MERKS and DAKODA CORPORATION PTY LTD

[2010] WASAT 18

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT: BUILDERS' REGISTRATION ACT 1939 (WA)

CITATION:   MERKS and DAKODA CORPORATION PTY LTD [2010] WASAT 18

MEMBER:   MR C RAYMOND (SENIOR MEMBER)

HEARD:   21 SEPTEMBER 2009

DELIVERED          :   12 FEBRUARY 2010

FILE NO/S:   CC 458 of 2009

BETWEEN:   LEANNE MERKS

EDWARD MERKS
Applicants

AND

DAKODA CORPORATION PTY LTD
Respondent

Catchwords:

Builders' Registration Act 1939 (WA) - Application for leave to review decision of Building Disputes Tribunal - Whether Building Disputes Tribunal erred in failing to have regard to material evidence - Whether decision open on the evidence - Whether Building Disputes Tribunal erred in failing to give parties an opportunity to address findings based on the conduct of a view ­ Turns on own facts

Legislation:

Building Code of Australia (2005 ed), Vol 2, s 2, Pt 2.2.1
Builders' Registration Act 1939 (WA), s 12A, s 41(1), s 46(2)

Result:

Application for leave granted on limited grounds

Category:    B

Representation:

Counsel:

Applicants:     Mr A Macpherson

Respondent:     No appearance

Solicitors:

Applicants:     Hotchkin Hanly

Respondent:     Self-represented

Case(s) referred to in decision(s):

Tangent Nominees Pty Ltd and Edwards [2005] WASAT 119

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. The applicants applied for leave to review a decision of the Building Disputes Tribunal in terms of which the respondent was ordered to pay compensation in an amount of $46,376.50.  The applicants contended that the Building Disputes Tribunal had erred in fact and in law in relation to various aspects of the assessment of compensation which, properly assessed, should have been awarded in the sum of $147,401.48.

2. A number of the grounds for the proposed review were based on the alleged failure of the Building Disputes Tribunal to place any or any sufficient weight on evidence which had been provided favourable to the applicants.  In relation to each of these grounds, the Tribunal concluded that the decision was open to the Building Disputes Tribunal and no error had been demonstrated, with the result that leave was refused in respect of such grounds.

3. The Tribunal concluded that leave should be granted in respect of three proposed grounds of review.  The first of those related to the cost of replacing scratched and dented French doors in relation to which it was contended that the Building Disputes Tribunal had overlooked evidence that the doors could not be repaired and needed to be replaced.  The second ground related to the assessment of the cost of repair to a particular area of render, which had been excluded from the quantity surveyor's general estimate of the cost of patching and repainting render.  It was contended that the Building Disputes Tribunal had erred in dealing with this claim as part of the general render claims.  The third ground asserted that the Building Disputes Tribunal had overlooked evidence establishing that the wrong wall tiles had been used in a bathroom.  In respect of each of these grounds, the Tribunal concluded that there was sufficient doubt about whether the Building Disputes Tribunal's decision was correct and that a substantial injustice would result if the opportunity to review that decision was not granted.

4. The Tribunal, accordingly, granted leave in respect of three grounds but otherwise dismissed the application.

The application and issues for determination

1. The applicants (owners) have applied, pursuant to s 41(1) of the Builders' Registration Act 1939 (WA) (BR Act), for a review of a decision of the Building Disputes Tribunal (BDT), reflected in an Order to Pay No 147 of 2008­09 dated 4 March 2009. The order required the respondent (builder) to pay to the owners an amount of $46,376.50, and it is common cause that amount has been paid. Pursuant to s 46(2) of the BR Act, the owners must first obtain leave of the Tribunal, and it is the hearing of the application for leave which is the subject of this decision.

2. The application was amended with leave of the Tribunal and, in its final form, raised the following issues for determination:

   1)whether the BDT erred in fact and law in finding that it was not necessary to replace the French door frames;

   2)whether the BDT erred in fact and law in addressing a complaint concerning remedial work in the vicinity of some footlights, as if it were part of a number of other complaints dealing with the external render finish in particular areas and the paint finish;

   3)whether the BDT erred in fact and law in assessing damages in respect of the balcony floor and skirting tiling by failing to have any or sufficient regard to evidence favourable to the owners;

   4)whether, in relation to particular external render and paint finish complaints, the BDT erred in fact and law by:

   a)failing to have any or sufficient regard to evidence favourable to the owners;

   b)by failing to take due account of the effect of the overcast conditions in which a view of the subject works was conducted;

   c)by failing to take account of the need for waterproofing works to a front wall;

   d)by applying a percentage assessment of the area of external render to the quantity surveyor's estimate of $19,425 as opposed to a contractor's quotation for $40,687.35; and

   e)by, in any event, failing to make any allowance for scaffolding.

   5)whether the BDT erred in fact or in law in dismissing the complaint concerning the use of incorrect tiles on the walls of bathroom three on the basis that the claim had not been proved, when there was evidence to support the claim.

3. In the decision proposed to be reviewed, the BDT dealt with some 154 items of complaint.  The written reasons for decision, which are well structured and succinctly expressed, are 51 pages in length.  Rather than attempt to summarise the relevant portions of the reasons for decision as a whole, I shall deal with those portions which are relevant as part of the consideration of each issue for determination.

The principles to be applied

1. The applicable principles are set out in Tangent Nominees Pty Ltd and Edwards [2005] WASAT 119. Although the Tribunal has a broad discretion to grant relief, the criteria which usually determine whether or not leave should be granted are:

   a)whether the decision in respect of which leave is sought is wrong, or at least attended with sufficient doubt to justify the grant of leave;

   b)whether a substantial injustice would be done by leaving the decision unreversed; and

   (c)that the Tribunal should be slow to grant leave except in cases where clearly there is no discernible basis for the decision of the Tribunal or, for example, where fundamental rules of natural justice have been breached by preventing a party adequately being heard.

2. The issues raised by the application for leave will now be addressed.

1. The French door claim

1. This claim was identified as item 1.68.  The BDT's reasons in relation to the claim are as follows:

   The Builder disputed liability for this item.  The Owners were seeking the cost of replacing the doors and the amount stated in Mr Rafferty's Costing for this is $15,308.15.  In the First Notice of Assessment Inspector O'Dea stated that he observed several blemishes on the woodgrain finished aluminium joinery and said that the Builder should remedy by removing the blemishes.  After the View by the Tribunal, it decided that the Builder is liable for this item, but it is not necessary to replace the doors and allowed four hours for a labourer at $55.00 per hour to remove the blemishes, being a total of $220.00.

2. Mrs Merks testified that she had dealt with the manufacturers of the aluminium door frames, Shelley Glass, and had been informed that no amount of touching up would disguise that the scratching had removed the protective coating from the frames and, further, that the dents could not be removed.  A quotation from Shelley Glass was tendered into evidence before the BDT (Exhibit O31) which reflected that the doors and frames would have to be replaced 'as we are unable to remove dents from the powder coating'.

3. The reasons for decision of the BDT do not disclose why this evidence was rejected and on what basis a decision was reached that the doors were capable of being repaired.

4. The owners have referred this Tribunal to a series of photographs which were before the BDT and which, apart from scratches, show some dents to the door frames.

5. The amount disallowed by the BDT is significant and I find that the decision is open to sufficient doubt on this aspect and that a substantial injustice would result if the owners were denied the opportunity to have the decision reversed.  Leave to review the decision on this aspect will be granted.

1. Rendering in the vicinity of the footlights

1. This complaint was identified as item 1.75.  The notice of assessment from Inspector O'Dea, dated 2 November 2007, commences at 31 of the BDT's book of papers for the hearing (hearing book).  In relation to this complaint, the report reflects:

   The inspector observed the wall surfaces adjacent the footlights to include features consistent with chasing activities having been carried out after the rendering was completed.  It may have been appropriate to have had chasing works done prior to the finish rendering being actioned.

   The inclusion of obvious deviations from a regular surface finish is assessed as faulty and unsatisfactory.

   Action recommended

   The builder is to remedy by removing obvious deviations, tool marks and blemishes from the surface finish and make good all surface finishes consequential to the render repair.

2. The BDT dealt with this claim in its reasons for decision as part of an in globo treatment of all external rendering claims.  The manner in which the BDT dealt with the matters on an in globo basis is addressed further below, but as a consequence of dealing with the claim in that manner, there are no specific reasons addressing this claim.

3. The reasons for decision are capable of being read in a manner which implies that the BDT found that the work, the subject of this claim, was faulty or unsatisfactory and that the only issue was the proper assessment of compensation to be paid.  But, if the reasons for decision are not to be read in this way, in the absence of any reasons rejecting the recommendations of the Builders' Registration Board inspector, the decision would be open to a sufficient degree of doubt.  Even assuming that the correct reading of the reasons for decision implies a finding of liability on the part of the builder, it is apparent that the BDT used, as the basis of its assessment of the claims, the costings of the owners' quantity surveyor in relation to the external render claims.  The difficulty with that is that the estimate used related only to complaint items 1.90 to 1.100.  Complaint item 1.75 was dealt with quite separately in the costings.  The amount claimed for complaint item 1.75 was only $422 (plus preliminaries and margin) and on its own is not significant.  But, as it has already been concluded that leave should be granted in respect of item 1.68 above, it would be inappropriate to place any emphasis on the substantial injustice requirement in relation to this item.  A sufficient doubt exists as to the correctness of the decision and leave will be granted in respect of this item.

1. Balcony floor and skirting tiling

1. The owners' complaints on this topic are reflected in complaint items 1.77 and 1.78.  Complaint 1.77 was that there was an insufficient gradient in the balcony floors which affected the ability of the balcony floors to drain.  The inspector's recommendation in the notice of assessment to which I have already referred, is that the builder remedy the complaint by providing an installation that includes a surface water disposal system that effectively accommodates the disposal of surface water from the balcony areas serviced by the installed floor wastes, all in compliance with the Building Code of Australia (2005 ed), Vol 2, s 2, Pt 2.2.1 Surface water.

2. Complaint 1.78 was to replace the skirting tiles at doorway reveals.  The BDT allowed an amount of $145 to cover this tiling.

3. As we understand the owners' submissions, they are directed to the BDT's findings on how to address the drainage of the balcony floors  It is not demonstrated how any review of that finding might impact on the tiling to doorway reveals.  There is skirting tiling on the balconies.  It may be that if the owners' contentions regarding drainage are accepted, that the skirting tiles to the balconies would need to be redone.  If so, that would not affect the amount allowed in respect of the skirting tiles within the reveals for which compensation has been awarded and no basis has been put forward to undermine the basis of assessment.  In the circumstances, leave to review the decision in relation to item 78 will be refused.

4. In relation to item 1.77, the BDT held as follows:

   This item relates to the upstairs balcony floor. The Owners were seeking the cost of removing the tiles and screed, waterproofing, re­screeding and retiling the balcony. The Builder disputed that the existing tiling is faulty or unsatisfactory, on the basis that the balcony is waterproofed and complies with the Building Code of Australia.

   In the First Notice of Assessment Inspector O'Dea stated that he observed a water puddle adjacent the floor waste to the northern sector of the main balcony area which demonstrated the inefficiency of floor falls in that area.  He also said that areas of the balcony outside the pool room demonstrated a general dampness consistent with having been recently wet but there was no water puddling evident.  Inspector O'Dea also referred to the Building Code of Australia 2005 Volume 2 Section 2 Part 2.2.1 Surface water, paragraph (c) which states that a drainage system for the disposal of surface water must convey surface water to an appropriate outfall.

   At the hearing Inspector O'Dea said that there was no evidence of water ingress at the time of his inspection and that the way in which the water had ponded, with the floor waste situated in the middle of the puddle, indicated that the water had been adequately taken to the waste outlet but that the waste had been set too high (approximately 2 mm) and that if the rim could be knocked down that would fix the problem.

5. The BDT went on to indicate that it had accepted the evidence of Inspector O'Dea and awarded compensation on the basis of the cost of reducing the height of the rim of the waste outlet.

6. The owners have referred to a body of evidence in support of their case that to achieve a sufficient gradient to allow the balcony floors to drain would require removal of the existing tiling, re-screeding and retiling.  In addition, references have been made to evidence to support their contention that an additional waste outlet is required.

7. Notwithstanding the evidence which favours the owners, the conclusion reached by the BDT was open to it on the evidence.  The BDT had the advantage of seeing and hearing the witnesses, as well as the practical benefit of having conducted a view.  It must also be said that the case for the installation of a second waste outlet is quite obviously not strong.  The owners relied on the evidence of Mr Robert Damiano, who had provided a quotation to perform the tiling work on the balcony, yet he did not include in his quotation any allowance for the installation of a second waste outlet.

8. It has not been demonstrated that the decision of the BDT is wrong, or attended with sufficient doubt, and accordingly leave to review this aspect of the decision will also be refused.

1. The external render complaints

1. These complaints are identified as complaint items 1.89 to 1.100.

2. The BDT's reasons for decision in relation to these items reflect that Inspector O'Dea had recommended remedial action in respect of the particular areas of render identified in items 1.89 to 1.91, 1.93 to 1.95, and 1.97 to 1.100.

3. These complaints ranged from requiring the removal of mortar joint marks which were visible through the render and which did not conform with a sample panel, to the removal of gouge marks in the render, and the like, in relation to which the inspector's recommendation was to either provide a finish to match the sample panel or to remove all blemishes from the surfaces of finished walls and make good to paintwork, as the case might be.

4. The complaint items 1.92 and 1.96 were that the paint finish was not in accordance with the specification.  The specification called for the use of a Dulux Acrasand roll­on external finish in Corinthian Column DX.  The inspector's conclusion in relation to these complaints, was that there was no appreciable difference between the provided finish and that which might be expected from an acrylic sand finish cement render.

5. A subsequent complaint item 2.38 alleged that the external rendering was drummy in various locations.  The reasons for decision reflect that Inspector O'Dea commented that the external render did not appear to be loose or coming away from the background.  Further, Inspector O'Dea recommended that the external wall surfaces be monitored and if bond failure exceeds the required standard, that the owners then pursue the matter at that stage.  The reasons for decision reflect that during the hearing the owners indicated their acceptance of the recommendation made by Inspector O'Dea.

6. Reference is then made to the owners seeking the cost of applying a sealer, acrylic render and acrylic texture coat to the entire external rendered surface of the dwelling.  It was noted that the quantity surveyor's costing had stated the area of rendered surface is 555 square metres and applied a unit rate of $35 per square metre to 'patch and paint' the rendered surface, being a total of $19,425.  It is then recounted that the owners increased the amount they were claiming at the hearing (Exhibit O14) to $40,687.85 on the basis of a quote obtained from Beyond Render WA Pty Ltd (Exhibit O18) and the cost of scaffolding.  Reference is made to the evidence provided on behalf of the owners from Mr Tyler of Plastering Assessment and Advisory Services and from Mr Simms of Beyond Render WA Pty Ltd.  The BDT then continued:

   During the View by the Tribunal the Tribunal members identified the areas of the external render of the Dwelling which they considered to be unsatisfactory in terms of the appearance of the finish and concluded that approximately 15% of the total area is unsatisfactory.  The Tribunal therefore decided not to accept the argument of the Owners and the evidence of Mr Tyler and Mr Sims regarding the treatment of the entire external rendered surface of the Dwelling and decided to allow 15% of the amount of $19,425.00 (that amount being for the entire area).  The amount allowed was $2,913.75 (being 15% of $19,425.00).

7. Elsewhere in the reasons for decision, the BDT determined that preliminaries and contingencies should be allowed at a rate of 6% and that a builder's margin of 25% should then be added.  Further, the reasons for decision later add 10% to cover GST to all amounts awarded. 

8. The particular bases on which this aspect of the BDT's findings have been criticised will now be addressed:

a)     The failure to have sufficient regard to the body of evidence favourable to the owners

1. It is apparent from the reasons for decision that the BDT had specific regard to the evidence adduced on behalf of the owners, but chose not to accept it.  The evidence put forward on behalf of the owners included repairs to all drummy render.  The Tribunal was not directed towards, and has been unable to find, any adjustment to that quotation to take into account the owners' concession that the areas of drummy render should be monitored.  Having regard to this, it was in the Tribunal's view quite appropriate for the BDT to rely upon the quantity surveyor's costings as a basis for the assessment because those costings covered only necessary patching to address the specific items of complaint.  The costing did not relate to any repairs to drummy render.

1. There is, accordingly, a discernible basis for the BDT's decision and it has not been demonstrated that the decision on this aspect is either wrong, or open to sufficient doubt so as to justify the grant of leave in relation to this particular ground.

b)     The view in overcast conditions

1. The case for the owners is that because the view occurred in overcast conditions, the BDT was unable to properly assess the areas of defective render.  It is submitted that despite the importance of this issue, the reasons for decision do not make any reference to the light conditions experienced during the view.

2. With respect, this is a speculative complaint.  The BDT is a specialist Tribunal and at least one of its members must be a registered builder.  If the BDT had reservations about the effectiveness of the view, it can be assumed that a view on a later date would have been arranged.  An affidavit filed by Mrs Merks in these proceedings indicates that she was fully aware of the conditions in which the view was conducted.  Yet, there is no evidence of any urgent application having been made to the BDT for a further view to be held.  The view was held on 13 February 2009, and the BDT issued its Order to Pay on 4 March 2009.  There was therefore ample time for an application of this nature to be made.  Instead, the owners have awaited the outcome of the hearing and then, being dissatisfied with the findings on this aspect, have complained about the conditions in which the view was undertaken.

3. Once it was agreed that the issue of any drummy plaster would be monitored, the real issue was whether or not a repainting of the entire dwelling was necessary.  The costings allowed for necessary patching work.  The builder disputed any liability and the owners contended that all render needed to be painted to ensure a good match between the affected areas and the rest of the dwelling.  It was therefore necessary for the BDT to make an assessment, having regard to the conflict on the evidence, and it was open to the BDT to make a determination anywhere between the two extremes for which the parties contended.  Leave to review will be refused in respect of this particular ground.

c)     The waterproofing of the front wall

1. The owners submit that the BDT erred in its in globo assessment by not including an amount for the waterproofing of the front wall.  Reference is made to complaint item 3.3 in the reasons for decision.  This reflects that Inspector O'Dea had found that moisture was visible through the inside wall to the garage facing the driveway, where the outside concrete rendered wall had not been fully painted.  The BDT held that as the owners had not provided any details of any amount being claimed by them in respect of this item, that it was dismissed.

2. It is correct, as submitted on behalf of the owners, that the quotation from Beyond Render WA Pty Ltd which appears at 384 of the hearing book, includes within the description of work to be undertaken 'waterproofing treatment for moisture affected garage wall'.  However, the quotation was for a lump sum amount without any breakdown for waterproofing.

3. In a contractual dispute it would be appropriate in these circumstances to award nominal damages. But, as the reasons for decision reflect, the BDT did not have jurisdiction to deal with contractual claims because the contract value exceeded the applicable jurisdictional limit. It was competent only to deal with workmanship claims, and in that respect, s 12A of the BR Act requires that the BDT may make an order for payment of the costs of remedying the building work that is faulty or unsatisfactory. If no evidence is provided of those costs, which is the case, the BDT was correct to dismiss the claim. Leave in relation to this particular ground will, therefore, also be refused.

d)     Assessment of costs based on the quantity surveyor's estimate of $19,425

1. For the reasons given in para (a) above, it was correct for the BDT to assess compensation on this basis, and the application for leave to review on this particular ground will be refused.

e)     The failure to allow for scaffolding

1. The quantity surveyor did not include within the costing for complaint items 90 to 100 any amount for scaffolding.  The BDT's reasons for decision, as summarised above, reflect the BDT was aware that the amended claim put forward at the hearing included a claim for scaffolding but, as submitted for the owners, no specific allowance was made in dealing with these complaint items. 

2. However, what this particular ground overlooks is that the BDT concluded at [38] of the reasons for decision that it was sufficient to allow 6% for preliminaries and contingencies.  That allowance was added to all of the amounts awarded at the end of the reasons for decision.  The quantity surveyor had allowed 10% for preliminaries and a further 2.5% for contingencies.  This aspect of the decision has not been challenged.

3. Within the building industry, preliminary items cover matters such as general mobilisation, supervision, site huts insurances, special liabilities under the contract, services and other items of expenditure which are applicable to all trades: see IN Duncan Wallace, Hudson's Building and Engineering Contracts (11th, ed 1995) at [2­223].  The quantity surveyor made no specific allowance for scaffolding and yet it is self­evident that scaffolding would be required to carry out painting of a two storey building the subject of these proceedings.  It must therefore be inferred that the quantity surveyor has included scaffolding within the allowance for preliminaries.  If this conclusion is wrong, the scaffolding must have been included in the rates allowed by the quantity surveyor for the carrying out of painting and patching the external render.

4. It has not been demonstrated that the BDT erred in the way in which it dealt with this aspect of the matter and leave to review the decision on this particular ground will also be refused.  It follows from the above reasons that none of the grounds advanced in relation to issue 4 have been made out.

1. Wall tiling of bathroom three

1. This complaint is referred to as complaint item No 2.33.  The reasons for decision simply reflect that the Tribunal decided that the owners had not proved this claim and that it was dismissed.

2. The owners' submissions point to the contract specification which was tendered as Exhibit O12 and which reflects that Toledo Blanco wall tiles were to be used and Oslo­Blue tiles were to be used on the floor.  In evidence, the builder endeavoured to rebut this evidence by referring to an earlier selection list, but it could not be disputed that the contract specification stipulated the above.  Mrs Merks' evidence that Oslo­Blue tiles had been used on the wall instead of Toledo Blanco tiles was not disputed.

3. It appears, therefore, that the BDT overlooked this evidence and there is therefore sufficient doubt to justify the grant of leave.  In view of the other matters in relation to which it has been concluded leave should be granted, it is not necessary to separately consider whether a substantial injustice would result if the decision was left unreversed in respect of this complaint item.

Conclusion

1. For the above reasons, leave should be granted to review the decision of the BDT in respect of issues 1, issue 2 and issue 5.  It is appropriate to grant that leave by reference to the grounds as set out in the amended application filed on 25 June 2009 and by reference to the further amendment set out in a letter dated 25 September 2009 pursuant to leave which was granted to the owners by order of the Tribunal made on 21 September 2009.  Ground 1, as therein expressed, has not been discretely covered by the issues discussed because it is a general ground asserting that the BDT erred in fact and law in finding that the correct quantum of the Order to Pay was $46,376.50, rather than the amount sought by the owners.  The amount sought by the owners is actually set out later in the application but automatically falls to be adjusted by reason of some of the issues having been determined against the owners.

2. In a sense, ground 1, as expressed in the application, is superfluous because the specific grounds later set out raise the specific issues which have been determined.  To avoid confusion, leave in respect of ground 1 will therefore be refused.  Ground 2, as set out in the application, corresponds to issue 1 above and consequently the order made will grant leave in respect of ground 2.  Ground 3 and ground 5A, as expressed in the application, correspond with issue 2 and issue 5 above and leave will, accordingly, be granted in respect of ground 3 and ground 5A.  Ground 4 and ground 5 of the application correspond with issue 3 and issue 4, as set out above, and leave in respect of each of those grounds will be refused for the reasons given.

3. The matter will be listed for a directions hearing in order that it may be programmed to a final hearing of the review.

Order

1. The Tribunal will, accordingly, order as follows:

   1.Leave to review the decision of the Building Disputes Tribunal reflected in Order to Pay No 147/2008­09 is granted in respect of ground 2, ground 3 and ground 5A of the application and the application is otherwise dismissed.

   2.The matter is listed for a directions hearing on 11 March 2010 at 10.45 am to program the matter to a final hearing of the review.

I certify that this and the preceding [53] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MR C RAYMOND, SENIOR MEMBER