HOLMAN and W&D MOFFATT PTY LTD
[2016] WASAT 105
•5 SEPTEMBER 2016
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)
CITATION: HOLMAN and W&D MOFFATT PTY LTD [2016] WASAT 105
MEMBER: MR C RAYMOND (SENIOR SESSIONAL MEMBER)
MR R AFFLECK (SENIOR SESSIONAL MEMBER)
HEARD: 7 JUNE 2016
DELIVERED : 5 SEPTEMBER 2016
FILE NO/S: CC 1736 of 2014
BETWEEN: IAN EDWARD HOLMAN
Applicant
AND
W&D MOFFATT PTY LTD
Respondent
Catchwords:
Building Services (Complaint Resolution and Administration) Act 2011 (WA) - Review of decision of Building Commissioner to issue building order for remedial work - House subject to extensive cracking of walls - Onus of proof - Whether necessary to show fault on part of builder or whether sufficient to show the regulated building service is faulty or unsatisfactory
Legislation:
Builders' Registration Act 1939 (WA), s 12A
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 3, s 5(1), s 37, s 37(1), s 38(1), s 57(1)(c)
State Administrative Tribunal Act 2004 (WA), s 27
Result:
Decision under review to be varied
Summary of Tribunal's decision:
The applicant applied under s 57(1)(c) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) for the review of a decision by the Building Commissioner to issue a building remedy order requiring the applicant to remedy the cause and effect of extensive cracking throughout the respondent's house, which had been constructed by the applicant for the original owner.
Various causes of the cracking had been hypothesised by the respondent's expert witness. The cracking had become progressively worse over a number of years. Monitoring over a two year period showed that the slab was warping with significant differential movement being experienced. It had only recently been discovered that the house had been constructed over the sloping bank of an old irrigation dam that had been on the site. The experts for both parties agreed that the principal cause of cracking was as a result of the differential movement of the slab which was effectively sliding in the direction of the dam. It was also agreed that cracking caused by bowing of the internal side of walls on the perimeter of the house was caused also by thermal movement of the roof sheeting.
The Tribunal rejected a submission from the applicant that it did not have jurisdiction to deal with a claim that the cracking was caused by the movement of the slab towards the dam because this was not advanced before the Building Commissioner, as the complaints were the same and the Tribunal was entitled in a de novo review to have regard to new evidence. The Tribunal also rejected a submission that it was necessary to find that the applicant was at fault in the sense of being negligent or incompetent. The applicant was responsible for the design of the foundation system, which had failed as it was not capable of supporting the weight of the house so that the regulated building service was faulty and unsatisfactory. The building service had also not been carried out in a proper and proficient manner because both expert witnesses agreed that a proper investigation of the site should have been carried out. The respondent had discharged the onus on it in these respects but the Tribunal did not uphold its contentions in relation to other alleged causes which were not established on the evidence.
The Tribunal found that the building order under review would need to be varied so that the action required by the applicant was consistent with the Tribunal's findings and that further input was required from the parties before a time could be imposed for the completion of the necessary remedial work. Consequently, the matter was adjourned to a directions hearing.
Category: B
Representation:
Counsel:
Applicant: Mr MS Macdonald
Respondent: Mr A Prime
Solicitors:
Applicant: Macdonald & Rudder
Respondent: MDS Legal
Case(s) referred to in decision(s):
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27
Bradshaw v McGuire WASC (FC) Unreported 30 April 1986
Diploma Construction (WA) Pty Ltd v South Central (WA) Pty Ltd [2015] WASC 289
J-Corp Pty Ltd and Ly & Anor [2006] WASAT 132
Saeed v Minister for Immigration and Citizenship [2010] HCA 23
REASONS FOR DECISION OF THE TRIBUNAL:
The Proceedings
The applicant applies under s 57(1)(c) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act) for the review of a decision made by the Building Commissioner to issue a building remedy order as reflected in Building Remedy Order No. 228 of 2014 in respect of a regulated building service carried out by the applicant in constructing a residential house at 5 Maher Street, Somerville, Kalgoorlie (the House, when referring to the building or the Property).
The Issues
The resolution of the following issues will be determinative of the application:
1.Does the Tribunal have jurisdiction to find that the regulated building service carried out by the builder has not been carried out in a proper and proficient manner or is faulty or unsatisfactory on grounds not raised before the Building Commissioner?
2.On a proper construction of the BSCRA Act does a complainant bear an onus to establish fault on the part of the builder by himself, his servants or agents?
3.Does the evidence establish that the regulated building service carried out by the builder has not been carried out in a proper and proficient manner or is faulty or unsatisfactory?
Although the parties' statement of issues, facts and contentions and their submissions raise many subsidiary issues they are subsumed within these main issues.
Background
The applicant is hereafter referred to as the builder and the respondent is referred to as the owner.
There is little factual dispute between the parties. The facts hereinafter stated have been extracted from the various documents provided by the parties and constitute facts found by the Tribunal unless the context reflects any controversy between the parties, in which event specific findings will be made and reasons for such findings will be given during the discussion of the above issues.
The House was one of a number of houses constructed following a subdivision of land then known as Lot 123 Gatacre Street which was completed during 2005. A sewer reticulation layout plan for the subdivision was prepared by an engineering firm, Duncan Jack Consulting Engineer (DJCE), showing the contours of the land. It is common cause that the plan depicts the location of a dam used to store water for a market garden that existed in the area prior to the subdivision.
A copy of the plan appears at page 214 of the Hearing Book (Exhibit 1) incorporated in a report prepared by the builder's expert engineer witness Mr Stephen Russel Woodhouse of the firm WML Consulting Engineers dated 29 February 2016 (WML Report). The position of the Property has been superimposed and shows that the central part of the longer western boundary of the Property, extending for approximately 5/8ths of the width of the Property, towards the east, is directly above one of the sloping sides of the dam, with the deepest part of the dam just to the west of the western boundary.
It should be noted that the above description is consistent with the description and use of the points of the compass used by the expert witnesses in their various reports referred to later. In evidence, probably inadvertently lead by the Tribunal in seeking clarification, the experts tended to refer to the side of the House, described in the reports as the western side, as the northern side with corresponding changes to all descriptions referencing points of the compass. This confusion arose quite easily and understandably because the true North/South line as shown in various plans in evidence actually runs at a diagonal through the House rather than squarely through any face of the building. To avoid confusion we have adopted the same manner of description as used in the reports rather than as used in oral evidence.
The Western Australian Planning Commission (WAPC) placed a number of conditions when granting approval for the sub-division. The conditions included that:
•the land be filled and drained to the satisfaction of the WAPC; and
•the applicant (for the sub-division approval) provide a geotechnical report certifying that the land be physically capable of development to the satisfaction of the WAPC.
By an email dated 18 December 2005 from the Coordinator Statutory Planning, City of Kalgoorlie Boulder (the City), confirmation was given that the City had advised the land surveyor (acting for the applicant for subdivision approval) by letter dated 2 September 2005, that all conditions of the WAPC's conditional approval had been met. It was also advised that hard copy records, including the geotechnical report, archived 10 years previously, would take some time to locate.
By further email of 12 January 2016, the City advised that despite checking the City's planning and engineering records and with WAPC and DJCE (described as being the design engineer for the subdivision), the geotechnical report could not be located. A copy of the report has not been put into evidence.
At the request of the builder, DJCE carried out a site classification for the Property. By letter of 6 December 2006 to the builder, DJCE advised that the classification:
… is based on local knowledge of the subsoil conditions as determined by a site visit to the site. The site classification has been based on visual assessment of the site and knowledge of soils in the area. No further investigations or testing have been undertaken and it is recommended that the site classification be confirmed when excavations for footings have been completed.
The area has been classified as a moderately reactive clay site and the footing system for the proposed building should therefore be designed to Class 'M' standard.
There is no evidence that the site classification was confirmed when the excavations for the footings had been completed.
A building licence for the construction of the House was issued by the City to the builder on 1 March 2007. There is no evidence as to when the construction of the House was completed but there is no suggestion that the complaint subsequently made by the owner to the Building Commissioner is out of time.
On 30April 2007, DJCE issued a report reflecting that the footings had been inspected on 4 April 2007 and the slab had been inspected on 9April 2007 and that the footing layout, thickness, reinforcement starter bars, internal tie bars and cover, slab thickness, waterproof membrane, slab reinforcement chairs reentrant bars, slab mesh ties to starter bars and internal thickening reinforcement were all correct and correctly installed.
No representative of DJCE was called to give evidence and the owner places in issue whether some stiffening beams are correctly located or that edge beams are correctly fixed to the slab so as to obtain proper integration. This is in contention and is addressed further below.
On 9 March 2010, the owner purchased the Property improved by the House from the then owners, Ms Deborah Gail and Mr Russel James Baker. The purchase was conditional upon the obtaining of a prepurchase inspection report not disclosing any significant defects and if it did, prescribing the parties to the contract rights. A report dated 13 May 2010 was obtained which commented, amongst other matters, that all walls and ceilings were in sound condition and that the exterior was in good condition with no major cracking to the brickwork.
Settlement of the Property sale occurred in July 2010 and the directors of the owner company took occupation in October of that year. Some cracking of walls was evident.
The cracking has become progressively worse over time (although more recently, movement of the slab has occurred to a greater extent in some areas than others and there has actually been a reduction in the width of some cracks). The state of the cracking has been recorded in a series of engineering reports prepared for the owner commencing in November 2012, with a report from Structerre Engineers (Structerre). This Structerre report noted specific areas of cracking to the external leaf of brickwork and to internal framed walls. None of the cracks was regarded as of structural significance and was attributed potentially to differential footing movement due to settlement of the sand pad or volumetric variation of clay soil. Distortion in the internal wood framed gyprock walls was stated to be caused by installation of under sized or over spanned materials and improper connection between elements and bowing of the gyprock (which had by then been replaced) to incorrect fixing to the studs. No definitive investigation was carried out to identify any specific cause of the cracking. Monitoring was recommended, together with other steps, to limit clay moisture variation. A further report from Structerre dated 15 October 2013, observed that the cracking had worsened over the 11 month period between inspections and that the cause of the damage was becoming more evident, being seasonal movement of the underlying clay soils and although the engineering drawings for the House were not available for review, it appeared that the footings may not have been constructed in accordance with the engineering details. While this was given as the primary cause of cracking, reference was made to a secondary consideration, being the construction of the timber wall frames, particularly the connection of the wall frames to the slab and connection of the bracing walls. The report concluded that to provide a clear picture of the construction of the House, invasive investigation and destructive testing would need to be undertaken.
The owner thereafter received numerous reports and email advice from an engineer, Mr Peter Airey, of Airey Taylor Consulting (ATC). The ATC reports and advice initially also opined that stiffening beams and edge beams could not have been constructed in accordance with the engineering details (which were then available for review) because if they had been properly constructed in accordance with the design, the cracking which was evident could not have occurred. This view was supported by pointing out that doming was unlikely to have occurred, a phenomenon associated with moisture variation of clay soils, which would be expected to cause level changes in corner rooms which was not evident. While level differences were evident, they were in other areas of the House (ATC Report 8 April 2015). The pattern of damage to internal wall coverings was described as repetitive and in all cases involving damage to sheeting on one side of the wall. This was said not to be expected with differential movement of the foundations, but by movement of the roof relative to other fixed elements such as walls. It was recommended that the roof framing be checked for compliance with the applicable Australian Standard. The cracking was again noted to have increased between an initial inspection by Mr Airey in April 2014 (ATC Report, 23 April 2014) and an inspection by him in April 2015.
All of these engineering conclusions are disputed by the builder whose position is that no conclusive cause is established for the cracking and it has not been shown that he is in any way at fault. In short, the builder contends that the owner has failed to discharge the onus upon it. No invasive investigation or destructive testing has been undertaken. The owner had refused the builder's request to allow drilling to ascertain whether the foundations were constructed in accordance with the design, on the basis that this could not determine how the footings were 'attached to the rest of the frame work' and because of the cost involved, including loss of rental and relocation of the tenant (letter from MDS Legal dated 2 February 2016, at page 187 of Exhibit 1). The issue was not pursued by seeking any direction from the Tribunal.
The builder engaged his own expert engineer, Mr Woodhouse, of WML Consulting (WMLC), to whose report of 29 February 2016 reference has already been made. Mr Woodhouse rejects the suggestion there must be a failure in the connection of the slab to the footings. He points out that the floor slab has sunk significantly as shown from Mr Airey's measurements so that it cannot be assumed there is any difference in the extent to which the footings have subsided relative to the slab. For the first time, reference is made to the sewer reticulation drawing which had been recently discovered and which, it was noted, Mr Airey had not had an opportunity to comment upon.
Mr Woodhouse refuted a contention by Mr Airey that soil perturbation was a likely cause of foundation sapping resulting in cracking in the kitchen area. Mr Woodhouse further points out that the plumbing in this area is at a right angle to the kitchen wall so that a lack of compaction of the plumbing trench backfill is unlikely to be a cause of the settlement of the kitchen wall.
The WMLC report further addresses the contentions raised concerning the roof sheeting and timber studs to wall frames. Both issues were the subject of specific examination. It is concluded that the sheeting conforms to the recommendation of the manufacturer and that thermal movement is unlikely to be the 'principle' (sic) cause of any damage. The stud framing was found to conform to the applicable Australian Standard.
The issues between the parties' respective expert witnesses were the subject of conferral and the filing of a joint expert statement in accordance with the Tribunal's usual practice. The joint expert statement considerably narrowed the differences between the experts, particularly as it enabled consideration by them of the location of the former dam. Our findings on the engineering issues are dealt with below in considering whether the owner has established that the regulated building service provided by the builder, has not been carried out in a proper and proficient manner, or is faulty or unsatisfactory.
In the builder's substituted statement of issues facts and contentions (SIFC) filed on 4 March 2016, the various causes for the cracking asserted by the owner were all disputed. Reference was made to the location of the former dam as a possible cause of settlement of the House and it is alleged that there are other alternative causes which further testing would be required to determine. It is alleged that the owner has failed to provide evidence discharging the onus on it, to establish that the builder is responsible for the damage to the House.
It is noted that the builder specifically states at paragraph 6 of its SIFC that DJCE carried out the site classification and designed the footings, slab and thickening beams at its request. It is not in issue and the case has been conducted on the basis that the builder was responsible for the design of the House.
In closing submissions, counsel for the builder raised for the first time, a contention that the Tribunal lacked jurisdiction to determine the matter on grounds not raised before the Building Commissioner. The owner did not object to the issue being dealt with at that point and as the Tribunal must always be satisfied that it has jurisdiction, it is a matter which must be considered.
Does the Tribunal have jurisdiction to find that the regulated building service carried out by the builder has not been carried out in a proper and proficient manner or is faulty or unsatisfactory on grounds not raised before the Building Commissioner?
The owner, in a response to the builder's SIFC raising the location of the dam as a possible cause of the cracking, conveyed its reliance on what Mr Airey described in the ATC report of April 2016 as the warping of the slab, with the west and south pronounceably lower than the north and east, the likely cause of which is that the House is constructed over a site which is continuing to develop differential settlement. Counsel for the builder challenged the jurisdiction of the Tribunal to consider this potential cause as he submitted that it was not a ground raised before the Building Commissioner.
This issue can be dealt with quite shortly. The complaint to the Building Commissioner raised extensive cracking in seven specific locations within the House and external walls. That remains the complaint. The cracking has widened in some areas and closed to some extent in others. All that is new is the evidence of monitoring and describing the cracking and the opinions offered for the cause or causes of the cracking.
The review is a hearing de novo and pursuant to s 27 of the State Administrative Tribunal Act 2004 (WA) (SAT Act). The Tribunal may consider new material whether or not it existed at the time the decision under review was made.
The Tribunal has jurisdiction to determine whether liability on the part of the builder arises due to subsidence of the House caused by the location of the former dam.
On a proper construction of the BSCRA Act does a complainant bear an onus to establish fault on the part of the builder by himself, his servants or agents?
It is submitted for the builder, relying on Bradshaw v McGuire WASC (FC) Unreported 30 April 1986 (Bradshaw) per Wallace J at p4 and Diploma Construction(WA) Pty Ltd v South Central (WA) Pty Ltd [2015] WASC 289 at [34] that the purpose of the BSCRA Act is to protect the public from incompetent or negligent work and that the concept of fault as referred to in s 37 of the BSCRA Act (and presumably corresponding sections) is the fault of the builder by himself or his servants or agents, that there must be work that is faulty or unsatisfactory because of some act or omission of the builder.
Counsel for the builder has made no reference to the actual provisions of the BSCRA Act. To avoid repetition, unless the context indicates otherwise, all following references to sections or parts of legislation are references to sections or parts of the BSCRA Act.
The task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27.
The definition of regulated building service (s 3) makes it plain that the building service must be provided by, relevantly, a registered building service provider. It is not in issue that the builder is a registered building service provider.
Section 5(1) provides:
Making complaint about building service or home building work contract matter
Subject to the regulations, a person may make a complaint to the Building Commissioner about a regulated building service not being carried out in a proper and proficient manner or being faulty or unsatisfactory.
Section 37(1) provides:
Building remedy order by Building Commissioner
Subject to regulations made under section 11(5), if the Building Commissioner is satisfied that a regulated building service that is the subject of a building service complaint has not been carried out in a proper and proficient manner or is faulty or unsatisfactory, the Building Commissioner may deal with the building service complaint by making a building remedy order.
Section 38(1) is similarly worded save that it refers to how the Tribunal may deal with a building service complaint.
All of these sections distinguish between either the building service not being carried out in a proper and proficient manner (which is consistent with the service provider being at fault at least in the sense that the service falls short of the stipulated standard) or that the service is, that is in a state of being, faulty or unsatisfactory. The second limb is, on an ordinary and grammatical reading, not dependent on the builder being negligent or incompetent. Satisfaction of this limb is dependent only on the work being found to be faulty or unsatisfactory.
What constitutes faulty or unsatisfactory work will obviously depend on the facts of each circumstance. When a builder purchases an item of equipment, say for example, a particular type of tap from a reputable supplier, he may not be at fault in any way in installing it believing it to be in good order, but if the manufacturer has omitted to install within the tap a standard 'O' ring, or a washer, the tap will leak. It is faulty and the service provided is therefore unsatisfactory. Liability of the builder is not dependent on an enquiry of whether a competent builder would have noticed the omission of the part concerned.
It is submitted for the builder that the effect of the decision of the Tribunal in J-Corp Pty Ltd and Ly & Anor [2006] WASAT 132 (Ly) is to impose strict liability on a builder. Ly was an application for leave to review a decision of the Building Disputes Tribunal (BDT) made under s 12A of the now repealed Builders' Registration Act 1939 (WA). Reliance was placed on Bradshaw as a basis for concluding that the BDT was correct in finding that the construction of footings in accordance with a design which would not support the weight of the dwelling, constituted a failure to construct in a proper and workmanlike manner although leave was granted because of an argument arising over the effect of a particular contractual provision.
In Bradshaw, which was an appeal from a decision of a magistrate, it was specifically argued that all that the magistrate had done was observe the extent of damage (cracking of walls throughout the residence), identify the applicant as the builder and impose on him strict liability (Wallace J at p4). But his Honour specifically observed after recording the above contention, that it was the fact, however, that the footings to the residence were defective and this caused the cracks that appeared in the building. Although his Honour went on to rely on the Second Reading speech to express the view that the purpose of the legislation was to protect the public from incompetent or negligent work, the construction of the footings in accordance with a design which was inadequate was regarded as incompetence. The Court was dealing with different legislation and is accordingly not binding in relation to determining the meaning of the BSCRA Act and was decided at a time when there was a greater inclination to rely on extrinsic evidence, a course which is now out of favour see Saeed v Minister for Immigration and Citizenship [2010] HCA 23 (23 June2010) at [26] and following. Further as appears from the decision of Chief Justice Burt in Bradshaw, the basis upon which the footings were considered to be faulty and unsatisfactory was simply that they were not capable of sustaining the weight of the building upon it. It is evident from Wallace J's judgment that there was no other evidence before the magistrate. It is also evident from all of the judgments that the builder had an obligation to design and construct the footings.
This is not to impose strict liability. The work for which the builder is responsible must be found to be faulty or unsatisfactory. What is faulty or unsatisfactory will often be informed by the contract under which the builder engages to provide the relevant building service, or standards or conditions imposed by regulatory bodies. The work may not be regarded as faulty or unsatisfactory where a builder contracts not to construct a habitable dwelling fit for purpose, but to construct in accordance with the owner's design, or where the contract nominates particular materials or specialist contractors for particular work without reliance on the skill of the builder.
Consistent with the above reasoning, we do not consider that Diploma stands as authority for the proposition for which the builder contends. The work was there held to be unsatisfactory because the terms of the building licence required the builder to construct a soakwell drainage system capable of accommodating a one in 10 year event, but although constructed to the engineer's design, it did not have the required capacity.
The obligation on a complainant is to provide evidence which meets the requirements of s 5 by showing that the regulated building service provided by a registered building service provider (builder) (or such other person falling within other parts of the definition of a regulated building service, which we have not had to consider here) has not been carried out in a proper and proficient manner, or is faulty or unsatisfactory, within the meaning discussed above. The onus is on the complainant to establish either of these limbs to found liability on the part of the builder.
Does the evidence establish that the regulated building service carried out by the builder has not been carried out in a proper and proficient manner or is faulty or unsatisfactory?
The expert witnesses, Mr Airey for the owner and Mr Woodhouse for the builder conferred on 4 March 2016. The conferral was adjourned as it was agreed that a more detailed geotechnical investigation and that a diagnostic level survey of the floor levels of the House would be desirable. The floor levels could then be compared to a benchmarking level check recorded in ATC report dated 10 April 2014.
The geotechnical survey was to be performed by Mr Woodhouse but was not carried out on instructions from the builder.
The benchmarking survey was conducted by a senior engineer from ATC on 16 March 2016. The ATC report (HB223) reflects considerable change in the slab levels over the two year period from April 2014. The spa room which had been level had dropped from north to south up to 7 millimetre, while downward movement of the southeast corner had dropped an additional 13 millimetre. Adjacent to the spa room the family room had dropped a further 6 millimetre. The difference in level between the spa room and master bedroom on opposite ends of the House was in the order of 65 millimetre.
The joint conferral of the expert witnesses recommenced on 23 March 2016. The joint expert report signed by both experts on 13 April 2016 states relevantly:
It was agreed that the entire House is sloping downwards towards the location where the old dam was shown as located on the drawing by Duncan Jack. The floor level changes are so clearly apparent that both engineers are of the opinion that the old dam must be significant in the behaviour of the House. This conclusion is reinforced by the recent level checks which reveal that further settlement and damage has occurred at the southwest corner of the building. The settlement is now so significant that, from the point of view of differentiation, the floor at the southwest corner is approximately 65 millimetre lower than the floor at the highest point in one of the bedrooms at the northeast corner of the building.
In discussing the issues relating to the edge stiffening beams and foundations both engineers agreed that the location of the dam 'is the probable main cause of the damage and displacement observed'
It is evident, and we find, that the footings and slab, whether the edge beams have been properly incorporated or not, are failing to support the weight of the House as they were designed to do and that regardless of other potential factors, this is a significant cause of the cracking which has occurred. Consequently, the regulated building service carried out by the builder is faulty and unsatisfactory on this basis alone. A full geotechnical investigation may conceivably show that the foundation system would have been adequate if other steps were taken to address any problems related to the filling of the dam, but it remains the case that on the site as it exists the foundation system is not achieving its intended purpose of providing a support for the Building.
We also find that the regulated building service was not carried out in a proper and proficient manner having regard to the manner in which the site classification was carried out by the builder through its agent DJCE. The letter from DCJE dated 6 December 2006 advising of the site classification as a Class M site reflects that the engineer relied solely on local knowledge of subsoil conditions as determined by a site visit and based on a visual assessment of the site. Both engineers agreed, and we find, that given DJCE's involvement in the subdivision of the site and therefore knowledge of the existence of the dam, investigation of the site was required in order to ensure proper classification and design of the foundation system.
It remains necessary to examine the other causes of damage which were advanced by the owner.
Stiffening beams
The material before the Tribunal shows that DJCE carried out inspections of the footings and subsequently the slab and observed all to have been correctly set out with starter bars and internal tie bars correctly installed. Noone from DJCE was called to give evidence and face testing by cross examination. If there had been no evidence of the movement of the slab due to the location of the dam and nothing to indicate any abnormality in the site the logical inference may well have been that either the edge stiffening beams were incorrectly located or had not been correctly integrated into the slab as Mr Airey contended. But, given the differential movement experienced which both engineers attribute to the former dam and having regard to Mr Woodhouse's view that the cracking could be caused by the slab movement, it cannot be determined without invasive testing whether there is no connection between the footings, slab and stiffening beams (WMLC report HB 194/5), and we are accordingly unable to draw the inference.
Plumbing trench effects
Both engineers agreed that plumbing trenches may have contributed to the movement to the west wall at the rear of the House but no definitive conclusion could be reached without further investigation, and that the south wall (adjacent to the kitchen) did not appear to have any trenches close enough to be of influence. They agreed that the general differential movement of the foundations was the primary cause of movement.
Roof sheeting
Both engineers agree that thermal expansion of the roof sheeting has caused displacement of the timber framed internal walls. The cracks are on the external sides of the House, not on central walls. The cracks result from splitting generated by bending of the wall panel.
While Mr Woodhouse contended that there was provision within the design for thermal expansion, Mr Airey pointed out that Mr Woodhouse's evidence relating to this addressed only expansion over one direction of the House not the longer direction being the area of concern. We accept Mr Airey's evidence in this regard. Thermal movement caused by heat buildup in the roof space is a factor causing cracking of cornices, which would usually be regarded as owner maintenance issue, but cracking of walls as have occurred in the House is in our view to be regarded as faulty and unsatisfactory.
Mr Woodhouse specifically acknowledged that the cracking to the brickwork in the corner spa room was caused due to an error in strutting the roof directly to the external brick wall (T:56; 07.06.16).
Wall framing/timber studs
Both engineers agree that the timber studs in the wall framing comply with the requisite Australian Standard and are conformant.
Disposition of the matter
It follows that the Building Remedy Order issued by the Building Commissioner has been effectively upheld, although it will need to be varied to ensure that the remedial action required is expressed in terms consistent with our above findings, and also to allow sufficient time to enable the builder to undertake any appropriate geotechnical or other investigations as he may be advised to have undertaken, and also to assess the methodology and time required for the necessary remedial work.
The owner has also foreshadowed, in correspondence when objecting to the proposal of the builder that invasive internal investigation be conducted, that there were difficulties associated with the House being occupied by tenants.
It is appropriate, therefore, that the parties be given an opportunity at a directions hearing to address these matters and any other concerns which might arise before any final order issue. That directions hearing will be listed sufficiently distant in time to enable the parties to properly consider their positions and obtain all necessary information so that the directions hearing can be of maximum effect so that a final order can then be made.
An order will accordingly issue as follows:
Order
1.The matter is listed for a directions hearing on 31 October 2016 at 11 am.
I certify that this and the preceding [66] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR SESSIONAL MEMBER
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)
CITATION: HOLMAN and W&D MOFFATT PTY LTD [2016] WASAT 105 (S)
MEMBER: MR C RAYMOND (SENIOR SESSIONAL MEMBER)
MR R AFFLECK (SENIOR SESSIONAL MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 19 DECEMBER 2017
FILE NO/S: CC 1736 of 2014
BETWEEN: IAN EDWARD HOLMAN
Applicant
AND
W&D MOFFATT PTY LTD
Respondent
Catchwords:
Building Services (Complaint Resolution and Administration) Act 2011 (WA) - Review of decision of Building Commissioner to issue building order for remedial work - Applicant unsuccessful - Applicant ordered to pay costs as agreed or failing agreement as fixed by Tribunal - Principles to be applied in fixing costs
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 57(1)(c)
Legal Practitioners (State Administrative Tribunal) Determination 2012 (WA)
Legal Practitioners (State Administrative Tribunal) Determination 2014 (WA)
Legal Practitioners (State Administrative Tribunal) Determination 2016 (WA)
Legal Profession Act 2008 (WA)
Result:
Applicant ordered to pay costs fixed by Tribunal
Summary of Tribunal's decision:
The applicant was unsuccessful in an application under s 57(1)(c) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) for the review of a decision by the Building Commissioner to issue a building remedy order requiring the applicant to remedy the cause and effect of extensive cracking throughout the respondent's house and was ordered to pay the respondent's costs either as agreed or failing agreement as fixed by the Tribunal.
The parties having failed to agree costs the Tribunal proceeded to fix the costs. The respondent claimed legal fees of $30,719.91 and disbursements in respect of expert witness fees of $30,130.81 totalling $60,850.72. After setting out and applying the applicable principles and considering the submissions of the parties the Tribunal allowed legal fees in an amount of $22,072.37 and disbursements in an amount of $24,104.75.
The Tribunal accordingly made an order fixing the total costs payable by the applicant to the respondent in the sum of $46,177.02 to be paid within 28 days.
Category: B
Representation:
Counsel:
Applicant: Mr MS Macdonald
Respondent: Mr A Prime
Solicitors:
Applicant: Macdonald & Rudder
Respondent: MDS Legal
Case(s) referred to in decision(s):
J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S)
Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125
REASONS FOR DECISION OF THE TRIBUNAL:
The Proceedings
The applicant applied under s 57(1)(c) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act) for the review of a decision made by the Building Commissioner to issue a building remedy order as reflected in Building Remedy Order No 228 of 2014 in respect of a regulated building service carried out by the applicant in constructing a residential house at 5 Maher Street, Somerville, Kalgoorlie.
On 5 September 2016 the Tribunal found against the applicant Mr Ian Edward Holman, (hereinafter referred to as the applicant), so that the review was unsuccessful, but delayed making final orders because it was apparent that the order under review should be varied to reflect a change in the remedial work required and because of practical considerations relating to the timing of the repairs. This required further expert investigation. Final orders were eventually made on 17 October 2017. The respondent W&D Moffatt Pty Ltd), (hereinafter referred to as the respondent) applied successfully for an order that the applicant pay the costs of the proceedings, either as agreed, or failing agreement, as fixed by the Tribunal. Directions were issued to enable the respondent to provide a schedule of the costs claimed with sufficient detail to enable the Tribunal to fix the costs, and to enable the applicant to file submissions in opposition to any costs claimed.
The parties have failed to agree the amount of the respondent's costs and it therefore falls on the Tribunal to fix the costs payable.
The principles to be applied
The principles set out in J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S) (J & P Metals) have been consistently applied in fixing costs.
At [9] the Tribunal stated:
'There is no prescribed scale in relation to work done in relation to proceedings before this Tribunal. Assessing costs for the purposes of s 87 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) will usually require a determination as to what costs are reasonable given the nature of the matter, its complexity, its importance, possibly its urgency, and the amount of time and effort required to properly prepare and present the case. Consideration of issues of that nature may be assisted by analogy with other legal work for which a statutory scale is applicable. Scales are, however, no more than an indication of what might be thought reasonable for certain categories of work. If a scale is to be used for that purpose, it will not always be the scale applicable to Supreme Court proceedings. There will be cases where the subject matter will make the determination in relation to Magistrates Court civil proceedings more appropriate by way of analogy. The Tribunal will always strive to maintain proportionality between the subject matter of the proceedings and the costs associated with the proceedings'.
Subsequent to the enactment of the Legal Profession Act 2008 (WA) determinations have been published which set the maximum rates which legal practitioners are permitted to charge as between solicitor and client in respect of proceedings before the Tribunal in the absence of a costs agreement. Since the publication of such determinations they have been used as a guide to the maximum rates which the Tribunal might allow in fixing costs as between party and party: see Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125.
The Tribunal stated further in J & P Metals at [38]:
'The procedures of the Tribunal are designed to achieve the objectives prescribed by s 9 of the SAT Act. The Tribunal strives to ensure that its procedures are proportionate to the nature of the matters in issue. On occasions, matters before the Tribunal are difficult and complex, sometimes involving lengthy hearings. This is not such a matter. In the unusual event that an order for costs is made by the Tribunal, the Tribunal's obligation to minimise the costs to parties will be reflected in the costs assessed by the Tribunal as recoverable. That approach reflects an expectation that representatives of parties before the Tribunal will approach a proceedings in a way that minimises costs to their clients. If clients choose to approach proceedings before the Tribunal in a way which substantially increases costs for them, it will be a rare case where that increase in costs will be recoverable through a favourable costs order'.
The application of the above and other principles
The respondent has provided a schedule of the costs in the form of a bill of costs, reflecting the services rendered, with footnotes to enable determination of the seniority of the legal practitioner doing so and the rates charged, together with attached vouchers showing amounts disbursed in respect of expert engineering attendances.
The legal services rendered cover a period from 13 November 2014 to 17 October 2017 and thereafter for the provision of the costs schedule. At all times, the services have been charged at the maximum rate reflected in the applicable determinations. These are:
•The Legal Practitioners (State Administrative Tribunal) Determination 2012 operative from 1 January 2013 which sets maximum hourly rates for senior practitioners of $374 and for junior practitioners of $275 inclusive of GST;
•The Legal Practitioners (State Administrative Tribunal) Determination 2014 operative from 1 January 2015 which sets maximum hourly rates for senior practitioners of $396 and for junior practitioners of $297 inclusive of GST; and
•The Legal Practitioners (State Administrative Tribunal) Determination 2016 operative from 1 July 2016 which sets maximum hourly rates for senior practitioners of $407 and for junior practitioners of $308 inclusive of GST.
All rates referred to and amounts stated to be allowed hereafter are inclusive of GST.
The importance of the case is a factor which weighs in favour of a rate towards the higher end of the scale. Although not known until a late stage in the proceedings the most probable cause was that the building was moving towards an old irrigation dam which was filled prior to subdivision of the land and ultimately development of the site. Cracking had continued for a considerable period and the appropriate remedy was not known until sometime relatively shortly before the final hearing in October 2017. The respondent would have had a justifiable concern about whether the house could be adequately repaired, but the legal principles involved were not complex. The respondent had authority in its favour which although dealing with the legislation in force prior to the coming into effect of the BSCRA Act was clearly analogous. Any complexity in the case lay in the investigation of the cause of cracking in the residence, which was really driven by the expert engineering witnesses.
Almost all the legal services were provided by a single senior practitioner. We have concluded that the appropriate hourly rate which should be allowed for a senior practitioner is $330 for the period prior to 1 January 2015, thereafter, $350 to 30 June 2017 and $360 from 1 July 2017. This equates to 88% of the maximum rate for each period and that percentage will therefore also be applied to the few attendances by a junior practitioner.
In arriving at this conclusion we have rejected the submission made on behalf of the applicant that for attendances at directions and other hearings the only costs which should be allowed are those applicable for counsel. Counsel did not attend those hearings. All appearances were by the same senior practitioner.
Having examined the attendances of the respondent's legal representatives we are satisfied that there has not been any over generous allocation of resources to the conduct of the proceedings. The matter has been conducted with the efficiency which the Tribunal expects of legal representatives appearing in the Tribunal.
In relation to all hearings the applicant has challenged the time claimed by the respondent. We have checked the time of the hearing as recorded by the Tribunal. The Tribunal's records may not always be entirely accurate and are dependent on the case manager recording the commencement and conclusion of each part of the hearing. Inaccuracies may occur because of short adjournments when parties may want an opportunity for discussion with clients or the other side, or simply because of human error. The records show that the respondent has often overstated the hearing time compared to the Tribunal's records. Where the applicant has stated a time period which is longer than that recorded by the Tribunal we have accepted the applicant's statement. It appears that the respondent has consistently included travelling or waiting time because generally the applicant's record of the time is less than that of the respondent but in all but one instance very close to that of the Tribunal.
We have rounded the time charged for attendances at hearings to such fractions of an hour as permit convenient calculation.
Assessment of the costs schedule
The schedule comprises of 15 items of claim totalling $60,850.72, being made up of $30,719.91 in respect of legal fees, and $30,130.81 in respect of disbursements paid to the engineers retained by the respondent.
We shall address each item in turn.
1. Response/statement of issues $2,957.04
A total time of 320 minutes by a junior practitioner and 207 minutes by a senior practitioner (in proportion 40:60) is claimed for services between 17 February 2015 and 9 October 2015 for the preparation of a statement of issues, an amendment and a later substituted statement of issues. This equates to 8¾ hours.
We consider that time to be excessive in any event, but also because as submitted by the applicant, much of the substance of the document would have been placed before the Building Commissioner. We consider a total time allowance of 4½ hours (270 minutes) is sufficient.
We do not accept the applicant's submission that the respondent should not recover the costs of the amendments to the statement. The need to amend is not unusual in a case such as this.
The reduced time should be apportioned between the junior and senior practitioner in the proportion they each contributed of 40:60 (108 minutes: 162 minutes.
Rounded up slightly this equates to 1¾ hours for the junior practitioner and 2¾ hours for the senior practitioner. We have allowed their charges at 88% of the maximum hourly rates of $297 rounded to $260, and $396 rounded to $350, respectively. This calculates to a total allowed for item 1 of $1,417.50.
2. Preparation for and attendance at mediation on 3 November 2015 - $1,696.20
The respondent claims 257 minutes for a senior practitioner. The applicant asserts the preparation for the case claimed under item 11 includes a 38 minute meeting with the applicant (it does on 2 November 2015) and this should be excluded. As this meeting is far more likely to have been to prepare for the mediation we disagree but it cannot be claimed twice and should be deducted when considering item 11.
The Tribunal record reflects the mediation hearing duration was 120 minutes which we accept. The applicant stated the duration was 'around 110 minutes'. That means the preparation for mediation (including a 38 minute meeting with the respondent) took 137 minutes. Contrary to the applicant's submission we do not consider the time spent in preparation to be excessive. Good preparation is essential for the process to be effective and is to be encouraged.
We allow the full time claimed at the rate of $350 which calculates to the sum of $1,487.50.
3. Attendance at directions hearing on 9 December 2014 - $573.46
The claim is based on 92 minutes of time for the senior practitioner. The applicant states the hearing took approximately 60 minutes. The Tribunal records show the hearing was of only 13 minutes duration which seems unreliable as it is very unusual for a first directions hearing to be of such short duration. We accept the applicant's statement of the duration.
The maximum rate for a senior practitioner at that time was $374 per hour so that applying a rate of 88% rounded to $330, the amount allowed for this item is $330.
4. Attendance at directions hearing on 5 February 2015 - $402.60.
The claim is based on 61 minutes of time for the senior practitioner. The applicant states the hearing took approximately 15 minutes. The Tribunal records show the hearing was of only 12 minutes duration.
We will allow $87.50 for this item based on ¼ of an hour at a rate of $350 per hour.
5. Attendance at directions hearing on 23 June 2015 - $613.80.
The claim is based on 93 minutes of time for the senior practitioner. The applicant states the hearing took approximately 36 minutes. The Tribunal records show the hearing was of 34 minutes duration.
We will allow $ 210 for this item based on six tenths of an hour at a rate of $350 per hour.
6. Attendance at directions hearing on 8 July 2015 - $514.80
The claim is based on 78 minutes of time for the senior practitioner. The applicant states the hearing took approximately 60 minutes. The Tribunal records show the hearing was of 58 minutes duration.
We will allow $350 for this item based on one hour at a rate of $350 per hour.
7. Attendance at directions hearing on 10 August 2015 - $277.20
The claim is based on 42 minutes of time for the senior practitioner. The applicant states the hearing took approximately 25 minutes. The Tribunal records show the hearing was also of 25 minutes duration.
We will allow $175 for this item based on ½ an hour at a rate of $350 per hour.
8. Attendance at directions hearing on 10 November 2015 - $433.60
The claim is based on 66 minutes of time for the senior practitioner. The applicant states the hearing took approximately 42 minutes. The Tribunal records show the hearing was of 43 minutes duration.
We will allow $262.50 for this item based on ¾ of an hour at a rate of $350 per hour.
9. Attendance at directions hearing on 19 April 2017 - $420.36
The claim is based on 62 minutes of time for the senior practitioner. The applicant states the hearing took approximately 42 minutes. The Tribunal records show the hearing was of 39 minutes duration.
We will allow $240 for this item based on two thirds of an hour at a rate of $360 per hour.
10. Attendance at directions hearing on 4 July 2017 - $379.68
The claim is based on 56 minutes of time for the senior practitioner. The applicant states the hearing took approximately 35 minutes. The Tribunal records show the hearing was of 33 minutes duration.
We will allow $180 for this item based on six tenths of an hour at a rate of $360 per hour.
11. Preparation of case - $17,046.49
The attendances and time spent showing how the amount claimed has been calculated is set in a separate attachment to the schedule of costs marked 'B'.
The applicant submits that many of the attendances for which charges are claimed are of an administrative nature not 'necessarily' recoverable on a party and party basis. No particular attendances are identified. There are many attendances in the form of correspondence, emails or telephone calls to various experts, the applicant's legal representatives and a few meetings with the respondent. The latter attendances are minimal and one meeting on 2 November 2015 is disallowed as discussed above as being in respect of preparation for mediation. Subject to this we see no reason why these attendances should not be recoverable as costs in preparation of the case.
We also do not accept the applicant's submission that reviewing documents or authorities should form costs of the hearing not preparation. In any event that would simply shift the recoverable costs from one item to another. Nor do we accept that some preparation on review should be disallowed because it is a hearing de novo. There was no actual hearing before the Building Commissioner and the attendances relate directly to the proceedings before the Tribunal.
We do however note that, on our calculation some 218 minutes is charged between 4 March 2016 for and in respect of attendances leading up to the hearing on 9 March 2016 which obviously relates to preparation for that hearing. The hearing was adjourned on the application of the respondent due to the hospitalisation of the respondent's expert witness. That preparation appears to be duplicated prior to the hearing on 7 June 2016. We disallow that time and the 38 minutes claimed for the meeting on 2 November 2015 to which we have referred that is in effect 4¼ hours.
The attendances during this period have been charged at a rate of $396 per hour so that the amount claimed is reduced by $1,683 leaving a balance claimed of $15,363.49. This amount needs to be further reduced by applying a rate of $350 per hour resulting in the amount which we will allow of $13,519.87.
12. (a) Hearing 9 March 2016 - $745.80
These costs do not constitute costs reasonably and necessarily incurred in the conduct of the case. The hearing could not continue and was adjourned on the application of the respondent due to the nonavailability of the respondent's expert witness. The amount claimed is disallowed.
(b) Hearing 7 June 2016 - $2,448.60
The applicant objects to the respondent also including under item 11 time spent in preparation and claiming 345 minutes for attendance at the hearing. This objection is not accepted. They are charges for two different activities.
The applicant states the hearing time was approximately 345 minutes (5¾ hours). The Tribunal records reflect the hearing time was 260 minutes. For the reasons previously given we prefer to rely on the applicant's record of the time.
We allow in respect of this item 5¾ hours at a rate of $350 which equals $2,012.50.
(c) Hearing 17 October 2017 - $1,396.68
Once again the applicant objects to claims for preparation and attendance at hearing which objection is not accepted for the reasons already given.
The respondent states the hearing time was approximately 206 minutes. The Tribunal records reflect the hearing time was 135 minutes. The applicant states the hearing time was approximately 170 minutes and for the reasons previously given we accept that time.
The rate applicable and which we have indicated we allow after 1 July 2017 is $360 per hour and which we allow for three hours resulting in the sum of $1,080 allowed in respect of this item.
13. Drawing Bill of Costs $813.60
The time claimed by the respondent is 120 minutes. The applicant submits the time is excessive and has been charged in respect of a senior practitioner when a junior practitioner could have done so at a lower rate.
We consider the work has been carried out efficiently and appropriately given that the senior practitioner had virtually the entire conduct of the matter on his own.
In respect of this item we allow the full time claimed at the rate of $360 per hour resulting in a sum allowed of $720.
14. Taxation of costs TBA
No costs are claimed as a taxation has not been held. The Tribunal has proceeded to fix the costs on the documents.
15. Disbursements Airey Taylor Fees $30,130.81
Accounts have been filed totalling the sum claimed as has a ledger showing payments totalling $33,722.22. The claim has not been amended to increase the amount nor have any further accounts been filed.
The applicant submits that insufficient detail has been provided to identify the actual work for which the charges have been made. We disagree sufficient detail is provided for that purpose.
A more valid criticism is that the accounts do not show the rate charged nor the hours spent on the work undertaken. The respondent has endeavoured to meet this criticism by subsequently filing a schedule of rates excluding GST which apply in 15 minute units. This carries a risk of charging at a very high rate for attendances that might involve only a few minutes. The rates vary per hour from $350 for one of the directors to $130 for an administrative assistant.
The rates provided are presumably the current rates and would be unlikely to have applied from the outset of this matter. The first account relates to advice provided in December 2014 and the last relates in part to attendance before the Tribunal on 17 October 2017.
Mr Peter Airey, a director of the company concerned, who appears to have provided all advice throughout the matter is a very experienced engineer who has given evidence before the Tribunal on numerous occasions, probably more so than any other engineer. The rates charged by him must as a matter of basic economics be set by supply and demand and we consider they can be taken to be reasonable having regard to his expertise or he would not appear as frequently as he has done before the Tribunal.
But in assessing the costs which should be borne by the applicant any lack of detail or insufficiency in the information provided should be assessed in a manner which ensures that we err in favour of the applicant. It was within the power of the respondent or his legal advisers to ensure there was no such insufficiency.
In the circumstances we intend to allow the disbursements claimed but subject to a 20% reduction resulting in the amount allowed in respect of this item of $24,104.65.
We accordingly fix the costs payable by the applicant to the respondent in the total sum of $46,177.02 made up as follows:
| Item No | Claimed | Allowed |
| 1 | $2,957.04 | $1,417.50 |
| 2 | $1,696.20 | $1,487.50 |
| 3 | $573.46 | $330.00 |
| 4 | $402.60 | $87.50 |
| 5 | $613.80 | $210.00 |
| 6 | $514.80 | $350.00 |
| 7 | $277.20 | $175.00 |
| 8 | $433.60 | $262.50 |
| 9 | 420.36 | $240.00 |
| 10 | $379.68 | $180.00 |
| 11 | $17,046.49 | $13,519.87 |
| 12 (a) | $745.80 | Nil |
| 12 (b) | $2,448.60 | $2,012.50 |
| 12 (c) | $1,396.68 | $1,080.00 |
| 13 | $813.60 | $720.00 |
| 14 | Nil | Nil |
| 15 | $30,130.81 | $24,104.65 |
| TOTAL: FEES | $30,719.91 | $22,072.37 |
| TOTAL: DISB | $30,130.81 | $24,104.65 |
| TOTAL | $60,850.72 | $46,177.02 |
Order
We shall accordingly cause an order to issue in the following terms:
1.The costs payable by the applicant to the respondent are fixed in the sum of $46,177.02.
2.The applicant must on or before 19 January 2018 pay the respondent's costs in the sum of $46,177.02 to the respondent.
I certify that this and the preceding [66] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR SESSIONAL MEMBER
4
6
3