Kapila v Monument Building Group Pty Ltd

[2025] NSWSC 1306

Supreme Court

New South Wales

Medium Neutral Citation:

Kapila v Monument Building Group Pty Ltd [2025] NSWSC 1306

Hearing dates:

11–15, 20 November 2024
Last submissions 7 February 2025

Date of orders:

5 November 2025

Decision date:

05 November 2025

Jurisdiction:

Equity

Before:

Richmond J

Decision:

(1) Direct the parties to bring in short minutes of order to give effect to these reasons within 14 days;

(2) Liberty to apply.

Catchwords:

BUILDING AND CONSTRUCTION — Contract — Implied terms — Statutory warranties under s 18B of Home Building Act 1989 (NSW) — Whether building work complied with Building Code of Australia (BCA) — Where under BCA different standards relating to waterproofing exists depending on correct classification of given room as ‘habitable’ or ‘non-habitable’ — Meaning of ‘habitable’ under the BCA

NEGLIGENCE — Duty of care — Non-delegable duty — Whether claim for breach of statutory duty under s 37 of Design and Building Practitioners Act 2020 (NSW) (DBPA) is apportionable under Part 4 of Civil Liability Act 2002 (NSW) where there has been no delegation of works to third parties — Consideration of Pafburn Pty Ltd v Owners – Strata Plan No 84674 (2024) 99 ALJR 148; [2024] HCA 49 and The Owners — Strata Plan No 84674 v Pafburn Pty Ltd (2023) 113 NSWLR 105; [2023] NSWCA 301

NEGLIGENCE — Defences — Contributory negligence — Whether defence of contributory negligence applicable to breach of statutory duty under s 37 DPBA — Whether defence made out on the facts

Legislation Cited:

Civil Liability Act 2002 (NSW)

Design and Building Practitioners Act 2020 (NSW)

Environmental Planning and Assessment Act 1979 (NSW)

Environmental Planning and Assessment Regulation 2000 (NSW)

Home Building Act 1989 (NSW)

Law Reform (Miscellaneous Provisions) Act 1965 (NSW)

Cases Cited:

About Life v Maddocks Lawyers [2021] NSWSC 1370

Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310

Astley v Austrust (1999) 197 CLR 1

Bannister & Hunter Pty Ltd v Transition Resort Holdings Pty Ltd (No 2) [2013] NSWSC 1943

Bellgrove v Eldridge (1954) 90 CLR 613

Boateng v Dharamdas [2016] NSWCA 183; (2016) 77 MVR 151

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Crouch v Hooper (1852) 16 Beav 182; 51 ER 747

Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599; [1999] HCA 15

Et-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232

Grills v Leighton Contractors Pty Ltd [2015] NSWCA 72

Hatch v Northern Beaches Council [2019] NSWLEC 1422

Jacob v Utah Construction & Engineering Pty Ltd (1966) 116 CLR 200

Jones v Dunkel (1959) 101 CLR 298

Kazzi v KR Properties Global Pty Ltd t/as AK Properties Group [2024] NSWCA 143

Kondis v State Transport Authority (1984) 154 CLR 672; [1984] HCA 61

Leichhardt Municipal Council v Montgomery (2007) 230 CLR 22; [2007] HCA 6

Ling v Beyond Development Group Pty Ltd [2022] NSWSC 685

McBride v Monzie [2007] FCA 1947

Onassis v Vergottis [1968] 2 Lloyd’s Rep 403

Onslow v Cullen [2022] NSWSC 1257

Owners - Strata Plan 80867 v Da Silva [2024] NSWDC 263

Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWSC 116

Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114

Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406

Pafburn Pty Limited v The Owners – Strata Plan No 84674 (2024) 99 ALJR 148; [2024] HCA 49

Rail Corporation New South Wales v Donald [2018] NSWCA 82

Ratcliffe v Watters (1969) 89 WN (NSW) (Pt 1) 497

Rennie Golledge Pty Ltd v Ballard (2012) 82 NSWLR 231; [2012] NSWCA 376

Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5; (2023) 110 NSWLR 557

Southern Region SLSA Helicopter Rescue Service Pty Ltd v NSW Golf Club Co Ltd [2021] NSWSC 1493

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8

The Owners – Strata Plan No 68372 v Allianz Australia Insurance Ltd [2014] NSWSC 1807

The Owners – Strata Plan No 84674 v Pafburn Pty Limited (2023) 113 NSWLR 105; [2023] NSWCA 301

Verryt v Schoupp [2015] NSWCA 128; (2015) 70 MVR 484

Watson v Foxman (1995) 49 NSWLR 315

Texts Cited:

Oxford English Dictionary (online ed)

Category:

Principal judgment

Parties:

Dr Shruti Kapila (Plaintiff)
Monument Building Group Pty Ltd (First Defendant)
Miles Brujic (Second Defendant)

Representation:

Counsel:
J Mack (Plaintiff)
C W Robinson (Defendants)

Solicitors:
Litigation Specialists (Plaintiff)
Valorum Legal (Defendants)

File Number(s):

2021/00127949

Publication restriction:

Nil

JUDGMENT

1. These proceedings concern a dispute regarding the construction of additions and alterations to a terrace house at 48 XXXX Street, Paddington, Sydney (the Property) pursuant to a building contract entered into on 23 August 2015 in the standard form published by NSW Fair Trading (the Contract). The name of the street in the Property’s address will be referred to as ‘King Street’ and the lane at the rear as ‘King Lane’ throughout the judgment for privacy reasons.The parties to the Contract are the plaintiff, Dr Shrutti Kapila, as ‘owner’, and the first defendant, Monument Building Group Pty Ltd (MBG), as ‘builder’. MBG holds a contractor licence issued under the Home Building Act 1989 (NSW) (HBA). The second defendant, Mr Miles Brujic (Mr Brujic), was the sole director of the first defendant, and the nominated supervisor under MBG’s contractor licence as required by the HBA at all relevant times.

2. The plaintiff claims damages against MBG for breach of contract for defective work, and also damages in respect of the same defective work against Mr Brujic for breach of his duty of care to the plaintiff under s 37 of the Design and Building Practitioners Act 2020 (NSW) (DBPA).

3. As pleaded in the amended statement of claim filed on 24 September 2021 (ASOC) there are seven alleged defects, comprising two on the lower level and five above, which are listed below with the reference given to each one in the ASOC and the Scott Schedule (CB 499):

1. on the garage level:

1. defective waterproofing and drainage to the new concrete walls in the area shown as ‘cellar’ and ‘gym/storage’ on the plan: ASOC [15] (SS#6.2 Garage Level - Gym/Cellar);

2. defective waterproofing to the new garage walls in the area shown as ‘existing garage’ on the plan: ASOC [35] (SS#6.7 Garage Level Brick Walls)   

2. on the upper levels:

1. defective waterproofing of the planter boxes on the terrace: ASOC [10] (SS#6.1 Planter Boxes);

2. defective construction of the roof and skylights on the upper levels: ASOC [19] (SS#6.3 Roof & Skylights);

3. defective electrical work: ASOC [23] (SS#6.4 Electrical Work);

4. defective installation of a box gutter: ASOC [27] (SS#6.5 Box Gutter);

5. defective construction of the walls on the eastern and western side of the living room and kitchen level: ASOC [39] (SS#6.8 Living Room Level – East & West Walls)

4. In closing submissions counsel the plaintiff informed the Court that the electrical work claim (SS#6.4) was not pressed.

5. The plaintiff was represented at the hearing by Mr J Mack of counsel and the defendants by Mr C Robinson of counsel.

6. In these reasons the Environmental Planning and Assessment Act 1979 (NSW) and the Environmental Planning and Assessment Regulation 2000 will be referred to as the EPA Act and the EPA Regulation respectively.

Pleaded claims

7. By the ASOC, the plaintiff pleads two causes of action against MBG. The first is that the defects involved acts or omissions of MBG which were a breach of clauses 2, 3 and 9 of the Contract. The second is that MBG carried out ‘construction work’ at the Property within the meaning of s 37 of the DBPA, that it owed a duty of care to the plaintiff as owner of the property within the meaning of s 37(2) of the DBPA and that by reason of the ‘water issues’ and ‘install issues’ it breached that duty. However, in closing submissions Mr Mack said that the claim against MBG under s 37 of the DBPA was not pressed.

8. In the case of Mr Brujic, the plaintiff relies solely on an alleged breach of s 37 of the DBPA. The plaintiff pleads that Mr Brujic was the nominated supervisor under MBG’s contractor license, that he carried out ‘construction work’ at the Property within the meaning of s 37 of the DBPA, that he owed a duty of care to the plaintiff as owner of the Property within the meaning of s 37(2) of the DBPA and that by reason of the ‘water issues’ and ‘install issues’ he breached that duty.

9. The ‘water issues’ are said to be the failure of the defendants to waterproof (a) the planter boxes on the balcony; (b) the garage level new concrete walls (gym/cellar-eastern, southern and western walls); (c) the internal staircase from the garage-western side of the property; (d) the garage level brick walls-garage; and (e) build the kitchen level-western and eastern side walls to prevent water entering into the property and into the walls (ASOC, [45F]).

10. The ‘install issues’ are said to be the failure to properly install (a) the roof and skylights; (b) electrical work; and (c) the box gutter outside the master bedroom on the western side (ASOC, [45G]). As noted above, the electrical work claim is no longer pressed.

11. The ASOC also includes a claim in negligence against both defendants but in closing submissions Mr Mack said that this was not pressed.

12. The ASOC does not bring a claim for breach of the warranties in s 18B of the HBA. In the original statement of claim there was such a claim but it is ruled through in the ASOC. It may be inferred that this is because cl 9 of the Contract includes express warranties in the same terms as s 18B.

13. By the amended defence filed on 19 June 2023 (AD), the defendants (1) admit that the Contract contained the express terms relied on by the plaintiff but deny the alleged defects amounted to a breach of those terms; (2) in relation to the claim under the DBPA against Mr Brujic, admit that he was the sole shareholder of MBG, held a contractor licence and was the nominated supervisor of MBG, but deny any breach of s 37 of the DBPA.

14. In addition to the denial of liability, the AD also pleads two further defences. The first is that if the defendants are liable for any loss or damage due to ingress of water to the garage level of the property, the claim against each of them is an ‘apportionable claim’ under Part 4 of the Civil Liability Act 2002 (NSW) (CLA): AD, [41]-[55]. The AD identifies four alleged ‘concurrent wrongdoers’ for the purposes of s 35 of the CLA, being (a) Mr Ball of DM Ball & Associates who was the certifying authority (PCA) for the development, (b) Ross Engineering which prepared the engineering drawings, (c) Amores Design which prepared the architectural drawings, and (d) Shreeji Consultants which prepared engineering drawings to remove the deep soil planter box: AD, [55]. All of the alleged ‘concurrent wrongdoers’ were appointed by the plaintiff rather than MBG.

15. Secondly, the AD pleads that there should be a reduction in the defendants’ liability under s 37 of the DBPA as a result of the plaintiff’s contributory negligence regarding the waterproofing and drainage of the garage level works, in particular with regard to the wall which is known as ‘RW1’ and removal of the deep soil planter box: AD, [63].

16. The conduct relied on for the contributory negligence defence is: (a) the plaintiff contracted with MBG to use Xypex as the waterproofing solution in the construction of the garage level boundary walls; (b) the plaintiff failed to inform the defendants that the proposed construction of the garage level was other than construction of a class 10.a structure under the National Construction Code; (c) the plaintiff failed to provide the defendants with a copy of the development consent conditions imposed by either the council or the Land and Environment Court for the development of the Property, in particular that it was a condition that the garage level the ‘tanked’; (d) the plaintiff refused and failed to instruct her architect or structural engineer to amend the design of the development at RW 1 to allow an alternative method waterproofing to Xypex to be installed; (e) the plaintiff failed to take account of advice provided to her by Martens Consulting Engineers in their report of September 2013 to the effect that retaining walls be constructed to allow backfill to the boundary for adequate drainage; (f) the plaintiff failed to take the advice provided by her nominated building consultant, Mr Paul Cavallo, on 24 February 2016 concerning the responsible engineer undertaking engineering design, inspection and certification and the caution that the builder is not an engineer; and (g) the plaintiff instructed Shreeji Consultants to remove the deep soil planter box shown in the original architectural drawings, and directed the defendants to construct the development accordingly, which adversely affected the drainage of water from the property: AD, [56]-[63].

17. It follows that the issues for determination are:

1. whether the alleged defects constituted a breach by MBG of the Contract;

2. whether Mr Brujic breached s 37(1) of the DBPA by reason of the ‘water issues’ and the ‘install issues’;

3. if a relevant breach occurred, whether the defendants can rely on Part 4 of the CLA;

4. whether in the case of the claim against Mr Brujic for breach of s 37(1) of the DBPA, the defence of contributory negligence is made out;

5. what damages, if any, are payable.

Evidence

18. The plaintiff relied on lay evidence comprising two affidavits made by her and two affidavits made by Mr John Kantouros, a civil and structural engineer who is a director and senior engineer at Ross Engineers, a structural engineering firm engaged by the plaintiff for the purposes of the project. Both of them were cross-examined.

19. The defendants relied on lay evidence comprising two affidavits of Mr Brujic and one affidavit of his wife, Georgina Brujic (Mrs Brujic). Both of them were cross-examined.

20. On the question of liability for the defects the parties relied on the following expert evidence:

1. The plaintiff relied on the expert evidence of Mr David Hall, a building consultant, and Mr David England, a civil and structural engineer. Mr Hall provided two reports and Mr England provided one. They each contributed to a joint report with the defendants’ experts and gave concurrent evidence.

2. The defendants relied on the expert evidence of Mr Chris Bulmer, a building consultant, and Mr Peter Blacker, a civil and structural engineer. Each of them provided a written report, contributed to the joint expert report and gave concurrent evidence.

21. On the question of damages, the plaintiff also relied on the expert evidence of Mr Ken Whyte, a quantity surveyor, who provided one report. Mr Whyte was not required for cross examination. A schedule setting out his calculation of damages is included later in these reasons.

Approach to evidence

22. Adverse credit findings were not sought by any party. However, the plaintiff submitted that the Court should place little or no weight evidence of Mr Brujic in his affidavit dated 1 July 2022 regarding numerous conversations between him and each of the plaintiff, Mr Kantouros, Mr Ball (the PCA) and his wife.

23. Given the lengthy passage of time between when those conversations occurred (in 2014 and 2015) and the time when his affidavit was prepared I have borne in mind the well-known observations of McLelland CJ in Eq regarding the fallibility of human memory in Watson v Foxman (1995) 49 NSWLR 315 at 318:

… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consider­ation of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

24. The risk of reconstruction is particularly acute in circumstances where the relevant witness has been in litigation on the matters about which they give evidence (which is the case here both in these proceedings and earlier proceedings in NCAT). In Crouch v Hooper (1852) 16 Beav 182 at 184-185; 51 ER 747 at 748, Sir John Romilly MR said:

It is matter of frequent observation that persons dwelling for a long time on facts, which they believe must have occurred, and trying to remember whether they did so or not, come at last to persuade themselves that they do actually recollect the occurrence of circumstances of which, at first, they only begin by believing must have happened. What was originally the result of imagination becomes in time the result of recollection…

25. It is for these reasons that it is accepted that reliable contemporaneous documents generally furnish the most reliable source of evidence as to what occurred or, at the very least, provide a generally reliable reference point from which to assess the reliability of witness testimony: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599; [1999] HCA 15 at [15]-[16]; Et-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [25]-[29] (and cases there cited).

26. Bearing these principles in mind, where there was a dispute in the lay evidence as to conversations I have placed primary reliance on the extent to which the evidence is corroborated by contemporaneous documents, the objective surrounding facts and the apparent logic of events: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31].

27. In certain cases, as explained below, I have not accepted the evidence of Mr Brujic and his wife as to important disputed conversations. I did so not on the basis that they were dishonest in their evidence but rather because I consider that their recollections of events were distorted by the passage of time or perhaps altered by ‘unconscious bias, wishful thinking or by over much discussion of it with others’. As Lord Pearce said in Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431:

“Credibility” involves wider problems than mere “demeanour” which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist.

28. I note also that when the law requires the proof of any fact the Court must feel an actual persuasion of its occurrence or existence before it can be found, and ‘it cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality’: Briginshaw v Briginshaw (1938) 60 CLR 336 at 361; [1938] HCA 34 per Dixon J.

Background

Development consent

29. The plaintiff lodged a development application (DA) with Woollahra Municipal Council (Council) in 2013 for a proposed renovation of the Property. The DA was rejected by the Council. A principal reason for the Council’s decision was the failure of the proposal to provide any private open space or deep soil landscape area due to the construction of an extension at the rear of the terrace to accommodate a cellar and gym/storage area, which would remove the open space between the existing house and the existing double car garage. After the Council rejected the application, the plaintiff appealed to the Land and Environment Court.

29. On 22 August 2014 the Land and Environment Court made orders granting the DA on conditions, following a successful conciliation conference between the plaintiff and the Council (Development Consent). The conditions of consent comprise Annexure A to the orders of the Land and Environment Court made on 22 August 2014 (Consent Conditions). Condition A.3 provides that the plaintiff must carry out all work and maintain the use and works in accordance with the plans and supporting documents listed in the condition, which include the stamped architectural drawings prepared by the plaintiff’s then architects, CVMA Architects, which had been revised from the plans previously submitted to Council (CVMA plans). The principal elements of the plans which had changed was the inclusion of a deep soil planter box which was to penetrate the first floor terrace above the garage, and also the garage slab below, and the reduction of the height of the roof terrace above the garage by 255mm to provide better privacy for neighbouring properties.

30. The supporting documents listed in condition A.3 also include a geotechnical report dated September 2013 provided by Martens Consulting Engineers which, at paragraph 1.2, describes the work involved in the proposed development as including ‘demolition of existing stairs within the garage’ and ‘excavation ranging from approximately 2.60-3.30 m deep (includes 200 mm allowance for concrete slab and footing) to extend the garage level and make way for a cellar and gym/storage and accompanying new stairs’. One of the recommendations in the report (at paragraph 3.6) in relation to retaining walls was as follows:

Any retaining structures to be constructed as part of site works are to be backfilled with suitable free-draining materials and include suitable drainage measures, such as a geotextile enclosed 100 mm agricultural pipe, to redirect water that may collect behind the retaining walls. Retaining structures are to be constructed such that excessive surface flows do not cause scouring of backfilled materials.

Any new retaining structures greater than 0.5 m high should be designed and inspected by a qualified structural or geotechnical engineer.

32. Another condition relevant to the present dispute is condition C.8 (Condition C.8) which provides relevantly:

The Construction Certificate plans and specification required to be submitted to the Certifying Authority pursuant to clause 139 of the Regulation must be accompanied by a Geotechnical/Hydrogeological Monitoring Program together with civil and structural engineering details for foundation retaining walls, footings, basement tanking, and subsoil drainage systems, as applicable, prepared by a professional engineer, who is a suitably qualified and experienced in geotechnical and hydro-geological engineering. These details must be satisfied by the professional engineer to:

…

(d) provided tanking to all belowground structures to prevent the entry of all groundwater such that they are fully tanked and no on-going dewatering of the site is required

33. This condition is relevant to the work to be done on the garage level at the rear of the Property which faces onto King Lane. The stamped CVMA plans annexed to the Consent Conditions show the lower level facing King Lane as having two distinct areas. First, a tandem parking space that accommodates two cars. Second, beyond the parking spaces, there is a separate area that serves as a gym, cellar, and lift well, and internal staircase (on the western side) to access the next level living room of the Premises. The below is an extract from the stamped plans (CB1242, with street names altered for privacy reasons):

34. It can be seen from this plan that the cellar and gym/storage areas were to be created by excavating land below the kitchen and living area shown on the plan and were, relevantly, in an area which was underground at the time the consent was obtained. The area between the part marked ‘gym/storage’ and the existing garage is where the ‘deep soil planter box’ was intended to be installed.

35. Following the excavation necessary to create the area shown as ‘cellar’ and ‘gym/storage’ it was necessary for three retaining walls to be constructed which are shown on the engineering drawings prepared by Mr Kantouros as ‘RW1’ and ‘RW2’, (RW being an acronym for ‘retaining wall’). RW1 comprises two separate retaining walls: one on the eastern side (adjoining 50 King St) (RW1 East) and another on the western side (adjoining 46 King St) (RW1 West). RW1 therefore refers to two separate retaining walls. RW2 is the “retaining wall” on the southern/rear end of the Property where the cellar is located, and there is only one RW2.

36. The below photograph (at CB 1607) shows where RW1 East, RW1 West and RW2 were built following the excavation:

37. RW1 East is described by Mr Brujic in his affidavit evidence as a ‘rock face wall’.

38. RW1 West is a smooth ‘concrete face wall’. The concrete wall to which it faces was constructed by Mr Brujic, not as part of the Contract, but rather, when he constructed 46 King St prior to entry into the Contract. RW1 West serves as an internal wall for the living room and internal staircase of the Premises and also accommodates the electrical wiring for the lights installed on the staircase.

39. Set out below are extracts from the approved plans which show the requirement for an ‘approved waterproof membrane’ on RW1 (east and west) and RW2 (CB1338) to the full height of each wall. RW2 also includes an ‘A.G line’ but no ‘A.G line’ is on RW1 because it is a tanked wall on the boundary.

40. On 2 September 2014 there was a meeting at the Property attended by the plaintiff, her architect (Mr Alex Chougam of CVMA Architects) and Mr Brujic to discuss the build, and on 5 September she forwarded to Mr Brujic a copy of the approved CVMA plans (which were unstamped but in the same form as the stamped plans) with a request that he provide a quote for the work.

41. Mr Brujic deposed that in the meeting on 2 September 2014 the following exchange occurred:

“Mr Brujic:   Regarding your design of the garage floor, I see that the drawings show the walls as boundary to boundary. Normally the walls are set 150mm off the boundary to give you water drainage and then you backfill the gap.

Plaintiff:   This would take up too much space and I want it in line with the existing garage as per the drawings. The existing plans don’t bring the walls in.

Mr Brujic:   There’s a lot of excavation required and the adjoining walls are rock. If you’re not going to bring the walls in, I think you should consider using Xypex in the concrete for the garage walls, it is a concrete waterproofer and acts as a moisture barrier.

Plaintiff:   We are thinking of changing the garage to have more parking space but we will do that after. I don’t want to move the walls in.”

42. The plaintiff does not recall the conversation, or the words attributed to her by Mr Brujic, which is not surprising given the passage of time. In particular, she deposed that she had no recollection of Mr Brujic referring to the Xypex product at the meeting, which would have meant nothing to her at that time, although she did recall that during her conversations with him throughout the build, Mr Brujic used the word ‘watertight’ when referring to the walls for the gym/cellar and she deposed that ‘Miles certainly did not mention or ever warn me that there would be any chance of the gym/cellar flooding by using Xypex as it does now’.

43. On 14 September 2014, Mr Brujic sent an email to the plaintiff attaching a quote to do the work for $680,000 plus GST (MBG quote). The quote set out a summary of the scope of the project which included the statement that ‘Basement level allowed for concrete walls and floor slab with zypecs waterproofing (Not polished concrete) floor covering to be advised not priced’. The words ‘zypecs waterproofing’ was intended to be a reference to Xypex which is a concrete waterproofing additive.

44. On 10 January 2015, the plaintiff and her husband met with Mr Brujic and his wife to discuss the MBG quote. Mr Brujic deposed in his affidavit of 1 July 2022 that he and the plaintiff had the following conversation during this meeting:

Plaintiff:   What is this Xypex you are referring to?

Mr Burjic:   Xypex is concrete waterproofing additive. Your design has the walls boundary to boundary which are against the rockface, so I am allowing for it in the price.

Plaintiff:   What did you do on number 46?

Mr Brujic:   We used Xypex on number 46 but our design is different. Our design has a courtyard and all the roofs are concrete. Our garage is set back and not connected to the house and what you have designed for number 48 has you keeping the existing walls to the garage, which are on the boundary and you have a terrace above the whole garage. Georgina has already sent you the plans which show this.

Plaintiff:   Yes, I understand these are the joys of terrace houses.

45. Mrs Brujic deposed in her affidavit of 5 July 2022 to a similar version of the conversation in so far as the references to Xypex are concerned. The plaintiff does not deny that the meeting occurred but she deposed that she had no recollection of what was said in the conversation, in particular any discussion regarding Xypex.

46. In early 2015, the plaintiff changed architects and engaged Mr Alan Amores of Amores Design to prepare the construction drawings necessary to obtain a construction certificate. Amores Design provided a set of drawings on around 5 May 2015 which were based on the approved CVMA plans (Amores drawings). It was the Amores drawings which were annexed to the Contract and were the basis for the construction certificate.

47. In April 2015, the plaintiff engaged consulting engineers, Ross Engineers, to prepare construction drawings necessary to obtain the construction certificate. For this purpose, the plaintiff provided Ross Engineers with copies of the CVMA plans, the Amores drawings and the Consent Conditions.

48. Mr Kantouros, a director and senior engineer at Ross Engineers, prepared these drawings which comprise two pages and are dated 29 June 2015 (RE Drawings). The RE Drawings, which refer to the need for an ‘approved waterproof membrane’ on RW1 and RW2, are central to the dispute in the proceedings, and are discussed below. Ross Engineers also issued a certificate of structural design adequacy dated 30 June 2015 (RE certificate) stating that the RE Drawings were in accordance with the Building Code of Australia (BCA) and other building codes identified in the certificate.

49. On 1 July 2015, the plaintiff sent the RE Drawings to Mr Bujic by email and there followed discussions between the plaintiff and Mr Bujic regarding the building contract.

50. Ultimately, on 23 August 2015 the plaintiff and MBG entered into the Contract under which MBG agreed to undertake renovation works at the Property for a contract price of $984,500 plus GST including certain PC items. A copy of the Amores drawings was attached to the Contract. The RE Drawings were not attached to the Contract but it is not in dispute that they formed part of the contract (see Defendants’ opening submissions at [13]).

Relevant events following execution of the Contract

51. In late July 2015, the plaintiff had engaged Mr Darren Ball of DM Ball & Associates Pty Ltd as the private certifying authority for the project. He issued a construction certificate to the plaintiff on 8 September 2015 (Construction Certificate), which:

1. described the ‘development’ as ‘dwelling alterations & additions’;

2. identified the ‘building classification’ for the purposes of the BCA as:

•   Dwelling alterations & additions - Class 1a

•   Garage alteration - Class 10a;

3. identified the development consent to which it related as the Development Consent;

4. certified that the construction work would comply with the requirements of the EPA Regulation if completed in accordance with the plans and specifications referred to in the certificate, which comprised the Amores drawings, the RE Drawings and the stormwater drawings;

5. attached the documents which had been provided to Mr Ball by the plaintiff, including the Development Consent, the three sets of drawings referred to at (4) above, the RE certificate and two reports prepared by Martens Consulting Engineers (being a geotechnical and hydrogeological assessment and a geotechnical and hydrogeological monitoring program).

52. On 11 September 2015, MBG commenced demolition works at the rear of the Property.

53. On 14 September 2015 Mr Bujic sent an email to the plaintiff stating:

“I need the full DA approval documentation from the land and environment courts

A full CC Folder from Daren Ball, with full set of stamped drawings updated by him

Also a PDF file of the latest stamped drawings so

I can get A1 prints from. If I could get this by Wednesday it would be good…”

54. The plaintiff’s evidence, which I accept, is that on the following day she delivered to Mr Brujic a set of documents attached to the Construction Certificate. She was not challenged on this in cross examination. This is confirmed by an email sent by Mr Brujic to the plaintiff on 16 September 2015 which states relevantly:

“I received the CC package from Shruti yesterday afternoon

There is a slight problem with the report

We need to set up a vibration monitoring to [an adjoining terrace]

As we are up to the main excavating stage this is a requirement by the courts and the certifier

I have left a message with the geo tech engineers and am waiting for their response

We cannot do any more work on site until this condition is fulfilled”

55. The ‘report’ to which Mr Brujic refers in this email appears to be the report dated 24 August 2015 by Martens Consulting Engineers which was attached to the Construction Certificate and sets out requirements for a monitoring program pursuant to the Conditions. Mr Brujic denied in his affidavit dated 28 June 2023 that he received a copy of the Consent Conditions in the ‘CC package’ which he received from the plaintiff at this time.

56. Although, in my view, ultimately nothing turns on when he received the Consent Conditions for the reasons explained below, I prefer the evidence of the plaintiff that she delivered them to him at this time particularly as (a) the email refers to vibration monitoring as a ‘requirement by the courts’ which suggests that he had read the Consent Conditions, and (b) he specifically asked in his earlier email of 14 September 2015 for the ‘full DA approval documentation from the land and environment courts’ which, read naturally, refers to the Consent Conditions as identified by the Construction Certificate itself, and there is no evidence that he subsequently told the plaintiff that he had not received them when the ‘CC package’ was delivered.

57. On 30 September 2015, Mr Kantouros met with Mr Brujic at the Property to inspect the underpinning works to the adjoining terraces. There is a dispute as to what was discussed at this meeting. Mr Brujic’s diary note simply states ‘Ross Engineers turned up to inspect underpinning to number 50. All good will send us an email. Underpinning more in some areas. All good so far.’ In his affidavit dated 1 July 2022, Mr Brujic deposed that he had a conversation with Mr Kantouros about the RE drawings, referred to below.

58. On 11 October 2015, there was a meeting between the plaintiff, husband, and Mr and Mrs Brujic at their home during which Mr Brujic gave the plaintiff an update as to the works up to that time. There is a dispute as to what was discussed at the meeting which is dealt with below.

59. On 22 October 2015, Mr Kantouros attended the site to inspect the footings and placement of steel reinforcement on the garage level prior to the pouring of the concrete slab. He subsequently issued a certificate (dated 13 November 2015) expressed to be for ‘footings and slab steel reinforcement for lower ground floor)’ as follows:

Ross Engineers have inspected the above property on 30^th Sept and 22^nd Oct 2015 for the purpose of inspection and certification of the footings and the placement of steel reinforcement.

We can confirm the steel and footings appear as to be placed in accordance with the approved structural drawings and the slab should be cast as soon as practical.

SITE INSTRUCTIONS - NIL

60. On 23 October 2015, Mr Ball attended the site to give approval for the concrete pour for the slab which occurred on that day.

61. On 9 November 2015 MBG commenced the formwork for the construction of RW1 and RW2 and on 16 November 2015 Ross Engineers attended the site again to inspect and certified the placement of the steel reinforcement for those walls. Mr Kantouros subsequently issued a certificate (on 20 November 2015) expressed to be for ‘wall reinforcement for garage level concrete walls’ as follows:

Ross Engineers have inspected the above mentioned site on 16^th November 2015 for the purpose of inspection and certification for the placement of steel reinforcement.

We can confirm that the steel reinforcement appears to be placed in accordance with the approved structural drawings. The walls should be cast as soon as practical.

SITE INSTRUCTIONS - NIL

62. During the meeting on site on 16 November 2015, either Mr Kantouros (or his colleague) recommended that Mr Brujic should infill the walls in the garage area with additional bricks between the engaged peers to the existing walls to improve structural integrity and stability and effectively creating a solid brick wall where there were previously gaps. Following this the plaintiff gave an instruction for a variation to the original construction plan which ultimately lead to additional costs which were paid by the plaintiff.

63. On 20 November 2015, MBG poured the concrete for RW1 and RW2.

64. On around 22 February 2016 the plaintiff appointed Paul Cavallo (Mr Cavallo), a building consultant who conducted a business under the name ‘Independent Building Inspections’, to inspect the defendants’ work, during the build. Mr Cavallo attended the site on 23 February 2016 and provided a report to the plaintiff on 24 February 2016 (which she forwarded to Mr Brujic on 29 February 2016) reporting on the inspection and drawing a the plaintiff’s attention to some issues with the construction. The relevance of the report to the present proceedings is that in his covering email to the plaintiff, Mr Cavallo said: ‘I would make sure the Engineer is visiting regularly and has designed all structural components so far and is happy to give you a certificate on all areas constructed so far? The Builder is doing a good job but he’s not an Engineer so cover yourself and him by ensuring the Engineer visits regularly?’

65. On 4 February 2016, plaintiff sent an email to an engineer, Mr Sumeer Gohil of Shreeji Consultants, attaching a diagram of a proposed redesign for the deep soil planter box in order to replace it with a shallower structure in the form of a steel ‘tub’. Mr Gohil prepared some plans to implement the design. The plaintiff had previously discussed this idea with Mr Brujic in September or October 2015. It appears that this change was implemented in around March or April 2016.

66. On 15 June 2017, Mr Ball (as the PCA) issued an interim occupation certificate to the plaintiff. All of the building work was certified. The certificate adopted the same BCA classification as the construction certificate noted earlier: CB1927.

67. Water leaks became evident from early 2017 were the result of the failure of the aged existing roof not having been replaced as part of the new build. This was explained to the plaintiff from an early stage both during and after completion of the works by the defendants. The plaintiff refused to take the defendants’ advice to replace or renovate the old roof or flashings to party walls.

68. It was also propounded by experts engaged by the plaintiff that leaks were evidently due to water entry from the balcony level. The defendants upon inspection discovered an unexplained penetration through the terrace slab not created by the first defendant.

62. On 26 March 2019 Mr Cavallo conducted a site inspection and provided a defect report to the plaintiff (which she forwarded to the defendants) which identified a number of defects including water ingress through the balcony terrace to the garage level below. The defendants agreed to undertake rectification works under the supervision of Mr Cavallo and a scope of works was agreed between the parties and Mr Cavallo.

63. In November 2019 the plaintiff commenced proceedings in NCAT for the rectification of a waterproofing defect. This application was concluded when the parties reached agreement that the first defendant would undertake further works including rectification of certain defects, with further consideration to be paid to the first defendant by plaintiff.

64. One matter which was agreed at the Tribunal not to form part of the proposed works to be undertaken, was the waterproofing of the first-floor planter boxes. The parties agreed that the plaintiff could appoint a building expert to identify a scope of works to be carried out by the first defendant, who would oversee and approve those works. Consent orders were made in NCAT giving effect to this agreement on 1 November 2019.

Disputed conversations during construction

72. There are a number of disputed conversations regarding the use of Xypex rather than an approved waterproof membrane.

Meeting on site on 30 September 2015 with engineer

73. The first is an alleged conversation on 30 September 2015 between Mr Brujic and Mr Kantouros during a site visit by Mr Kantouros to inspect the underpinning works for the concrete slab. Mr Brujic deposed that the conversation was to the following effect (references to ‘Miles’ and ‘John’ being to Mr Brujic and Mr Kantouros respectively):

John:   You can continue with the works. It all looks good.

Miles:   Looking at the drawings, what is this “approved waterproof membrane”, as there is no specifications on it. What you’ve drawn I don’t think is possible. I can’t apply a waterproofing membrane on a wall because I can’t physically get access – it’s a rock and a wall.

John:   I see we haven’t specified and I agree that you can’t get between the walls.

Miles:   On previous projects we’ve moved the walls in. There’s no cavity wall in the drawings for RW1, and there is one on RW2 but you still can’t physically get in there to do the membrane. I can use Bondek on RW2. On RW1, I haven’t come across any product other than Xypex that we could use to deal with the access issue.

John:   Xypex is a good option and you could up the concrete to 40MpA.

Miles:   I have used it before, Xypex is concrete waterproofing and the garage is a Class 10a.

John:   These are retaining walls, and I have designed drainage behind RW2

Miles:   Of course, we will do the works as per your drawings, and you inspect all our work before any pour anyway.

John:   These works are good so far, let me know when you are ready for the ground work inspection.

Miles:   Absolutely- I think I will have it ready in a few weeks but I will call you and book it in. I flagged that the only thing I could come up with was Xypex to Shruti at the beginning of the project. Have you and Shruti discussed this as she told me that everything goes through her.

John:   I will discuss it with Shruti. We haven’t specified a product and we can up the concrete strength to 40mpa.

74. Mr Kantouros denies that he said the words attributed to him by Mr Brujic. His evidence was that he had no recollection of any conversation with Mr Brujic about approved waterproof membranes on RW1 and RW2. He accepts that he may have said that Xypex was a suitable product to add to concrete, but not that Xypex could be used as a substitute for a waterproof membrane.

75. Mr Kantouros deposed that he had designed RW1 and RW2 to comply with the requirement for ‘tanking’ in Condition C.8., stating that ‘tanking’ means that ‘external water cannot enter the internal space’. He deposed that he regarded a waterproof membrane as a standard feature for a retaining wall, such as RW1, to achieve tanking and prevent water ingress and this was the reason he designed RW1 with an ‘approved waterproof membrane’. He deposed that he was aware when he designed RW1 that there were suitable products available in the market which could have been installed as per the drawings, including a product manufactured by companies such as Sika and other products described as ‘geo tech liners and ‘poly liners’, which were capable of being applied to a rockface wall such as RW1. This evidence is consistent with the evidence of the expert engineers referred to below. Mr Kantouros also deposed that had he been asked about a suitable waterproof membrane during construction he would have directed Mr Brujic to consult a licensed waterproofer. Mr Kantouros was not cross-examined on this evidence and I accept it.

76. In addition Mr Kantouros gave detailed evidence in his affidavit as to his usual practice in a situation where a builder requested a change to his firm’s engineering plans, which was that he would not give off-the-cuff advice of this kind but rather would ask the builder to make a request by email indicating what the builder would like to change, which did not occur, and he would then undertake steps to ensure that the changes were within the architectural intent (including in this case that the area would be a moisture free space suitable for the designated purpose shown on the architectural plans). He was not cross-examined on that evidence.

77. In cross examination, Mr Kantouros denied that he said ‘we can up the concrete strength to 40mpa’ because his view was that there is no engineering reason to change the mpa if Xypex is being added to the concrete.

78. I prefer Mr Kantouros’ evidence on this conversation to that of Mr Brujic. First, Mr Brujic’s diary note for the meeting on 30 September 2015 set out earlier makes no mention of a discussion of Xypex or a waterproof membrane. It is unlikely that such a significant matter would not have been mentioned in the note had this discussion occurred.

79. Secondly, when Mr Brujic was asked in cross-examination what was discussed in the conversation with Mr Kantouros about Xypex (T173), none of the words attributed to Mr Kantouros in the version above were recalled by him. I note that the only conversation with Mr Kantouros which Mr Brujic deposes to as involving a discussion about Xypex and a waterproof membrane is during the site inspection on 30 September 2015 and he makes no mention of any discussion of those topics during the site inspection on 22 October 2015.

80. Thirdly, during either or both of the two site inspections of the garage level before the concrete slab was poured, being on 30 September 2015 and 22 October 2015, Mr Kantouros took photographs (Ex 4, pp 133 to 148). He accepted in cross examination that these photographs showed there was no waterproof membrane on RW1 or RW2 prior to the concrete pour of the ground floor slab or the walls themselves. However, he did not accept the proposition put to him that these photographs showed that structure he had drawn for a waterproof membrane in the RE drawings had not been implemented. This was because he considered that a waterproof membrane could still have been installed after the photographs were taken and before the concrete pour for the slab and walls took place (T84.12).

81. He denied in cross examination that this meant it was likely that he had a conversation with Mr Brujic about the absence of a waterproof membrane. His evidence was as follows:

ROBINSON: The fact that these photographs demonstrate to you that there was no waterproofing at the time is consistent with you having had a conversation with him and knowing that there was no waterproofing membrane being put up. That’s correct, isn’t it?

WITNESS: I don’t agree with that, because, you know, that - when, you know, there’s a lot that goes on in a construction process, and we’re called out for a very short window to do a specific task. And, you know, waterproofing is not structural engineering, okay. So, you know, if, if I’m called out specifically to look at steel reinforcement, I’m not necessarily across all the other facets that need to be managed on a construction project, and it would be a lot more than just waterproofing

82. Mr England in his oral evidence said that he would have expected that a structural engineer who attended to check the structural steel before the pouring of the concrete for the slab and walls to have noticed the absence of a waterproof membrane (T253.36). He was asked what he would expect the engineer to do in that situation and he responded: ‘If there was an alternate that’s been proposed by others, I think he would consider that as an alternate to what’s shown on the plans, knowing that he has to certify the works when they’re complete’ (T253.46).

83. I am not satisfied that I should reject Mr Kantouros’ evidence as to what was discussed in the site meeting with Mr Brujic on 30 September 2015 based on Mr England’s evidence. At its highest, Mr England’s evidence would support an argument that Mr Kantouros failed to take a step he ought reasonably to have taken when observing the absence of a waterproof membrane shortly before the concrete pour of the walls.

84. Fourthly, Mr Brujic accepted in cross examination that he did not understand after his conversation with Mr Kantouros on 30 September 2015 that he did not need to install a waterproof membrane (T175). This is consistent with his evidence in his affidavit of 1 July 2022 that on 1 October 2015 he asked Mrs Brujic to ‘look into waterproofing membranes for the boundary rockface walls and to look at Xypex options and qualified Xypex applicators’. Had he reached agreement with Mr Kantouros that no membrane was required why would he have asked his wife to investigate such a product?

85. I note that there is no evidence from Mr Brujic or any other witness for the defendants regarding any other conversation with Mr Kantouros regarding the installation of waterproof membranes for RW1 or RW2 or the use of Xypex.

Meeting on 11 October 2015 with plaintiff

86. The second alleged conversation was on Sunday, 11 October 2015 in a meeting at Mr Brujic’s home at which the plaintiff and her husband were present together with Mr Brujic and his wife. Mr Brujic deposed that the conversation was to the following effect (references to ‘Shruti’ being to the plaintiff):

Miles:   Things are going good so far. Ross Engineers did the vibration monitoring and signed off on the underpinning works and are happy with everything so far.

Shruti:   That’s great. What else did he say?

Miles:   We spoke of the concrete walls and that we can’t have access between the boundary wall and rock. The engineers did not specify the waterproof membrane and without access I don’t have many options.

Shruti:   I know you have already told me but what did you do next door again and what is common practice in terraces?

Miles:   Next door is a different design. It has a courtyard, and remember we spoke about how normally the basements are designed – the walls are normally set in 150mm off the boundary. Your drawings don’t show this type of design. You should look into some additional drainage options before we finish the ground slab, you should speak to the engineers.

Shruti:   Oh yes, I will but I do not want to change the design. The garage is already narrow.

Miles:   I asked Georgina to look at options before this meeting but outside of the Xypex there isn’t anything she could find.

87. Mr Brujic deposes that his wife then gave the plaintiff a fact sheet on the Xypex product, and he then had a conversation with the plaintiff to the following effect:

Me:   Shruti, I originally quoted using the Xypex and I will upgrade the concrete to 40mpa as I discussed with your engineer.

Shruti:   Okay. We can go with the Xypex. How do you do it?

Me:   It’s done by an approved Xypex applicator in coordination with the concrete plant. They add it to the concrete.

88. The plaintiff denies the words attributed to her. Mrs Brujic kept a handwritten file note of the meeting which relevantly states the following about the discussion regarding Xypex:

Miles flags access to boundary walls not possible. Need to work out options – Xypex? Last year mentioned when quoting. CB shared sheet - concrete waterproofing. Need approved company – Shruti said OK - other options but lose space – Shruti already so narrow –

OK Xypex - Miles to source company.

89. There was no challenge to the veracity of the file note and I accept Mrs Brujic’s evidence that she made it during the meeting. This file note makes no mention of Mr Brujic telling the plaintiff in the meeting that he had spoken to Ross Engineers about the lack of access between the boundary wall and rock, that Ross Engineers had not specified the waterproof membrane or that ‘without access I don’t have many options’. Mr Brujic in cross examination could not recall any discussion on these matters at the meeting, nor could he recall what was said at the meeting about Xypex. Given the elapse of time since the conversation and when he prepared his affidavit (almost 7 years) and having observed him during the course of his evidence, I do not regard his recollection of the conversation as reliable except to the extent confirmed by the file note.

90. I accept, based on the file note, that there was a discussion about the use of Xypex and that a copy of a product information sheet on Xypex was provided to the plaintiff at the meeting. However, neither the file note nor Mr Brujic’s version of the conversation, establishes that there was any discussion or agreement that Xypex would be substituted for a waterproof membrane.

91. I have taken into account that the plaintiff’s husband attended the meeting and he did not give evidence. I accept that the inference should be drawn that his evidence as to the meeting would not have assisted the plaintiff’s case as to what was discussed at the meeting: Jones v Dunkel (1959) 101 CLR 298 at 320-321. However, that does not lead to the conclusion that I should accept Mr Brujic’s recollection beyond what is confirmed by the file note.

92. As noted above, Mr Brujic stated in his affidavit of 1 July 2022 that on 1 October 2015 he asked his wife to ‘look into waterproofing membranes for boundary rockface walls’. Neither he nor Mrs Brujic gave evidence about the nature of the investigation done, or the outcome but in cross examination Mrs Brujic said that he had asked her to ‘make some phone calls in regards to an approved waterproof membrane’ and that after making ‘a couple of phone calls’ she created on her computer a list of ‘Xypex approved applicators’ and ‘waterproofing companies’ which she printed and handed to her husband. She said the list of ‘Xypex approved applicators’ included Reliable Trade Services (RTS), and that the list of ‘waterproofing companies’ included the names of three companies which she ‘believed … would have been Sika, Remseal and Ardex’, and the name of the relevant product (T119-122). She said she did only ‘basic research’, and that the existence of the list was not raised at the meeting. She also said the list could no longer be found.

93. When Mr Brujic was asked about this matter in cross examination, he said that Mrs Brujic had told him that she could find ‘nothing that will stick to a rockface wall’ (T177.50) that the only person he spoke to about a waterproof membrane after speaking to his wife was ’Tony’ from RTS. RTS is the company which provided Xypex in the concrete mix. Mr Brujic gave the following evidence in cross examination of about his discussion with RTS (T178):

MACK: … What did you say to Tony from RTS?

WITNESS: I asked Tony from RTS does he know of any product, what does he recommend, is there any recommendations, does he know of any waterproofing system, does he - what’s he done before from his experience, things like that, and he said no, he goes, he goes you need access to the external of the walls to put anything, to put a membrane on the outside of the wall….

MACK: Did you speak to anybody else about approved waterproof membrane?

WITNESS: No, cause I rely on the advice of the engineers that provide me the drawings and the instructions on what to do

94. No witness from RTS was called to give evidence and Mr Brujic could not recall the surname of the person he referred to as ‘Tony’. He could not name any other waterproofing companies he spoke to and said his wife had ‘already got their datasheets’ which she provided to him. However, apart from the Xypex date sheet, Mrs Brujic made no mention of obtaining datasheets from waterproofing companies.

95. None of this evidence appeared in the affidavit evidence of either Mr Brujic or his wife. That is difficult to explain given that it is material to the claims brought against the defendants. It is also difficult to understand why, if these conversations had occurred, Mr Brujic did not mention them to the plaintiff in the meeting on 15 October (which he accepted he did not). I note also that Mr Brujic was in court when his wife was cross-examined. In all the circumstances I am not satisfied that the recollection of either Mr Brujic or his wife on this topic is reliable and I do not accept their evidence on it.

Telephone conversation on 13 October 2015 with plaintiff

96. The third alleged conversation is a telephone conversation between Mr Brujic and the plaintiff on around 13 October 2015. Mr Brujic deposed that he contacted Tony at RTS on that day to discuss the addition of Xypex to the concrete for the retaining walls and that Tony said ‘I can’t recommend a membrane for a rockface wall. Xypex is widely used in the industry in these situations. The 40 mpa would be added protection.’ Mr Brujic also deposes that following this he telephoned the plaintiff and had a discussion with the plaintiff in which he told her that RTS was ‘on-board for adding the Xypex to the concrete and adding the water stop’ and then deposed that the following exchange occurred:

Miles:   Did you speak with anybody about extra drawings to RW1.

Shruti:   Not yet.

Miles:   You should consider some type of drainage cell to RW1.

Shruti:   How does this work again?

Miles:   It comes in a roll. It’s about 16 mm thick with nipples. You put it on the boundary between the concrete walls and the excavated surface, but you need to do it before we pour the garage slab.

Shruti:   How would this work for this property?.

Miles:   I don’t know because normally you have a drainage pipe at the base so it can drain into something. Most of the projects I have done the walls are set in off the boundary to allow for drainage.

Shruti:   Why would we use it if it’s not going to work?

Miles:   I didn’t say that. You need to run it past your engineers and Shruti you need to supply me with the specifications for this project and consult your engineers and designers.

Shruti:   If it’s not on the drawings let’s not create extra costs.   

97. There is no contemporaneous record of this conversation nor any email following it up. The plaintiff denies this conversation occurred and specifically says that had Mr Brujic ever asked her to contact Ross Engineers she would have immediately done so, as she had on other occasions when design issues arose, including the redesign of the deep soil planter box. I accept the plaintiff’s evidence on this conversation and do not regard Mr Brujic’s recollection as reliable.

Meeting on site on 19 October 2015 with Mr Ball

98. The fourth alleged conversation is said to have occurred on 19 October 2015 at the Property between Mr Brujic and Mr Ball which Mr Brujic deposed was to the following effect:

Miles:   I spoke to the engineer about the waterproofing membrane application issue to RW1 and RW2.

Mr Ball:   It’s a hard one you can’t get to it. Miles the garage is a class 10a it is not a habitable space, it should be fine, you have done the drainage works, all looks good, make sure you get me the compliance certificate.

Miles:   Shruti is thinking about removing the deep soil planter box to get more parking space in the garage to open it all up.

Mr Ball:   You need to get engineering drawings, it could be load bearing.

Miles:      I think Shruti is already on to it.

99. Mr Ball was not called to give evidence. Consistently with my earlier conclusion that Mr Brujic did not speak to Ross Engineering ‘about the waterproofing membrane application issue to RW1 and RW2’, I do not accept that Mr Brujic’s recollection of this conversation as reliable.

Terms of the Contract

100. The Contract included the following terms.

101. Clause 1 (headed ‘Contract documents’) provided:

This contract consists of owner, contractor, site and price details, the Clauses 1 through to 30 (hereafter referred to as ‘the contract conditions’) and any additional conditions agreed to by the owner and contractor which must be in writing, together with the section for signatories and contract date appearing after the contract conditions.

All plans and specifications for work to be done under this contract, including any variations to those plans and specifications are taken to form part of this contract.

Any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by each party to this contract. The documents listed below also form part of this contract and must be attached:

102. The ‘documents listed below’ include the Amores documents but do not include the Ross Engineering drawings. However, it was conceded by the defendants that the RE Drawings provided to MBG on 1 July 2015 formed part of the Contract. This concession is correct because they are referred to in the construction certificate and were ‘plans and specifications for work to be done under this contract’ and hence are taken to form part of the Contract by cl 1.

103. Clause 2 provided:

All work done under this contract will comply with:

1. (a) the Building Code of Australia (to the extent required under the Environmental Planning and Assessment Act 1979 (including any regulation or other instrument made under that Act); and

(b)   all other relevant codes, standards and specifications that the work is required to comply with under any law, and

(c)   the conditions of any relevant development consent or complying development certificate.

2.   Despite subclause (1), this contract may limit the liability of the contractor for a failure to comply with subclause (1) if the failure relates solely to:

(a)   design or specification prepared by or on behalf of the owner (but not by or on behalf of the contractor), or

(b)   a design or specification required by the owner, if the contractor has advised the owner in writing that the design or specification contravenes (1).

104. By cl 3(a) it was agreed that the contractor will:

• comply with the statutory warranties in section 18B of the Home Building Act 1989 and complete the work in accordance with the requirements of this contract; and

•   comply with all relevant Australian Standards, laws and the requirements of the relevant local council and all statutory authorities with respect to the work.

105. By cl 3(b) it was agreed that owner will pay the contract price in the manner specified in the contract. One of the annexures to the Contract is a document entitled ‘Monument Building Group Cost Sheet as at 15^th August 2015’ which stated the ‘project breakdown to lock up’ comprising: (a) $680,000 (ex GST) for various specified ‘tasks’ on each level of the Property which included ‘waterproofing’ in relation to the ‘garage floor plan’, the ‘basement level’ (where the planter boxes were to be constructed on the terrace) and the ‘ground floor plan’, and (b) a further $215,000 (ex GST) by way an allowance for additional works/finishes and PC items, giving a total figure of $984,500 (incl GST). A note at the bottom of the page states that the quotation is based on the architectural and engineering drawings referred to in the construction certificate, which include the Amores drawings and the RE drawings.

106. By cl 9 contained the following warranties by the contractor which are in the same terms as s 18B of the HBA:

The contractor warrants that:

(a)   the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract

(b)   all material supplied by the contractor will be good and suitable for the purpose for which they are used and, unless otherwise stated in the contract, those materials will be new

(c) the work will be done in accordance with, and will comply with, the Home Building Act or any other law

(d)   the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time

(e)   if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling

(f)   the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the owner expressly makes known to the contractor or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the contractor, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the contractor’s skill and judgment.

These warranties do not in any way reduce or limit the contractor’s obligations in relation to workmanship, materials, completion or other matters specified in Clause 2 and 3 or elsewhere in this contract. No provision of this contract can reduce, restrict or remove these statutory warranties.

107. Clause 13 set out the requirement for variations to the Contract to be in writing, relevantly as follows:

The work to be done or materials used under this contract may be varied:

•   at the request of the owner, or

•   at the request of the contractor. If the necessity for the variation is due to the fault of the contractor the owner will not be liable for any increase in the contract price, or

•   due to such other matters that could not reasonably be expected to be foreseen by an experienced, competent and skilled contractor for the completion of the work at the date of the contract, or

•   due to a requirement of a council or other statutory authority relating to the work, if at the date of this contract such requirement could not reasonably have been foreseen by the contractor.

Procedure for variations

Before commencing work on a variation, the contractor must provide to the owner a notice in writing containing a description of the work and the price (including GST). If not otherwise specified the price will be taken to include the contractor’s margin for overheads, supervision and profit. The notice must then be signed and dated by both parties to constitute acceptance…

The requirement for variations to be in writing does not apply where, if the work were not to be done promptly there is likely to be a hazard to the health or safety of any person or to the public or to be damage to property and the work could not be done promptly if the variation had to be put in writing before commencing the work…

108. Clause 18 provided:

In carrying out the work the contractor must comply with the codes, standards, specifications and conditions of consent as set out in Clause 3.

If, due to such a requirement, the plans or specifications have to be amended, the contractor must immediately advise the owner in writing explaining the reason for the change. Any agreement to vary the plans and specifications for the work must be in writing and signed by both parties.

Any changes to be made to the work or materials to be used, provided they are not as a result of any fault on the part of the contractor, will be dealt with as variations in accordance with Clause 13.

The contractor must make good, at the contractor’s own cost, any damage to footpaths and kerbs to the council’s satisfaction.

109. By cl 20 a provision of or a right created under the Contract may not be varied except in writing signed by the parties.

Expert evidence regarding the design and waterproofing of RW1 and RW2

110. As noted above, the parties relied on expert evidence of structural engineers (Mr England and Mr Blacker) and building experts (Mr Hall and Mr Bulmer) dealing with the design of RW1 and RW2 and in particular the reference to an ‘approved waterproof membrane’. This evidence goes to the failure of MBG to install any waterproof membrane on those walls; all he did was add Xypex to the concrete mix for the walls.

111. While the report of the plaintiff’s engineering expert, Mr England, and the report of the defendants’ engineering expert, Mr Blacker, did not respond to the same questions, to a large extent their areas of disagreement were addressed in their concurrent oral evidence.

112. All the experts participated in a joint report and gave concurrent oral evidence. In the joint report, they dealt with this issue in relation to the topic described as ‘6.5 Land and Environment Court condition for tanking’.

Mr England

113. Mr England expressed the opinion in his report that the construction of RW1 (both eastern and western) for the cellar and gym/storage area on the approved CVMA plans included in the Consent Conditions were required to be constructed on the side boundaries of the land, which was common for similar sites in the City of Sydney and Woollahra local government areas, and the location of those walls on the RE drawings was in accordance with those approved plans and the Conditions of Consent.

114. Mr England expressed the following opinion on the meaning of ‘tanking’ Condition C.8:

The term ‘tanking’ is a technical term used for subterranean construction to indicate that a structure is waterproof without the need for the continuous removal of inflowing water. The internal space of the structure remains dry due to the presence of a waterproof barrier which is part of, or attached to, the structure. An example of a tank structure is a boat. The internal space of a boat remains dry without the need for continuous removal of water is the structure of the boat provides the waterproof barrier.

115. He expressed the opinion in his report, confirmed in his oral evidence, that the design of RW1 in the RE drawings was structurally suitable to perform as a tanked wall structure and prevent water ingress provided that the walls are constructed as shown in the RE drawings and the design of RW2 in the RE drawings was a tanked construction, that is a waterproof wall, which complied with Condition C.8 (T250.34 and T273.11).

116. In response to a question whether the design of RW1 was capable of preventing water ingress if the walls were constructed as drawn on the RE drawings, Mr England said in his report:

In my opinion, the design of RW1 shown on Ross Engineers engineering drawings dated 29 June 2015, Sheet 1 of 2 and Sheet 2 of 2, is structurally suitable to perform as a tanked wall structure and prevent water ingress provided that the walls are constructed as shown on the Ross Engineers engineering plans.

With reference to paragraphs [23, 73, 78, 310] of the Affidavit of Miles Brujic dated 1 July 2022 it appears that Mr Brujic is not aware of how to construct the tanked walls, RW1, in the locations shown on the CVMA Architects, Amores Design plans and Ross Engineers plans. Likewise, it appears that Mr Brujic is not aware of the purpose of the tanked wall, RW1, and that a drainage lawyer is not required behind wall RW1.

With reference to paragraphs [85, 86, 249, 359] of the report by Christopher Bulmer it appears that Mr Bulmer is not aware of the construction practice of tanked boundary walls nor the purpose of tanked walls.

In my opinion Mr Brujic and Mr Bulmer are incorrect in their opinion that the boundary walls could only be constructed with drainage layers behind the wall or needed to be set in off the boundary as per [23, 78, 85] of Mr Brujic’s affidavit or offset from the boundary as per [85, 88, 249, 272, 359], and other places in Mr Bulmer’s expert report.

In my experience, the construction of tanked boundary walls is commonplace, particularly within the City of Sydney and Woollahra Local Government Areas, where redevelopment of small lots and lots containing terrace housing requires maximum use of the available space.

117. He expressed a similar view in relation to the design of RW2, stating that it is a waterproof wall designed in an identical manner to RW1. In other words, RW1 and RW2 were designed as waterproof walls.

118. In response to a question whether there were membrane products available for sale on 29 June 2015 (the date of the RE drawings) that could achieve the design depicted in RW1 and RW2 he expressed the following opinion:

In my experience a large variety of waterproof membrane materials, both proprietary and non-proprietary, were available on 29 June 2015.

Waterproof membranes were available on 29 June 2015 in the form of rubber sheet membranes, spray on rubber sheet membranes, neoprene sheet membranes, bitumen-based membranes and polyethylene sheet membranes. Typical proprietary products were SikaBit, SikaProof and Sikaplan available from the Sika Group.

The waterproof membrane should be installed following manufacturers’ instructions by a licensed, professional waterproofer who is experienced in tanking basements within the City of Sydney and Woollahra Local Government Areas.

In my experience the use of waterproof membranes directly against an excavated subterranean wall is commonplace and used regularly throughout the construction industry.

119. In the joint report he said that Condition C.8 was ‘a standard condition in any such situation where there is a likely water issue. Tanking systems are regularly used. Rock can be sprayed-bituminous product for temporary waterproofing and then tanking installed…’ He maintained this view during his oral evidence (see the discussion of Mr Blacker’s evidence below).

Mr Blacker

120. In his report, Mr Blacker responded to a question whether the reference to ‘approved waterproof membrane’ in the RE drawings was adequate, by noting that he was informed that the job was ‘construct only’ and continued:

In a ‘construct only’ contract, the term quote ‘Approved Waterproofing Membrane’ should be backed up with a brand and designation for the approved membrane.

The contractor is not responsible for the design but is liable for constructing the project according to the design, generally without question; but if the Defendants thought the supplied information was deficient then the Defendants can ask for clarification or request further information and/or guidance from the relevant designers.

121. His answer then proceeds to observe that the waterstop as shown on the RE drawings was located in the wrong location (ie. on the negative side rather than the positive side of the wall) and that this was corrected by the builder in the course of construction. I note that Mr England agreed with Mr Blacker on this point in his oral evidence (T261). Ultimately, this is not relevant to the question whether an ‘approved waterproofing membrane’ was required to be installed.

122. Mr Blacker’s report then goes on to observe that the builder provided Xypex as an additive to the concrete and increase the concrete strength to 40MPa from 25MPa noted for the slabs on the RE drawings, and that the builder encountered rock at a much higher level than expected which meant that there was nothing to which a waterproof membrane could be attached to. He expressed this opinion in his report as follows:

Finally, and probably most notably, the section detail for RW1 on the approved Drawings is not correct for what occurred on site. The underpinning of the existing wall does not continue down to the basement slab level as rock was encountered at a much higher level (as in photos provided by my instructing solicitor and reproduced at Appendix 3).

This means that there is nothing the Defendant could physically waterproof up against, so the ‘Approved Waterproof Membrane’ noted on the Drawings is impossible to install due to access and, in my opinion, should have been updated to ensure the relevant DA condition is still met. This is a notable issue and, at the time of the construction and the inspections, a professional engineer and/or an architect familiar with this type of work, in my opinion, should have known to engage a waterproofing specialist to come up with an appropriate detail.

I am not a waterproofing expert but, in my opinion, there should have been suggestions made by the design professionals, and not left to the Defendants in a ‘construct only’ contract, to provide an additional drainage layer and/or battened out substrate behind the wall to allow for the installation of the membrane in conjunction with the Xypex additive in the reinforced concrete wall suggested.

Alternatively, a product like Dincel (plastic permanent wall formwork) would have been another more appropriate solution as it provides an additional layer of protection. This was a ‘construct only’ contract so the Defendants should not be relied on for providing alternative designs for when the waterproofing membrane in the detail could not be applied to the cut rockface is put forward by the Engineers.

It should be noted that Xypex is excellent in controlling the amount of water ingress (by trying to eliminate as many voids in the porous concrete as possible) but I’m not a complete waterproofing solution, and should not be relied on by themselves for a ‘wet wall’ as they do not necessarily stop community travelling through the concrete.

In my opinion, when the side rock was encountered and exposed and the structural detail was no longer strictly applicable, the Defendant under a ‘construct only’ contract has completed his due diligence in notifying the designers, Engineer, and others, and should have been supplied with a new detailed drawing and/or specification to follow in constructing the Wall.

123. In the joint report he said in relation to Condition C.8:

Questioned the detailing on tanking. Waterproofing detail tells nothing. Lacking detail. Not showing importance. It had been proposed by others that the rockface could be sprayed with bitumen or some other waterproofing but I suggested that I could not see that it would stick to wet rock and if it did and then water started to come through the rock that it would pop that waterproofing off rendering it useless. I could not opine further on this matter.

124. The view expressed by Mr Blacker that there was some significance in the fact that this was a ‘construct only’ contract, which was taken up by Mr Robinson in his closing submissions, involves a transgression by him into what is essentially a question of law as to the obligations of the builder on the proper construction of the Contract, which I will deal with below. More importantly, so far as Mr Blacker was suggesting in his report and the joint report that the encountering of rock meant that a further instruction was required because the design of RW1 and RW2 as shown in the RE drawings could no longer be implemented, he resiled from this during his oral evidence.

125. The issue came up in this way. Mr England had during his oral evidence said the following when asked to summarise his views on the Condition C.8 for tanking (T240):

I’ve acted in the area of Woollahra, Waverley, city, City of Sydney, particularly for the councils in court matters. Tanking is a standard condition in those development applications, development approvals that I’ve seen. There are others where you don’t have tanking but I’ve seen it as a standard condition, and that’s the comment I make there. I’ve got there then rock can be sprayed with cumulus product for temporary waterproofing. If I go into that, waterproofing doesn’t have to be spray‑on onto the rock, it can be in the form of a film, it can be bituminous, it can be polyethylene. There’s, there’s many, many different products that it could have been that could have been put into that location. But certainly from the point of view of tanking as a condition, it’s a standard condition in many development approvals that I have seen.

247. However, while that argument is open on the majority’s reasoning in Pafburn HCA, it is inconsistent with the reasoning in Pafburn CA which was not disapproved by the majority in Pafburn HCA.

248. It is apparent from the reasoning of Basten JA (with whom Ward P agreed) that a necessary step in his Honour’s reasons for upholding the appeal was that it does not matter whether the putative concurrent wrongdoer can be characterised as a ‘delegate’. Basten JA said at [20]:

… A secondary argument appears to have been that there was an anterior question of fact and law to be decided, namely whether any of the persons listed as independent contracts was a ‘delegate’ of the respondents, and if so which respondent. Arguably the question is misconceived, but in any event, if the defence is not available, that ‘anterior question’ will not need to be decided.

251. From this passage, it is clear that the Court of Appeal was very much aware of the fact that the only way in which it would not matter whether the other independent contractors was if Part 4 of the CLA was if the statutory scheme under Part 4 was to be construed in a way that it is not available at all as a defence to a claim in respect of s 37 of the DBPA at all. That conclusion was confirmed at paragraph [56] of the decision when Basten JA, after considering the proper construction of Part 4 (at [51]-[55]), held that (emphasis added):

[The foregoing construction of Part 4] is a sufficient basis on which to conclude that the reasoning of the primary judge was in error… The claims to rely on the apportionment of liability under Pt 4 for of the Civil Liability Act could not succeed if Pt 4 was not engaged.

252. The reference to this path of reasoning, which did not involve any consideration of s 5Q, as a ‘sufficient basis’ to resolve the appeal, suggests that it was a distinct basis on which the Court of Appeal decided the matter which was separate from the remaining basis on which the appeal was decided (namely that which involved a consideration of s 5Q). This also explains the breadth of the remaining observations by the other members of the Court (especially that of Adamson JA at [11]-[12] and Ward P at [1]), to the effect that s 39 by “necessary implication” excludes the operation of Part 4 CLA to a duty under s 37. Such a conclusion also did not involve any consideration of the impact of s 5Q of the CLA.

253. In my view, the reasoning in Pafburn CA in support of the conclusion that Part 4 does not apply to a claim under s 37 of the DBPA is part of the ratio of that decision and is binding on me: see Jacob v Utah Construction & Engineering Pty Ltd (1966) 116 CLR 200 at 217; Ratcliffe v Watters (1969) 89 WN (NSW) (Pt 1) 497 at 505; McBride v Monzie [2007] FCA 1947 at [6].

254. As Adamson JA noted in Pafburn CA at [14], this does not leave a person subject to a claim under s 37 of the DBPA without a remedy as that person can bring a cross-claim against concurrent wrongdoers. Pafburn CA was handed down on 13 December 2023, which was some 11 months before the hearing in this matter. No cross claim was brought in this case against the putative concurrent wrongdoers despite her Honour’s observation.

255. It follows that Mr Brujic does not have an apportionable claim under Part 4 of the CLA.

256. In relation to MBG, the defence based on there being an ‘apportionable claim’ under Part 4 is not precluded by Pafburn CA. What is pleaded in the AD is that the claim against MBG in respect of any loss or damage due to ingress of water to the garage level of the Property is an ‘apportionable claim’ under Part 4. This relates to Defect 1 only. The only claim against MBG in relation to that matter is for breach of clauses 2, 3 and 9 of the Contract. I have concluded above that MBG is liable for damages for breach of contract in respect of the ingress of water to the garage level of the Property, but on the basis that MBG breached cl 2(1)(a), cl 3(a), cl 9(c) and cl 9(f) of the Contract.

257. The only extent to which these pleaded claims relating to those clauses of the Contract arise from a failure to take reasonable care is the claim for breach of cl 9(a) which requires that the work under the Contract be done ‘with due care and skill and in accordance with the plans and specifications set out in the Contract’. However, given that cl 9(a) merely replicates the statutory warranty in s 18B(1)(a) of the HBA, the claim for breach of cl 9(a) is properly regarded as a claim in an action for damages arising from a breach of statutory warranty under Part 2C of the HBA and brought by a person having the benefit of the statutory warranty; hence it is not an ‘apportionable claim’ under Part 4 of the CLA due to s 34(3A) of the CLA: Onslow v Cullen [2022] NSWSC 1257 at [55]-[58]; see also Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232 at [171]-[183] per Stern JA and [191]-[244] per Basten JA. It follows that MBG does not have an apportionable claim under Part 4 against the putative concurrent wrongdoers.

Issue 4: Whether Mr Brujic’s defence of contributory negligence is made out

258. As noted earlier, the AD pleads a defence of contributory negligence in relation to the plaintiff’s conduct regarding the waterproofing and drainage of the garage level works (in particular with regard to RW1) and the removal of the deep soil planter box. In closing submissions, it was submitted by the defendants that ‘but for [the plaintiff’s] decision not to allow the boundary walls of the garage to be set back from the boundary the waterproofing membrane stipulated on the retaining walls might have been applied’.

259. Although it was not clear which claim these submissions were made in respect of, UCPR r 14.16 requires a defendant who wishes to rely on the defence of contributory negligence must specifically plead the contributory negligence. On these pleadings, the defence is pleaded only in respect of the claim in relation to breach of s 37 of the DBPA against Mr Brujic.

Principles

260. It was not in dispute that a defence of contributory negligence is capable of being advanced in respect of a breach of s 37 of the DBPA. In my view this is correct, either on the basis s 37(3) of the DBPA assimilates the duty arising under s 37 to the duty of care established by the common law, or as a result of s 9(1) of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) which provides:

If a person (the claimant) suffers damage as the result partly of the claimant’s failure to take reasonable care (contributory negligence) and partly of the wrong of any other person:

(a) a claim in respect of the damage is not defeated by reason of the contributory negligence of the claimant, and

(b) the damages recoverable in respect of the wrong are to be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage.

261. The expression ‘wrong’ is defined in s 8 of that Act to include an act or omission that ‘gives rise to a liability in tort in respect of which a defence of contributory negligence is available at common law’.

262. I note that in Southern Region SLSA Helicopter Rescue Service Pty Ltd v NSW Golf Club Co Ltd [2021] NSWSC 1493, which was an application to amend a List Response where breaches of s 37 of the DBPA were alleged in the original List Statement, there was an issue as to whether potential amendments to that List Response in respect of a defence in contributory negligence ought be allowed (at [25]-[30]). Although rejecting the proposed amendments on other grounds, Stevenson J was evidently prepared to proceed on the basis that the defence was capable of being advanced against a claim in respect of s 37 of the DBPA as a matter of law (see also Owners - Strata Plan 80867 v Da Silva [2024] NSWDC 263 at [259]-[263] per Waugh SC DCJ).

263. The conclusion that the defence in contributory negligence does apply to a claim under s 37 of the DBPA is consistent with the principles governing the character of the duty under s 37 as a non-delegable duty, which is also sometimes referred to as a duty to ensure that ‘reasonable care is taken’ (see eg. Kondis v State Transport Authority (1984) 154 CLR 672 at 687 per Mason J). More precisely, the nature of the duty under s 37 DBPA of the Act on these facts is that of the second kind of non-delegable duty identified by Gleeson CJ in Leichhardt Municipal Council v Montgomery (2007) 230 CLR 22; [2007] HCA 6 at [9]-[10], where ‘the engagement of a third party to perform a certain function is consistent with the exercise of reasonable care by a defendant, but the defendant’s legal duty is not merely to exercise reasonable care but also (if a third party is engaged) to ensure that reasonable care is taken’. To this end, the obligation on the defendant to ‘ensure that reasonable care is taken’ would operate to render that party liable for ‘the act or omission of some third party, for whose fault the defendant would not ordinarily be vicariously responsible’ (emphasis added). In my view, such a definition expressly limits the liability of the defendant upon whom the non-delegable duty is imposed to acts or omissions by third parties to whom there has been a delegation of some part of the work by the defendant, and not those acts or omissions by the plaintiff.

264. This conclusion is consistent with the fact that appellate courts have regarded a defence on the basis of contributory negligence in respect of breach of non-delegable duty claims as legally open: see eg. Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406 at [128]-[129], [141]-[143]; Rail Corporation New South Wales v Donald [2018] NSWCA 82 at [201]-[205]. There appears to be no reason in principle why the same cannot be true as regards a claim under s 37 of the DBPA, especially in the light of the statutory prescription found in s 41(1) and (3) of the DBPA which expressly provide that Part 4 of that Act (to which s 37 belongs) ‘do not limit the duties, warranties or other obligations imposed under that Act, other Acts or the common law’ and is ‘subject to the Civil Liability Act 2002’.

265. This conclusion is also not inconsistent with Pafburn CA, given that the definition of ‘concurrent wrongdoer’ in s 34(2) of the CLA has been held not to include a plaintiff who is guilty of contributory negligence: Rennie Golledge Pty Ltd v Ballard (2012) 82 NSWLR 231; [2012] NSWCA 376 at [15] per Basten JA, [128]-[132] per Campbell JA. As such, the inability of a defendant to reduce their liability by reference to ‘concurrent wrongdoers’ does not prevent them from doing so by reference to a party who is not a concurrent wrongdoer, which is governed by the combined effects of s 5R of the CLA and s 9 of the LRMPA rather than Part 4 of the CLA.

266. Turning now to the requirements for the defence, as indicated in Rail Corporation (at [201]), the starting point for determining whether the plaintiff was contributorily negligent is s 5R of the CLA, which provides:

5R – Standard of contributory negligence

(1) The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm.

(2) For that purpose:

(a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and

(b) the matter is to be determined on the basis of what that person knew or ought to have known at the time.

267. It has been established that the ‘principles’ referred to in s 5R(1) above are those prescribed by s 5B: Verryt v Schoupp [2015] NSWCA 128; (2015) 70 MVR 484 at [27]. That is so even in claims involving pure economic loss or property damage: About Life v Maddocks Lawyers [2021] NSWSC 1370 at [657]-[660], cited in Ling v Beyond Development Group Pty Ltd [2022] NSWSC 685 at [359], [397]. Sections 5B provide as follows:

5B - General principles

(1) A person is not negligent in failing to take precautions against a risk of harm unless—

(a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and

(b) the risk was not insignificant, and

(c) in the circumstances, a reasonable person in the person’s position would have taken those precautions.

(2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things)--

(a) the probability that the harm would occur if care were not taken,

(b) the likely seriousness of the harm,

(c) the burden of taking precautions to avoid the risk of harm,

(d) the social utility of the activity that creates the risk of harm.

268. In addition, s 5C also provides as follows:

5C Other principles

In proceedings relating to liability for negligence—

(a) the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and

(b) the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and

(c) the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk.

269. In relation to the application of s 5R and the interactions between it and sections 5B and 5C, the following observations were made by the Court of Appeal in Grills v Leighton Contractors Pty Ltd [2015] NSWCA 72 (quoted with approval in Boateng v Dharamdas [2016] NSWCA 183 at [129] and applied in Rail Corp at [201]):

The effect of s 5R therefore is to require the court, in determining whether a person is contributorily negligent, to apply the provisions of ss 5B and 5C, being the statutory provisions applicable to determining breach. There may be a question whether any aspect of the common law continues to apply to the determination. However, that question does not need to be determined in this case.

As has been remarked in various cases in this court, there is a conceptual difficulty in applying the general principles identified in ss 5B and 5C to the determination of contributory negligence: the question of breach is directed to whether a person has breached a duty owed to another person; contributory negligence, however, requires a determination whether a person has taken reasonable care for the person’s own safety. Once this difference in the fact finding task is recognised, the manner of application of s 5B becomes apparent. Consideration is required to be given to the statutory prescriptions in s 5B. In doing so, it is to be borne in mind that s 5B(2) is not limited to the factors identified in s 5B(2)(a)–(d) and that pursuant to s 5R(2), the standard of care is that of a reasonable person in the position of the plaintiff and the matter is to be determined on the basis of what the person knew.

270. In addition, the following guidelines are relevant to the process by which a court approaches the task of determining whether contributory negligence has been established on the facts, as stated by a majority of the High Court in Astley v Austrust (1999) 197 CLR 1 at [30]:

A finding of contributory negligence turns on a factual investigation of whether the plaintiff contributed to his or her own loss by failing to take reasonable care of his or her person or property. What is reasonable care depends on the circumstances of the case. In many cases, it may be proper for a plaintiff to rely on the defendant to perform its duty. But there is no absolute rule. The duties and responsibilities of the defendant are a variable factor in determining whether contributory negligence exists and, if so, to what degree. In some cases, the nature of the duty owed may exculpate the plaintiff from a claim of contributory negligence; in other cases the nature of that duty may reduce the plaintiff’s share of responsibility for the damage suffered; and in yet other cases the nature of the duty may not prevent a finding that the plaintiff failed to take reasonable care for the safety of his or her person or property. Contributory negligence focuses on the conduct of the plaintiff. The duty owed by the defendant, although relevant, is one only of the many factors that must be weighed in determining whether the plaintiff has so conducted itself that it failed to take reasonable care for the safety of its person or property.

Consideration

271. I will now address the seven matters said to involve contributory negligence by the plaintiff.

272. The first is that the plaintiff contracted with MBG to use Xypex as the waterproofing solution in the construction of the garage level boundary walls. I reject this contention because the Contract did not provide that MBG could use Xypex for the waterproofing of the garage level boundary walls. There is in fact no mention of Xypex in the Contract. Insofar as this is a contention that the Contract was varied in the meeting on 11 October 2015 to permit the use of Xypex as a substitute for a waterproof membrane for RW1 and RW2, I have rejected that submission the reasons given earlier.

273. The second is that the plaintiff failed to inform the defendants that the proposed construction of the garage level was other than construction of a class 10.a structure under the National Construction Code. I reject this contention because the plaintiff did not have any responsibility to the defendants to inform them of the building classification under the BCC. It was apparent, for the reasons given earlier, from the construction certificate that it was only the area of the existing garage which was a Class 10 building.

274. The third is that the plaintiff failed to provide the defendants with a copy of the development consent conditions imposed by either the Council or the Land and Environment Court for the development of the Property, in particular that it was a condition that the garage level the ‘tanked’. For the reasons given earlier, I am satisfied that the plaintiff did provide a copy of the Consent Conditions to the Defendants on around 15 September 2015. In any event, this contention goes nowhere because Consent Condition 3.8(d) which required the ‘tanking’ of RW1 and RW2 was satisfied by the preparation of the RE drawings with the inclusion of the ‘approved waterproof membrane’ and the water stop for those walls. The defendants were certainly aware of the requirement for tanking in those drawings.

275. The fourth is that the plaintiff refused and failed to instruct her architect or structural engineer to amend the design of the development at RW 1 to allow an alternative method waterproofing to Xypex to be installed. This contention is not made out because there was no requirement for the plaintiff to instruct her architect or Ross Engineers to amend the design to allow Xypex to be used for RW1, because Xypex was not an appropriate method for ‘tanking’ that wall.

276. The fifth is that the plaintiff failed to take account of advice provided to her by Martens, consulting engineers, in their report of September 2013 to the effect that retaining walls be constructed to allow backfill to the boundary for adequate drainage. It is not clear why it is said that the plaintiff should have taken into account a report prepared by Martens in September 2013 which was prior to the Development Consent. Relevantly, the Development Consent included a requirement for ‘tanking’ in Condition C.8(d) and the RW drawings met that requirement. The defendants have not established that the construction of the walls to allow backfill was necessary to meet the tanking requirement. I am satisfied on the evidence that a waterproof membrane was capable of being applied to RW1 and RW2 to achieve the required tanking.

271. The sixth is that the plaintiff failed to take the advice provided by her nominated building consultant, Mr Paul Cavallo, in his email of 24 February 2016, the relevant part of which is set out above. As set out there, Mr Cavallo suggested that the plaintiff should ensure that the engineer visited the site regularly and had designed all structural components so far, and he added (emphasis added): ‘…so cover yourself and him by ensuring the Engineer visits regularly’. The ‘him’ is a reference to Mr Brujic, to whom the plaintiff forwarded a copy of the email shortly afterwards. Hence any caution provided to the plaintiff in the email was equally provided to Mr Brujic. The defendants failed to show how, given the time at which this email was sent, it could reasonably be said that it could have had any impact on the construction work to which the claim against Mr Brujic relates, in particular the structural work to construct RW1 and RW2 which by this time had already been done.

272. The seventh is that the plaintiff instructed Shreeji Consultants to remove the deep soil planter box shown in the original architectural drawings, and directed the defendants to construct the development accordingly, which adversely affected the drainage of water from the property. It is not in dispute that the plaintiff changed the design of the deep soil planter box to replace it with the shallow ‘tub’ structure which was constructed in the area on the terrace where the deep soil planter box was designed to be placed. The defendants have not established that this had any impact on the drainage to the garage level or the terrace.

273. For these reasons, Mr Brujic has not discharged his onus of demonstrating any contributory negligence by the plaintiff.

Issue 5: What damages, if any, are payable

280. The measure of damages for breach of a building contract is the reasonable costs of rectification of the defects complained of so as to give the plaintiff ‘the equivalent of a building on her land which is substantially in accordance with the contract’ subject to the qualification that the rectification work must be necessary to produce conformity and must be ‘a reasonable course to adopt’: Bellgrove v Eldridge (1954) 90 CLR 613 at 617-618.

281. In Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 at [17], the High Court said that such work will only be considered unreasonable in ‘fairly exceptional circumstances’. For example, the cost of rectification will be unreasonable if it is wholly disproportionate to achievement of the contractual objective: Bannister & Hunter Pty Ltd v Transition Resort Holdings Pty Ltd (No 2) [2013] NSWSC 1943 at [330].

282. The Damages claimed by the Plaintiff (supported by the unchallenged evidence of Mr Whyte) is as follows (MFI-5):

No.	Description	Amended
1	6.1 - Planter Boxes	$8,173
2	6.2 - Garage level - gym/ cellar	$152,123
3	6.3 - Roof & skylights	$5,957
4	6.4 - Electrical work (not pressed)	$0
5	6.5 - Box gutter	$11,412
6	6.6 - Internal staircase from garage – west side of property	$0
7	6.7 - garage level brick walls	$10,459
8	6.8 - living room level - west & east walls	$133,834
8A	Subtotal	$321,958
9	Project manager/client’s agent	$64,500
9A	Subtotal 8A + 9	$386,458
10	Builders’ preliminaries - 38 working weeks	$252,316
10A	Subtotal 9A + 10h	$638,774
11	Professional fees - engineers fees @ 2.5% (10A*2.5%)	$15,970
11A	Subtotal 10A + 11	$654,744
12	Professional certifying authority @ 0.75% (11A*.75%)	$5,011
12A	Subtotal 11A + 12	$659,755
13	Home warranty insurances @ 3% (12A*3%)	$19,793
13A	Subtotal 12A + 13	$679,548
14	Builders OH & profit @ 25% (13A*25%)	$169,887
14A	Subtotal 13A + 14	$849,435
15	Council fees & charges @ 1.8% (14A*1.8%)	$15,290
15A	Subtotal 14A + 15	$864,725
16	Contingency @ 10% (15A*10%)	$86,473
16A	Subtotal	$951,198
17	GST @ 10% (16A * 10%)	$97,036
17A	Subtotal	$1,048,234
18	Alternative accommodation	$93,600
18A	Subtotal	$1,141,834
19	Building price adjustment	$176,219
20	Grand total 18A + 19	$1,318,052

283. The plaintiff also claims pre-judgment interest on these amounts.

284. I have found that the plaintiff has succeeded in relation to items SS#6.1, 6.2, 6.3, 6.5 and 6.7, but not in relation to item SS#6.8. Items SS#6.4 and 6.6 were not pressed.

285. The defendants did not dispute the damages claimed for those items with one exception. In closing submissions, Mr Robinson submitted that the damages for item SS#6.2 should not be the cost of demolition and reinstallation of RW1 and RW2 (which is how the damages in the above schedule was calculated). He submitted that rectification work of this nature was unreasonable, because there was an alternative and significantly more cost-effective rectification measure available. He relied on an email sent by Mr Kantouros to the plaintiff on 9 September 2020 following a site visit on 25 August 2020 in which he inspected RW1 and RW2 and observed concrete shrinking cracks in those walls and said ‘cracks that are of concern for water [ingress] should be filled with a suitable proprietary filler’ and forwarded a link to such a filler being a product manufactured by Ardex (Ex 4, p130).

286. Mr Kantouros accepted in cross examination that he had visited the site and made a recommendation as to how the cracks in the concrete he had observed could be repaired (T87.38) but the matter was not taken any further with him. The experts provided no evidence on whether injecting the concrete walls RW1 and RW2 with a suitable proprietary filler would be an adequate method of rectifying the failure to install a waterproof membrane behind those walls. In view of this I accept the plaintiff’s submission that the defendants have failed to establish that the proposed rectification work for which damages are being calculated by Mr Whyte is unreasonable.

287. The defendants did not challenge any of the other items in the schedule set out above. There is no dispute that the plaintiff is entitled to pre-judgment interest on those amounts.

Conclusion

288. For the above reasons, I have concluded that (a) the plaintiff has succeeded in her claim for breach of contract against MBG relation to items SS#6.1, 6.2, 6.3, 6.5 and 6.7 of the Scott Schedule and is entitled to damages in the amount claimed; (b) the plaintiff has succeeded in her claim against Mr Brujic for breach of the duty of care in s 37 of the DBPA in respect of those items and is entitled to damages in the amount claimed for those items; (c) Mr Brujic and MBG do not have an apportionable claim under Part 4 of the CLA and (d) Mr Brujic has not discharged his onus of demonstrating any contributory negligence by the plaintiff.

289. I will hear the parties on costs.

290. I will direct the parties to bring in short minutes of order to give effect to these reasons. I will also grant liberty to apply in the event that there is a disagreement as to the form of the orders.

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Decision last updated: 06 November 2025