MATHEW and RIVIERA HOMES (WA) PTY LTD
[2024] WASAT 98
•11 SEPTEMBER 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION: MATHEW and RIVIERA HOMES (WA) PTY LTD [2024] WASAT 98
MEMBER: DR B DE VILLIERS, MEMBER
MR R AFFLECK, SENIOR SESSIONAL MEMBER
HEARD: 26 AUGUST 2024
DELIVERED : 11 SEPTEMBER 2024
FILE NO/S: CC 863 of 2022
BETWEEN: JAMES MATHEW
First Applicant
TINTA JACOB KUNNAPPALLIL
Second Applicant
AND
RIVIERA HOMES (WA) PTY LTD
Respondent
Catchwords:
Building service complaint - Set coat failing - Appropriate remedy - Suitability of experimental remedy - Election of remedy by owner
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 36, s 36(1)(a), s 36(1)(b)
Result:
Costs to remedy awarded to the applicants
Category: B
Representation:
Counsel:
| First Applicant | : | In Person |
| Second Applicant | : | In Person |
| Respondent | : | JA Robertson |
Solicitors:
| First Applicant | : | N/A |
| Second Applicant | : | N/A |
| Respondent | : | Williams & Hughes |
Case(s) referred to in decision(s):
Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613
Gemmill Homes Pty Ltd v Sanders [2018] WASC 179
J-Corp Pty Ltd v Gilmour [2005] WASCA 136
Kos and DND Building Co Pty Ltd [2020] WASAT 95
The Owners of One Brighton Strata Plan 51948 and Pindan Pty Ltd [No 2] [2020] WASAT 3
REASONS FOR DECISION OF THE TRIBUNAL:
Background
This is a dispute about the cost of remedial work arising from building work not carried out in a proper or proficient manner or being faulty or unsatisfactory. The building defect is, in essence, that the paint of all the walls in the dwelling, except tiled surfaces, fails to adequately adhere to the substrate due to defects with the set coat. The owners seek a monetary order for the cost of remedying the deficiency under s 36(1)(b) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRAAct). The builder has consented to the making of a monetary order rather than for a building service remedy order to be made. The builder accepts liability for workmanship, but the parties disagree about the quantum to be awarded. The owners originally sought $304,894.69 (Exhibit A: 437) but they have now adjusted their claim to $130,106.60 (Exhibit A: 427). The parties and their experts agree that the paint and the float coat of all the walls of the dwelling are fit for purposes, but that the set coat on all the walls is deficient. As a result of this deficiency, the outer surfaces of the walls are soft and chalky. This deficiency is commonly experienced in the home building industry. The scientific experts recommended two potential remedial options, the one being widely practised in the building industry and the other at an experimental stage. It was thought at the time of the expert conferral that the cost differentiation between the two options would be substantial. However, during examination in the hearing it appeared that the scope of remedial work and the costs of those works for the respective options would not necessarily be as far apart as had been initially thought by the scientific experts. The costs awarded for remedy therefore places the owners in a position to self-select either of the remedial options.
Introduction
The dwelling the subject of the complaint is located at 21 Compton Way, Morley. Practical completion was achieved on 22 December 2015 (Exhibit A: 745). The complaint was lodged on 10 December 2021 (Exhibit A: 11). The complaint is brought pursuant to s 5 of the BSCRA Act. The relief sought by the owner is for a monetary order to be made pursuant to s 36(1)(b) of the BSCRA Act, which provides as follows:
(1)A building remedy order consists of one of the following -
(a)…
(b)an order that a person who carried out a regulated building service pay to an aggrieved person such costs of remedying the building service as the Building Commissioner or State Administrative Tribunal, as the case requires, considers reasonable and specifies in the order;
The parties filed extensive material, communications, and reports developed over a long period. All those were collated in a bundle numbering pages 1 ‑ 826 and marked Exhibit A. The original complaint comprises three items (Exhibit A: 656 - 657), but two of those (complaint items 2 and 3) were settled by consent at the commencement of the hearing and orders were made for the builder to pay to the owner the sum recommended by Mr Chris Jones, one of the building experts. An order was made on 27 August 2024 to give effect to that agreement.
The principal evidence before us regarding complaint 1 comprise the reports and oral evidence of two building experts, Mr James Lawrence and Mr Chris Jones, and two scientific experts, Mr Rick Hughes and Dr Armand Zurhaar. These experts filed several reports during the course of the matter, including joint conferral reports, all of which are contained in the Bundle.
Complaint 1 relates to what was generally described at the commencement of the proceeding as defective plaster, excessive pH levels, inadequate thickness of the set coat, and air entraining agents in the float coat. The complaint is not about the adhesion of the paint, but about the defectiveness of the set coat. The hardness of the set coat is not to the required standard which results in the surface being soft, being able to be pulled way by Scotch Magic Tape no. 810 (Exhibit A: 145 ‑ 148), and capable of being scraped away by a metal scraper (Exhibit A: 672). Although none of the experts tested each of the walls in the dwelling, the experts agreed during the hearing that it is reasonable to assume that all the walls except for tiled areas, are affected by the same deficiency. The builder did not object to this assessment of the experts. The quantum for remedial work must therefore provide for all non-tiled wall surfaces to be remedied, which is approximately 240 square metres.
The issue that causes disputation between the parties is the appropriate remedial option for complaint 1 and the cost thereof. The scientific experts, Mr Hughes and Dr Zurhaar propose two possible options, referred to during the hearing as Option A and Option B (discussed in greater detail below). Option A is said to be the general practice of remediation in the building industry, whilst Option B has not been applied in practice and could be regarded as being at an experimental stage. Mr Lawrence rejects the efficacy of Option B and Mr Hughes, Dr Zurhaar, and Mr Jones also say that they cannot give any degree of certainty if Option B would be suitable to be applied in the dwelling the subject of this dispute. Option B is however seen by Mr Hughes, Dr Zurhaar, and Mr Jones as the cheaper option. The owners reject Option B since they did not want their house to be used for the application of an untested remedy. After extensive examination during the hearing, it appeared to us that Option A and Option B may not in practice be as distinct from each other in respect of scope of work or remedial cost, as originally proposed. Put simply, Option B may require so much of the set coat to be removed that it becomes similar to Option A. The experts and builders now agree that there could be a fair degree of overlap between the options, in fact, the two options could end up requiring the same level of rectification. Whilst initially the proposition was put that we must elect between the cost of Option A or Option B, it ultimately appears that once the remedial work starts and the paint is removed, so much of the set coat may be damaged in the process of paint removal and removing chalky set coat, that most if not all of the set coat would have to be removed. Thereby the distinction initially sought to be drawn between Option A and Option B would largely fall away.
Description of the complaint
The set coat through the entire house presents as thin, chalky, soft, with a high pH level. As a result, the set coat does not properly attach to the float coat and easily peels away or crumbles with the paint attached to it. In a written report of 15 November 2021, Mr Daniel Shuttleworth summarised the defect as follows: 'The result is that the plaster had dried out too rapidly and the excessive lime was unable to carbonate. Thus, this is a defect caused by the builder/plastered' (Exhibit A: 113). He suggested a scope of remedial work as well as suitable accommodation arrangements for the owners while remedial work was being done (Exhibit A: 126).
It is agreed by the parties and experts that the set coat was thin and entailed air entraining agents. The scientific experts in their reports respectively found that the set coat ranged from 2.38 mm ‑ .067 mm (Mr Rick Hughes); and 1 mm ‑ 2 mm (Dr Armand Zurhaar) (Exhibit A: 635). The scientific and building experts agree that the thickness of the set coat is a likely cause of the deficiency since low thickness could cause the set coat to dry out too quickly preventing the carbonisation from occurring and limiting the curing of the plaster. Thickness of the set coat is not necessarily in itself the cause of the deficiency provided the set coat cures properly. In this case the pH of the set coat is after many years higher than 10 which indicates that it had not properly set - most likely due to rapid drying and thinness (Exhibit A: 635). The pH when tested, some nine years after the build, was up to 12. This according to all the experts is indicative of the set coat not having properly cured. The float coat and paint were found to be adequate (Exhibit A 636 - 637). The two building experts, Mr Chris Jones and Mr James Lawrence agreed that the set coat required remediation (Exhibit A: 630). The two building experts undertook what was called a 'hand test' with the aid of a 76 mm paint scraper (Exhibit A: 671). Both found it was easy to remove the set coat and it appeared chalky and came away from the wall in small lumps and powder form.
All four experts agree with the owner that the set coat is deficient, and it requires remedial work. The builder also accepts the evidence of the experts. The experts furthermore agree that there is no remedial work required for the float coat. The paint is not deficient, but it would inevitably have to be removed to remedy the set coat.
The question is what remedy should be applied to the set coat, and the cost of the remedial work.
Recommended remediation: Options A and B
The scientific experts in their joint report agreed that there are two options available, being referred to as Option A and Option B (Exhibit A: 637).
Option A: Completely remove the set coat layer back to the sound float coat and install a new set coat layer taking into account the porosity of the set coat and ensuring adequate moisture management.
Option B: Apply water to the remaining set coat (after painting had been removed) to reactivate the cure (carbonation) process and wait around one week for that process to be complete with completion evidenced by reduction of pH to 10 or less. Then apply a new supplement skim layer set coat to create a level consistent finish. If Option B is not successful, then Option A is the only viable remedy.
The reinstated set coat can be prepared for painting by one of two options: (a) wait at least four weeks for the plaster cure process to be completed by natural carbonation (indicated by when the pH is 10 or less), then prime/undercoat and paint the wall as normal with normal trade painting products; or (b) wait one week for the set coat to dry (pH will be higher than 10) and then apply a specialist high pH tolerant sealer/binder such as Zinsser Gards before applying two coats of premium acrylic wash-n-wear topcoat. The finished paint system, after being allowed to cure for a minimum of seven days, should pass an Australian Standard 1580 tape adhesion test which is then considered the plaster and paint system is properly remediated and fit for purpose (Exhibit A: 638).
It is accepted by all the experts that Option A is suitable, viable, tested, and generally used in the building industry to perform remedial work of the nature required in this proceeding. Regarding Option B there is agreement between the scientific experts and builder Mr Chris Jones about its potential suitability and viability, but builder Mr James Lawrence disagrees. Mr Lawrence is of the view that only Option A is tested, suitable and viable.
Consideration and decision
Several issues were raised during the course of the proceeding and we shall deal with those under distinct headings:
4.1 Jurisdiction of the Tribunal
The hearing was originally set down for 29 January 2024. At the commencement of the hearing on 29 January 2024 the builder questioned the jurisdiction of the Tribunal to determine the matter on the basis that the complaint may have been brought out of time. The hearing was adjourned for the owner to seek advice and for material to be filed by the parties (Exhibit A 674). The jurisdictional question was set down for a hearing on 17 April 2024. On 15 April 2024 the builder informed the Tribunal and the owners that on reflection the builder accepted that jurisdiction was properly vested in the Tribunal (Exhibit A 748). The preliminary issue thus fell away. We are satisfied that the Tribunal has jurisdiction to determine the dispute. The owner indicated at the time that it would seek an order for costs that had been wasted as a result of the adjournment. As part of orders made in this decision, an opportunity is given for parties to make applications for costs regarding the jurisdictional proceeding and the final hearing.
4.2 Potential inconsistencies between expert reports and joint expert conferral reports and oral evidence
Due to the time it had taken to bring this complaint to a hearing, several reports had been prepared by the respective experts about the possible cause of the failure of the set coat and the appropriate remedy. For example, at various stages issues were raised about the appropriate standard that applies to set coat; the applicability of HB-161-2005 as a guide or a standard, the testing of paint, the testing of float coat and set coat, the proper methodology for testing; and suitable remedies. At the commencement of the hearing the experts giving evidence were offered the opportunity to revisit each of their reports to indicate which aspect, if any, no longer forms their opinion, or in the alternative we raised the possibility that they adopt their joint expert conferral reports as their evidence‑in‑chief and that any opinion expressed in an earlier report that is inconsistent with their joint expert conferral reports, be regarded as withdrawn and thus no weight be attached to it. The experts preferred the latter whereby they adopted the joint expert conferral reports and their oral evidence during the hearing as their evidence‑in‑chief. If any inconsistency arises between the hearing-evidence (written and oral) and an earlier report by the same expert, the hearing-evidence is to be regarded as the evidence of the particular witness.
4.3 Applicable standard: Relevance of HB-161-2005
A threshold question that arose was what standard should be applied to set coat and to what standard should the remedial work comply? Building and Energy in their Revised Proposed Building Remedy Order (Exhibit A: 98 ‑ 111) dated 14 June 2022 defined the 'action required' as having to be in compliance with HB-161-2005 Guide to Plastering. This purported standard became the subject of extensive examination, questioning, and confusion since the owner viewed HB-161-2005 as a legal standard for a set coat, whilst the experts held a different view, as explained below.
The experts adopted the following position about the applicability of HB-161-2005 to the work the subject of the dispute as well as to the preferred remedial option:
(i)At the time when the dwelling was built, HB-161-2005 was only a relevant guide of good practice since it had been authored by experts in the building and construction industry;
(ii)HB-161-2005 was however not a binding standard at the time when the dwelling was built;[1]
(iii)HB-161-2005 at no stage had been adopted as a binding standard in Western Australia;
(iv)HB-161-2005 was withdrawn as a guide on 29 November 2018;
(v)HB-161-2005 is no longer formally cited as a guide to plastering;
(vi)A builder may continue to rely on the guiding principles as previously set out in HB-161-2005, but there are also other ways to ensure proper and proficient plastering;
(vii)Strict compliance with the Revised Proposed Building Remedy Order, in as much as it cites HB-161-2005, cannot be achieved since it never was a standard and is no longer used as a guide;
(viii)There is currently no objective industry standard to apply set coat, other than the work having to meet the standard of proficiency for purpose; and
(ix)It is noted that deficiencies arising from white set plaster walls that appear soft, crumbly and easy to crack are widespread in the housing industry, but in the absence of a prescribed standard to be adhered to, it is the responsibility of each building practitioner to utilise material and adopt practices that are fit for purpose, namely to provide a hard and durable wall.
[1] The Preface to the HB-161-2005 Guide to Plastering states as follows: 'Plastering is an art involving adjustment of the use of materials and the physical manner of application in order to achieve a durable, visually pleasing surface. It is difficult to define the performance required of the finished surface. Therefore, it has been published as a Handbook, rather than as a Standard, to enable the inclusion of "best practice" information and advice'. (emphasis added)
We accept this position of the experts regarding HB-161-2005 as it also reflects our experience and knowledge. Since it is agreed that the set coat is failing, there is no need to further consider the relevance of HB‑161-2005, and as far as remedial work is concerned HB‑161‑2005 no longer applies as a guide but the quantum we award must be adequate to provide a product that is hard and durable.
4.4 Remedy sought: money order
The owners indicated in their amended claim sheet that they sought a 'money order' (Exhibit A: 656; ts 21). The builder consented to this preference. In their original complaint the owners sought a remedial work order (Exhibit A: 10). At the commencement of the hearing, we sought clarification from the owners about the remedy they now seek. They confirmed that they seek a money order for all three claim items. We repeated our understanding of their preference several times to ensure that the owners understood what they were asking for and the implications. This preferred position is consistent with the position they adopted in the directions hearing of 28 June 2024 before Senior Member Le Miere. In that directions hearing Mr Mathews indicated that he would 'prefer a money order only' (Exhibit A: 802). Senior Member Le Miere then explained to the applicant that if he sought a monetary order, he would have to submit relevant evidence and call a witness/es at the time of hearing (Exhibit A: 806). At the hearing Mr Mathews confirmed that they sought only a monetary order. The builder did not object to a monetary order and we proceeded on the basis of determining the quantum to be awarded.
We are satisfied that pursuant to s 36(1) BSCRA Act it is open to us, if the parties agree, to make a monetary order under s 36(1)(b) BSCRA Act.
4.5 Can the owners select a remedy?
Since the owners have elected a monetary remedy pursuant to s 36(1)(b) BSCRA Act, the question arises whether the owners are entitled to elect a remedy? The answer is in the negative. It is for the Tribunal to determine the appropriate remedy, but the Tribunal may of course consider submissions by the parties about remedy. The preference expressed by an owner of a particular remedy is not binding on the Tribunal. In the ordinary course of building disputes, the builder is usually given an opportunity to perform remedial work pursuant to s 36(1)(a) BSCRA Act. In this case however the parties were in agreement that the building remedy order should not be made. If the builder had not consented to a monetary order pursuant to s 36(1)(b) BSCRA Act, we would have considered all relevant options before exercising our discretion. We are however satisfied that the parties have given careful consideration to the appropriate remedy, the matter has been in the Tribunal for a substantial time, both parties had the benefit of expert assistance, and they have agreed on the appropriate remedy order to be made.
When making of an order pursuant to s 36(1)(b) BSCRA Act, it is open to us to consider the nature and extent of remedial work to be conducted. In this proceeding the possibility of two remedial options were raised. The owners and their building expert, Mr Lawrence, rejected Option B. Their rationale, which is discussed below, was simply that Option B was not practical, did not have industry endorsement, and had not progressed outside the realm of laboratory testing. Option A on the other hand is widely endorsed by the industry.
In light of the ambivalent nature of Option B it is appropriate for make findings about its utility to this dispute because the quantum awarded may be impacted upon by the election of Option A or Option B.
In Gemmill Homes Pty Ltd v Sanders[2018] WASC 179 it was observed at [104] that s 38 BSCRA Act read with s 36 BSCRA Act:
… provides for three alternative categories of building remedy orders. The first is a work order. The second is a payment of reasonable costs of remedying the building services work order. The third is a payment of compensation order for the failure to carry out the building service in a proper and proficient manner, or for faulty or unsatisfactory building work.
The Court continued to observe that the Tribunal has a 'genuine free' discretion to ascertain in light of all the facts, what remedy is to be ordered [110]. The court concluded at [131] that:
Whilst comity and consistency require that the Tribunal formulate well‑founded coherent principles to guide the exercise of the discretion conferred by s 38, the right of the innocent party to elect cannot, in my respectful opinion, be applied to the statutory remedies in s 36 of the Complaint Resolution Act. To imply a right on an owner to elect a remedy is to add a gloss to the statutory task the Tribunal must embark upon to exercise the discretion conferred by s 38 to make a building remedy order in the form of one (or more) of the orders specified in s 36(1).
When determining the appropriate building remedy order, the Tribunal is therefore exercising a discretion that is informed by the preferences of the parties (rather than an owner electing a remedy) and the relationship between the parties as well as other relevant matters particular to the facts and circumstances of the proceedings.
Of note is that the Tribunal in the Gemmill case was found to have erred by setting out in its reasons what remedial work was required, but in its orders did not refer to any specificity other than to say the cracking had to be remedied. The court said at [169]:
However, I do agree that in light of the Tribunal's clear and unambiguous findings made about the method that is to be implemented to make good the cornices and ceilings, to simply state in the order that Gemmill Homes is required to remedy 'the effect' of all cracking is not to specify how the regulated building service is to be remedied. Put another way, an order that simply requires Gemmill Homes to remedy the effect of the cracking is not to implement the findings made by the Tribunal as to how the defects in the work were to be remedied.
(footnote omitted)
In the The Owners of One Brighton Strata Plan 51948 and Pindan Pty Ltd [No 2] [2020] WASAT 3 it was emphasised that it is open to the Tribunal to consider the preferred remedy orders put forward by the parties, but that the discretion to determine a remedy remains that of the Tribunal and if the Tribunal elects a particular option, it must specify in the orders the remedial work to be done. If detailed orders are made about rectification, the Tribunal must ensure that the method complies with all regulatory requirements.
In Kos and DND Building Co Pty Ltd [2020] WASAT 95 the Tribunal adopted the approach that it may 'specify the work to be done' when there are 'clear and unambiguous findings' about the 'method or approach that should be implemented to remedy the defects' [67].
The approach adopted by the Tribunal must be viewed within the context of identifying the practicality, functionality, and efficacy of a proposed remedy. The Tribunal may find that a proposed remedy is 'doubtful' and hence the cost or remedial work ought to be based on a more realistic remedy (J-Corp Pty Ltd v Gilmour [2005] WASCA 136 (27 July 2005) and Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613).
In our determination of a quantum according to s 36(1)(b) BSCRA Act, we therefore note the preferred remedy sought by the owners and the agreement by the builder with the remedy sought by the owners. In our calculation of quantum we have taken into account, as is reasoned below, the merit of Option A and Option B, and we have made a finding that Option B is not a reasonable, realistic, tested, or a preferred option.
4.6 Implication of refusal by owners to allow testing on part of dwelling
The builder proposed to the owners that Option B be applied to one area in the dwelling to ascertain its effectiveness. A proposed minute of consent orders were submitted for consideration of the owners (Exhibit A: 775, 778). The assumption of the builder was that should Option B be effective in the test area, then it could be applied to the rest of the walls at a lower cost and in a less disruptive manner than Option A. At the directions hearing before Senior Member Le Miere on 28 June 2024 the possibility of a test-application to their dwelling was discussed with the owners. The owners repeatedly rejected the proposal. They explained that they were not open for their house to be used for purposes of experimenting for a remedy that according to the scientific experts has not been tested outside of a laboratory (Exhibit A: 774).
The builder suggested during the hearing that the owners acted unreasonably by refusing to allow a wall in their house to be tested. The builder proposed that their refusal should be a relevant factor when the quantum for remedial work is determined. We reject this proposition. We find that the owners acted reasonable and within their rights to refuse to allow their dwelling to be used for purposes of experimenting. It was an option open to them and they declined it. Another person may have made a different decision and allowed the experiment, but the owners cannot be regarded as unreasonable by having refused it. Furthermore, we note that neither of the scientific experts could provide us with any evidence of where Option B had been applied in similar circumstances as those of this dwelling. Neither of the scientific experts could explain to us why they had not tested Option B in a practical environment where its efficacy could be scientifically reviewed and endorsed.
The refusal of the owners to consent to the proposed minute of orders prepared by the builder is therefore not a relevant consideration when quantum for remedial work is determined.
4.7 Assessment of Option A and Option B
At the commencement of the hearing the scientific experts and Mr Jones believed that there would be a major cost differentiation between Option A and Option B. As the examination progressed, it appeared that Option A and Option B were not as distinct as may have been proposed by the scientific experts in their joint report. The experts ultimately agreed that the quantum awarded to the owners for purposes of remediation ought not be influenced in substance by the options elected. Mr Lawrence, who was the only expert critical of Option B, also agreed with the quantum as estimated by Mr Jones and specifically that the quantum is adequate regardless of which of the options were elected.
Option A is the 'typical' remedial work performed for set coat that fails in a manner the subject of this proceeding (Exhibit A: 773). We concur with the experts and the builder that this is the standard remedial approach. The typical remedial work would be for the set coat to be removed in its entity back to the float coat; for a new set coat to be applied; and for it to be painted.
Option B is not an option known to us. We therefore feel it is appropriate that we make a finding about the suitability of Option B based on the evidence we heard. Ordinarily, a builder would be given the opportunity to remedy without prescription, but in this case where there are two clearly distinct remedial actions proposed and they may differ in cost to remedy, it is suitable for us to reflect on Option B.
We reject Option B as a suitable or appropriate option to undertake remedial work to this dwelling. We find so for the following reasons:
(a)Option B is described by the experts in their joint report as a 'theoretical option based on plaster science' (Exhibit A: 773). Neither of the experts offered any evidence in documented form or during the hearing to sustain their proposition that Option B is suitable for application in this dwelling. The proposition by Mr Robertson for the builder that the owners ought to have made available a wall for Option B to be experimented, is rejected. There is no duty on the owners to make their house available for the scientific experts to test what they could have done in a laboratory or at another site. In the words of Mr Hughes: 'I mean, what we're saying is that it hasn't been tested in practice. It's a theoretical option' (ts 47).
(b)Option B has not been endorsed by any expert standard, guidelines, or practice manual by the building industry in Western Australia or the rest of Australia. Option B is highly speculative and ambivalent. We were surprised that two experts such as Dr Zurhaar and Mr Hughes would so vehemently defend Option B with so little scientific or practical evidence in support of its suitability and practicality. They put the credibility of their opinion at risk.
(c)Option B seems to have been the proposal of Mr Hughes and then it was adopted by Dr Zurhaar. Dr Zurhaar stated: 'All I can say is that during the expert conferral, the origin of option B actually came from Mr Hughes' (ts 50). And again, on ts 52 Dr Zurhaar put to Mr Hughes the following: 'It was your option that you put on the table at the expert conferral. I mean, at the expert conferral, you brought this up as an option that you wanted to be included, yet now you're actually taking it off the table. You convinced me at the expert referral that this was a viable alternative to option A because I put option A on the table, and you said, "Well, there is option B", and you put option B on the table as something that I ought to consider and was viable and had science behind it'. Dr Zurhaar could not cite, other than to material that had apparently been given to him by Mr Hughes, any scientific tests results or publications supportive of Option B. Mr Hughes said he had read an article about the possibilities of Option B but he could not recall when or where it had been published, or whether it had been adopted in practice.
(d)Neither of the scientific experts considered the 'logistical or economic costs' of either of the options (Exhibit A: 773). This raises the question why they were so persistent to support Option B as the preferred alternative if it had not been tested and if they had not considered its economic or logistical implications. It therefore came as little surprise to us that Mr Jones under cross‑examination stated that Option A and Option B may end up requiring the same scope of remedial work. He stated with some level of frustration as follows when we put to him the proposition that there does not seem such a material difference between the remedial works under Option A and Option B:[2]
WITNESS, JONES: That's exactly what I've been asking. I'm sorry but that's exactly what I've been asking from the beginning. I - 100 per cent agree with you. So removal of the paint system is going to remove some of the white set and not removal of all. So I think, the main differentiation between the two is removal of 100 per cent of white set, which is going to be almost impossible; to removal of paint, which is inevitably going to remove some white set, skimming and painting.
(e)Mr Hughes furthermore caveated his support for Option B by stating that he did not consider the 'efficacy' of the option (Exhibit A: 773). This statement took us by surprise because it was not clear how an expert could recommend Option B without taking into account the efficacy of it. Dr Zurhaar could also not attest to the efficacy of Option B since it had not progressed outside a laboratory.
(f)Option B has, according to the scientific experts, not been applied 'outside of laboratory testing' (Exhibit A: 774). Neither of the experts could however to our satisfaction answer questions about where Option B had been tested; in which laboratory; whether the experiment had been peer reviewed; whether any results have been published; or whether any industry bodies had accepted the theoretical results for purposes of practical application.
(g)We accept the evidence of Mr Lawrence who says that he had made enquiries at the local TAFE, at Building and Energy, and with other persons of experience to ascertain their view of Option B. He says that they had not heard of Option B, or if they had heard of it, it had no credibility as a serious practical solution for the remedial work required for this dwelling. This evidence is consistent with our understanding of remedial work for this type of deficiency.
(h)Both scientific experts agreed that even if Option B had been a realistic option, its efficacy may be impacted by the fact that the walls had been painted and that paint or sealer that had not been removed may limit the process of re-hydration. The result would be that the set coat would then also have to be removed as the case is with Option A.
(i)The lack of utility of Option B was acknowledged by the scientific experts and Mr Jones when they concluded that the damage likely to be caused to the set coat when the paint is removed would be so substantial that a new skim layer of set coat would in any event be required (Exhibit A: 774). This explains why Mr Jones agreed with the proposition put to him by us that the purported difference between Option A and Option B may come to naught.
[2] ts 167.
We find that based on the evidence we heard, Option A remains the preferred option for remedial work, whist Option B is unsuitable, highly speculative and unsupported by credible scientific testing or evidence.
4.8 Quantum to be awarded
The final question is what quantum should be awarded for the owners to undertake the remedial work. Since the utility of relying on either Option A or Option B has fallen away, the cost calculated is based on Option A.
We note that only Mr Chris Jones, who is a quantity surveyor, filed a detailed estimation for the costs of remedial work and gave oral evidence regarding his estimation. We also note than in regard to complaints 2 and 3 the owners had accepted the estimation proposed by Mr Jones. Senior Member Le Miere during the directions hearing of 28 June 2024 explained to the owners how the hearing process would work, the importance of witnesses being called to give evidence, and matters associated therewith (Exhibit A: 804-6). Senior Member Le Miere stressed that it does not matter if an estimation had been given in writing, 'they [the witness] need to come'. She went on to say (Exhibit A: 806):
… if there is a witness – if there' a report, then the person needs to give evidence so the tribunal can ask them questions about it and Mr Robertson [legal representative for the builder] can ask them questions. You can't just have the report. Well, sorry, you may have the report, but if you don't provide them to answer questions, then the tribunal might not accept their evidence.
Senior Member Le Miere went on to explain why it is important for a witness to attend; to answer questions about costings; hourly rates; and methodology. This explanation reflected what had been told to the owners at previous directions hearings by Member De Villiers. Mr Mathews responded to say he would ascertain if his building expert Mr James Lawrence 'can help or not regarding the matter [of costing]' (Exhibit A: 807). Senior Member Le Miere concluded with a caution: 'If you choose not to call somebody who has given you a report, then the value of that to the tribunal may be very low. That is your choice' (Exhibit A: 807).
The owners relied on the Remedial Works Proposal (Proposal) prepared by Midnight Construction Group (Exhibit A: 424-427). The quantum of claim they seek is $130,106.60. No person was called to give evidence in support of the Proposal or to answer questions about it. Mr Lawrence, who was called by the owners as an expert builder witness, expressed support for the estimation prepared by Mr Jones.
We find that the Midnight Construction Proposal is not suitable for purposes of calculating the quantum to be awarded to the owners. Our reasons for this finding are:
(a)The Proposal was not signed by an authorised person or dated.
(b)No person was called to give evidence about the Proposal or to answer questions about it.
(c)The scope of the Proposal exceeds the scope of work as agreed to during the hearing by the scientific and building experts.
(d)The Proposal assumes that all set coat must be removed, whilst the evidence of the scientific experts and the building experts is that only the set coat of exposed areas needs to be removed, thereby excluding the removal of skirtings, floor coverings, mirrors, window treatments, and cornices. Since the Proposal included substantial works that would in fact not be required, and since the line-item works were not separately costed in detail (Exhibit A: 158 and 424), the utility of the Proposal fell away in its entirety.
The builder relied on the estimation prepared by Mr Chris Jones (Exhibit A: 506). The estimate is $12,035 excluding 5% for sundries and GST. The total estimate is therefore $13,900.43. During the hearing we gave Mr Jones the opportunity to amend his estimate in light of the evidence that had been heard and the examination that had taken place. Mr Jones effectively retained the estimate but he did explain that differences in the line-allowance may be open to the owners, for example: if they do not want to use the product Prep Rite in accordance with Option B, the amount estimated of $3,120 could be used to apply set coat to the entire surface; or, if the patching of walls is not done, then the amount of $550 can be directed to the application of set coat to the entire surface. The nett result of the estimate remains the same.
We allowed Mr Lawrence time during the hearing to reflect on the estimate prepared by Mr Jones. Mr Lawrence confirmed that the estimate is adequate for work to be done to give effect to his preferred option, Option A. Mr Lawrence had no other cost items to add for the remedial work to be undertaken.
The four experts agree that the amount of $13,900.43 is reasonable for remedial work to be undertaken in regard to Option A and Option B. We also note that the credibility of the estimate by Mr Jones is enhanced by the fact the owners accepted the estimate that had been prepared by Mr Jones in respect of complaints 2 and 3.
We accept the estimate prepared by Mr Jones and determine that the amount of $13,900.43 must be paid by the builder to the owners in full settlement for remedial work to be done in respect of complaint 1.
4.9 Other costs
Both parties have raised the possibility of costs being awarded in their favour. The owners also claim cost for relocation whilst the remedial work is being undertaken. Although the Midnight Construction Group estimate for remedial work is given little weight, the estimate anticipated around eight weeks during which alternative accommodation would have to be secured (Exhibit A: 158). This is consistent with the time estimated by the experts for remedial work to take place. We shall adjourn the question of costs in general for mediation since the parties may be able to come to an all inclusive settlement without a further hearing. An order will be made for the parties to file a proposed settlement as to costs for purposes of mediation. If agreement is not reached, the matter will return to us for a hearing.
In summary, we find that the amount of $13,900.43 should be paid by the builder to the owner for remedial work to be done in full satisfaction of complaint 1. As to the question of costs the parties will be directed to mediation.
Orders
The Tribunal orders:
1.The respondent shall pay the applicants the amount of $13,900.43 in full and final satisfaction of Complaint 1. The payment must be made by no later than 1 October 2024.
2.The parties must by no later than 27 September 2024, file and serve a Memorandum for Mediation of no more than two pages in which each party sets out the cost claimed.
3.The question of costs is referred to a mediation to commence at 10.00 am on 4 October 2024. The parties shall attend the mediation in person.
4.If the matter does not resolve at mediation, orders may be made in mediation for the question of costs to be set down for a hearing.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
DR B DEVILLIERS, MEMBER
11 SEPTEMBER 2024
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