
Parties:	Donald Gregory Everson and Jo Anne Everson (the homeowners ) applicants Robert James Mackley (the builder) respondent
Representation:	The homeowners were self-represented (Jo Anne Everson) Duncan Maclean and Associates for the builder (Mr Birtles)
File Number(s):	HB 14/10250

reasons for decision

APPLICATION

1. The application by the homeowners alleges that they contracted with the builder pursuant to a Contract for the Sale of Land settled on 1 May 2013 to purchase the premises at XXX Baranbah St Baan Baa on the condition that certain renovation work to the premises would be completed in a proper and workmanlike manner. It is alleged that the renovations were defective and incomplete.

2. The homeowners seek damages from the builder for allegedly defective and incomplete work. The homeowners’ claim for damages arises on the basis that Clause 46 of the sale agreement quoted at paragraph 6 below, constituted essentially a separate contract in respect to the building works which were undertaken by the builder as a condition of the sale. It is asserted for the homeowners that they are entitled to the benefit of the warranties and obligations arising under the Home Building Act 1989 and particularly Section 18B in respect of the work carried pursuant to Clause 46 of the agreement.

JURISDICTION

3. This Tribunal derives its jurisdiction in this matter under the Home Building Act 1989 (the Act). This dispute arises out of a contract to perform residential building work involving the renovation of an existing residential premises .The amount in dispute in respect of such work is well within the prescribed $500,000.00 monetary limit of this Tribunal as prescribed by the Civil and Administrative Tribunal Act 2013 (the Act).

ISSUE

4. Whether or to what extent the works performed by the builder were defective or incomplete at the date of completion of the purchase contract.

5. Whether the claimed costs of rectification/ completion are reasonable.

THE EVIDENCE

6. On 9 April 2013 the homeowners entered into a Contract for the Sale of land with the builder for the amount of $135,000.00. Included in the sale contract was the following Clause:

6.1“ COMPLETION OF RENOVATIONS BY VENDOR PRIOR TO COMPLETION

6.2 46 It is the vendor’s obligation hereunder at his sole expense and in a proper and workmanlike manner and using proper and sufficient materials to complete the renovations to the house standing on the land hereby sold in accordance with the following specification all to the standard manifest at the Vendor’s property renovated by him at 5 Baranbah Street Baan Baa .

46.1 Kitchen

46.2 Laundry

46.3 Dividing Wall

46.4 Remove old awning at rear and replace with new awning

46.5 Painting of the interior

Renovations of Bathroom

6.3 The bathroom is to be completely renovated with shower , bath , vanity and toilet in a proper and workmanlike manner and to the purchaser’s satisfaction .”

7. The homeowners’ evidence was largely contained in the detailed statement dated 13 June 2014 of Jo Anne Everson (JAE) who represented their interests at the hearing , gave oral evidence and was cross examined .

8. It was JAE’s evidence that prior to signing the contract they had initially inspected the premises around February 2013. At the time of that initial inspection she says that the renovations were already underway , although there is a difference in views as to the extent of the works at that time mainly in relation to the kitchen

9. The builder asserts that at the time of the initial inspection all the kitchen carcasses for the cabinets were in place although the cabinet doors, kitchen sink and bench were not installed. JAE says that at this time the carcasses were only partly installed.

10. JAE says that at the initial inspection there were discussions as to what work was to be carried out although the only documentation relating to such work as was agreed is that contained in Clause 46 referred to above.

11. JAE indicated further that at the time of the first inspection the builder was residing in another premises owned by him close by in the same street which was also an old house in respect of which he had already completed renovations. JAE asserts that the builder had also shown them around the subject premises and that he had agreed that the subject premises was to be brought up to the same standard as the premises in which he was residing that had already been completed, as a condition of the sale. The latter assertion is not denied by the builder although it is not referred to in Clause 46.

12. No evidence was tendered by either party as to the actual standard of the other premises in spite of its integral relevance to an understanding of the alleged obligation being undertaken by the builder with respect to the subject premises.

13. JAE says that the builder put pressure on her to settle the purchase on 1 May 2013 because he was in need of the settlement money to proceed with a purchase of another property he wished to renovate. Because of this she asserts that the builder said “He would come back and fix things after settlement”.

14. JAE conceded that she had inspected the subject premises at least 10 times during the course of the works as it progressed prior to settlement. The builder asserts that she was there considerably more often and that the number would be at least 20 times.

15. JAE says that prior to settlement she was aware that the kitchen was a second hand one and that at the time she did not object to that fact. She conceded that the only issue she raised with the builder prior to the settlement was that there were a number of holes in the cabinets which she asserts he had indicated that he would return and fix.

16. In relation to the bathroom JAE says that at the pre settlement inspection she complained about the floor being wavy like an ocean and that the vanity was not new because it was discoloured with water damage. She claims that the builder said that he would come back and fix these things but she does not say that he said that he would replace the vanity with a new one .The builder says that the vanity was new as he had purchased it from Bunnings, but conceded that some damage had occurred because of it having been exposed to weather before it was installed.

17. In her oral evidence JAE said that the door between the bathroom and laundry, which is a sliding door installed by the builder, does not move. She described the problem with this door as being the way in which it is built into the wall without any access to its roller mechanisms

18. Also in her oral evidence JAE indicated that there is a similar problem with the laundry floor as with the kitchen floor. In this regard she was referring to the small room which constitutes the laundry as distinct from the area inside the laundry cupboard /cabinet itself. She claimed that the floor levels of the laundry room are irregular and that the builder had agreed to come back after settlement to put some covering on the floor to fix this problem.

EXPERT EVIDENCE

19. The homeowners’ claim for damage is set out in the Joint Scott Schedule (JSS) dated 4 September 2014, which was prepared following an informal joint conclave. The joint conclave report and the JSS were relied upon by both parties. Of the six items listed in the JSS three are agreed as to both liability and quantum. The three disputed items are the kitchen, the floor covering of the kitchen and the bathroom /laundry.

20. The homeowners claim relies on the expert report of Mr Ralph Westley dated 26 August 2014. Mr Westley’ s opinion is that the kitchen bathroom and laundry are so substandard and defective that they should be ripped out and replaced altogether as repair in his view would be impractical . He says also that new floor coverings should be installed in the kitchen to make good the variations in the floor where different applications of flooring have been used.

21. Mr Jeffrey Cork, the expert for the builder provided a report which is in evidence dated 2 July 2014. Mr Cork also was called and gave oral evidence. Although Mr Cork conceded a substantial number of defects in relation to all aspects the main difference in his opinion is that he believes all defects can be rectified and he strongly disagrees with Mr Westley’s contention as to the need to fully replace the kitchen and bathroom.

22. Mr Cork’s view in relation to a number of items including the kitchen flooring was that they were not part of the agreement and therefore there was no liability for them.

23. The homeowners’ expert evidence in relation to quantum with respect to the bathroom and laundry is not itemised as to the work required but simply relies on the global amounts opined by Mr Westley as being necessary to completely replace the bathroom and laundry namely $18,000.00 and $6,000.00 respectively .

24. Mr Cork has provided detailed costings for the work which he concedes is required. It is clear that in relation to the bathroom his costings are limited to the retiling of the floor and re-aligning of the shower screen.

25. Mr Cork conceded when questioned that he had not made allowances for all alleged defect items set out in Mr Westley’s report as he had only received it a couple of days prior to the conclave .At my request he provided rough estimates as to such further defective items as were alleged by JAE in her evidence and supported by photographs tendered by her and as more particularly identified and set out in Mr Westley’s report. Mr Cork conceded around $1,500.00 additional costs for the bathroom and laundry to rectify these further defects .

26. It is noted that Mr Cork did not include any allowances for fixing the sliding door between the bathroom and laundry or for making good the alleged irregular and uneven flooring outside the bathroom and laundry. Mr Cork indicated that without looking at those areas he was unable to provide estimates.

27. The homeowners’ claim in respect of the kitchen replacement is $8,800.00 which is broken down into a number of items as set out in the Westley report. Mr Cork at the conclave conceded repair costs totalling $281.00. Once again however Mr Cork conceded in oral evidence that he had not accounted for all of the alleged defective items as set out in Mr Westley’s report or as evidenced by the photographs tendered by JAE. He conceded an additional amount for the further items queried bringing his total for the kitchen repairs to around $1,000.00.

CONSIDERATION AND DECISION

28. This case presents some difficulties for the homeowners arising largely from the inadequate documentation of the terms of precisely what work was to be carried out pursuant to the agreement .Paragraph 46 of the sale contract is very vague. There is no evidence from either party such as photographs illustrating the quality or type of work or the extent of finish at the builder’s other renovated premises which was supposed to be the yardstick for the works at the subject premises.

29. I am satisfied that the homeowner was aware prior to settlement that what she was getting in respect of the kitchen under the contract was second hand not new . Similarly in terms of the bathroom whether or not the vanity was new, she had inspected it before settlement and accepted it subject to the proviso that the builder was required to come back and fix any defects.

30. The evidence does not satisfy me to the required standard of proof that the homeowners had bargained for a totally new bathroom or totally new kitchen.

31. To award the homeowners damages on the basis sought in reliance on the evidence of Mr Westley would involve a potential betterment on what I find for which the original agreement had bargained. Furthermore JAE knew prior to settlement what they were getting and accepted it as such and proceeded to settle on the understanding that the builder would return and fix the defects and or complete outstanding work, but there was no agreement that he would replace second items with new ones.

32. The homeowners were entitled to have the renovations agreed upon with the fittings and fixtures included as inspected and accepted prior to settlement, provided the work in doing so met the standards required by the warranties under the HBA which are in any event essentially consistent with the specific terms of Clause 46 of the contract as well. The builder was obliged to carry out the works generally in a proper and workmanlike manner which I find in many respects he clearly did not do.

33. JAE has made assertions as to the credibility of the builder having regard to the certain inconsistencies in his statements. It has also been alleged that the builder was unlicensed at the relevant time the contract was entered. The evidence does establish that the builder’s license had lapsed on 1 April 2013, prior to signing the contract, although the works were well underway by that time. The builder concedes that he has been seeking to have his licence reinstated but the delay in doing so has been caused by OFT requisitions

34. I do not propose to make findings in relation to credibility as the objective evidence as to the state of the works speaks for itself for the purpose of this determination. As to the fact of the builder being unlicensed presently, it is clear that his licence did lapse during the course of the work after it had commenced and indeed only days prior to the signing of the contract. Whether or not the builder was licensed is not relevant to the assessment of the damages. It would only be relevant if a work order was proposed but I do not consider that a work order is appropriate.

35. Mr Birtles submitted that Mr. Cork’s evidence should be preferred to that of Mr. Westley because Mr Cork’s evidence was compliant with the expert witness code of conduct and Mr. Westley’s evidence was not compliant. There is clearly some force to Mr Birtles’ submission therefore where there are conflicting views relative to whether or not particular defects existed, Mr Cork’s view I find would have to be preferred.

36. My decision however does not rely on the report of Mr. Westley for the purpose of establishing liability for defects nor in most respects for quantum as Mr. Westley only provides very limited relevant evidence with regard to quantum for the purpose of this decision.

37. Mr Westley articulates with clarity various alleged defects in respect of which the home owner has given evidence and which was useful for identifying those various alleged defects, which were put to Mr. Cork in the witness box. It is clear from Mr. Cork’s response in some instances and from the supporting photographic evidence that he conceded them as defects and gave cost estimates for their repair as outlined earlier at paragraph 25 and 27 above.

38. I find that the homeowners have established the existence of defects which are quantifiable to the extent of $7,000.00, and indeed this amount was conceded in submissions by Mr Birtles following the concessions made by Mr Cork in his evidence.

39. The main defects/ incomplete items that were not the subject of allowances by Mr Cork were the making good of the sliding door between the bathroom and laundry in order to allow access to the roller fittings for adjustment and the finishing of the flooring in both the kitchen and the laundry.

40. Mr. Westley does provide evidence as to the costs to complete the floor in the kitchen, namely $2,000.00. There is no evidence as to the cost to complete the floor in the laundry, that is, the non-tiled area outside the laundry cupboard itself.

41. I find that it is reasonable to accept the evidence of Mr. Westley with respect to the completion of the kitchen flooring to compensate the home owner in respect of that area. Since Mr. Westley’s assessment is the only evidence on this point, notwithstanding that his evidence, having regard to it being non-compliant with the Code, should be given little weight, and does not preclude me from giving it any weight at all. Since it is the only evidence in relation to completion of the floor cost it is not conflicting with that of Mr. Cork as he excluded this item only because in his view it was not included in the contract, a determination that was not within his jurisdiction to make.

42. Whilst there is no evidence available to enable me to quantify the actual cost to make good the laundry/bathroom/sliding door I accept the home owners statement that it is simply not functioning and needs to be rectified and therefore it constitutes a defect .However I can make no allowance for this defect as there is no evidence available quantifying this as a separate item and Mr Cork was unable to give any estimate for it without seeing it.

43. The laundry floor suffers a similar deficiency to that of the sliding door in that there is no specific costing for it. Mr Westley’s $6,000.00 estimate is a global figure to cover the replacement in full and is unhelpful. However JAE’s evidence was that the laundry floor problem is similar to that of the kitchen even though the room itself is smaller than the kitchen. I conclude that half the cost of the kitchen flooring rectification as estimated by Mr Westley at $2,000.00 is a reasonable allowance for the laundry room. I therefore propose to allow $1,000.00 to complete /rectify the laundry room floor.

44. I therefore find the cost to rectify the defects and to complete the work in accordance with clause 46 of the contract and the warranties under the HBA is $10,000.00 made up of the $7,000.00 in items conceded by the builder and the $3,000.00 as determined by me in paragraphs 40, 41, and 43 above.

N Correy

Senior Member

Civil and Administrative Tribunal of New South Wales

16 October 2014

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 20 February 2015