Metricon Homes Pty Ltd v Hooper

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE

Not Restricted

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S CI 2014 1749

BETWEEN

METRICON HOMES PTY LTD (ACN 005 108 752)	Plaintiff
- and –
GRAHAM HOOPER	Defendant

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JUDGE:	DIGBY J
WHERE HELD:	Melbourne
DATES OF HEARING:	21 & 22 October 2014 and 3 December 2014
DATE OF JUDGMENT:	26 March 2015
CASE MAY BE CITED AS:	Metricon Homes Pty Ltd v Hooper
MEDIUM NEUTRAL CITATION:	[2015] VSC 110	Revised: 1 April 2015

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JUDICIAL REVIEW – Section 148(1) Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act) – Questions of law – Factual findings and inferences not open to Tribunal – Factual findings unreasonable – Wednesbury unreasonableness – Tribunal’s obligations to act fairly (s 97 VCAT Act), to afford natural justice (s 98(1) VCAT Act), to provide a reasonable opportunity to call or give evidence (s 102(1)(a) and (b) VCAT Act) – Incorrect application of the Building Code of Australia 2006 (BCA) – Scheme of the BCA – Options to satisfy BCA Performance Requirements – Provisions of AS 2870 – Tribunal’s errors in determining damages – Notice of contention – Tribunal’s errors in construing the Building Contract.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Gobbo QC with Mr B Carr	CBP Lawyers
For the Defendant	Mr J Twigg SC with Mr T Sedal	Legro Lawyers

HIS HONOUR:

Overview

This appeal concerns a decision of the Victorian Civil and Administrative Tribunal (“the Tribunal”) in Proceeding D972 of 2012 (“the VCAT proceeding”), by which the Senior Member upheld the defendant owner’s claim for the costs involved in the demolition and reconstruction of his house at Tarneit in Victoria. The house had suffered from extensive damage as a result of unacceptable movement of the slab upon which the house was constructed. The Senior Member found that the slab concerned had experienced unacceptable movement because the earthen fill upon which it was founded had not been adequately compacted by the plaintiff builder.

The plaintiff builder contests the decision of the Tribunal. Its principal argument in this appeal is that the Senior Member had no evidentiary basis upon which to conclude that it had imported and placed fill on the site under the slab or that such fill was inadequately compacted.

Summary of application

By Originating Motion dated 14 April 2014, pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (“the VCAT Act”), Metricon Homes Pty Ltd (“the Builder”) seeks leave to appeal in the VCAT proceeding, and if leave is granted, appeals against:

(a)Order 6 and the orders of the Tribunal made on 3 December 2013 (refusal to allow further soil testing); and

(b) Order 1 of the orders of the Tribunal made on 18 March 2014 (the substantive orders on the owner’s claims); and

(c) Order 1 of the orders of the Tribunal made on 1 April 2014 in the proceeding (“the Costs Orders”).

The Builder submits that the Tribunal erred in law when it made the above orders, and did so in the respects which the Builder specifies in its Originating Motion and Proposed Notice of Appeal dated 14 April 2014. The Builder argues that the orders identified above (including the Costs Orders) should be set aside pursuant to s 148(7) of the VCAT Act.

At the hearing of the appeal the Builder also applied for an order that the claim by the defendant owner (“the Owner“) be dismissed, alternatively, that the VCAT proceeding be remitted to the Tribunal to be determined according to law.[1]
[1]T26.

The Builder’s Proposed Notice of Appeal dated 14 April 2014 identifies eight questions of law and seven grounds of appeal. The Builder’s questions and grounds, with the exception of Ground 3, are concerned with the final decision of the Senior Member and the Senior Member’s Reasons delivered on 18 March 2014 (“Reasons”). The decision delivered on 3 December 2013 (dealing with an application by the Builder to undertake additional soil testing) is the subject of Ground 3. Each of the above grounds and corresponding alleged errors are addressed below.

Further to the Builder’s appeal, by Notice of Contention dated 13 October 2014, the Owner asserts that the Tribunal erred in construing a certain provision of the subject Building Contract, and also erred in implying a further term into that contract.

Identification of errors of law and criteria for leave to appeal

Section 148(1) of the VCAT Act provides that a party to a proceeding at VCAT may appeal, on a question of law, from an order of the Tribunal in the proceeding to the Trial Division of the Supreme Court, when the Tribunal’s decision is one made by a Senior Member, if a judge of the Trial Division grants leave to appeal.

It is the identification of a question of law which both founds the Court’s jurisdiction and enlivens the right to appeal. Further, in proceedings such as these, it is the identified questions of law which constituted the subject matter of the appeal.

However, difficulty may arise as to whether, in the circumstances, a question is one of law or of mixed fact and law, and as to the extent to which it may be permissible to interpret the term “on a question of law” widely.[2]
[2]Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Limited [2014] VSCA 353, [47], [49] and [52] (Warren CJ), [159], [162]-[171] (Whelan JA, with whom Santamaria JA agreed).

A factual finding will ordinarily give rise to a question of law only if the finding was not open on the evidence, or was unreasonable or perverse.

Similarly, where the Tribunal has drawn an inference which is not reasonably open on the evidence, an error of law will exist.

That the reviewing court would have made a different finding on the facts is not, in itself, a basis for reviewing the findings. In this regard, a finding of fact will ordinarily be sufficiently supported if there is some evidence before the Tribunal upon which it is able to be based and any challenge to a Tribunal’s factual findings should be evaluated taking into account the context applicable to the Tribunal, including that it is not bound by the rules of evidence.

Leave to appeal

On 29 May 2014, Associate Justice Zammit ordered, in substance, that the Builder’s application for leave to appeal be heard and determined by the Court, together with the substantive appeal, if leave is granted.

At the hearing of the Builder’s application for leave to appeal the parties agreed that the application for leave and the substantive appeal, if leave to appeal were granted, should be heard together.[3] In this regard, insofar as is necessary, I grant leave to the Builder to file a Notice of Appeal, in the terms of the Builder’s Proposed Notice of Appeal dated 14 April 2014.
[3]T4 L14-31, T5 L1-7.

In relation to Questions of Law 1, 2, 3, 6(e), 7 and 8, I am satisfied that each Question identified by the Builder is in the nature of a question of law arising out of the Senior Member’s decisions and the Orders referred to in paragraph 3(a) and (b) hereof.

I am also satisfied that each of Questions of Law 1, 2, 3, 7 and 8 are relevant to the relief sought by the Builder, and that if the Tribunal was held to have erred in law in relation to those questions, the Builder’s claim for relief would be advanced.

In relation to Question of Law 6(e), I consider the necessarily associated issues concerning the application of the Building Code of Australia and its proper construction, are questions of general importance in the domestic housing construction industry.

Similarly, I consider that Question 3 also raises issues of breach of procedural fairness and for this reason Question 3 also raises aspects of public interest.

I add in relation to Question 3 that although that Question relates to arguable error in respect of an interlocutory order I am of the view that for the purpose of the Builder’s leave application there is sufficient doubt attending the correctness of that order to grant leave both because of the risk of substantial injustice were the order to stand, and because this question raises aspects of public interest.

Further, by reason of the matters addressed below in relation to each of Questions 1, 2, 3, 6(e), 7 and 8, I consider that the Builder’s contentions are sufficient to establish that these are real and significant arguments as to the existence of an error of law, at least sufficient to justify the grant of leave to appeal in relation to each of those Questions.

For the above reasons, I grant leave to appeal pursuant to section 148(1) of the VCAT Act in relation to the Builder’s Questions 1, 2, 3, 6(e), 7 and 8. The Builder’s other Questions 4, 5 and 6(a)-(d) are not pressed.

The Owner’s Notice of Contention dated 13 October 2014 has been fully argued and also forms part of the subject matter of this appeal for that reason and, further, because those contentions are intrinsically bound up with the above Questions, they require determination.

Questions of Law and Grounds of Appeal

The Builder’s Proposed Notice of Appeal dated 14 April 2014, sets out the Grounds of Appeal in relation to each of the Builder’s eight Questions of Law. Ground 7, is raised in relation to Question 7 and Question 8. Those questions of law and the grounds relied on by the Builder are as follows:

Question 1:

Did the Tribunal err in law when it found as a fact that “builders fill” was brought onto the site located under the slab, a finding, which fundamentally underpinned the reasoning of the Tribunal and provided the basis upon which it awarded damages

(a)       In the absence of any probative evidence to support such a finding,

(b)      By drawing an inference which was not reasonably open,

(c)       When such a finding was plainly wrong and unreasonable in the Wednesbury sense?

Ground of Appeal: 1

The Tribunal erred when it found as a fact that “builders fill” was brought onto the site located under the slab, a finding, which fundamentally underpinned the reasoning of the Tribunal and provided the basis upon which it awarded damages (reasons [74], [89], [135]–[137], [149], [182], [206], [210]).

Question 2:

Did the Tribunal err in law when having found there was “builders fill” brought onto the site located under the slab it found that more than six years later such fill was not compacted, causing the slab to fail:

(a)       In the absence of any probative evidence to support such a finding,

(b)       Drawing or relying upon an inference which was not reasonably open,

(c)       When such a finding was plainly wrong and unreasonable in the Wednesbury sense?

Ground of Appeal: 2

The Tribunal erred when having found there was “builders fill” brought onto the site located under the slab it found that more than six years later such fill was not compacted, causing the slab to fail.

Question 3:

Whether in making Order 6 of the 3 December 2013 orders the Tribunal:

(a)       Failed to comply with its obligation under s.97 of the Act to act fairly and in accordance with the substantial merits of the case,

(b)       Failed to comply with its obligations under s.98(1)(a) of the Act to afford the plaintiff natural justice,

(c) Failed to comply with its obligations under s.102(1)(a) and (b) of the Act to allow the plaintiff a reasonable opportunity to call or give evidence.

Ground of Appeal: 3

The Tribunal acted contrary to the hearing rule of natural justice when on 3 December 2013 it refused an application by Metricon to drill an exploratory hole through the slab in circumstances where it nevertheless ordered a further inspection of the house, including by experts to take place during what was otherwise a lengthy adjournment in the part heard proceeding.

Question 4:

Was the finding of defective workmanship by the builder in preparing the footing and constructing the slab causing it to move irregularly [207] a finding made contrary to law being a finding:

(a)       Made in the absence of any probative evidence to support it,

(b)       That was plainly wrong or unreasonable in the Wednesbury sense?

Ground of Appeal: 4

The finding of defective workmanship by the builder in preparing the footing and constructing the slab causing it to move irregularly [207] was a finding made contrary to law.

Question 5:

Did the Tribunal err in law when having found that “builders fill” had not been compacted [74], [145] and that the slab was founded on it, the Tribunal concluded that more than six years later, the slab had not stabilised and that any stabilisation of the soil would be at some indeterminate time in the future [70], [218], such a finding being plainly wrong or unreasonable in the Wednesbury sense?

Ground of Appeal: 5

The Tribunal erred in law when having found that "builders fill" had not been compacted [74], [145] and that the slab was founded on it, the Tribunal concluded that more than six years later, the slab had not stabilised and that any stabilisation of the soil would be at some indeterminate time in the future.

Question 6:

When concluding that the slab had not stabilised and that any stabilisation of the soil would be at some time in the future [70], [218], did the Tribunal err in law by:

(a)       Failing to take into account relevant expert evidence of “edge heave” and “heave recovery” leading it to make an erroneous finding which was plainly wrong or unreasonable in the Wednesbury sense,

(b)       Failing to take into account relevant survey evidence being the Wilson 2013 survey which showed the level of the slab to be the same level as survey by Wilson in 2006 [45],

(c)       Failing to take into account relevant evidence as to elevated moisture levels,

(d)      Basing such a finding upon the proposition that the slab was founded on “builders fill”, itself a finding arrived at due to an error of law as identified in paragraph 1,

(e)       When having regard to the placement of scoria [153], a material of the class to which the structural engineering drawing referred and which on the evidence is commonly and routinely used for such purposes, the Tribunal irrelevantly and contrary to the drawing, the contract and AS 2870 incorporated into the contract, purported to apply the BCA as the basis of a breach of warranty?

Ground of Appeal: 6

When concluding that the slab had not stabilised and that any stabilisation of the soil would be at some time in the future [70], [218], the Tribunal erred in law by:

(a)       Failing to take into account relevant expert evidence of “edge heave” and “heave recovery” leading it to make an erroneous finding which was plainly wrong or unreasonable in the Wednesbury sense,

(b)       Failing to take into account relevant survey evidence being the Wilson 2013 survey which showed the level of the slab to be the same level as survey by Wilson in 2006 [45],

(c)       Failing to take into account relevant evidence as to elevated moisture levels,

(d)      Basing such a finding upon the proposition that the slab was founded on "builders fill", itself a finding arrived at due to an error of law as identified in paragraph 1,

(e)       When having regard to the placement of scoria [153], a material of the class to which the structural engineering drawing referred and which on the evidence is commonly and routinely used for such purposes, the Tribunal irrelevantly and contrary to the drawing, the contract and AS 2870 incorporated into the contract, purported to apply the BCA as the basis of a breach of warranty.

Question 7:

Having found that despite its defects, the house which was a rental property could have been rented by M Hooper [238] did the Tribunal err in law when it proceeded to award damages of $264,794[4] based upon an assumption of demolition and reconstruction and $15,600 based upon an assumption of lost rental during demolition and reconstruction and was such an award of damages:

(a)       An award which was plainly wrong or unreasonable in the Wednesbury sense,

(b)       An award which resulted from the misapplication of the decision of the High Court in Belgrove v Eldridge [1954] HCA 36 [sic] to which the tribunal referred?

Ground of Appeal: 7 [Applicable to Questions 7 and 8]

The Tribunal erred in law when it proceeded to award damages of $264,794 based upon an assumption of demolition and reconstruction and $15,600 based upon an assumption of lost rental during demolition and reconstruction.

Question 8:

Having regard to the finding as to the suitability of the property for occupation and having regard to the evidence of actual manifest damage and in the absence of any evidence as to the additional costs associated with ongoing maintenance was the award of damages based on the assumed premise of demolition and reconstruction plainly wrong or unreasonable in the Wednesbury sense?

Ground of Appeal: 7 [Applicable to Questions 7 and 8]

The Tribunal erred in law when it proceeded to award damages of $264,794 based upon an assumption of demolition and reconstruction and $15,600 based upon an assumption of lost rental during demolition and reconstruction.

[4]I note in relation to Questions 7 and 8 that the Tribunal allowed the Owner’s claim for the cost of demolition and reconstruction in the sum of $264,784, not $264,794, as stated on the Builder’s Proposed Notice of Appeal.

Owner’s Notice of Contention

Shortly before the hearing of the appeal, a dispute crystallised between the parties in relation to the Senior Member’s construction of the Building Contract. By its Notice of Contention dated 13 October 2014, the Owner contends that the Senior Member misconstrued the Building Contract and thereby identified the wrong set of documents as constituting the Engineer’s Design/s. It is contended by the Owner in paragraph 1 of the Notice of Contention that the Senior Member took these documents to be a soil testing report prepared by Structural Works Engineering for the Builder, whereas the Senior Member should have construed the contract to incorporate the Footing Design and accompanying computations prepared by Structural Works Engineering for the Builder, which the Tribunal refers to as the “First Plan”.[5]
[5]Reasons, [20].

Because the Builder did not construct the slab of the dwelling in accordance with the First Plan, the Owner submits that the Builder is in breach of s 8 of the Domestic Building Contracts Act 1995 (Vic) (“DBC Act”) and clause 11 of the Building Contract and the owner thereby, on these alternative bases, seeks to support the Tribunal’s ultimate decision.

By its Notice of Contention the Owner also contends that the Senior Member wrongly implied into the Building Contract a term that, where there were no engineering designs that formed part of the contract, the Builder would obtain engineering designs suitable for construction that were consistent with the architectural plans, specifications and the geotechnical reports.

The Owner’s Notice of Contention is dealt with below.

Background

The learned Senior Member summarised the relevant factual setting as follows:

The parties
1The Applicant (“the Owner”) is the Owner of a House in Hollows Circuit, Tarneit, an outer suburb of Melbourne (“the House”).
2The First Respondent (“the Builder”) is and was at all material times carrying on business as a builder. The Second Respondent (“the Engineer”) is and was at all material times carrying on business providing geotechnical and structural engineering advice and designs.

The claim
3On 1 November 2006 the Owner signed a Building Contract (“the Building Contract”) with the Builder for the construction of the House. The particulars on page 1 of the Building Contract described the building works as being the construction of a dwelling house “as set out in the specifications and plans”.

4A description of the specifications and of the eight sheets of plans prepared by the Builder followed. Both the specifications and the architectural plans were attached to the Building Contract and were initialled by the Owner and a representative of the Builder. As to the engineering plans, the Building Contract stated:
“There are 8 sheets in the ENGINEER’S DESIGN/S AND it/they was/were prepared by STRUCTURAL WORKS ENGINEERING for the BUILDER” [sic].

5It is not disputed that the words “STRUCTURAL WORKS ENGINEERING” were intended to refer to the Engineer. There were eight pages prepared by the Engineer appended to the Building Contract but they were not engineering designs. They were simply the results of a soil test and recommendations as to the construction of footings. They did not contain any design. The recommendation in these pages was for a stiffened raft footing system appropriate to a site with “H” class reactivity.
6This soil report went on to say:
“If certification is provided to confirm that the filling is compacted as per AS 3798 specifications to “controlled fill” standard as per AS 2870 a “rigid” waffle footing system suitable for the site’s reactivity may be appropriate for an articulated brick veneer dwelling. The waffle footing system may bear directly onto the compacted filling and shall be designed to take account for a differential settlement of the fill by an Engineer experienced with the design of “rigid” waffle footings.
ALTERNATIVELY a waffle footing system suspended on piers/piles founded into firm natural B horizon CLAY, may be appropriate for an articulated brick veneer dwelling. Refer AS 2870-1996 fig 3.4 and Clause 3.2. Waffle footing systems shall be designed for an “H” site reactivity by an experienced Engineer”.

7Two sets of plans were prepared by the Engineer for a waffle pod slab for the House. The first of these (“the First Plan”) was in existence at the time the Contract was signed and the other (“the Second Plan”) was prepared shortly afterwards. They are detailed below. The Owner argues that it was the First Plan that the Builder was to follow but the Builder denies that and says that it was to follow the Second Plan.
8When the slab was constructed, purportedly in accordance with the Second Plan, it was found to be much higher than the Second Plan had directed. The effect of that, which was immediately apparent, was that the edges of the slab were well above ground level and so would be unsightly. After the Owner complained about the excess height the slab was surveyed and it was found to have a datum level of 100.690 instead of 100.485 as required by both the architectural plans and also by the Second Plan. In other words, it was 205mm too high.
9After some negotiations an agreement was reached that the Builder would deduct $7,500 off the price of the House and import soil onto the site following completion in order to bring the external landscape level up to that of the brick rebate on the sides of the slab. The construction of the House was then completed and an occupancy permit for the House was issued on 10 July 2007.
10The Owner moved in on 10 October 2007. He said that within two months of moving in he noticed cracks. He said these became more severe during the following twelve months and the front bedroom window would not open. He complained to the Builder and some windows were re-fitted and a section of wall in the front bedroom was re-plastered.
11The Owner moved interstate to work in 2009 and the House was tenanted. He said that the Tenants complained about cracking and the front door jamming. He said that the front door was adjusted once by the Builder and that he paid a carpenter himself to repair it on several other occasions. The problems became worse with windows not opening and large cracks opening up in the plasterwork.
12Following further complaints by the Owner, the Builder had the drainage system inspected to see if there were any plumbing leaks. There were none detected. It then wrote to the Owner stating that the problems were due to “edge heave”. The letter claimed that this was no fault of the Builder but due to the landscaping undertaken by the Owner and to excessive garden watering.
13The Owner engaged a building and engineering expert, Mr Cross, who inspected the House in October 2011. After obtaining a survey of internal levels in the House and an investigation of the soil upon which it had been constructed, Mr Cross concluded that:
(a) the slab had deflected in a differential and non-linear manner;
(b)the fill soil below the slab was not consistently or adequately compacted;
(c)the varying densities of the supporting fill were resulting in soil compaction and adverse building movements;
(d)the House and its footings will experience ongoing movement into the future due to the inadequate foundation and the inadequate rigidity of the slab; and
(e)it would be cheaper to demolish and re-build the House than repair it.

14The VCAT proceeding was commenced by the Owner on 26 September 2012 claiming damages of $264,784 plus loss of rent. In essence, the Owner contends that the slab and/or the foundation upon which the House has been constructed are defective and that the House needs to be demolished.

The Reasons

The following are the key aspects of the Reasons:

(i) The Builder contended that there was no direct evidence as to the Builder’s importation of additional fill to the site and the earthworks contractor would not have done work not covered by purchase orders issued to it without approval. Mr Sweeting, the Builder’s construction manager, gave evidence that he did not approve work beyond the Builder’s purchase orders issued to Earthlift Excavations (“Earthlift”), the Builder’s earthworks subcontractor.[6]
[6]Ibid, [37].

(ii) The Tribunal considered that the geotechnical evidence demonstrated that a considerable amount of soil was brought onto the building site, although the Second Plan of the engineer appeared to show that the slab was founded upon subdivisional fill.[7]
[7]Ibid, [38]-[39].

(iii) The Tribunal found that after the slab was ultimately poured it was found to be 205 millimetres too high.[8]
[8]Ibid, [41].

(iv) Apart from an extra 40 millimetres of concrete which largely accords with the extra thickness of the edge of the slab, varying from 35 millimetres to 65 millimetres above the designed thickness of 385 millimetres, the geotechnical evidence established that the remaining additional height (of the slab as built) was additional soil brought onto the site by the Builder.[9]
[9]Ibid, [43]-[44].

(v) Mr Cross (structural engineer and consultant) said that the slab had not stabilised and will not, because the slab has insufficient stiffness and is founded on loose variable compacted fill. The evidence established that the builder’s fill is loose and variable.[10]
[10]Ibid, [70].

(vi) There was some dispute about the depth of the fill and whether there was any builder’s fill at all imported onto the site which might account for the greater constructed slab height. No evidence was adduced from those who prepared and constructed the slab. The Senior Member considered that the best evidence of what lay beneath was the geotechnical evidence including the bore logs and the samples that were taken.[11]
[11]Ibid, [71].

(vii) In each case experts have sworn as to the accuracy of their findings on soil profiles and there is no contrary evidence. The mere fact that two experts taking bore logs near each other find a different soil profile is not a reason to doubt the accuracy of either. In the absence of some other evidence the Senior Member considered that he must find that each bore log represents the profile of the soil in the place from where it was taken.[12]
[12]Ibid, [86].

(viii) The subdivisional fill placed by the developer is of a different colour. Both Mr Hennig and Mr Lawrance described it as being light grey or pale grey. The bore logs show that fill of that colour is some distance below the founding level of the slab.

Neither Mr Hennig nor Mr Lawrance suggested that the soil below the founding layer was any different in appearance from the soil above, which is the landscaping fill deposited by the Builder.

Even allowing for an edge beam thickness of 420 to 450 millimetres, more soil would need to have been imported onto the site in order to arrive at a constructed height of 100.690.[13]
[13]Ibid, [88].

(ix) The Tribunal found that on the balance of probabilities the upper layer of red/brown fill was placed by the Builder and that the light grey or pale grey fill immediately above the topsoil was the subdivisional fill placed by the developer.[14]
[14]Ibid, [89].

(x) The upper layer of fill, the portion which is between the subdivisional fill and the underside of the slab is the builder’s fill upon which the slab was constructed. Above that is the landscape fill. The relative thicknesses of these levels are shown in the bore logs.[15]
[15]Ibid.

(xi) The learned Senior Member summarised the geotechnical descriptions of landscape fill, builder’s fill, subdivisional fill, residual topsoil and residual soil.[16]
[16]Ibid, [92]-[97].

(xii) The Senior Member noted that it is unknown whether Earthlift removed any soil from the site or did a cut and fill, without charging for it in either case. However, the Senior Member was satisfied from the bore logs that the Builder brought a substantial amount of fill onto the site. The Senior Member considered that such fill was not what the slab had been designed to be founded upon.[17]
[17]Ibid, [136].

(xiii) The Senior Member concluded that the depth of the builder’s fill is highly variable. It ranged from only 50 millimetres in bore log L3 to 130 millimetres in bore logs L1 and L2 and as much as 850 millimetres in bore log C3. In L3, Mr Lawrance found no subdivisional fill at all. Instead that corner of the slab is sitting upon only 50 millimetres of builder’s fill placed over the natural topsoil. It would seem from this that what the slab is sitting on down to the depth of 2300 millimetres is highly variable from place to place in regard to what proportion is natural ground, what proportion is subdivisional fill and what proportion is builder’s fill. The geotechnical evidence demonstrated that the calculation of the reactivity of the soil is dependent upon an examination of the characteristics of the soil at each level. The footprint of the house as constructed would depend upon where the soil engineer dug. Each spot would appear to have a different reaction to the addition of moisture.[18]
[18]Ibid, [137].

(xiv) Mr Cross said that the builder’s fill was unsuitable to support the slab. He said that, at 83 per cent, the soil in bore log C3 was virtually uncompacted. This was supported by Mr Morgans who said that, straight out of the back of a dump truck, soil would have compaction of 85 to perhaps 90 per cent depending on the moisture condition of the soil and how much it just settled under its own weight.[19]
[19]Ibid, [144].

(xv) The Senior Member considered that from this evidence it followed that the soil, at least in some parts, may not have been compacted at all or, if it was, it was certainly not sufficiently compacted. The Senior Member could not find that the builder’s fill under the slab is rolled fill as called for in the Building Contract Specification, AS 2870-1996 (Clause 6.4.2(b)), called up in the Second Plan dated 6 November 2006. He considered that the evidence before him was to the contrary.[20]
[20]Ibid, [145].

(xvi) The Senior Member was satisfied that, in breach of the contract, the Builder failed to construct the slab in accordance with the Second Plan and that it also failed to adequately compact the fill material upon which the slab was constructed.[21]
[21]Ibid, [149].

(xvii) The Engineer’s Design and AS 2870-1996 required the slab to be placed upon controlled fill. There is no evidence that the builder’s fill upon which it had been constructed was compacted at all but, even if it was, the compaction of the soil under the edge beams was found by CivilTest to have been inadequate. Mr Cross said that the Builder should have informed the engineer about the fill before pouring the slab. That is what the note on the Second Plan required and there is no evidence that it was done. The Senior Member was not satisfied that the builder’s fill was adequately compacted.[22]
[22]Ibid, [200].

(xviii) The Senior Member was unable to say whether the slab was otherwise constructed in accordance with the Second Plan because there was no evidence as to how the slab was constructed. He was, however, satisfied on the balance of probabilities that the slab is moving irregularly and to an extent well outside what it was designed for and that it was not built upon an adequate foundation. He found that this irregular movement is due to defective workmanship by the Builder in preparing the footing and constructing the slab.[23]
[23]Ibid, [207].

(xix) The Senior Member was satisfied that the slab was not constructed as designed. It was built upon an inadequate foundation. He found that the Second Plan was adequate, notwithstanding that it was not the result of any contemporaneous calculations. Consequently, although the Senior Member found various breaches by the engineer of its duty of care to the Owner, there was no proof of actual damage arising from those breaches. The responsibility for the foundation failure lay wholly upon the Builder.[24]
[24]Ibid, [210].

(xx) Mr McFarlane suggested in his first report that the slab may have stabilised and that once it had stabilised its future performance would be satisfactory. Mr Cross disagreed, because he said that the slab had insufficient stiffness to cope with the foundation upon which it was laid and the loose fill was allowing water to enter under the slab and was not an appropriate foundation for any slab. The material was also not evenly compacted. In this regard his prediction was borne out by the more recent surveys which show that there have been substantial and irregular movements over less than 12 months.[25]

(xxi) Because there has been heave under the slab the Senior Member found that water is entering under the slab. He also found that the loose fill, not being controlled fill and not being evenly compacted, was an inadequate foundation material that was more likely to admit water than properly compacted fill.[26]

[25]Ibid, [211].

[26]Ibid, [212].

In summary I consider that the bases of the Senior Member’s conclusion that there was “irregular movement due to defective workmanship by the Builder in preparing the footing and constructing the slab” were the Senior Member’s findings and conclusions set out in his Reasons,[27] namely that, on the evidence before him, including the expert evidence:

(i)The bore logs establish that the builder imported a substantial amount of fill onto the site;
(ii)Imported builder’s fill was not what the slab was designed to be founded upon;
(iii)The slab was placed on varying fill including imported builder’s fill;
(iv)The builder failed to adequately compact the fill material upon which the slab was constructed;
(v)The builder’s fill under the slab was unsuitable to support the slab because it was not sufficiently compacted; and
(vi)The inadequate foundations under the slab caused the slab to move irregularly to an extent well outside the slabs design parameters.
[27]Ibid, [136]-[137], [144]-[145], [149], [203], [206] and [207].

Ground 1 (Question of Law 1)
The Tribunal erred when it found as a fact that “builders fill” was brought onto the site located under the slab, a finding, which fundamentally underpinned the reasoning of the Tribunal and provided the basis upon which it awarded damages (reasons [74], [89], [135] – [137], [149], [182], [206], [210]).

At the outset of argument, Senior Counsel for the Builder submitted that Ground 1 (impugning the Tribunal’s inference that fill was imported onto the site) and Ground 3 (alleging that in certain respects the Tribunal did not afford natural justice) reflected the plaintiff’s key grounds of appeal. Further, the Builder’s submission was that, save for Ground 3, the other grounds of appeal relied upon by the Builder were consequential upon the success of Ground 1.[28]
[28]T5 L8-23.

The Builder’s case on Ground 1

The Builder’s case on Ground 1 (Question 1) relied on the following key contentions:

(a) There was no evidentiary basis for the Tribunal to infer that the Builder brought additional fill onto site and placed that fill where the slab was ultimately built;

(b) The Builder did not at any time remove soil from site as part of the earthworks;

(c) An analysis of the before construction and post slab construction levels on site show that no builder’s fill was imported onto site;

(d) The geotechnical soil samples and tests did not provide a basis from which it could be inferred that the Builder had imported and placed fill under the slab;

(e) The geotechnical evidence showed that there were only two types of fill, namely, subdivisional fill and landscape fill.

I deal with each of the Builder’s key contentions below.

There was no evidentiary basis for the Tribunal to infer that the Builder brought additional fill onto site and placed that fill where the slab was ultimately built

The Builder’s fundamental contention is that the Tribunal had no evidentiary or other reasonable basis upon which it could have drawn the inference that the Builder brought additional “fill” onto the building site prior to the construction of the slab (which exhibited excessive movement), nor any evidentiary or other reasonable basis upon which to infer that the Builder placed such fill under the slab as part of the earthen foundation for that slab.

The Builder also argues that Grounds 1 and 2 identify an error of law on the part of the Tribunal because the learned Senior Member made findings which are plainly wrong or unreasonable in the Wednesbury sense.[29]
[29]Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223.

The Builder contends that the Tribunal’s finding that it imported “builder’s fill” cascades through and infects the Tribunal’s findings in respect of the subsidiary questions relating to the materials beneath the slab forming an inadequate base and resulting in slab failure and consequential defects in the structure it supports. If, contrary to the Tribunal’s conclusions, the Builder did not import fill onto the site, the Builder contends that the defective slab must have been founded on the original subdivisional fill.

The Builder points out that there is no dispute between the parties that the original “subdivisional fill” or “developer’s fill” was placed before the Building Contract works commenced, and that this layer of fill was sufficiently well compacted to provide a proper foundation for the slab.

The Builder also points out that it was common ground between the parties that when during construction it emerged that the finished level of the slab was too high, the Builder placed “landscape fill” around the perimeter of the house. This occurred after construction of the house had been completed.

The Builder asserts that the Tribunal’s findings about moisture penetration, destabilisation of the slab and subsidence, were all findings consequential upon the Tribunal’s inference that the Builder had imported fill which was placed between the subdivisional fill and the slab and which was not adequately compacted.

The Builder also points out that there was no direct evidence as to the importation of builder’s fill onto the building site. The Builder emphasises that the bore log results upon which the Tribunal relied were all taken from around the perimeter of the slab, and were drawn on by the Tribunal to infer the nature and characteristics of the soils beneath the slab.

Further, the Builder submits that although the dimensions of the slab were said by the Tribunal to be part of the basis for inferring placement of builder’s fill under the slab, the Tribunal ultimately relied solely on the bore log results to make that finding.

Accordingly, the Builder focused in its appeal on what it says was the Tribunal’s unsupported and unreasonable inference and erroneous conclusion that the Builder imported fill which was placed on top of the original subdivisional fill and beneath the slab.

The Builder also contends that because there was no acceptable bore log test undertaken through the slab, the Tribunal’s conclusions as to the nature and characteristics of the soils under the slab were necessarily inferred from the bore log results from around the perimeter of the slab.

The Builder argues that because the soil reported in the bore logs, and inferred to be “builder’s fill”, is of substantially the same colour and characteristics as the “landscape fill”, it was illogical, unsupported by the evidence and not open for the Tribunal to find that under the slab there was a separate and different layer of fill to the landscape fill.

The Builder says that it was not open to the Tribunal on the evidence before it to draw a distinction between an upper layer of landscape fill and a middle layer of builder’s fill, and a lower layer being “subdivisional fill” beneath the middle and upper layers.

The Builder argues that prima facie the slab was built on the subdivisional fill which was highly compacted.

The Builder also argues that the layer of scoria which was placed under the slab is compliant with contract specifications. I deal separately with this issue below under Ground 6(e) (Question 6(e)).

The Builder contends that the key vitiating error made by the Tribunal was the drawing of the unsupported inferences that it was the imported and inadequately compacted builder’s fill placed under the slab which caused damaging slab movement.

The Builder acknowledges that the defective slab has moved and moved substantially. The Builder says that the unacceptable movement of the slab was caused by water penetration under the slab resulting in the reaction of the subdivisional fill and the naturally occurring clays. The moistening of the soils resulted in expansion of the reactive clays and the lifting of the slab, in particular at the edges of the slab where there is the least resistance.

The Builder in its submissions concedes that there was a sufficient evidentiary basis for the Tribunal to find that the slab had been subject to subsidence, rather than heave.[30]
[30]T19 L14.

It appears that the Builder’s case before the Tribunal was that, in various ways, the Owner failed to prevent water penetration and ingress in the immediate vicinity of and under the slab. The Builder, in its submissions, recognises that the Tribunal addressed the question of water ingress and the Builder did not contest that the Tribunal’s findings, on that aspect, were based on evidence which had been adduced at trial.

It was not argued by the parties before the Senior Member, or on this appeal, that the design or construction of the concrete slab itself was deficient.

The Builder also argues that because the Senior Member proceeded to reach his key findings on the basis of the unjustifiable inferences, the only way justice can be served is for the Court to set aside the Tribunal’s present orders in this matter and remit the matter back to a different Tribunal member to rehear the Owner’s applications.[31]
[31]T26.

In my view the Tribunal was provided with sufficient evidence to support and justify the key finding referred to in paragraph [31] above including the Tribunal’s finding that “builder’s fill” was brought onto the site located under the slab. That evidence included the following.

In his Report of 26 March 2013, Mr Buffington of CivilTest, a geotechnical witness called by the Owner, concluded that the edge beams of the house were founded on “builder’s fill“.[32] He stated that the compaction tests conducted on the upper layer of fill (the builder’s fill) showed that the in place density (compaction level) revealed poorly compacted fill which would barely meet the requirements of rolled fill as defined by AS 2870 6.4.2(b) and would be unsuitable to support edge beams as shown by AS 2870 6.4.3(ii) and (iii). At 3.3.3.1 in his Report,[33] Mr Buffington also concluded that the builder’s fill under the edge beams was loose and could not be termed ‘controlled fill’ as defined in AS 2870 1.7.13.[34]
[32]Buffington Report, 3.3.5.2, TB533; T141 L25-31, T142 L1-14.
[33]TB529.
[34]T142 L4-8.

I also note in relation to The Construction of Slabs, Filling at clause 6.4.2(a) of AS 2870, that the Australian Standard there incorporated, namely AS 3798, requires controlled fill to achieve a 95 per cent minimum relative compaction.

Mr Cross, an engineer called by the Owner, stated in his Report dated 5 September 2012, that the soil below the slab is not consistent or adequately compacted.[35] He concluded that the varying densities of the supporting fill had resulted in inadequate soil compaction and adverse building movements. Mr Cross also said that the CivilTest results were taken immediately adjacent to the footings of the waffle slab and reveal that the soil was not compacted in a consistent or adequate manner. He concluded from the CivilTest results that the Builder did not properly supervise the compaction work and that the inconsistent and inadequate compaction of the soil had resulted in adverse slab movement. Mr Cross considered that the soil on site is an unsuitable material to support the slab of the house.[36]
[35]Cross Report, [1]; TB365, and TB373 [23], TB366 [46].
[36]Cross Report, [46]; TB376; T142 L6-14.

In addition to the above, I accept the Owner’s submissions[37] that there was a large body of expert evidence before the Senior Member, on the basis of which it was open to the Senior Member to conclude that the layers of fill immediately adjacent to the slab and the fill extending under the slab were inadequately compacted, including inadequately compacted materials extending to at least a metre beyond the outer face of the edge beams bordering the slab. That same body of expert evidence also supported a finding that the edge beams were not placed on controlled fill as they were required to be under AS 2870.
[37]T143-157, particularly T143 L8-24, T147 L1-31, T148 L1-13, T149 L19-31, T150 L5-17, T153 L27-31, T154 1-28, T155 L6-23, T156 L22-31 and T157 L1-12.

I also note that the Owner contended before the Tribunal, and on appeal, both that it was irrelevant to his case whether or not the Builder placed fill under the slab and that the geotechnical bore log evidence showed that there was builder’s fill under the slab.[38] The Owner, however, placed his emphasis on the proposition that whatever was under the slab was not compacted to contractual requirements. It appears that this approach by the Owner was influenced by the argument which took place before the Tribunal about whether the Owner bore any burden of proof in relation to the issue as to whether the Builder placed fill under the slab.
[38]Owner’s submissions dated 8 October 2014 [4.2, 4.4, 4.7(a)-(c), 4.8, 4.9, 4.12 and 4.28]

Further, that evidence, including Mr Lawrance’s expert evidence,[39] provided a basis upon which it was open for the Senior Member to conclude that there were two distinct layers of fill placed above the underlying subdivisional fill, and that the Builder probably placed both those layers of fill on site.
[39]TB627 (3.0 (a) and (b)).

There are also other parts of the expert evidence which opine that the fill material below the slab is likely to be of varying densities, below those contractually specified, and is not consistently or adequately compacted.[40]
[40]See the Cross Report dated 5 September 2012, 372 [15], 373 [23], 374 [35], 375 [36], and 376 [45-49]; and the Hennig Report dated 6 December 2011, AB358-361.

Further, Senior Counsel for the Owner highlighted the following expert evidence given by Mr Lawrance, who was called by the Builder, during his cross-examination:

Do you agree it's more likely than not that what you've shown under the edge beam is accurate, which is a layer of subdivisional fill and a layer of some other fill? --- As sure as I can be by drilling down the outside of the edge beam, yes. It's possible that it doesn't extend underneath there but as sure I can be by drilling down the outside.
You would say based on that, it's more likely than not that you've got two layers of fill under the edge beam? --- That's fair.
I mean where there's subdivisional fill, subdivisional fill that's been disturbed, builder's fill, whatever it is that this slab is founded on has been tested and it does not comply with 95 per cent compaction that's required for a residential house? --- I agree, that's the results of the tests done.[41]
[41]T183 L9-18, T184 L11-16.

The builder did not at any time remove soil from site as part of the earthworks

The Builder also argues that the evidence establishes that there was no charge for removing soil from the site by Earthlift and therefore no material was removed from the site. Accordingly, the Builder contends that if, as the Tribunal inferred, the Builder imported fill this would have resulted in the slab being built much higher than it was in fact built.

The Builder refers to a letter from Earthlift to the Builder dated 10 August 2012[42] where Earthlift mentioned site preparation earthworks as involving “placement of site excavated soil and/or imported fill placed at in situ moisture content by spreading certain loose layers and track rolling to elevate the fill areas to the required level” and criticises the Tribunal’s conclusions. The Senior Member concluded that the plaintiff’s earthworks contractor did not charge for removing any soil from the site nor for cut and fill.[43]
[42]AB1153.
[43]Reasons, [135].

The Builder contends that the Senior Member did not explain how he concluded that “site preparation”, referred to in Earthlift’s invoice,[44] did not include a reference to cut and fill works.
[44]AB359.

In my view, however, a fair reading of the contemporaneous invoice of 10 January 2007[45] and the Earthworks letter dated 10 August 2012 reveal that it was open to the Tribunal to conclude that Earthlift had not recorded the undertaking of earthworks in the nature of cut and fill and had not charged for such work at the site. The invoice of 10 January 2007 does not refer to removal of soil from the site or work in the nature of cut and fill. The letter of 10 August 2012 does not refer to cut and fill, but rather stripping, excavation and equivocally, the placement of site-excavated soil and/or imported fill.
[45]AB359.

The Builder also submits that the Senior Member was wrong to suggest that upon receipt of Earthlift’s invoice, the Builder should have followed up with Earthlift to see whether the Builder’s instructions, including to remove soil from the site, had been carried out.[46] The Senior Member considered that because the Earthlift invoice did not charge for soil removal the Builder should have realised that its instructions to Earthlift to cut and fill the site and to remove the surplus soil and proof roll the surface may not have been undertaken.[47]
[46]T31.
[47]Reasons, [133], [135].

However, I do not consider that it is of any real significance that the Senior Member speculated as to whether Earthlift had carried out the Builder’s earthworks instructions. This is because the Senior Member did not need to conclude that the Builder removed excavated materials from the site. This was not a matter in respect of which a finding was necessary so as to determine whether or not builder’s fill had been imported onto the site and whether the Builder was responsible for placing poorly compacted fill under the slab.

The learned Senior Member concluded that it was not established to the Tribunal’s satisfaction, whether or not Earthlift had removed any soil from site or whether Earthlift had undertaken cut and fill earthworks.[48]
[48]Ibid, [136].

The Senior Member made sufficiently clear that his critical finding as to the Builder’s importation of fill onto site was based on the expert geotechnical evidence presented to him by way of a number of site bore logs.[49] The Senior Member also made it sufficiently clear that his findings relating to the importation and placement of substantial quantities of builder’s fill under the slab, were not primarily founded on the as-built level of slab or the extent of earthwork undertaken by Earthlift.[50]
[49]Ibid.
[50]Ibid, [71].

The Builder argues that the Senior Member erred in finding that fill was imported onto the site. It points to the evidence of Mr Sweeting, the Builder’s construction manager. Mr Sweeting stated in his evidence that there was no additional fill imported onto the site. Mr Sweeting supported this assertion by adding:

Earthlift would not have done any work not covered by the purchase order without approval, as this would have meant that they wouldn’t have been paid, and any approval would have needed to have come from me.

In my view the Senior Member satisfactorily explained his bases for not being persuaded by Mr Sweeting’s evidence. The Senior Member first identified the assumptive basis of Mr Sweeting’s assertion, namely Earthlift’s records not recording the importation of fill.[51] The Senior Member also highlighted the unreliability of Earthlift’s records which did not record importation and placement of scoria although it was undisputed that scoria had been brought onto the site.[52] Finally, the Senior Member explained that he was persuaded by the expert geotechnical evidence which demonstrated a considerable amount of soil had been brought onto the site.
[51]Ibid, [37]-[38].
[52]Ibid, [84]; T41 L15-27.

Further, the Senior Member pointed out that there was no evidence available to the Tribunal from those who prepared and constructed the slab, and the best evidence available to the Tribunal as to what materials lay beneath the slab was the expert geotechnical evidence including the bore logs and samples that were taken.[53]
[53]Reasons, [71].

The Senior Member also dealt extensively with what the expert geotechnical evidence establishes in relation to the materials supporting the slab.[54]
[54]Ibid, [71]-[120].

Two experts, Mr Hennig and Mr Lawrance, described the subdivisional fill placed by the developer as “light grey” or “pale grey” in colour. The bore log evidence established that the subdivisional fill was some distance below the founding level of the slab. The Senior Member was persuaded, on the evidence before him, particularly the expert evidence, that the upper layer of material under the slab, which was “red brown” in colour was placed by the Builder. This layer beneath the slab is the builder’s fill. The layer of material below the builder’s fill, is the light grey/pale grey subdivisional fill.[55]
[55]Ibid, [87]-[89].

The Senior Member not only made it plain that his satisfaction about the importation of fill onto the site was based upon the expert geotechnical evidence adduced, he also mentioned the bases for his lack of confidence in the Builder’s records concerning earthworks and associated activities and cited the above mentioned examples relating to the importation of scoria.

In my view, the Tribunal’s finding that fill had been imported onto the site was adequately justified on the basis of expert geotechnical evidence which I have referred to above.

An analysis of the before construction and post slab construction levels on site show that no builder’s fill was imported onto site

The Builder also argued that a reconstruction of the levels on site which were recorded by Wilson Surveying in September 2006, together with surmise as to the extent of Earthlift’s work onsite, provided a basis for concluding that the slab was constructed on the original subdivisional fill.[56] This thesis is put forward by the Builder to establish that it was not open to the Tribunal to find that the Builder imported fill and placed substantial quantities of fill under the slab.
[56]T6 L12-15.

By related submissions the Builder says that because the Tribunal considered that, as built, the slab was 205 millimetres higher than the design called for, the Tribunal was led to erroneously conclude that the Builder imported fill to provide the material to found the slab at a higher level.

The Builder says that the slab was placed higher than required by the design because the Builder did not cut to the specified level of 100.1 millimetres.[57]
[57]T40 L1-3.

The Senior Member, however, mentioned the paucity of the Builder’s records by noting that there was no evidence as to the extent to which the Builder excavated to reduce the levels of the site.[58]
[58]Reasons, [44].

The Senior Member dealt with the Builder’s argument that it could be inferred from pre-construction site levels that the Builder did not need to import fill onto the site to found the slab at the levels it was constructed.[59]
[59]Ibid, [87]-[89].

The Tribunal, as was open to it on the evidence presented, was not satisfied that the reconstruction argued for by the Builder was likely to have occurred. The Tribunal was, on the contrary, satisfied on the balance of probabilities that the best evidence in relation to what lay beneath the slab was the expert evidence of what the bore logs disclosed. That finding was open on the bore logs and associated expert evidence to which I have referred and was also both cogently explained and reasonable in my view.

The issue concerning the reconstruction of site levels and what they were said to demonstrate was of some prominence and consumed much time at the trial before the Senior Member. A good deal of evidence was presented to the Senior Member on this aspect.[60] On the evidence, including expert surveying and geotechnical evidence presented to the Tribunal, the Senior Member found that the slab was 205 millimetres too high when poured,[61] and that the additional height of the slab was because of additional soil brought onto the site by the Builder (the builder’s fill).
[60]Ibid, [38]-[44].
[61]Ibid, [41], [44].

Accordingly, I am satisfied that the Senior Member had before him sufficient evidence to reject the Builder’s hypotheses concerning what should be concluded from the relative levels on site before and after construction. The Senior Member had before him evidence sufficient to found his conclusion that the Builder had imported and placed additional fill under the slab. These were hotly contested factual disputes in the Tribunal proceeding, and resulted in factual findings which, for the reasons I have stated, I consider I should not disturb.

The geotechnical soil samples and tests did not provide a basis from which it could be inferred that the Builder had imported and placed fill under the slab

The Builder argues that if it had imported fill and placed it under the slab, and the fill had the characteristics of the material shown in the bore logs, that would have been disclosed in the results of test hole 5 (which was drilled through the concrete slab in the middle of the house). The Builder contends that, in these circumstances, the result of test hole 5 would disclose two different layers of fill.[62]
[62]T52 L19-28.

The Builder argues that the Senior Member’s conclusion that a large amount of fill was imported onto the site by the Builder, up to a possible volume of 145 cubic metres, was not reasonably open or, alternatively, was a conclusion that was so unreasonable that no reasonable Tribunal could have so concluded.

The Builder also argues that the geotechnical results of bore log tests and the test holes showed that there was “no way that there was builder’s fill under the slab”, and the Builder emphasises that test hole 5, produced by CivilTest, was consistent with this in that it showed there was only one type of fill (“brown silty clay, firm to stiff”) extending down under the slab to 1200 millimetres.[63]
[63]T52.

The Builder criticises the Senior Member for interpreting the bore log results to mean that there were two different types of fill above the subdivisional fill when the reported bore log results do not justify such an interpretation. In this respect the Builder relies on Mr Hennig’s bore hole C1 and Mr Lawrance’s L1 and L2 results.[64]
[64]T57 L5-23.

However, in my view the asserted differences between the bore log report by Mr Hennig in relation to C1 and the Senior Member’s description of the same soil assays (brown silty clay – soft firm moist – 270 – 500; and below that pale grey – silty clay stiff/v stiff moist – 500 – 800)[65] are not substantial or material. The engineering log[66] appears to accord with the table in the Senior Member’s Reasons.[67]
[65]Reasons, [94].
[66]AB416.
[67]Reasons, [94]-[95].

Similarly, the criticisms of the Senior Member’s summary[68] of Mr Lawrance’s results at L1 and L2 are also, in my view, lacking in substance. The Senior Member’s summary is substantially in accord with Mr Lawrance’s geotechnical bore log.[69]
[68]Ibid.
[69]AB542.

Mr Lawrance appears to depict a dividing point for L1 at 400 millimetres between red/brown silty clay — variably to moderately compacted filling and below 400 millimetres to about 820 millimetres, light grey silty clay — moderately to well compacted filling. Save to note that with L2,[70] the Senior Member has apparently omitted the word “variable” in relation to compaction, I can identify no substantial discrepancy between the cited geotechnical bore log and the Senior Member’s Reasons summarising them.
[70]AB543.

Accordingly I am not satisfied that, in the respects relied on by the Builder, the Senior Member has materially misunderstood or mis-described the evidence. Further, in my view the omission of the word “variable” by the Senior Member is immaterial, principally because the key information which the Builder asserts was misinterpreted, and/or misunderstood by the Tribunal, was the type of material under the slab and not the state of compaction of that material.

I am not satisfied that the Senior Member has erred in any substantial or material way in relation to his transposition or understanding of the geotechnical information before him and referred to in his Reasons.

The Builder highlights the results of Mr Lawrance’s test at bore log 3[71] and the CivilTest result at test pit 3.[72] The Lawrance test at L3 shows builder’s fill (silty clay red/brown) between 250 to 300 millimetres whereas the CivilTest, at CivilTest’s nominated C3, disclosed builder’s fill (brown silty clay) from 250 to 1,100 millimetres.
[71]AB541, AB544.
[72]AB415, AB418.

Although the bore holes compared above are relatively close they are not testing the soil at the same location. Accordingly, I do not regard the comparisons and differences highlighted by the Builder as sufficient to satisfy me that the Senior Member lacked the evidence to support the findings he made as to what the geotechnical evidence established on the balance of probabilities.

The Builder also argued that if a decision on a matter is so unreasonable that no reasonable Tribunal could ever have come to it, then there is jurisdiction to interfere with that decision.

The Builder also submits in relation to CivilTest result C3 that it appears to be an “unreliable log”. The Builder, however, adds that it is not for this Court, on an appeal of this nature, to make a finding to that effect. I accept that it is not appropriate for me to make such a finding, given the nature of this appeal.

In my view, the Tribunal’s findings about the importation and placement of fill by the Builder were open on the evidence referred to above, and should not be interfered with on appeal. On the expert geotechnical evidence relied on by the Senior Member, including the bore logs and samples referred to in the Senior Member’s Reasons,[73] the Senior Member had a proper basis upon which to infer that imported builder’s fill had been placed under the slab.
[73]Reasons, [71] and [90]-[97].

For the reasons I have also referred to above, I am unpersuaded that on the available evidence the Senior Member’s findings in relation to the geotechnical issues sought to be impugned by the Builder were plainly wrong or unreasonable in what the Builder refers to as the Wednesbury sense.

The Senior Member also relegated the Buffington C5 compaction tests as unreliable because of non-compliance with the required compaction testing regime.[74] This component of Mr Buffington’s testing is, however, separate from the results he recorded as to the colour and general characteristics of the soils found at test location C5. The Senior Member was content to refer to these non-compliant results as nevertheless recording soil colour and general characteristics.[75]
[74]T158-159, T160 L3.
[75]Reasons, [84].

The Builder had argued that the best evidence of what is under the slab is the CivilTest core through the concrete slab at C5. Mr Buffington, a CivilTest Expert reported the soil composition results at C5, down to 725 millimetres. I do not consider that this sole assay negates the many test results around the perimeter of the slab. For this reason I am unpersuaded the C5 results which showed “brown silty clay”[76] below the 30 millimetres of “red ground gravel”, establish that the Senior Member’s findings based on the expert geotechnical evidence, which included a number of perimeter bore log tests, are without an evidentiary base, or illogical or unreasonable or wrong. The Senior Member, having heard all the evidence, including the expert evidence, concluded that the perimeter bore logs were the best evidence of what was under the slab. The Senior Member did not regard the results at C5 as displacing the numerous other soil tests from around the perimeter of the slab. Further, I add that the soil which the Senior Member refers to being discovered at C5 (“brown silty clay”)[77] is consistent with a layer of fill existing above the subdivisional fill at that point. As referenced above the Senior Member was furnished with the evidentiary basis to make such findings.

The geotechnical evidence showed that there were only two types of fill, namely, subdivisional fill and landscape fill

[76]Ibid, [84].

[77]Ibid, [84].

The Builder argues that the geotechnical evidence was only capable of supporting the view that there were two types of fill;

(a) the light grey/pale grey fill (subdivisional fill);
(b) the brown or red-brown fill (landscape fill).[78]

This represented part of the Builder’s base contention that the evidence did not support a finding that there was a layer of builder’s fill, placed on top of the subdivisional fill and under the slab, and that the Builder had not imported any fill, other than landscaping fill, placed after construction of the slab.

[78]T63.

The Builder submits that the bore logs do not say anything about any other layer of fill or a split of the top layer of fill.[79]
[79]T63 L12-16.

The Builder argued that the Senior Member had misunderstood the geotechnical evidence, and that the Senior Member should have concluded that there were only two types of fill to be found on site, namely the underlying subdivisional fill (pale grey/light grey in colour) and the brown-red/brown fill above the subdivisional fill.[80] The Builder designated all the brown-red/brown fill as “landscaping fill”, and also argued that the “landscaping fill” had been placed after the slab had been constructed.
[80]Builder’s Submissions dated 1 August 2014, [21].

The Senior Member concluded that, leaving aside the 30 millimetres of scoria gravel, the soil formation on which the slab is constructed comprised:

(i)        an upper layer of red/brown silty clay fill placed by the builder;
(ii)       below that, subdivisional fill of light grey/pale grey silty clay;
(iii)      and below that the underlying topsoil.[81]

[81]Reasons, [88]-[89].

The Senior Member summarised the two layers of fill above the topsoil, and referred to the top 250 to 270 millimetres of the material as landscape fill.[82] This was the material located at the side of the slab down to the level representing the approximate soffit of the slab at 250 to 270 millimetres.[83] I do not consider that it is a fair reading of the Senior Member’s Reasons to conclude that he has unjustifiably “split” the material referred to in what he calls the “upper layer” of fill.[84] The Senior Member explains that he refers to the portion of the “upper layer” of fill between the subdivisional fill and the underside of the slab as builder’s fill, being the fill upon which the slab was constructed. Above that he refers to the fill brought on to the site to build up the soil level around the edge beams of the slab as landscape fill.[85]
[82]Ibid, [93]-[97].
[83]See CivilTest and Mr Lawrance’s logs at AB416-417 and AB550-551, respectively.
[84]Reasons, [89].
[85]Ibid, [93].

The Tribunal collated the data at the cut-off point of the approximate soffit of the slab, at about 250 to 270 millimetres. It is sufficiently clear, on a reading of the Senior Member’s Reasons that his findings and conclusions[86] are based on the collation he has produced[87] after considering all of the evidence including the expert geotechnical evidence.
[86]Ibid, [87]-[120].
[87]Ibid, [93]-[97].

At all events the bore logs, for example at C1 and C2 and L1 and L2, do depict extensive fill immediately adjacent to and at levels below the soffit of the slab. This fill commences on top of the underlying topsoil, and both Mr Lawrance and CivilTest concluded, that above the topsoil was subdivisional fill and on top of the subdivisional fill was fill in the nature of brown/red brown silty clay.

The Builder also contends that the Senior Member was wrong to rely on the bore logs (except C5) to demonstrate what was under the slab.[88]
[88]T66 L21-31, T67 L1-20.

It argues that it was not appropriate to infer what was under the slab from the expert geotechnical evidence derived from the tests conducted at the immediate perimeter of the slab.

The experts, however, clearly relied upon the test pit and bore logs at the edge of the slab to establish, by inference it is clear, that the materials identified at those points were likely to be the same materials as extended beneath the slab. In my view the expert evidence in this regard is logical and reasonable. In my view the inference drawn and conclusion reached by the Tribunal as to what material was probably under the slab at certain depths was appropriately founded on the geotechnical information and opinions to which I have referred, and was also therefore reasonable.

In my view the Senior Member’s findings and conclusions about the nature and characteristics of the soil formations under the slab, cannot be successfully impugned on the grounds that the Senior Member did not have any basis to draw such an inference or that such an inference was not reasonably open, or was plainly wrong, considering the body of geotechnical and expert opinion that was in evidence.

Furthermore, the Senior Member found that the site levels were such that there was fill placed between the subdivisional fill (which was already in situ at the time of the plaintiff’s earthworks) and the slab, to achieve a slab finished height of 100.690.[89]
[89]Reasons, [41], [44]-[45], [88].

The Senior Member found that the landscape fill was imported and placed on site after the subject slab had been placed, to build up area around the elevated slab and edge beams.[90]
[90]Ibid, [91].

The Senior Member found that the brown-red/brown fill was placed at two separate times and in two distinct places. The lower part was placed to raise the level of the building platform to support the slab. The Senior Member referred to the lower part of the “brown-red/brown fill” as “builder’s fill”. The Senior Member referred to the upper part of brown-red/brown fill as “landscape fill”.[91] These two placements of fill were in addition to the underlying subdivisional fill.
[91]Ibid, [89], [91], [93].

So understood, the Senior Member cannot be validly criticised for concluding that overall there were three layers of fill.[92]
[92]Ibid, [93]-[95].

Furthermore, in my view, the Senior Member was justified in concluding that there were three components of fill, and that the Builder had placed the brown-red/brown fill, which the Senior Member called “builder’s fill”, between the existing subdivisional fill and the soffit of the slab and edge beams which it formed and poured early in the construction sequence. This is so because although the colour and characteristics of the “builder’s fill” and the “landscape fill” were substantially similar, they were placed at separate times as distinct layers of fill.

This must be so, even on the unchallenged facts which are accepted by the Builder, because after the slab was constructed in January 2007, an unknown quantity of soil, which the Builder agrees was in the nature of “landscape fill” was brought onto the site by the Builder to cover the slab rebates. That is, to build up the ground level around the perimeter of the slab, which as built was 205 millimetres higher than had been anticipated.[93]
[93]Reasons, [41], [75]; and Builder’s submissions dated 1 August 2014, [11].

The parties accepted that there was the post slab construction placement of “landscape fill”.[94]
[94]Reasons, [8]-[9].

Therefore, the “landscape fill”, placed around the perimeter of the slab and the “builder’s fill” placed earlier under the slab were justifiably referred to by the Tribunal as separate and distinct layers of fill. Accordingly, in my view, it was accurate for the Senior Member to say that there were three layers of fill, not two as contended for by the Builder.

In my view the Senior Member‘s finding that the layer of fill below the slab and above the subdivisional fill was placed there by the Builder is quite open on the evidence, logical and cogent. This is because it is an uncontested fact that in September 2006, prior to the works, the building site presented as a layer of subdivisional fill over the original topsoil.[95] Therefore, sometime after September 2006 and before construction of the slab and edge beams in January 2007, fill was placed on top of the pre-existing “subdivisional fill” in the vicinity of where the slab was ultimately constructed in January 2007. The existence of red-brown silty clay fill above the subdivisional fill and below the slab depicted in the bore logs demonstrates that fact.
[95]Reasons, [72]-[74]; and Builder’s submissions dated 1 August 2014, [10].

There is no dispute as to the Builder being the party in control of the building site, and also responsible for the design and construction of the house, including its foundations and its slab and edge beams.

Accordingly, the Senior Member was justified in finding that it was the Builder that was responsible for the placement of the layer of additional fill on top of the pre-existing subdivisional fill, sometime before the slab and edge beams were formed and poured in January 2007.

Accordingly, I reject the Builder’s contention that the Tribunal fell into material error by identifying three layers of fill by reference to the geotechnical reports.

The fundamental findings and conclusions about the soil compositions accurately summarise the main layers of fill above the underlying topsoil on site, as described by the geotechnical experts.[96] Of these components of fill it is the layer of red/brown fill which the Senior Member justifiably concluded was imported by the builder and which the Senior Member justifiably considered was not adequately compacted and had thereby caused the slab to fail. These findings and conclusions, made and arrived at by the Senior Member, were open to the Tribunal on the evidence, including the expert evidence, and were in my view reasonable, given that evidence.
[96]Reasons, [89].

Similarly, on the evidence to which I have referred, the Tribunal was justified in concluding that the test pits, bore logs and expert opinions established on the balance of probabilities that the soil material assayed at the immediate perimeter of the slab, provided a logical, reasonable and probative basis upon which to find that the soils underneath the slab were of the same types and characteristics shown to be present in the pits and bore holes very nearby.

Accordingly, I am not satisfied that the Builder has established that the learned Senior Member made the finding sought to be impugned in the absence of relevant probative evidence, or that such an inference was not reasonably open on the evidence before the Tribunal. Nor am I satisfied that such a finding was otherwise plainly wrong or unreasonable.

The Owner’s primary case against the Builder should succeed even if the Builder was found not to have imported fill

In argument the Builder highlighted that the Owner’s case was that he did not need to prove what is under the slab because whatever is there was not compacted properly and the slab had moved. The Builder’s response to that argument was that the Tribunal approached the matter differently and inferred that there was builder’s fill under the slab.[97]
[97]T53.

However, even if it was not open for the Senior Member to find that the builder imported fill which was then placed under the slab, I am not persuaded the Tribunal’s decision under appeal is vitiated by error of law. I accept the Owner’s argument that a finding of lack of adequate compaction alone was enough to support the Tribunal’s decision.

This is because the Senior Member’s ultimate findings are, in any event, supported by the geotechnical evidence that there was extensive “fill” beneath the failed slab (whatever the source or means of placement of that fill may have been) and that fill was not adequately compacted. As a result, those materials did not provide a stable support for the slab and for that reason the slab failed.

The design and construction of a sound slab was the Builder’s responsibility and the Builder did not argue otherwise.

The Senior Member’s Reasons identify the evidence drawn upon to conclude that the Builder breached the subject Building Contract by failing to construct the slab in accordance with the Second Plan and identify the evidence upon which the Senior Member concluded that the Builder failed to adequately compact the fill material upon which the slab was constructed.[98]
[98]Reasons, [131], [137], [149].

Summary of conclusions Ground 1 (Question 1)

In summary, for the reasons I have referred to above, I conclude the following in relation to the Builder’s key contentions on this Question:

Contention

(a) There was no evidentiary basis for the Tribunal to infer that the Builder brought additional fill onto site and placed that fill where the slab was ultimately built.

Conclusion

The Tribunal had a sufficient evidentiary basis to infer that the Builder imported fill onto the site and placed that fill where the slab was ultimately built.

Pursuant to the Second Plan, which was produced after the execution of the Building Contract, the bored piers/piles depicted in the First Plan were deleted and the footing layout plan which was part of the Second Plan provided in Note (3) that:

The entire building platform should be well compacted at optimum moisture content by repeated rolling with an excavator or non-vibrating smooth drum roller in orthogonal directions as per AS 2870-1996. Clause 6.4.2(b) prior to placing waffle boxes any filling placed as part of cut and fill shall be placed and compacted in 150mm layers. If building platform is soft or suspect then contact this office for additional requirements.[149]

[149]AB1106.

According to the Owner, the Tribunal’s interpretation of the Building Contract which incorporated the Second Plan by implication is inconsistent with:

(xxv) the above text of the contract, and results in the words of the Building Contract having no work to do; and

(xxvi) s 31(1)(d) of the DBC Act, as it assumes that the Builder intended to commit an offence under the Act.

The Owner also argues that the Tribunal’s reasoning,[150] which led it to conclude that the parties did not intend to include an Engineer’s Design in the Building Works, is in error. The Owner argues that the reference to the “Contract Documents” in the Contract, is not expressed to include a signed Engineer’s Design and, the ‘fact’ that the Engineer’s Design was not ‘signed and initialled by the parties’ is not consistent with the language of the Contract. The Owner points out that the “Engineer’s Design” is a Contract Document, but it is not required to be signed and/or initialled.
[150]Reasons, [25].

Further, the Owner submits that the side note under the heading ‘Building Works’ in the Contract Particulars which requires the parties to sign and date the documents listed under Building Works (which would include the Engineer’s Design), does not form part of the Contract because of the operation of cl. 2.0 of the Interpretation Clause of the Contract.

The Owner also argues that the Tribunal’s findings and interpretation on the issue of what Engineer’s Design had been agreed by the parties, are contrary to the express language of the contract’s terms and the Builder’s obligations under the DBC Act. The Tribunal’s findings are, the Owner contends, at odds with the contract and common sense and lead to an absurd outcome.

The Owner also argues that the implied term as found by the Tribunal, is inconsistent with the express terms of the Building Contract and is inconsistent with s 31(1)(d) of the DBC Act. Further, the Owner contends that the implied term is unnecessary because the parties intended to include the Engineer’s Design.

The Owner asserts that it is also unlikely that, despite the language of the Contract, the parties entered into an agreement without including the existing Engineer’s Design, and instead, it went without saying, that the parties intended nevertheless that the Builder would at some time in the future obtain another Engineer’s Design which was inconsistent with the Engineer’s Design that they already had.

The Owner argues that the intended design cannot be the Structural Works Engineering Engineer’s Design dated 6 November 2006 and produced five days after the contract was signed. Similarly, the Owner contends the intended design cannot be the Soil Test Report.

It is clear that the words used in the Contract Particulars “8 sheets in the ENGINEER’S DESIGN/S … prepared by STRUCTURAL WORKS ENGINEERING” do not mean the Soil Test Report, as this phrase has its own definition or meaning in cl 1.0 of the contract:[151]

‘Soil Test Report’ - means an investigation of the Building Site to seek evidence of filling on the Land …

[151]AB172.

The Tribunal also found that the Soil Test Report does not contain an Engineer’s Design.[152]
[152]AB1353; Reasons, [5].

The Builder’s arguments

The Builder’s response and arguments in relation to the Engineering Design applicable to the Building Contract note that in evidence before the Tribunal were four original drawings prepared by Structural Works Engineering dated 19 October 2006. These were:
(a)       “Footing Layout Plan”;
(b)       “Footing Details – Type 2”;
(c)       “Part Roof Framing Plan”; and
(d)      “Articulation Plan”.[153]
[153]AB1110-1113.
The “Footing Layout Plan”, or First Plan, was stamped “superceded” in several places on that drawing. The Builder points out that there was no reason or explanation put forward at VCAT for this drawing being so endorsed.

Also in evidence before the Tribunal were four amended drawings bearing the same titles as set out in sub-paragraphs (a) to (d) above, but marked as amendment ‘A’10. These amended drawings were dated “6.11.06”, and were all stamped by ACME Building Consultants Pty Ltd in the same way as the original versions.[154]
[154]The amended “Footing Layout Plan” did not bear any “SUPERCEDED” stamp.

The Builder submits that by specification clauses 2.1 and 2.2,[155] the Building Contract informed the Owner that the Builder would deliver a concrete slab constructed in accordance with AS 2870.1-1996 and also in accordance with the Engineer’s Design. The Builder also argues that these clauses also reflected the parties’ agreement to that arrangement.
[155]AB215.

The Building Contract Specification provides in clauses 2.1 and 2.2:

2. CONCRETE SLAB
2.1Concrete slab shall be constructed in accordance with AS 2870.1 1996 and in accordance with engineers design.

2.2      Foundations/Concrete Slab includes:
•        Concrete Slab
•        Type — Raft Slab/Waffle Slab
(Note: Raft slab will only be used at the discretion of Metricon Homes)

The Builder argues that the slab the Builder was to provide was to be a raft or waffle slab at the discretion of the Builder.

The Builder points out that s 6.1.2 of the Structural Works Engineering “Geotechnical Site Investigation and Footing Recommendations”,[156] states that if the Builder builds a waffle slab then it might be in the form of one or two alternative designs.
[156]AB209.

The Builder argues that the objective intention of the parties, as reflected in the building contact documents at 1 November 2006, was not that any particular one of the two alternative waffle slab designs was the agreed design.

The Builder submits that, absent any knowledge by the Owner of the First Plan, the Building Contract documents convey that the Builder was required to construct a concrete slab in accordance with AS 2870, as designed by an appropriately qualified engineer. This obligation imposed upon the Builder is recorded in the provisions of clauses 2.1 and 2.2 of the Building Contract Specification.

In my view the terms of the Building Contract reflect the parties’ agreement that the Builder would, after the date of contract but before commencement of construction of the footing system, decide upon, and design, a suitable footing system. This is the substance of the recommendations in Part 6 of the Geotechnical Site Investigation and Footing Recommendations which formed part of the Building Contract executed on 1 November 2006. The recommendation also states that if a waffle slab is used then it might be a rigid system or alternatively a waffle system suspended on piers or piles.

Further, the Specification for dwelling, Clauses 2.1 and 2.2, stipulate that a concrete slab be constructed in accordance with AS 2870.1 1996, “in accordance with engineers design”, including a concrete slab of a raft or waffle design at the discretion of the Builder.

In my view at the time of contract, beyond agreeing the above regime by which the concrete slab design would be finalised by the Builder, the parties failed to expressly agree or identify or incorporate the First Plan, or any other specific finalised slab design, via the reference to “Engineer’s Design”, in the particulars of Contract or the defined “Building Works”, or otherwise.

Accordingly, in my view, the Senior Member’s decision on the Owner’s Notice of Contention discloses no error of law.

In substance the Senior Member’s analysis[157] reflects the required approach of objectively considering the language used by the parties in the contractual documents which their signatures and formal initialling connote they intended to contain their agreement.
[157]Reasons, [20]-[32].

In my view the Senior Member’s Reasons also reflect that he has objectively considered the parties’ contractual language, in the surrounding circumstances known to them, and taking into account the commercial purpose and object of the Building Contract. In this regard the Senior Member took into account the background and context of the Building Contract. Further, by the analysis referred to above, the Senior Member has considered what a reasonable person would have understood that language to mean. In dealing with this issue the Senior Member proceeded to address this issue according to law.

In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd the High Court said the following about the correct approach in relation to this topic:

This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement...[158]

[158](2004) 219 CLR 165, [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon J). (Citation omitted.)

The Owner argues that the Tribunal’s interpretation of the Building Contract is inconsistent with the objective theory of contract, because the Tribunal interpreted the contract taking into account the irrelevant subjective view of the Owner that he had never seen or turned his mind to the First Plan providing for a slab constructed on 38 concrete piers.

In my view however the Tribunal’s reference to its factual finding that the Owner had at no stage turned his mind to the First Plan, is referred to by the Tribunal as an aside, and not as a reason for concluding that the Building Contract did not include any engineering designs. On a fair reading of its decision the Tribunal reached this conclusion based on the form of the Building Contract and the other documents the parties initialled.[159] The Senior Member held that the parties intended that those signed and initialled documents, and no others, recorded their agreement. The documents which were signed and initialled by the parties as the agreed Building Contract did not include the First Plan.
[159]Ibid, [24].

In so reasoning the Senior Member accepted the approach submitted by the Builder, namely to objectively assess the parties’ intention by reference to the Contract Documents. In my view it is clear enough that this is what the Senior Member did.[160] I also note that the Senior Member’s construction is supported by clause 3.0 of the Particulars of Contract, which provides that the contract is complete in itself and overrides any earlier agreement, whether made verbally or in writing.
[160]See ibid, [23]-[25].

Further, I also consider that the signed Contract Documents are somewhat unambiguous in that the Contract Documents contemplate the production of “an Engineers’ Design” consistent with the specification at 2.1 and 2.2 and the Geotechnical Site Investigation and Footing Recommendations, and thereby provide flexibility to the Builder to develop alternative slab designs. This scheme accords with the Building Contract contemplating, in this particular case, that the Engineer’s Design may not be available to be signed together with those other parts of the contract which are to be signed as part of the Contract Documents, including the “Contract” and “Specification” and “Plans”.

Understood in this way, for the reasons I have referred to above, I consider that there is no inconsistency which arises between the implied term recognised by the Senior Member[161] and the Building Contract agreed and signed by the parties. Indeed such an implied term in my view is consistent with the scheme of the Building Contract, and, as explained by the Senior Member, necessary.
[161]Ibid, [25].

The Owner contends that it is the Tribunal’s reasoning at [25] of the Reasons which led the Tribunal to conclude that the parties did not intend to include an Engineer’s Design in the Contract Documents. The Owner argues that the phrase “Contract Documents” is not expressed to include a signed Engineer’s Design and the fact that the Engineer’s Design in the form of the First Plan was not signed and initialled by the parties, was not inconsistent with the words of the contract.

In my view the answer to the Owner’s above contention, and the reason for the First Plan not being included in the Contract Documents, is that the First Plan was not signed or initialled by the parties together with the other Contract Documents as one of the specified contract documents, nor was the First Plan specifically or effectively identified in the signed Building Contract so as to bring about its incorporation by reference.

Finally, as explained above the signed Building Contract contemplated the Builder having latitude to finalise a design for the slab after the other terms of the Building Contract were entered into, and it specifically referred to alternative designs in that regard.

The Tribunal relevantly found that:

(i)The First Plan, produced on 19 October 2006 was neither initialled by the parties, nor attached to the Contract nor at any stage sighted or considered by the Owner, Mr Hooper.
(ii)The First Plan was however in existence at the date of Contract, which was 1 November 2006.
(iii)The “Specification” and the “Plans” referred to under “the BUILDING WORKS at Page 1 of the Particulars of Contract” [AB 160] were both initialled and attached to the Contract.
(iv)It was accepted by the parties that “STRUCTURAL WORKS ENGINEERING” was the Engineer under the Building Contract. The Engineer was subcontracted to the Builder.
(v)There were eight pages produced by STRUCTURAL WORKS ENGINEERING which were initialled and attached as part of the Contract, however those eight pages were entitled “Geotechnical Site Investigation and Footing Recommendations” dated 26 September 2006 [AB 206-213]. These pages are not in the nature of “Engineer’s DESIGN/S”.
(vi)The slab, as built by the Builder, was generally in accordance with the Second Plan, which omitted the 38 concrete piers.

(vii) The house could not have been constructed without engineering designs.
(viii)It was common ground that the Builder was responsible for the provision of a suitable engineering design, including for the subject slab.

Conclusions as to the Notice of Contention

For the above reasons, I am not persuaded that the Tribunal has erred in law in not being satisfied that the First Plan formed part of the Building Contract by incorporation, or otherwise. In my view no proper or sufficient basis has been made out for the incorporation of the First Plan into the Building Contract dated 1 November 2006. This is because the First Plan was not included by the parties as part of the Contract Documents. The First Plan was not signed or initialled by the parties and the Contract Particulars do not specifically or effectively incorporate the First Plan by reference.

For these reasons, in my view, the Senior Member did not err in concluding that an objective interpretation of the Contract Documents does not establish that the parties probably intended that the Engineer’s Design would be constituted by the First Plan.

It is of no assistance to the Owner that by failing to effectively include in the Building Contract enough information by way of plans and specifications for the work to enable a building permit to be obtained, the Builder may have contravened s 31(1) of the DBC Act. The answer to the question as to the suggested incorporation of the First Plan by the Owner is to be found in the objective interpretation of the relevant contract documents, in accordance with the approach earlier referred to and directed by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[162] and Electricity Generation Corporation v Woodside Energy Ltd,[163] as addressed above, and not by reference to s 31(1) of the DBC Act.
[162](2004) 219 CLR 165, [178] and [179].
[163](2014) 251 CLR 640, [35].

Further, for the above reasons, I am also of the view that the implied term, found by the Senior Member, namely that the Builder would obtain an engineering design suitable for the construction and consistent with the geotechnical report, the architectural plans and the specifications forming part of the contract,[164] does not contradict the express terms of the Building Contract. Reading the contract as a whole, such an implied term is consistent with the Contract, accepting that in this instance the parties have omitted to agree and include any applicable Engineer’s Design/s for the foundation solution at the date of contract. The parties did, however agree, as explained above, that the Builder would provide a suitable foundation/slab design, and agreed a regime within which that would occur.
[164]Reasons, [25].

It follows from the above that I am not persuaded that the Senior Member fell into error at law by implying a term which was unreasonable, and/or unnecessary and/or contrary to law. In my view the term which the Senior Member implied, was in all the relevant circumstances contractually necessary and lawful.[165]
[165]BP Refinery Pty Ltd v Hastings Shire Council (1977) 180 CLR 266, 283; Codelfa Constructions Pty Ltd v State Rail Authority(NSW) (1982) 149 CLR 337.

Accordingly, the Owner’s contention that the decision of the Tribunal under review should be affirmed on the alternative basis that the Builder has breached s 8 of the DBC Act and s 11 of the Building Contract because it constructed a house that did not comply with the First Plan is unsustainable and should fail.

Overall conclusion

Save in relation to the Tribunal’s decision as to non-compliant placement of scoria (Question 6(e) Ground 6(e)) no error has been shown to exist in the Tribunal’s Reasons or in relation to its decisions dated 3 November 2013 [Order 6] and 18 March 2014 [Order 1] and 1 April 2014 [Order 1].

Further, in relation to the Tribunal’s error in concluding the placement of scoria by the Builder breached the BCA, as explained above, that error is ultimately of no consequence because the Tribunal correctly found that other breaches by the Builder were causative of the slab’s unacceptable movement and consequent distress to the dwelling.

Summary of Conclusions

For the above reasons:

Questions 1 and 2 (Grounds 1 and 2)

I am not persuaded that the Tribunal has erred in law in finding that “builder’s fill” was brought onto the site and placed under the slab. In my view the Tribunal had an adequate evidentiary basis for these findings, and such findings were not plainly wrong or unreasonable.

Further, however, in my view it is of no moment whether the fill under the unstable slab was imported onto the site by the Builder. Even absent the Tribunal’s findings in relation to this issue, the Tribunal’s ultimate decision attributing responsibility for the damage to the subject dwelling to the Builder appears to be devoid of error because there is no dispute that the Builder was liable to ensure that the design of the foundations for the house were adequate and the Builder was similarly liable for the construction of the foundation system and the footings and slab placed thereon.

On appeal there is no contest as to the unacceptable movement experienced by the slab and the extent of resultant damage to the house. Furthermore, given that the Tribunal did not find that ingress of water via the scoria layer caused any damage, the sole cause of distress to the house was inadequate compaction of the fill beneath the slab resulting in unacceptable movement of the slab.

Accordingly, irrespective of whether the Builder imported fill onto site, the Tribunal’s finding that the Builder is liable for the distress to the Owner’s dwelling is without error.

I am not persuaded that the Tribunal has erred in law in concluding that the “builder’s fill” located under the slab was not adequately compacted and the slab had not stabilised. The Tribunal had an adequate evidentiary basis for this finding. It also follows that such finding was not plainly wrong or unreasonable.

Question 3 (Ground 3)

I am unpersuaded that the Tribunal erred in law in making the Ruling, and thereby refusing the Builder’s application to undertake additional testing of foundation materials from under the slab and to file resultant additional expert geotechnical evidence.

Questions 4 and 5 (Grounds 4 and 5)

These grounds were not pressed by the Builder.

Questions 6(a) to (d) (Grounds 6(a) to (d))

These grounds were not pressed by the Builder.

Questions 6(e) (Ground 6(e))

I consider that the Builder was contractually entitled to place a 30 millimetre layer of scoria under the slab and on top of the fill, as a blinding layer. Therefore the Tribunal erred in law in concluding that the Builder was in breach of the BCA in its placement of scoria beneath the slab.

I also consider that, for the reasons I have explained elsewhere, this error on the part of the Tribunal does not vitiate its orders which are sought to be overturned in this appeal.

Questions 7 and 8 (Ground 7)

I am unpersuaded that the Tribunal erred in awarding damages in the sum it did, based upon the cost of demolishing and reconstructing the house and the loss of rental during demolition and reconstruction.

Notice of Contention

The Tribunal did not err in law in finding that the First Plan did not form part of the Building Contract. The Builder was entitled to design and construct the foundation system and slab, as it did, and in accordance with the Second Plan.

The Tribunal did not err in implying into the written Building Contract the term defined by the Tribunal and set out in its Reasons.[166]
[166]Reasons, [25].

Decision

For the above reasons the Builder’s appeals against the Tribunal’s orders referred to in paragraph 3(a), (b) and (c) above are dismissed.

I shall hear the parties, if necessary, as to the form of final orders and as to the costs of this appeal.

Question 1:	Did the Tribunal err in law when it found as a fact that “builders fill” was brought onto the site located under the slab, a finding, which fundamentally underpinned the reasoning of the Tribunal and provided the basis upon which it awarded damages
(a) In the absence of any probative evidence to support such a finding, (b) By drawing an inference which was not reasonably open, (c) When such a finding was plainly wrong and unreasonable in the Wednesbury sense?
Ground of Appeal: 1
The Tribunal erred when it found as a fact that “builders fill” was brought onto the site located under the slab, a finding, which fundamentally underpinned the reasoning of the Tribunal and provided the basis upon which it awarded damages (reasons [74], [89], [135]–[137], [149], [182], [206], [210]).
Question 2:	Did the Tribunal err in law when having found there was “builders fill” brought onto the site located under the slab it found that more than six years later such fill was not compacted, causing the slab to fail:
(a) In the absence of any probative evidence to support such a finding, (b) Drawing or relying upon an inference which was not reasonably open, (c) When such a finding was plainly wrong and unreasonable in the Wednesbury sense?
Ground of Appeal: 2
The Tribunal erred when having found there was “builders fill” brought onto the site located under the slab it found that more than six years later such fill was not compacted, causing the slab to fail.
Question 3:	Whether in making Order 6 of the 3 December 2013 orders the Tribunal:
(a) Failed to comply with its obligation under s.97 of the Act to act fairly and in accordance with the substantial merits of the case, (b) Failed to comply with its obligations under s.98(1)(a) of the Act to afford the plaintiff natural justice, (c) Failed to comply with its obligations under s.102(1)(a) and (b) of the Act to allow the plaintiff a reasonable opportunity to call or give evidence.
Ground of Appeal: 3
The Tribunal acted contrary to the hearing rule of natural justice when on 3 December 2013 it refused an application by Metricon to drill an exploratory hole through the slab in circumstances where it nevertheless ordered a further inspection of the house, including by experts to take place during what was otherwise a lengthy adjournment in the part heard proceeding.
Question 4:	Was the finding of defective workmanship by the builder in preparing the footing and constructing the slab causing it to move irregularly [207] a finding made contrary to law being a finding:
(a) Made in the absence of any probative evidence to support it, (b) That was plainly wrong or unreasonable in the Wednesbury sense?
Ground of Appeal: 4
The finding of defective workmanship by the builder in preparing the footing and constructing the slab causing it to move irregularly [207] was a finding made contrary to law.
Question 5:	Did the Tribunal err in law when having found that “builders fill” had not been compacted [74], [145] and that the slab was founded on it, the Tribunal concluded that more than six years later, the slab had not stabilised and that any stabilisation of the soil would be at some indeterminate time in the future [70], [218], such a finding being plainly wrong or unreasonable in the Wednesbury sense?
Ground of Appeal: 5
The Tribunal erred in law when having found that "builders fill" had not been compacted [74], [145] and that the slab was founded on it, the Tribunal concluded that more than six years later, the slab had not stabilised and that any stabilisation of the soil would be at some indeterminate time in the future.
Question 6:	When concluding that the slab had not stabilised and that any stabilisation of the soil would be at some time in the future [70], [218], did the Tribunal err in law by:
(a) Failing to take into account relevant expert evidence of “edge heave” and “heave recovery” leading it to make an erroneous finding which was plainly wrong or unreasonable in the Wednesbury sense, (b) Failing to take into account relevant survey evidence being the Wilson 2013 survey which showed the level of the slab to be the same level as survey by Wilson in 2006 [45], (c) Failing to take into account relevant evidence as to elevated moisture levels, (d) Basing such a finding upon the proposition that the slab was founded on “builders fill”, itself a finding arrived at due to an error of law as identified in paragraph 1, (e) When having regard to the placement of scoria [153], a material of the class to which the structural engineering drawing referred and which on the evidence is commonly and routinely used for such purposes, the Tribunal irrelevantly and contrary to the drawing, the contract and AS 2870 incorporated into the contract, purported to apply the BCA as the basis of a breach of warranty?
Ground of Appeal: 6
When concluding that the slab had not stabilised and that any stabilisation of the soil would be at some time in the future [70], [218], the Tribunal erred in law by:
(a) Failing to take into account relevant expert evidence of “edge heave” and “heave recovery” leading it to make an erroneous finding which was plainly wrong or unreasonable in the Wednesbury sense, (b) Failing to take into account relevant survey evidence being the Wilson 2013 survey which showed the level of the slab to be the same level as survey by Wilson in 2006 [45], (c) Failing to take into account relevant evidence as to elevated moisture levels, (d) Basing such a finding upon the proposition that the slab was founded on "builders fill", itself a finding arrived at due to an error of law as identified in paragraph 1, (e) When having regard to the placement of scoria [153], a material of the class to which the structural engineering drawing referred and which on the evidence is commonly and routinely used for such purposes, the Tribunal irrelevantly and contrary to the drawing, the contract and AS 2870 incorporated into the contract, purported to apply the BCA as the basis of a breach of warranty.
Question 7:	Having found that despite its defects, the house which was a rental property could have been rented by M Hooper [238] did the Tribunal err in law when it proceeded to award damages of $264,794[4] based upon an assumption of demolition and reconstruction and $15,600 based upon an assumption of lost rental during demolition and reconstruction and was such an award of damages:
(a) An award which was plainly wrong or unreasonable in the Wednesbury sense, (b) An award which resulted from the misapplication of the decision of the High Court in Belgrove v Eldridge [1954] HCA 36 [sic] to which the tribunal referred?
Ground of Appeal: 7 [Applicable to Questions 7 and 8]
The Tribunal erred in law when it proceeded to award damages of $264,794 based upon an assumption of demolition and reconstruction and $15,600 based upon an assumption of lost rental during demolition and reconstruction.
Question 8:	Having regard to the finding as to the suitability of the property for occupation and having regard to the evidence of actual manifest damage and in the absence of any evidence as to the additional costs associated with ongoing maintenance was the award of damages based on the assumed premise of demolition and reconstruction plainly wrong or unreasonable in the Wednesbury sense?
Ground of Appeal: 7 [Applicable to Questions 7 and 8]
The Tribunal erred in law when it proceeded to award damages of $264,794 based upon an assumption of demolition and reconstruction and $15,600 based upon an assumption of lost rental during demolition and reconstruction.

[2015] VSC 110

26 March 2015