Economos v P and T Athos Constructions Pty Ltd

[2016] NSWCATCD 89

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Economos v P & T Athos Constructions Pty Ltd [2016] NSWCATCD 89

Hearing dates:

29 June 2016

Decision date:

15 November 2016

Jurisdiction:

Consumer and Commercial Division

Before:

D Goldstein, Senior Member

Decision:

1. P & T Athos constructions Pty Ltd must pay Angelo Economos and Maria Economos the sum of $30,201.18 immediately

 

2. The following orders will apply in the event that either party wishes to make an application for costs.

 

3. Any costs application pursuant to section 60 of the Civil and Administrative Tribunal Act 2013 or rule 38 of the Civil and Administrative Tribunal Rules 2014 must be lodged in the Tribunal and served on the costs respondent within 21 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.

 

4. The costs respondent will have 21 days after the date of receipt of the costs application referred to above, to lodge in the Tribunal and serve on the costs applicant the submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.

 

5. The cost applicant will have 14 days after the date of receipt of the cost respondent’s submissions to lodge in the Tribunal and serve on the costs respondent the submissions, if any, in reply, such submissions either attaching or referring to the documents relied upon.

 6. The Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal.

Catchwords:

Defective work

Legislation Cited:

Civil and Administrative Tribunal Act 2013
Civil and Administrative Tribunal Rules 2014
Home Building Act 1989

Cases Cited:

Bollock v Wellington (1996) 15 WAR 1
Briginshaw v Briginshaw (1938) 60 CLR 336
Codelfa Construction Pty Ltd v State Rail Authority of NSW 149 CLR 337
Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305
Nguyen v Cosmopolitan Homes [2008] NSWCA 246
Steffen v Ruban [1996] 2 NSWLR 622
Thorn v. Mayor and Commonalty of London (1876) 1 App Cas 120

Category:

Principal judgment

Parties:

Applicants: Angelo and Maria Economos
Respondent: P & T Athos Constructions Pty Ltd

Representation:

Counsel:
Mr I George for the applicants
Mr T Flaherty for the respondent

  Solicitors:
Mavrakis & Associates for the applicants
Jordan Djunda for the respondent

File Number(s):

HB 15/39207

Publication restriction:

Unrestricted

Reasons for Decision

1. In these proceedings the applicants claim against the respondent in the sum of $71,050.00 for defective work which they allege the respondent carried out at their residence in Northbridge, Sydney.

2. These proceedings were heard in the Tribunal on 29 June 2016. The parties were legally represented.

3. There is no dispute between the parties that the owners’ claim is a building claim as that term is defined in the Home Building Act 1989 (the ‘Act’) and that I have the jurisdiction under the Act to determine the claim.

4. In these Reasons for Decision I will refer to the applicants as the owners and to the respondent as the builder.

5. The evidence tendered at the hearing was:

1. Exhibit 1, respondents quote 1006, 12 January 2014;

2. Exhibit 2, Abril building solutions report dated 10 June 2015;

3. Exhibit 3, GIO background and policy details;

4. Exhibit 4 builder’s letter to Fair Trading 9 August 2015;

5. Exhibit 5 Mr Drexler's 20 June 2016 Amendment to 4 February 2016 report;

6. Exhibit 6, Mr Drexler Drexler's 20 June 2016 report – costings;

7. Exhibit A, Joint Tender Bundle Volumes 1 and 2, excluding Mr Economos’ affidavit dated 28 June 2016 which was left out of the bundle; and

8. Exhibit B, Fair Trading letter 13 July 2015.

6. The owners’ claim arises out of a contract entered into by the parties on 2 October 2014.

The contract

7. I find that the parties entered into a HIA NSW Residential Building Contract for Renovations & Additions (the ‘contract’) which was dated 2 October 2014. The contract price was $68,200.00. The builder’s quotation number 10009 dated 23 February 2014 was a contract document. Pursuant to Schedule 4 of the contract the building works were to be described by reference to the builder’s quotation 10009.

8. Clause 38 of the contract expressly set out the warranties that were implied by section 18B of the Act.

9. I find that the documents contained in Exhibit A show that the builder sent a Notice of Practical Completion to the owners in which it assessed the date of practical completion to be 14 January 2015.

10. The builder has submitted that the contract ought to be construed having regard to the discussions held between the parties before signature and in the context of the relevant background facts.

11. I find that the owners were having work carried out to their residence from funds made available by their insurers as a result of insurance claims made by them in the past. I do not see that fact as being of particular significance. More importantly in my view is the fact that the owners did not have consultants prepare plans or specifications for the work they wanted to have done.

12. Instead I find that the parties discussed the work to be done by the builder. I find that this does not decrease the builder’s obligations or the standard of the work that was to be undertaken. The builder submitted its quote for the work and I find in so doing considered and stated the price for which it was offering to carry out and complete the work.

13. In the decision of the House of Lords in Thorn v. Mayor and Commonalty of London (1876) 1 App Cas 120 Lord Chelmsford at p 132 thought that "in the exercise of common prudence" the contractor before tender ought to have informed himself of "all the particulars connected with the work, and especially as to the practicability of executing every part of the work contained in the specification, according to the specified terms and conditions". On the facts in issue in these proceedings, I think the same may be said of the builder before it sent its quote to the owners even if it did not have the benefit of a specification and perhaps more so because of the fact that it had no specification or design. I find that it was up to the builder relying on its expertise to set out all the necessary work in its quote and to price for that work to be carried out at a profit that it found acceptable.

14. In Codelfa Construction Pty Ltd v State Rail Authority of NSW 149 CLR 337 Mason J stated that as a canon of commonsense Lord Chelmsford’s statement could not be faulted. But it could not be elevated into an absolute rule of law – ‘its value and force necessarily depends on the relationship between the parties and the arrangements which they make.’ I find that that the builder ought to have carefully considered and priced every aspect of the work that it was obliged to carry out in order to discharge its contractual obligations. This is reinforced by the fact that clause 38 of the contract expressly incorporated the warranties contained in section 18B of the Act.

15. These warranties included the standard warranty of completing the works in a proper and workmanlike manner and also extended to warranties to provide a dwelling reasonably fit for occupation and fit for a specified purpose. In this case the builder’s evidence is that the owner stated that a purpose of the work was to deal with water damage and to prevent leaking.

The experts

16. The owner served a report prepared by SGS building services. Mr Shamieh was the author of the report which was dated 2 November 2015. Mr Shamieh is a Bachelor of Structural Engineering. He holds a builder’s license and is a licensed building consultant. His curriculum vitae discloses substantial experience as a contract builder and a civil and structural engineer. There is no challenge to Mr Shamieh’s status as an expert. I find that he has the expertise necessary to give opinion evidence in the Tribunal and in these proceedings.

17. Mr Shamieh carried out site inspections of the residence on 20 May 2015 and 14 October 2015. On 28 October 2015 he conducted a flood test of the detention wells along the southern boundary of the residence.

18. Mr Shamieh prepared an Inspection Findings Schedule which contains 21 items of what he states is defective work. In this schedule he describes the defect, states which regulatory requirement he believes has been breached and then sets out the rectification methodology that he proposes. Mr Shamieh prepared a Scott Schedule and also a Brief Estimate Summary where he summarises the amount he has calculated as the cost of rectification in connection with each item in his report. He then prepared a Trade Break up of each and every item which explains how the total rectification cost is arrived at.

19. Mr Shamieh calculated that the total rectification cost is $71,050.00. This amount includes a builder’s mark up of 30% and GST of 10%.

20. The builder served an expert building report prepared by Mr Drexler dated 4 February 2016. Mr Drexler inspected the residence on 22 January 2016.

21. Mr Drexler holds a building license and has completed a building course at Western Sydney TAFE. He has also passed a Building Industry Skills Centre exam. Mr Drexler has been working in the building industry since 1975. I accept Mr Drexler as an expert capable of giving opinion evidence in the Tribunal.

22. In his report Mr Drexler addresses each of the defects which Mr Shamir has referred to. Mr Drexler did not complete the Scott schedule which Mr Shamieh prepared. However Mr Shamieh has prepared another version of the Scott schedule into which he incorporated Mr Drexler's comments. Mr Drexler has conceded that the builder has carried out some defective work and he has priced that at $156.00.

23. Some nine days before the hearing Mr Drexler prepared two reports which were tendered at the hearing. In one report he amended clause 5.1 of his report dated 4 February in connection with detention pit one. That report was Exhibit 5. He also prepared a costing report dated 20 June 2016 which is Exhibit 6. In that report Mr Drexler omitted to total the amount of his costs or to state what in his opinion an appropriate builder’s mark-up was.

24. I have totalled the amount he has found to be the cost of rectifying the defects identified by Mr Shamieh, $24,014.00.

25. I do not take his report to be a concession that the work identified by Mr Shameih is defective. He has costed the work in the event that it is found to be defective. In all cases his estimate of rectification costs is less than the amount arrived at by Mr Shamieh.

The insurance Issue

26. The builder issued a summons to produce documents to the owners’ insurers. The documents produced in answer to the summons are contained in exhibit A under tab 10. Exhibit 2 is a ‘Builder Assessment – Report’ from Abril Building Solutions dated 10 June 2015 which records that company attended at the owners’ residence on 10 June 2015. The purpose of the attendance was to inspect storm damage to the residence as a result of storms experienced in Sydney between 20 and 22nd of April 2015. The report states that Abril was advised that during the rainfall on 21st April, water was dripping through the garage ceiling damaging the plasterboard and cabinets. The report states that on inspection of that area damage was viewed which appeared to be consistent with recent rain water ingress.

27. The report reveals that Abril engaged a plumber to inspect and report to them regarding the damage. The plumber reported that on the right hand side of the property above the storm water tank, the box gutter which discharged into the main water tank was full of garden debris, leaves and branches which did not allow the storm water system to discharge from the box gutter into the rainwater tank. It was stated that this allowed the box gutter to fill with stormwater causing it to overflow onto the garage ceiling. The damage was stated to be in the plasterboard ceiling to the garage and in the shelving cabinets in the garage.

28. I accept the matters stated in the Abril report to be true.

29. I find that on 8 November 2015 Abril claimed $9,425.29 from the insurer for work carried out at the owners’ residence between 23 September and 14 October 2015 in connection with the owners’ claim relating to the April 2015 storms. Documents produced by the insurers show that the work authorised by it related to cabinets and the ceiling in the garage of the residence including supply and installation of 5 tall storage units to match existing, and supply and installation of new bulkheads to match including replacement of damaged sections of plasterboard ceiling.

30. I infer from the above documents that the insurer through Abril carried out work to the value of $9,425.29 at the owners’ residence as a result of a claim made by the owners on their insurance following the April 2015 storms. In particular I find that the work carried out was in the garage of the residence and was replacement of the storage units in the garage and portions of the plasterboard ceiling. The evidence which I accept establishes that the work was completed on 14 October 2015 and I find accordingly.

The defects claim

31. Since there is no agreement between the experts regarding the defect items, I will deal with each and every item raised by the owners as set out in the scott schedule prepared by Mr Shamieh.

Item 1, Water leaking into Garage from above ground detention pit 1. Failed waterproofing membrane – amount claimed $2,776.00

32. Mr Shamieh states that water is leaking into the garage from detention pit 1. He stated that he completed a flood test of detention pit one and in so doing he hired labourers to remove all stones contained within the detention pits. He then plugged the side overflow and filled the pit with water at the level of the overflow. He then placed green dye for ease of detection of leaks in the water.

33. Mr Shamieh further states that after a short time he noticed that water was constantly seeping into the garage along the three walls enclosing the above ground pit. He also stated he observed the green water escaping from the pit walls into the adjoining control discharge pit. His photographs 5 – 10 evidence the water leakage. He states that the work is defective since it does not comply with BCA 2014 P2.2.2 and in particular that there must be membrane failure in detention pit 1.

34. BCA P2.2.2 states:

‘A roof and external wall (including openings around windows and doors) must prevent the penetration of water that could cause –

(a) unhealthy or dangerous conditions, or loss of energy for occupants; and (b) undue dampness or deterioration of building elements.’

35. By way of rectification work, Mr Shamieh recommends stripping back the bitumen membrane and preparing and patching with acrylic render and waterproofing of walls and floors and terminate waterproofing to external walls.

36. Mr Drexler states that in his opinion Mr Shamieh damaged the waterproof membrane in detention pit 1 by arranging for the removal of the stones from there. He concludes by stating that it is not possible to determine whether the failure of the waterproof membrane in detention pit 1 was due to the builder’s workmanship issues or caused by Mr Shamieh removing the stones out of detention pit 1.

37. Further Mr Drexler's has costed the waterproofing work in connection with this item and concludes that the rectification costs should total $1,026 00.

38. I do not accept Mr Drexler’s evidence that the cause of the leaking is that Mr Shamieh damaged the waterproof membrane in the detention pit 1 by arranging for the removal of the stones. In my view that is mere speculation on his part. Mr Shamieh was cross examined about this and did not concede that there was a possibility that the removal of the stones damaged the membrane. I accept his evidence in that regard.

39. I accept Mr Shamieh’s evidence that he conducted a flood test and that he was able to observe water leakage into the garage area indicating membrane failure in detention pit 1. As a result I find that the cause of the leaking into the garage observed by Mr Shamieh was membrane failure in detention pit 1. I find by reference to the builders quote that it carried out the membrane work and because the membrane failed, the builder was in breach of clause 38.1(a) of the contract.

40. I have discussed the insurance report that was obtained after the April 2015 storms. I am aware that the cause of the leakage into the garage was at that time stated to be garden debris, leaves and branches blocking the drainage system. There was no flood testing undertaken by the insurers at that time. As a result of Mr Shamieh’s later evidence which I accept, I do not accept the Abril report, exhibit 2, as establishing that the sole cause of the leaking into the garage was the blockage or impediment of the drainage system by garden debris, leaves and branches.

41. Mr Shamieh’s estimated rectification cost is $2,776.00. Mr Drexler has estimated the cost of the work to be $1,026.00. The difference between them is the hours estimated to perform the work. Mr Shamieh has allowed 40 hours and Mr Drexler has allowed 12 hours.

42. Damages are a once and for all remedy. Mr Shamieh’s estimates are conservative while Mr Drexler’s seem somewhat optimistic. I accept Mr Shamieh’s estimate in preference to Mr Drexler’s because it allows enough time for every aspect of the rectification work to be carried out in a proper and orderly way without undue haste which may occur if I were to accept Mr Dexler’s estimate. I will find for the owners in the amount of $2,776.00 estimated by Mr Shamieh to allow the rectification work to be carried out as carefully as possible in connection with this defect item.

Item 2, Water leaking into Garage from control discharge pit 1 – failed waterproofing membrane - amount claimed $6,392.00

43. Mr Shamieh states that this item is concerned with defective membrane in the control discharge pit 1 which is adjacent to the detention pit 1, the subject of item one. Mr Shamieh also flood tested ground detention pit 2 as the photographs in his report establish. He states that as a result of his testing water began to seep into the garage. The photographs in his report P18 – 21 establish the water ingress to which he refers. As I understand this section of his report, Mr Shamieh is stating that there are membrane failures in control discharge pit 1 and detention pit 2 which cause water ingress into the garage.

44. In relation to this item Mr Drexler gives evidence that he has been instructed by the builder as to certain matters of fact. Be that as it may, I do not accept that his statement of what he has been told by the builder is evidence of that fact or facts. I find that it is necessary for the builder to support the assumptions in Mr Drexler’s report by the provision of suitable evidence. I find that the builder has not provided evidence to establish the matters referred to in paragraphs 5.2.1.3 or 5.2.1.10 of Mr Drexler's 4 February 2016 report. In particular annotations to photographs in annexures to Mr Athos’ affidavit are not particularly helpful. The same may be said as regards the annotations to the photographs in Exhibit 4.

45. I accept Mr Shamieh’s evidence that he conducted the tests that he has described and that those tests indicted water leakage into the garage. Mr Shamieh identified a bulged area of membrane in control pit 1 as shown in his photograph 13. I find based on Mr Shamieh’s evidence that the cause of the water leakage into the garage was failed waterproof membranes in control discharge pit 1 and detention pit 2 and that the builder was responsible for carrying out this work. I infer from these facts that the builder breached clause 38.1(a) in carrying out this work causing the defects that Mr Shamieh has identified.

46. Mr Shamieh has calculated the cost of rectification to be $6,392.00. Mr Drexler's has also costed the waterproofing work in connection with this item and concludes that the rectification costs should total $1,162.00. The difference between them is the hours estimated to perform the work. Mr Shamieh has allowed 70 hours and Mr Drexler has allowed 14 hours.

43. As stated above damages are a once and for all remedy and I find that Mr Drexler’s estimate seems to be too optimistic given that work is required in two places, control discharge pit 1 and detention pit 2. I accept Mr Shamieh’s estimate of the hours necessary to carry out this work for the same reasons that I accepted his estimate in connection with defect item 1.

44. I will make an order in the owners’ favour in connection with this item in the sum of $6,392.00.

Item 3, 150mm stormwater pipe penetrating cavity wall of Garage - amount claimed $1,545.00

49. Mr Shamieh's evidence in connection with this item is that a storm water pipe which penetrates a 270mm wide cavity wall of the garage does not have a weatherproof apron or a flashing sleeve. He states that water from the metal roof has entered into the cavity and by implication it has done so through the penetration created by the storm water pipe penetration of the cavity wall. Mr Shamieh said that he has noticed that silicon that has been placed around the pipe and the external wall to stop the ingress of water into the garage below meaning, I find, that he assumes that water has entered the cavity of the garage wall through that area.

50. He further states that the suspended plasterboard ceiling of the garaged was damaged beyond economic repair. I deal with that issue under defect item 16.

51. Mr Drexler states that there is no evidence of water ingress from the storm water pipe and that repair is not warranted.

52. Mr Shamieh states that the contract has been breached as well as BCA P2.2.2. Since the main issue raised by Mr Shamieh is that there has been a penetration of the garage wall without a weatherproof apron or a flashing sleeve and that the use of silicone is a secondary method of waterproofing, I find that the builder has breached clause 38.1(a), failure to build in a proper and workmanlike manner, namely the failure to provide a weatherproof apron or a flashing sleeve.

53. Mr Shamieh has calculated the cost of rectification to be $1,545.00. Mr Drexler's has also costed the waterproofing work in connection with this item and concludes that the rectification costs should total $1,272.00. The difference between them is the hours estimated for disconnection of stormwater pipe from the cavity penetration. Mr Shamieh has allowed 4 hours and Mr Drexler has allowed 1hour. I find that Mr Drexler’s assessment is the most appropriate as the task seems straightforward with a relatively small length of pipe to be removed as Mr Shamieh’s photographs indicate.

54. I will make an order in the owners’ favour in connection with this item in the sum of $1,272.00.

Item 4, repaired section of box gutter near outlet holding water – non-trademan like repairs - amount claimed include in item 5

55. In relation to this item the owners’ expert states that there are excessive joins present in the box gutter near the outlet as depicted in photograph number 27 of his report. He also states that the section is holding water and not falling into the outlet nearby, thus suggesting defective falls. He states that BCA P2.2.2, weather proofing has been breached.

56. Mr Drexler for the builder stated that when he inspected the works he could see no evidence of water seepage through the box gutter. That may not be surprising since he inspected the residence on 22 January 2016. He further points out that there is no evidence that water is seeping through the box gutter and that he observed ponding of water at one location along the box gutter, but it was his opinion that ponding of water in one section of the box gutter was a minor defect.

57. He also states that unsightly joins in the box gutter do not contravene BCA P2.2.2 and that ponding of water in a section of the box gutter also does not contravene BCA P2.2.2. He does state that in his opinion the builder is required to insert additional rivets in the section of the box gutter where water is ponding to allow the water to flow into the stormwater pit and he has costed that in his assessment of the rectification cost relating to item 5.

58. Based on the evidence referred to above I find that the experts are agreed that rectification work is required in connection with this defect item and that the costs are reflected in item 5, which in turn are carried through to defect item 9.

Item 5, fasteners spaced 75 mm apart to be repaired - amount claimed included in item 9

59. The owners’ expert says very little in connection with item 5 apart from the fact that fasteners are spaced more than 40mm apart and that he observed the fasteners of joints to be 75mm apart. Mr Shamieh cites a number of sources in support of this complaint stating that the placing of fasteners in this regard contravenes a number of regulatory requirements and suppliers recommendations.

60. Mr Drexler agrees with this item stating that it is a minor defect. He states that he could not determine why the builder inserted insufficient rivets into the metal sheets in the box gutter and the most likely reason was because the builder was unaware of the correct spacing for the rivets.

61. So far as the rectification cost of this item is concerned, the owners’ expert has included the costing in the costing for item 9. I will deal with this issue in item 9 on the basis that both experts agree that this item represents defective work.

Item 6, inadequate downturn folds of box gutter into recess outlet – amount claimed $1,388.00

62. This item relates to a recessed outlet in a box gutter and is illustrated in photo 29 in the owners’ expert’s report. Mr Shamieh states that there are inadequate downturn folds into the recess outlet. As I understand the report Mr Shamieh states that the downturns should be more than 50 mm, but they are not. The basis for this statement is not provided. There is also a complaint that there is no flashing as the recessed outlet passes through the cavity wall.

63. Mr Shamieh states that the builder has constructed this aspect of the works in contravention of the contract, BCA P2.2.2 and SA HB 39:2015 which is a Standards Australia document providing an installation code for metal roof and wall cladding.

64. Mr Drexler states that he was instructed by the builder that the recess outlet in the gutter box was constructed by a previous builder. Be that as it may, the builder has not provided any evidence to make good this instruction. As stated previously annotations to photographs in annexures to Mr Athos’ affidavit are not particularly helpful. The same may be said as regards the annotations to the photographs in Exhibit 4. If important evidence is desired to be given that work the owners allege the builder performed defectively or in breach of contract was in fact carried out by some other person leading to a conclusion that the builder ought not be held liable for that work, such evidence should I find be given clearly, in detail and in a statement or an affidavit. This has not been done by the builder.

65. Otherwise Mr Drexler states that there is no evidence that water is seeping through the recess outlet in the box gutter and as such there is no defective workmanship. In particular he states that there is no contravention of BCA P2.2.2 if there is no evidence of water penetration through the box gutter.

66. I agree with Mr Drexler that there is no evidence of water seepage leading to the conclusion that there is no breach of BCA P2.2.2. SA HB 39:2015 is clearly a 2015 code. The works were practically complete in January 2015. I cannot be persuaded that the Code was applicable when the relevant work was carried out. As such I will not find that there has been a failure to comply with it.

67. Mr Shamieh’s evidence does not specifically establish a breach of clause 38 of the contract.

68. This item of the owners’ defects case is dismissed.

Item 8, eight inadequate box gutter depth – amount claimed $18,419.00

69. Mr Shamieh states in connection with this item that the box gutter is defective because it has inadequate depth which affects its water carrying capacity. He also states that the box gutter is obstructed with a 150mm stormwater pipe from the rear downpipe.

70. He states that as a result of these matters, namely the inadequate depth of the box gutter causing a reduced water carrying capacity, damage to the first floor cladding and water ingress into the dwelling is considered by him to be inevitable. He cites breaches of the contract, BCA 2.2.2 and BCA Part 3.5.2, Gutters and Downpipes, clause 3.5.2.1 (b) which states:

‘Compliance with this acceptable construction practice satisfies Performance Requirement P2.2.1 for gutters and downpipes provided-

(b) the roof drainage system is designed so that any overflow during heavy rain is prevented from flowing back into the building.’

71. Mr Drexler states that he is instructed that the box gutter was an existing structure constructed by a previous builder and that increasing the depth of the box gutter was not part of the builder’s contract. Be that as it as it may, the builder has not provided any evidence to make good these instructions. As previously stated, annotations to photographs in annexures to Mr Athos’ affidavit are not particularly helpful. If important evidence is desired to be given that work the owners allege the builder performed defectively, or in breach of contract was in fact carried out by some other person leading to a conclusion that the builder ought not be held liable for that work, such evidence should I find be given clearly, in detail and in a statement or an affidavit. This has not been done by the builder in connection with this defect item.

72. Mr Drexler also states that there is no evidence of water seepage through the box gutter.

73. The basis of Mr Shamieh’s report is that;

‘damage to the first floor cladding and water ingress into the dwelling in wet periods is inevitable’

74. I find that by reason of this statement Mr Shamieh is unable to say and has not stated that there has been water ingress into the dwelling in the past via the box gutter. There is also no evidence that during heavy rain water from the box gutter has flowed back into the residence.

75. There is no evidence of a regulatory requirement that the box gutter be of a specified depth, or must hold a specified volume of water and that the builder has not complied with those requirements. In addition Mr Shamieh does not state that there has been a failure to construct the box gutter in a proper and workmanlike manner. At best his evidence hints that the box gutter may not be fit for purpose.

76. Mr Shamieh does not carry out a calculation of how much water the box gutter could carry and how much water it ought to carry. As a result I would have to make a number of assumptions in Mr Shamieh’s favour in order to find that the builder has breached clause 38.1(f) of the contract or indeed any other aspect of clause 38.1.

77. In Briginshaw v Briginshaw (1938) 60 CLR 336 Dixon J stated as follows in connection with the civil standard of proof, such observations being relevant to deciding whether a matter is proved on the balance of probabilities:

“Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences”

78. The relevant principles in relation to discharging the burden of proof in civil cases were recently summarised by the New South Wales Court of Appeal in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55] as follows:

‘(1) A finding that a fact exists (or existed) requires that the evidence induce, in the mind of the fact-finder, an actual persuasion that the fact does (or at the relevant time did) exist;

(2) where on the whole of the evidence such a feeling of actual persuasion is induced, so that the fact-finder finds that the probabilities of the fact’s existence are greater than the possibilities of its non-existence, the burden of

proof on the balance of probabilities may be satisfied;

(3) where circumstantial evidence is relied upon, it is not in general necessary that all reasonable hypotheses consistent with the non-existence of a fact, or inconsistent with its existence, be excluded before the fact can be found; and

(4) a rational choice between competing hypotheses, informed by a sense of actual persuasion in favour of the choice made, will support a finding, on the balance of probabilities, as to the existence of the fact in issue.’

79. Mr Shamieh’s evidence in connection with this defect item does not establish to my reasonable satisfaction that the builder has breached the contract by constructing the box gutter with a 150mm stormwater pipe sitting in it. Nor do I have an actual persuasion that there has been a breach of contract.

80. In Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 Heydon JA referred to the need for an expert’s opinion to be based on a reasoning process. He referred with approval to the decision of Anderson J in Bollock v Wellington (1996) 15 WAR 1 at 3 where Anderson J said:

"Before an expert medical opinion can be of any value the facts upon which it is founded must be proved by admissible evidence and the opinion must actually be founded upon those facts ..."

and citing Steffen v Ruban [1996] 2 NSWLR 622:

"As with any other evidence, expert opinion must be comprehensible and the conclusions reached must be rationally based. A court ought not to act on an opinion, the basis for which is not explained by the witness expressing it ...

None of these requirements is satisfied, when all that the medical expert says is `I have examined this patient and from what I know about plant operation I think he can drive a D10 bulldozer on production work'."

81. I find that Mr Shamieh’s opinion that ‘damage to the first floor cladding and water ingress into the dwelling in wet periods is inevitable’ is not supported by a reasoning process such that it is rationally based. I particular as I have stated there is no basis advanced by Mr Shamieh that the builder has breached any code or requirement as regards the depth of the box gutter or the placing of the pipe in the box gutter. There is also no evidence of water ingress or back flow into the residence via the box gutter.

82. For the reasons expressed, I dismiss this aspect of the owners’ defects case.

Item 9, rivets spaced more than 40 mm apart at joints in box gutter

83. As with item 5 the owners’ expert says very little in connection with this item apart that from the fact that fasteners are spaced more than 40mm apart and that he observed the fasteners of joints to be 75mm apart. Mr Shamieh cites a number of sources in support of this complaint stating that the placing of fasteners by the builder contravenes a number of regulatory requirements and suppliers’ recommendations.

84. Mr Drexler agrees with Mr Shamieh in the same way as he did in connection with item 5.

85. The cost of this rectification work is included in the estimate given for item 8. In the trade breakup for item 8, there are two items which seem relevant. They are items 12 and 13 which state:

‘12. Allowance for rivets at 40 mm apart for all joints (2 men) and undersealing of joints                  $2,192.00

13. Sealants/rivets/screws/glue/nails            $1,000.00’

86. Mr Shamieh has calculated the cost of rectification to be $3,192.00. Mr Drexler's has also costed item 8 and provided his costings of items 12 and 13 above at $744.00.

87. The difference between the experts is that for item 12 is that Mr Shamieh has allowed 32 hours and Mr Drexler has allowed 8 hours. In connection with item 13 is that Mr Shamieh has allowed $1000.00 and Mr Drexler has allowed $200.

88. There are three defect items collected in the costs referred to above. They are items 4, 5 and 9.

89. For the same reasons as expressed in connection with item 1, will accept Mr Shamieh’s estimate in the larger amount. I will make an order for $3,192.00 in the owners’ favour for this defect item.

Items 10, 11 and 12, the height of the storm water pipe is higher than the up stand of the box gutter and parapet wall and inadequate pipe falls - amount claimed included in item 8

90. Mr Shamieh states that the storm water pipe which is in the box gutter measures 50mm higher than the top of the parapet capping of the external wall and could be seen from the front footpath. He also states that the pipe is wedged against the base of the box gutter with 2 x 10mm plastic packers one of which is slipping away. Importantly he states that the straight length of the pipe running inside the box gutter has no fall and as a result he states that the work is defective. He states that there has been a breach of BCA 2.2.2 and BCA Part 3.5.2, Gutters and Downpipes, clause 3.5.2.1 (b) which states:

‘Compliance with this acceptable construction practice satisfies Performance Requirement P2.2.1 for gutters and downpipes provided-

(b) the roof drainage system is designed so that any overflow during heavy rain. is prevented from flowing back into the building.’

91. Mr Drexler agrees that the height of the storm water pipe is above the box gutter. However he says he says that this factor is of no consequence and there is no contravention of any section of the BCA, or Australian Standards. He also states that there is no evidence of water seepage through the storm water pipe negating any reliance on a breach of BCA P2.2.2 and that there are no measurements to establish that there is an inadequate fall in the pipe. He also states that the two plastic Packers wedged between the stormwater pipe and the box gutter have no function and can be removed.

92. I am not satisfied that Mr Shamieh’s evidence establishes a breach of BCA 2.2.2 or BCA Part 3.5.2 because his opinion relies in part on the fact that the pipe may be seen from the street. In that regard there is and can be no breach of BCA 2.2.2 or BCA Part 3.5.2. So far as an inadequate fall is concerned Mr Shamieh has taken no measurements to support his opinion. As a result I give that part of his report no weight as it is not supported by the necessary detail which is I find necessary to give the evidence persuasive value. As regards the packers, I accept Mr Drexler’s opinion that they serve no purpose and may be discarded.

93. For these reasons I dismiss this aspect of the owners’ case.

Item 13, defective flashing to steel beam causing water entry and damage to kitchen and laundry ceiling - amount claimed $4,131.00

94. In connection with this item Mr Shamieh says that there is defective capping of a rear steel beam and that the work has been carried out in a non-tradesmen like manner and there are gaps to the top and bottom flange and web of the beam. He states that the steel beam was partially capped and the joints to the cappings were unsatisfactorily smeared with sealant. He further observed that gaps referred to do not prevent the ingress of water in wet periods and relies on a breach of BCA P2.2.2.

95. Mr Drexler states that he has been instructed by the builder that it did not install the steam steel beam, but it was part of the existing structure and that the flashing to the steel beam was part of the existing structure not part of the builder’s contract. As stated previously the builder has not filed any evidence to establish the matters to which Mr Drexler refers.

96. The builder’s quote 10009 dated 23 February 2014 does not mention either the provision of or the flashing of a steel beam or the flashing of an existing steel beam. I find that by reference to quote 10009 the contract did not require the builder to carry out the work the owners’ expert states is defective.

94. It is on this basis that this item of the owner’s claim is dismissed.

Item 14 new cladding boards are not level to existing – amount claimed $1,800.00

98. Mr Shamieh states that the new cladding boards on the external southern wall are not level with the existing boards and they bow outwards by 10 mm. He further states that the box gutter upstand placed under the boards causes the bow of the boards. By way of rectification Mr Shamieh calls for the removal and replacement of these boards.

99. Mr Drexler for the builder agrees that the boards are out of level by 10mm. He also states that the existing boards are also out of level. Mr Drexler states that he has been instructed by the builder that a steel beam is present directly behind the newly installed cladding boards and because of that, they are out of level. The builder provides no evidence that there is a steel beam behind the newly installed cladding boards thus making good the instruction referred to by Mr Drexler. Mr Shamieh states that when installing these boards bowing outwards by 10mm, the builder has breached BCA P2.2.2 and the Office of Fair Trading Guidelines section 5.02. Mr Drexler states that neither BCA P2.2.2 or OFT 2007 section 5.02 has been breached.

100. The Office of Fair Trading Guidelines section 5.02 states:

‘Staining, folds, splits, dents, open joints between panels, cracking and other distortions in wall cladding are defects if they are visible from a normal viewing position at ground level or an upper floor level.’

101. The experts agree that the boards are out of level. The fact that pre-existing boards may also be out of level as stated by Mr Drexler, does not I find permit the new boards installed by the builder also to be out of level or to bow outwards by 10 mm. The builder’s obligation was to construct the boards in accordance with clause 38.1(a) which required the work to be performed in a proper and workmanlike manner. I find by reason of the experts’ agreement that the boards are out of level that the work was not performed in a proper and workmanlike manner.

102. Mr Shamieh has estimated the rectification cost to be $1,800.00. Mr Drexler estimates the cost to be $544.00.

103. The difference between the experts is that Mr Shamieh has allowed 8 hours work at $100.00 per hour and materials and tip fees at $1,000.00. Mr Drexler has also allowed 8 hours albeit at a lesser rate and states that the boards could be re-used thereby avoiding the cost of materials and tip fees.

104. I do not accept Mr Drexler’s evidence that the boards, or all of them, may be re-used thus creating a saving. I find that the boards have been nailed or fixed into position. It is in my view unduly optimistic to assume that all boards may be de-nailed and then refixed without damage or waste. It is for that reason that I do not accept Mr Drexler’s rectification estimate. In these circumstances I accept Mr Shamieh’s estimate on the same basis as was stated in connection with defect item 1.

105. I will find for the owners in the sum of $1,800.00 in connection with this item.

Item 15, new cladding boards are not level to existing bow inwards – amount claimed $1,800.00

106. This defect item is similar to item 14 except the boards bow inwards by 10mm and the boards the subject of this defect item are in a different position to those referred to in item 14.

107. For the same reasons as were provided in connection with item 14, I will find for the owners in the sum of $1,800.00 in connection with this item.

Item 16, water ingress from box gutter and outlet damaging suspended plasterboard ceiling in garage - amount claimed $3,583.00

108. The amount claimed in connection with this item relates to removal and replacement of the damaged suspended plasterboard ceiling in the garage as set out in Mr Shamieh’s Trade Breakup in his report.

109. I reject this aspect of the owners’ claim. As I have found, by 14 October 2015 Abril Building Solutions at the owners’ insurer’s expense had completed the rectification work to the damaged plasterboard ceiling of the garage caused by water ingress in the April 2015 storms. The cause of that water ingress was stated to be that the box gutter which discharged into the main water tank was full of garden debris, leaves and branches thereby preventing the storm water system to discharge from the box gutter into the rainwater tank.

110. I find that the damaged plasterboard ceiling was repaired by the insurer. There is also no evidence that the water testing that Mr Shamieh undertook on 28 October 2015 caused any damage to the plasterboard ceiling in the garage.

111. It is on this basis that this item of the owners’ claim is dismissed.

Item 17, water ingress from box gutter and outlet damaging joinery unit placed at rear garage wall - amount claimed $3,403.00

112. This defect item is similar to item 16.

113. The amount claimed in connection with this item relates to supply and install new joinery unit as set out in Mr Shamieh’s Trade Breakup in his report.

114. I reject this aspect of the owners’ claim. As I have found, by 14 October 2015 Abril Building Solutions at the owners’ insurer’s expense had supplied and installed 5 tall storage units in the garage to match existing which were water damaged during the April 2015 storms.

115. I find that the water joinery units were replaced by the insurer.

116. There is also no evidence that the water testing that Mr Shamieh undertook on 28 October 2015 caused any damage to the joinery units in the garage.

117. It is on this basis that this item of the owners’ claim is dismissed.

Item 18, water damage and staining to plasterboard ceiling near rear wall kitchen - amount claimed $263.00

118. Mr Shamieh states that there is water damage and staining to the plasterboard ceiling near rear wall. His photograph 54 states that this has occurred from defective capping to the rear steel beam. Item 13 relates to defective capping to the rear steel beam.

119. I have found that the builder’s quote 10009 dated 23 February 2014 does not mention either the provision and flashing of a steel beam or the flashing or capping of an existing steel beam. I have found that the contract did not require the builder to carry out the work the owners’ expert states is defective. As with item 13, it is on this basis that this item of the owner’s claim is dismissed.

Item 19, water staining on suspended plasterboard ceiling from above box gutter - amount claimed $263.00

120. The location of water staining is stated to be the laundry.

121. Mr Drexler stated that he could not see the staining complained of.

122. The photographs in Mr Shamieh’s report show faint hints of water staining which he asserts indicates leakage from the box gutter above.

123. The Department of Fair Trading rectification order of 13 July 2015 notes a leak to the laundry ceiling as a defect, although it is the builder’s case that it had rectified this defect as at 9 August 2015.

124. Given that the photographic evidence of the alleged defect is inconclusive and that Mr Drexler stated that he observed no evidence of staining, I am not persuaded that the laundry ceiling is stained as alleged indicating water leakage from the box gutter above.

125. This item of the owners’ claim is dismissed.

Item 20, plasterboard wall surface patched and not finally finished above cupboard doors – amount claimed $263.00

126. The location of this defect is stated to be in the kitchen.

127. Mr Drexler agrees that the plasterboard wall above the cupboard door in the kitchen has been patched but not painted. He states that he has been instructed by the builder that patching and painting of the plasterboard wall in the kitchen was not part of the builder’s contract. The builder has not provided evidence to make good his instruction to Mr Drexler.

128. I have had regard to the builder’s letter dated 11 February 2015 to the owner which is attached to Mr Shamieh’s report which states that the defect rectification work that the builder would be carrying out included ‘Patch in front of cupboards where we replaced carcase’.

129. The Department of Fair Trading rectification order of 13 July 2015 states touch up the bulkhead over the kitchen cupboard carcass over the ovens as a defect, although it is the builder’s case that it had rectified this defect as at 9 August 2015.

130. The evidence of the experts confirms that this work was not carried out. On that basis I will find for the owner in the amount of $236.00 as stated by Mr Shamieh.

Item 21, final appearance of finish to all timbers - amount claimed $3,658.00

131. Mr Shamieh states that the final appearance of the timber privacy screens shows a clear gloss finish over a poorly prepared timber substrate. He states that the builder’s work is defective having regard to OFT2007 Section 12.02. He suggests that rectification should be to strip, prepare and sand timberwork and seal with three coats of urethane or sikkens type finish.

132. Mr Drexler states that the weathering of the clear gloss finish to the external privacy screens is due to climatic conditions, including wind, rain and sun.

133. The photographs taken by Mr Shamieh show a deterioration of the timber privacy screens, which the experts agree upon.

134. The works were practically complete on 14 January 2015 and by 2 November 2015, the date of Mr Shamieh’s report or earlier depending when his photographs were taken, the deterioration of the timber privacy screens was readily apparent.

135. I accept Mr Shamieh’s evidence that the painting of the timber privacy screens with ‘sikens’ as required by the contract breached both the contract , clause 38 and OFT2007 Section 12.02.

136. The builder acknowledged that this work was defective in February 2015.

137. I do not accept Mr Drexler’s evidence that the weathering of the clear gloss finish to the external privacy screens is due to climatic conditions, including wind, rain and sun. For such deterioration to occur within less than 12 months I find indicates defective work by the builder. Table 12.05 of OFT2007 demonstrates that the minimum durability of exterior semi-transparent stains is 12 months, yet the work carried out by the builder has lasted less than that time.

138. I will find in the owners’ favour in connection with this item.

139. Mr Shamieh has estimated the rectification cost to be $3,658.00 Mr Drexler estimates the cost to be $976.00.

140. The difference between the experts is that Mr Shameih has allowed 64 hours work for strip, prepare and sand timber privacy screens with 3 coats of clear finish at $53.25 per hour and materials of $250.00. Mr Drexler has allowed 12 hours for the same work and materials of $160.00.

141. I find that it is clear that the nature of the work stated by Mr Shamieh in his rectification methodology is time consuming and requires substantial effort to prepare the timber for 3 coats of clear finish. It is for this reason that I have come to the conclusion that Mr Shamieh’s estimate is to be preferred to Mr Drexler’s as it provides greater assurance that the amount awarded to the owners will allow the rectification work to be carried out in a proper and workmanlike manner.

142. For these reasons I will find in the owners favour in the sum of $3,658.00 in connection with this defect item.

Margin

143. Mr Shamieh has allowed a builder’s mark up of 30% on the rectification costs in the scott schedule that he prepared. Mr Drexler did not address the issue of a builder’s mark up.

144. Mr Shamieh was cross examined on the mark up and it is on the basis of his evidence regarding the mark up in cross examination that I am satisfied and find that a 30% mark up for rectification work is justified and that the owners will be put to the expense of a mark up in that vicinity in having rectification work carried out by a rectification contractor.

145. It is on this basis that I will allow the owners to recover a 30% mark up on the rectification costs.

Conclusion

146. I have found the following amounts in favour of the owners.

Defect Item	Amount Found
1.	$2,776.00
2.	$6,392.00
3.	$1,272.00
9.	$3,192.00
14.	$1,800.00
15.	$1,800.00
20.	$ 236.00
21	$3,658.00
Subtotal	$21,126.00
Margin 30%	$ 6,337.80
Subtotal	$27,463.80
GST 10%	$ 2,746.38
Total	$30,201.18

147. The total amount found in favour of the owners is $30,201.18.

148. The builder has not sought an order that it be permitted to carry out the necessary rectification work and it is on that basis that I have not made a work order under the Act.

Costs

149. The following orders will apply in the event that either party wishes to make an application for costs.

150. Any costs application pursuant to section 60 of the Civil and AdministrativeTribunal Act 2013 or rule 38 of the Civil and AdministrativeTribunal Rules 2014 must be lodged in the Tribunal and served on the costs respondent within 21 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.

151. The costs respondent will have 21 days after the date of receipt of the costs application referred to above, to lodge in the Tribunal and serve on the costs applicant the submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.

152. The cost applicant will have 14 days after the date of receipt of the cost respondent’s submissions to lodge in the Tribunal and serve on the costs respondent the submissions, if any, in reply, such submissions either attaching or referring to the documents relied upon.

153. The Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal.

D Goldstein

Senior Member

Civil and Administrative Tribunal of New South Wales

15 November 2016

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: 05 January 2017