Owners Corporation SP 77788 v VK Buildings P/L - [2011] NSWDC 91

District Court

New South Wales

Medium Neutral Citation: Owners Corporation SP 77788 v VK Buildings P/L [2011] NSWDC 91
Hearing dates: 28, 29 July, 1, 2, 3, 4 and 5 August 2011
Decision date: 12 August 2011
Jurisdiction: Civil
Before: Levy SC DCJ
Decision:
1.Verdict and judgment for the plaintiff in the sum of $23,495.10 including pre-judgment interest;
2.I will hear the parties on the question of costs if the parties cannot agree on the appropriate order for costs;
3.The exhibits may be returned;
4.Liberty to apply on 7 days notice if further orders are required.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords: BUILDING CONTRACTS - claim by owners' corporation against builder seeking to recover costs of rectification works covered by statutory warranty under Pt 2C of the Home Building Act 1989
Legislation Cited: Building Code of Australia
Civil Liability Act 2002, s 5E
Development Control Plan 40
Environmental Planning and Assessment Act 1979, s 121B & s 121H
Home Building Act 1989, Pt 2C
Uniform Civil Procedure Rules 2005, r 14.2(1), Sch 5, cl 5(c)
Category: Principal judgment
Parties: Owners Corporation SP 77788 (Plaintiff)
VK Buildings Pty Limited (Defendant)
Representation: Mr R Zikmann (Plaintiff)
Mr G Karagavrilidis, by leave (Defendant)
Gary I Castle & Partners (Plaintiff)
Mr G Karagavrilidis, by leave (Defendant)

File Number(s): 2010/235839

Judgment

Table of Contents

Nature of case

[1] - [3]

Procedural background

[4] - [10]

Issues

[11] - [12]

Evidence overview

[13] -[23]

Facts

[24] - [47]

Decision on Issue 1 - Relocation of garbage room

[48] - [51]

Decision on Issue 2 - Rectification of stairs

[52] - [60]

Decision on Issue 3 - Intercom security system

[61]

Decision on Issue 4 - Gutters, flashing, downpipes

[62] - [71]

Decision on Issue 5 - Consultant's fees

[72] - [75]

Decision on Issue 6 - Legal, insurance expenses

[76] - [78]

Decision on Issues 7, 8 and 9 - Tiling

[79] - [168]

Decision on Issue 10 - Repairs to garage roof

[169] - [181]

Decision on Issue 11 - Rectification of guttering

[182] - [194]

Decision on Issue 12 - Install fire collars to pipes

[195] - [223]

Decision on Issue 13 - Garage driveway wall

[224] - [242]

Decision on Issue 14 - Garage retaining wall

[243] - [251]

Decision on Issue 15 - Remedial brickwork

[251] - [256]

Decision on Issue 16 - Supervisory fees

[257] - [261]

Summary

[262] - [263]

Interest

[264]

Disposition

[265]

Costs

[266]

Orders

[267]

Nature of case

This is a claim framed alternatively in contract and in negligence brought by strata plan Owners Corporation SP 77788 ["the owners"] seeking to recover from VK Buildings Pty Ltd ["the builder"], the costs of rectification of alleged faulty building works involving a block of home units at 317- 321 Mona Vale Road, St Ives ["the premises"]. It was conceded that the proceedings were subject to the provisions of the Civil Liability Act 2002 [" CL Act "].

The owners sought damages for the cost of rectification works for claimed breaches of statutory warranties pursuant to Part 2C of the Home Building Act 1989 [" HB Act "]. The plaintiff claimed the building works did not comply with the requirements of the Building Code of Australia ["BCA"] and certain conditions of the Development Approval. By a further amended statement of claim filed on 15 July 2011, the plaintiff quantified its claim in the sum of $204,352.65. At the hearing, without objection, the plaintiff's claimed quantum was further amended, first in the revised sum of $256,752.65, and later in the further revised sum of $260,708.90. The builder disputed both liability and quantum.

The owners were represented by solicitors and by counsel. By leave, the defendant was represented by Mr Gavil Karagavrilidis, a former director of the defendant company. The owners raised no objection to that course.

Procedural background

At the 31 May 2011 call over, the case was allocated a hearing date for 28 July 2011 with a 1-day estimate. That was an unusual estimate for a multi-item disputed building case where it must have been anticipated that evidence on technical matters would at the least be tested.

Despite the allocated 1-day estimate, the case proceeded over the course of 7 days. The 1-day estimate for the case had been provided by the plaintiff at a call over on 31 May 2011. That estimate was apparently put forward on the assumption that the defendant would not be permitted to call evidence without the leave of the court. This was because at the call over, the Judicial Registrar had made an order to that effect. At that call over, an order was also made withdrawing Mr Karagavrilidis' leave to appear for the defendant.

At that time the plaintiff must have known that it was itself intending to seek further amendments to the statement of claim with regard to the amount to be claimed from the defendant. This was because the plaintiff was pursuing revised or further costing estimates for its damages claim. This was ultimately borne out when, on 15 July 2011, the plaintiff successfully applied to a Judge of this court for leave to file its further amended statement of claim. That order was made in the absence of the defendant. The notation on the court file on that occasion, to the effect the defendant was represented by an agent for the purposes of the plaintiff's listing request for that order to be made, was conceded by the plaintiff to be incorrect.

From at least 15 July 2011, due to the amendment of the claim made in the absence of the defendant, it could not have been safely assumed by the plaintiff that the defendant would not be permitted to be represented by Mr Karagavrilidis at the hearing, or that the defendant would not be given leave to call factual evidence in it's defence. I gave leave to the plaintiff to further amend its claim for damages because the defendant raised no objection and was ready to proceed, subject to Mr Karagavrilidis being given leave to represent the defendant. The plaintiff demurred to that course.

The pleadings evolved after the call-over. The initial defence was filed on 13 August 2010. A further defence was filed on 18 November 2010. the defendant purported to file an amended defence on 10 May 2011. At the call over on 31 May 2011 the Judicial Registrar made an order to the effect that the defendant was not permitted to rely on that amended defence. Given the manner in which the case and the amount claimed had evolved, in the interests of expediency and justice between the parties I made an order dispensing with the filing of a further amended defence: Uniform Civil Procedure Rules 2005 ["UCPR'] r14.2(1). I made that order because it was plain that the parties were seized of the relevant issues and this called for a practical course when the defendant was not legally represented, and to require the filing of a further formal document would probably have caused undue delay.

Although the defendant did not have legal representation, and that fact may have had some influence on the length of the case, the effect of such a factor was difficult to assess. In any event, I consider that factor was to a significant degree counter-balanced by the fact that Mr Karagavrilidis was able to assist with the consideration of the issues because he had an intimate, detailed technical and working knowledge of the facts, issues and circumstances of the case.

Whilst it would obviously have been more desirable for the defendant to have had legal representation in a case of this kind, the absence of such representation was explained as being due to the defendant's impecuniosity. In fact, in order to pursue these proceedings, the plaintiff had taken steps to prevent the defendant company from going into voluntary liquidation. Whilst it was unfortunate that the case occupied 7 days of hearing, this was substantially due to the subject matter and the inherent detail of the matters in dispute,

Issues

There were a total of 16 substantive issues identified by the plaintiff as calling for determination. Those issues are summarised as follows:

Issue 1 : Relocation of the garbage room in the premises to comply with the approved development application, in the claimed sum of $5764. My findings on this issue are set out between paragraphs [48] to [51] of these reasons;

Issue 2 : Rectification of the common stairs in the premises in order to comply with the Building Code of Australia, in the claimed amount of $2530. My findings on this issue are set out between paragraphs [52] to [60] of these reasons;

Issue 3 Completion of the installation of an intercom security system, in the claimed amount of $4151.40. My findings on this issue are set out at paragraph [61] of these reasons;

Issue 4 : Repairs to gutters, flashings and downpipes, in the initially claimed amount of $2310 later reduced to $1710. My findings on this issue are set out between paragraphs [62] to [71] of these reasons;

Issue 5 : Consultants fees for pre-litigation inspections and reports, in the claimed amount of $3916. My findings on this issue are set out between paragraphs [72] to [75] of these reasons;

Issue 6 : Pre-litigation legal, insurance and complaints expenses, in the initially claimed amount of $1000. My findings on this issue are set out between paragraphs [76] to [78] of these reasons;

Issue 7 : Waterproofing and retiling of the Unit 4 courtyard, in the initially claimed amount of $17,400. My findings on this issue are set out between paragraphs [79] to [169] of these reasons;

Issue 8 : Waterproofing and retiling of the Unit 5 courtyard, in the initially claimed amount of $32,770. My findings on this issue are set out between paragraphs [79] to [169] of these reasons;

Issue 9 : Waterproofing and retiling of the Unit 8 courtyard, in the initially claimed amount of $44,600. My findings on this issue are set out between paragraphs [79] to [168] of these reasons;

Issue 10 : Repairs to the garage roof to eliminate water ingress, in the claimed amount of $55,000. My findings on this issue are set out between paragraphs [169] to [181] of these reasons;

Issue 11 : Rectification of guttering in the claimed amount of $2131.25. My findings on this issue are set out between paragraphs [182] to [194] of these reasons;

Issue 12 : Costs of installing fire collars on pipe work, in the claimed amount of $17,600. My findings on this issue are set out between paragraphs [195] to [223] of these reasons;

Issue 13: Repair costs for cracking in the retaining wall of the driveway to the premises, in the initially claimed amount of $3602.50. My findings on this issue are set out between paragraphs [224] to [242] of these reasons;

Issue 14 : Repairs to the garage retaining wall, in the initially claimed amount of $2543.75 later increased to $6500. My findings on this issue are set out between paragraphs [243] to [251] of these reasons;

Issue 15 : Remedial brickwork, in the claimed amount of $893.75. My findings on this issue are set out between paragraphs [252] to [256] of these reasons;

Issue 16 : Expenses associated with the tender for the works and for the supervision of the execution of the works, in the claimed amount of $8140. My findings on this issue are set out between paragraphs [257] to [261] of these reasons;

As a result of a revision of the costing evidence the plaintiff sought an additional $54,000 adjustment with respect to Issues 7, 8 and 9, to bring its total claim against the defendant to a revised claim of $256,752.65. That sum was further revised by an additional costing of Issue 14 by a further $3956.25 to bring the further revised total amount claimed to $260,708.90. That was the ultimate sum claimed by the plaintiff after deducting an adjustment for an abandonment of a claim for $1600 in respect of Issues 6 ($600) and 11 ($1000).

Evidence overview

The owners relied upon affidavit evidence from Mr Michael Judge, a resident of the premises and secretary/treasurer of the owners' corporation. Mr Judge's first affidavit sworn on 30 March 2011: Exhibit "B". That affidavit set out something of the history of the matter and also annexed relevant documents and reports. Mr Judge's second affidavit, which was sworn on 5 July 2011, set out the plaintiff's then claim for revised costings: Exhibit "C".

The plaintiff relied upon the evidence of an expert engineer, Mr Anthony Fowler. The plaintiff also relied upon two fee proposals for quantification of the rectification claim. Mr Fowler's opinions and estimates were based on reports from RHM Consultants Pty Ltd, respectively dated May 2010 and February 2011: Exhibits "D" and "E". The content of those reports led to Mr Fowler preparing his report dated 31 March 2011: Exhibit "F". For the purposes of preparing his report Mr Fowler inspected the premises on 18 March 2011.

One of the fee proposals relied upon by the plaintiff was from Taylor's Building Solutions in the sum of $236,141: Exhibit "G". The other fee proposal relied upon by the plaintiff was that of Sun-Greenway Builders, in the sum of $249,329.98: Exhibit "H". Mr Fowler stated that the amounts of those estimates indicated to him that his own estimates were conservative. On reviewing the costing methodologies and Mr Fowler's opinions the plaintiff ultimately adjusted and revised his estimates. The individual items will be separately analysed.

The defendant challenged the assumptions which founded the above quantification evidence, and argued that the work claimed by the plaintiff as necessary rectification, was to a substantial extent in fact not required. The defendant claimed that the rectification costs sought by the plaintiff were unreasonable and excessive for the work that was claimed. In that regard, the defendant challenged the opinions of Mr Fowler on the issues of alleged faulty workmanship and on the amount suggested for rectification costs.

The evidence of Mr Judge comprised affidavit and oral evidence. Mr Judge's affidavit, with the attached documentary exhibits number MJ1 - MJ36, traced the history of the development of the premises leading to his own purchase of Unit 8 from the mortgagee in possession. In these proceedings, it is not necessary to detail the circumstances by which the mortgagee came to be in possession of the premises.

Mr Judge's affidavit attached the relevant documentation that led to the evolution of the dispute between the parties. Mr Judge's evidence was not in substantial contention as the events which led to the proceedings had occurred before he had moved into the premises and before he had assumed his role as secretary/treasurer of the plaintiff corporation. Relevantly, Mr Judge had no personal knowledge of the measurements and construction methods in question in these proceedings. The plaintiff relied upon opinion evidence to prove its case.

The general approach taken by Mr Fowler was to review a series of inspection reports that had preceded his involvement in the case in order to provide the background to his inspection on 18 March 2011. His report dated 31 March 2011 was prepared on that basis: Exhibit "F". Mr Fowler gave evidence in chief as well as in reply. The evidence in reply arose from the introduction of evidence by Mr Karagavrilidis concerning an element of the claim concerning fire collar devices. Where it is relevant to do so, I will analyse Mr Fowler's evidence according to the discrete areas of each of the components of the plaintiff's claim.

Mr Karagavrilidis' evidence dealt with factual matters of assumption which were relevant to the project as a whole, and to the basis of Mr Fowler's criticisms of the builder's work. I will analyse Mr Karagavrilidis' evidence in a similar manner to that which I have indicated in respect of Mr Fowler's evidence.

The parties were at odds as to whether the works in question were compliant with the BCA, the development approval, and whether the works were carried out in a workmanlike manner. The effect of Mr Fowler's criticisms was that the works were non-compliant whereas Mr Karagavrilidis maintained that they were. Those issues fall to be examined on an item-by-item basis.

The plaintiff called its solicitor, Mr Gary Castle, to give evidence of a reply he had sent in response to an open offer of settlement that had been made by the defendant. In my view nothing turned on the reply as the offer was not accepted, and there was no evidence to contradict Mr Karagavrilidis' evidence that he did not personally access email correspondence, which was the means by which the reply had been sent.

In my view no relevant credit issues arose from the evidence or called for adverse comment. Instead, I consider that the evidence had to be analysed according to its inherent content and reliability.

Facts

It was clear from the evidence and from his questions that Mr Karagavrilidis is a skilled and astute builder of many years experience. It was clear that he was the guiding mind of the defendant company. In 2003 the defendant, under its former name Bradah Holdings Pty Ltd, took on the project of building a block of home units at the site in question at Mona Vale Road, St Ives. The project was within the regulatory purview of the Ku-ring-gai Council. Bradah Holdings Pty Ltd subsequently underwent a name change to VK Buildings Pty Ltd.

On 17 February 2003 Ku-ring-gai Council issued a development consent for the project: MJ3(a). The evidence was that the development in question was to be certified by an accredited private certifying surveyor. In particular, par 155 of the development consent provided for the basement clearance height of the car park to allow access and egress for waste collection vehicles. That issue was not directly expressed in measurement terms, but was stated to be as follows:

"...

(c) The standard Council waste collection truck can enter the basement carpark, access the waste collection bay and egress the basement carpark with the use of one reverse movement only."

Subsequently, the defendant applied to modify the development approval including by seeking approval for the installation of a security gate. On 16 December 2004 the Council determined an approval of modifications but not for the proposed gate. The defendant tendered Exhibit "1", which was the letter advising of the modified approval. The Schedule to that approval then relevantly provided for a new condition as follows:

"3 ...

In order to allow unrestricted access for Council waste collection vehicles to the basement storage area no doors or gates shall be provided in the access driveways to the basement carpark which would prevent this service."

The matter of the height restriction for the entrance to the car park and the garbage bin areas was in significant contention and the source of the height restriction for the basement car park was at first difficult to discern. I am grateful to counsel for the plaintiff for working through the labyrinth of Council correspondence and the regulatory framework in order to identify that clearance height as being 2.44m.

That provision is to be found by a tracing exercise that commenced at par 155 of the development consent dated 17 February 2003, which referred to the Council's Development Control Plan 40 code at Appendix C.2, which provided a minimum clearance of 2.44m at the full width of the driveway as well as over the internal distance from that point to the waste and recycling storage facility collection points in the premises. The requirement was for a Council waste collection vehicle to be driven over the course of that area and to permit the vehicle to be manoeuvred into a 3-point turn. Reference was also made to the provisions of Australian Standard AS 2890 for entrance and exit thresholds, and condition 108 of the 18 October 2006 s 96 Application assessment report which referred to the height of the council's waste collection trucks being 2.44m; thus requiring a minimum clearance of 2.45m.

Some confusion remained as to vehicle manoeuvrability requirements of the approval. A single vehicle movement was contemplated by par 155(c) compared to a 3-point turn manoeuvre which was contemplated by Appendix C.2 of DCP 40.

Nevertheless, I am satisfied from that evidence that the basement entry and car park area of the development in question was governed by the need to provide a minimum 2.44m clearance height.

On 12 October 2006 the private certifier, Mr Peter Boyce, issued an inspection certificate certifying that the works at the site had been completed according to the Development Approval and the BCA. The defendant argued that this was evidence of compliance with the height requirements.

On 21 December 2006 the Council issued a determination dated 19 December 2006 refusing the builder's application to vary the previously issued consent. The schedule to that determination relevantly included the following term:

"1. The vehicular access to the basement car parking facilities does not comply with Council's Development Control Plan No. 40 - Waste Management in that a waste collection vehicle cannot enter and exit the basement area and does not allow unimpeded access to the basement area."

At around the end of 2006 and the beginning of 2007, for a variety of reasons that are not necessary to explore, the builder was having difficulties with its financier, with neighbours at the premises, and with the Council.

On 17 January 2007 the defendant, and therefore Mr Karagavrilidis, was excluded from the premises and from the site at the behest of the mortgagee in possession, Donovan Oates Hannaford Mortgage Corporation Limited.

That course of events proved to be of significant detriment to Mr Karagavrilidis, who was the registered proprietor of the units within the development. It seems that the financier exercised a right of entry and possession, and commenced a programme of sales of the units within the development. Those actions caused Mr Karagavrilidis to be significantly aggrieved. It was not relevant to the issues of the present case to examine all of the circumstances of those events. Mr Karagavrilidis is apparently pursuing another course in that regard, separate from these proceedings.

On 23 February 2007, Mr and Mrs Judge received the benefit of a transfer of a unit at the premises. The documentation listed them as transferees. The transferor's name was noted to be Mr Gavril Karagavrilidis, the registered proprietor. Donovan Oates Hannaford Mortgage Corporation Limited was listed as the transferor mortgagee acting pursuant to a power of sale.

Mr Karagavrilidis claimed that those events, and the subsequent similar sales of other units in the development of which he was the proprietor, involved an infringement of his rights as registered proprietor. These proceedings are not concerned with those complaints by Mr Karagavrilidis, as he has acknowledged.

The owners acknowledged that at some stage after the builder had been excluded from the site, the owners or an agent acting on behalf of the mortgagee in possession arranged for a security gate to be placed and fitted at the entrance to the basement car park. This necessitated the installation of an adjacent intercom. The gate structure incorporated an overhead structure within the basement car park area which was installed at a height less than 2.44m when measured from the car park slab surface. Mr Karagavrilidis described that gate as having incorporated within it a plastic screen. At some stage after its construction, the presence of the gate had been drawn to the attention of the Council. This appears to have triggered further action on the part of the Council to order rectification work in the car park area in order to achieve a height clearance of 2.44m.

On 28 August 2007 the Council wrote to the owners advising that " several non-compliant issues, which are contrary to Development Consent 659/02, have been brought to the attention of Council ". On the same day, the Council issue an order pursuant to s 121B and s 121H of the Environmental Planning and Assessment Act 1979. Those orders, which were numbered 1 - 7, were in the following terms:

" The terms of the Order

1.Re-construct the vehicular entry ramp to the basement, allowing for a minimum clearance of 2.44 metres, in accordance with Appendix C.2 of Development Control Plan (DCP) 40 - Waste Management^ as required by Condition 118 a) & d) of Development Consent No.659/02, so that waste collection vehicles may enter & exit the basement for the collection of waste and recycling bins.

2.Re-locate the service pipes, attached to the ceiling of the basement, allowing for a minimum clearance of 2.44 metres, in accordance with Appendix. C.2 of Development Control Plan (DCP) 40 - Waste Management, as required by Condition 118 a) & d) of Development Consent No.659/02, so that waste management vehicles may enter & exit the basement for the collection of waste and recycling bins.

3.Re-locate the garbage & recycling room, which is currently located at the rear of the basement carpark, to the location approved under Development Consent No.659/02.

4.Remove the security gate, which has been installed at the vehicular entry point to the basement carpark, contrary to Development Consent No.659/02.

5.Re-construct the stairways, which access the basement carpark to comply with the Building Code of Australia (BCA).

6.Provide balustrades to the threshold ramps, which are located at the unit entry points, to comply with AS1428.1 - 2001, Design for Access and Mobility.

7.Re-instate the redundant driveway laybacks to kerb and gutter, along the Mona Vale Road frontage, as required by condition no. 58 of Development Consent No.659/02."

The 28 August 2007 letter from the Council also gave particularised reasons for those orders as follows:

" Reason(s) for the Order

1.The vehicular entry ramp to the basement, has not been constructed in accordance with Appendix C of Development Control Plan (DCP) 40 - Waste Management, as required by Condition 118 a) & d) of Development Consent No.659/02.

2.The vehicular entry ramp as constructed does not have a minimum clearance of 2.44 metres, in accordance with Appendix C.2 of Development Control Plan (DCP) 40 - Waste Management, as required by Condition 118 a) & d) of Development Consent No.659/02, to allow for waste collection vehicles to enter & exit the basement, for the collection of waste and recycling bins,

3.The service pipes, attached to the ceiling of the basement, do not have a minimum clearance of 2.44 metres, in accordance with Appendix C.2 of Development Control Plan (DCP) 40 - Waste Management, as required by Condition 118 a) & d) of Development Consent No.659/02, to allow for waste collection vehicles to enter & exit the basement, for the collection of waste and recycling bins.

4.The service pipes, attached to the ceiling of the basement, do not allow for waste management vehicles to enter & exit the basement in a forward direction.

5.The garbage & recycling room, which is currently located at the rear of the basement carpark, is not in the location approved under Development Consent No.659/02.

6.The garbage & recycling room, which is currently located at the rear of the basement carpark does not comply with requirements of Appendix C.1 of Development Control Plan (DCP) 40 - Waste Management.

7.The security gate, which has been installed at the vehicular entry point to the basement carpark, was refused under a Section 96 modification to Development Consent No.659/02.

8.The security gate, which has been installed at the vehicular entry point to the basement carpark, does not have a minimum clearance of 2.44 metres, in accordance with Appendix C.2 of Development Control Plan (DCP) 40 - Waste Management, as required by Condition 118 a) & d) of Development Consent No.659/02.

9.The stairways, which access the basement carpark do not comply with the Building Code of Australia (BCA), in that they have inconsistent tread and riser dimensions.

10.The stairways, which access the basement carpark do not comply with the Building Code of Australia (BCA), in that some of the treads and risers do not comply with the minimum and maximum dimensions."

Mr Karagavrilidis claimed that at the time he, that is the builder, was excluded from the premises by the mortgagee in possession, the building was compliant with the Development Consent and with the BCA. He disputed that the clearance height at the entrance to the basement car park or even the area within the basement was less than 2.44m. There was evidence within the documentation as to the importance of this height clearance for access and egress by Council waste collection vehicles.

Clearly, the parties were at difference as to whether there was compliance with the clearance height requirement of the car park entry and basement area at 2.44m. On the one hand Mr Karagavrilidis was adamant he had measured the height of the structure he had built and he claimed that it was compliant. This was supported to a degree by the Compliance Certificate of Mr Boyce dated 12 October 2006. On the other hand, the Council measurements and correspondence, the measurements taken by RHM Consultants Pty Ltd and Mr Fowler indicated that there was non-compliance with the 2.44m height requirement.

In weighing this dispute I have concluded that I should prefer and accept the objective evidence of the Council's measurements which indicate non-compliance in comparison to Mr Karagavrilidis' subjective evidence on this issue as it is improbable that council certifying personnel and two building consultants would have made erroneous measurements on this issue. I find that the 2006 council correspondence revealed the areas in question ranged in height between 2.49m to 2.4m and therefore did not comply with the Council's DCP 40 code: Exhibit "B"; MJ3(g), p 79; MJA 8, pp 101-102.

It appears that on various dates, which are not necessary to identify, between 17 January 2007 and the commencement of the hearing, the builder attended at the premises in order to carry out some requested rectification works. Notwithstanding those events, several rectification issues of contention remained outstanding, and in dispute between the parties.

In the lead-up to the trial, the owners obtained a number of expert reports concerning alleged building defects. These reports were as follows:

(a) RHM Consultants Pty Ltd report dated 18 February 2008: MJ15;

(b) RHM Consultants Pty Ltd report dated June 2008: MJ23;

(d) RHM Consultants Pty Ltd report dated May 2010: MJ30; Exhibit "E";

(e) RHM Consultants Pty Ltd report dated February 2011: Exhibit "D";

(f) Mr Anthony Fowler, report dated 31 March 2011: Exhibit "F".

In his evidence Mr Karagavrilidis recounted what I shall describe as difficulties in the form of harassment, interference and other problems he claimed to have experienced with neighbours and with the Ku-ring-gai Council once the construction works for the premises were underway at the site. He also adverted to some instances of trespassing and vandalism that had inconvenienced and hindered his works at the site. Those matters were not facts in substantial issue in these proceedings, and it is therefore not necessary for me to delve into the detail of those matters, other than to record Mr Karagavrilidis' account of those difficulties as background matters to the dispute between the parties.

I now turn to a consideration of the 16 individual items of dispute that are in issue and that call for decision in these proceedings.

Decision on Issue 1 - Relocation of garbage room

The plaintiff made a claim of $5764 for the cost of relocating the garbage bin room that was situated underneath the unit block into a new position. The rationale of that claim was that the ground to ceiling clearance height of the entrance to the car park and the under-slab car park area itself was non-compliant with the development approval. It was determined that it would be cheaper to relocate the garbage collection area to another portion of the premises than to undertake very substantial demolition and rebuilding.

I have accepted that the defendant failed to ensure a height clearance of a minimum of 2.44m and it therefore follows that the plaintiff should receive compensation for the cost of relocation of the garbage bin room or waste collection area to a position hat was acceptable to the Council.

Mr Karagavrilidis disputed the claimed cost of $5764. Instead he argued that in the event it was found that the remedial works were in fact necessary, as an experienced builder accustomed to carrying out building work to a fair and reasonable cost budget, a proper alternate quantum sum would have been of the order of $1500.

On the question of quantum, having seen the photographs of the works carried out to provide an alternative waste collection area, and having heard the evidence of Mr Fowler, I am satisfied that the amount of $5764 paid by the plaintiff has been shown to be fair and reasonable. I prefer that evidence to that of Mr Karagavrilidis on this issue as it seemed to me his assessment of $1500 seemed to be an arbitrary underassessment and seemed to have been based on an assumption that a builder would do the work himself without a profit margin. I infer from the fact that the plaintiff corporation expended the sum of $5764, that the reasonableness of that sum was the subject of scrutiny and I prefer that costing evidence to that provided by Mr Karagavrilidis on this issue.

Decision on Issue 2 - Rectification of common stairs

The plaintiff made a claim of $2530 for the cost of rectifying the allegedly defective treads, risers and carpet on the common stairs within the premises. The claim was based upon the proposition that these items were not compliant with the requirements of the BCA.

The evidence for the claim was the Council determination already cited, and the engineering reports. Item CW1.2 of Exhibit "D", which comprised the RHM report dated February 2011, stated that the rectification work of $1441 and the recarpeting costs of $1089 were reasonable having regard to the work that was required to fix the uneven treads and risers in the internal stairwell. Mr Fowler's report dated 31 March 2011 includes photographs 79 and 80 of the area concerned, with the timber rectification battens in place.

In contrast, Mr Karagavrilidis maintained that the risers and treads of the stairs were of the correct width, height and were fitted with the correct fire rated carpet. He rejected the assertion that the treads and risers were of the incorrect dimensions.

The evidence of Mr Judge did not relevantly contribute to an understanding of why the stairs had been modified. I accept his evidence in that regard.

In my view it was not reasonably possible to interpret photograph 90 that was attached to Mr Fowler's report as to showing unevenness of the treads and risers. Mr Karagavrilidis stated that the work was completed to within a tolerance of a few millimetres as was required by the BCA. He also said that the treads were cleaned smooth and were left even before carpeting.

Notwithstanding Mr Karagavrilidis' claim that the internal car park stairs were compliant with the BCA I accept the submission of the plaintiff that the stairs were not compliant. I base that finding on the measurements taken by the Council which resulted in the non-compliance order already cited at paragraph [39] of these reasons. I also base my finding on the 13 February 2008 inspection carried out by RHM Consultants Pty Ltd before the rectification work was carried out: Exhibit "D", p 4.

On the question of quantum for this component Mr Karagavrilidis pointed to the fact that the claimed repair costs were themselves based upon unreasonable propositions, namely that the timber battens which had been affixed to the stairs with dynabolts were themselves in contravention of the fire prevention requirements of the BCA for an enclosed staircase. He argued, that the repair costs that involved such non-compliance were inherently unreasonable because of such non-compliance, and therefore the plaintiff's claim was not reasonably quantified in this respect.

I do not accept Mr Karagavrilidis' criticisms to the effect that the timber battens used for the rectification works contravened the BCA. I base that view on the evidence of Mr Fowler, who stated that the concrete steps provided the required fire separation, and therefore the timber battens, just like timber skirting boards, were used acceptably.

There is one aspect of the plaintiff's quantum claim for the stair rectification that I do not accept. I am not satisfied that it was reasonable to discard the existing carpet to the stairs as it was relatively new and photographs 79 and 80 attached to Mr Fowler's report, Exhibit "F", indicate the flight of stairs was a straight one and not complicated by corners or turns. Accordingly, I reject the claim for re-carpeting costs of $1089, but I allow the other costs of rectification of the stairs at $1441 as being fair and reasonable.

Decision on Issue 3 - Installation of intercom

The plaintiff made a claim of $4151.40 for the cost of installing a security intercom device at the security gate entrance to the garage area. The reasoning behind this claim was difficult to understand because the only reason for the installation of the intercom device was the fact that the security gate had been installed after the defendant had been excluded from the premises, and the new gate arrangement, which was contrary to the terms of the Council's approval, required the placement of an intercom. It has not been shown that the intercom in question had been part of the building specifications. Accordingly, in my view, the evidence of Mr Karagavrilidis to the effect that the item is not reasonably capable of being made the responsibility of the defendant, should be accepted. The claim for the intercom cost must necessarily be characterised as being unreasonable and I make no allowance in respect of that item.

Decision on Issue 4 - Repairs to gutters, flashing and downpipes

The plaintiff made a claim of $2310 for the cost of repairs to the guttering, flashings and downpipes to part of the roof drainage system of the premises.

The evidence in support of the claim was paragraph 38 of the first affidavit of Mr Judge and the exhibited document MJ29 to that affidavit. When that evidence is examined it is revealed to comprise a quotation from the contractor who carried out the work for the sum of $2310. In the course of argument, the plaintiff reduced this amount by $600 to $1710.

In my view there are inherent difficulties with this component of the plaintiff's claim.

In rejecting this component of the claim, Mr Karagavrilidis stated that the problems with the blocked downpipes and guttering was as a result of failure on the part of the owners' corporation to properly clean and maintain the guttering which was prone to the collection of leaves falling from nearby trees which in turn blocked these structures. There is support for Mr Karagavrilidis' view in the form of the comments contained in the quotations from Gabor's Roof Service dated 4 September 2009. That document was not put forward as opinion evidence as to matters of alignment or poor construction, but rather, on the issue of the cost of repairs.

Mr Karagavrilidis' position was, in part supported by the further evidence of Mr Judge, who confirmed that regular maintenance of the guttering had not commenced until 2008, which was several years after the building had been constructed.

Mr Karagavrilidis rejected the assertions that there was guttering mal-alignment, sagging and poor drainage claims concerning the downpipes. He rejected these items as not being the responsibility of the builder. When Mr Karagavrilidis left the site no pergola had been constructed at the balcony of Unit 5. I infer from the terms of the quotation in question and the evidence of Mr Karagavrilidis that the alignment problems seen in the guttering were due to the fitting of the pergola in close proximity to the guttering at Unit 5.

I accept Mr Karagavrilidis' evidence that there were no problems with the guttering alignment or roof drainage when he left the site. Accordingly, I reject the claim for the cost of repairs to guttering flashings and downpipes of the roof drainage system as these were not the responsibility of the builder.

Instead I find that any problems of drainage were due to subsequent work that was not the responsibility of Mr Karagavrilidis as well as being due to a failure on the part of the owners to carry out appropriate and regular cleaning and maintenance work. In my view it is manifestly unreasonable, based on inspections carried out in 2009 and in 2011, to require the builder to pay for the cost of cleaning gutters that had become blocked with weeds growing from them and which required cleaning as a matter of ordinary home maintenance. This is especially so where there is evidence that other works had been carried out in the vicinity.

I accept Mr Karagavrilidis' evidence that the claimed repairs were not due to faulty workmanship so as to attract liability under the statutory warranty. In my view, there is no evidence reasonably attributing the work referred to in the 30 September 2009 invoice of Gabor Roof Service to faulty workmanship on the part of the builder especially where there has been a passage of significant time since the works had been completed and in the interim, other works had been carried out on, and in the vicinity of the guttering. I am not satisfied that the problems identified with the guttering have been shown to have been caused by faulty workmanship.

I therefore reject the clam for guttering, flashing and downpipes in the claimed amount. I note that in its final submissions, the plaintiff reduced the amount of this component of its claim from $2310 to $1710 to delete the amount that had been claimed for the cleaning of the gutters.

Decision on Issue 5 - Pre-litigation consultant's fees

The plaintiff made a claim of $3916 for the cost of pre-litigation consultant's fees for inspections and reports.

The evidence in support of the claim was MJ16 which was an RHM invoice dated 18 February 2008 in the sum of $3156, which was exhibited to the first affidavit of Mr Judge. It is clear from the invoice that " all available units, internal and external common property " were inspected in a search for defects. In my view that search was part of the continuum of investigatory activity that obviously related to the present litigated claim. It would be artificial to characterise it as a claimable expense in this case, as was sought by the plaintiff. In that regard, this claim is only concerned with common property issues and has no relationship to the units themselves.

Mr Karagavrilidis resisted the reasonableness and attributability of that claim and claimed the contended works were unnecessary, and were not due to alleged faulty workmanship.

In my evaluation of the evidence, the claim for pre-litigation consultant's fees is revealed to be an item of legal costs, and as such, it is not a properly claimed head of damage. In my view, the expenses claimed for this component are more properly characterised as being part of the investigation costs associated with the litigation, and are matters within the province of a costs assessor. As such they are not reasonably claimed against the builder in this case. Furthermore, as the invoice for $3916 makes no differentiation between inspection of the common property and other non-relevant matters to do with the units themselves, I consider it is inappropriate that I undertake an arbitrary apportionment of that sum.

Decision on Issue 6 - Pre-litigation legal, insurance and complaints expenses

The plaintiff initially made a claim of $1000 for the cost of pre-litigation legal expenses associated with insurance issues and complaints. That claim was abandoned in the course of final submissions. For completeness, and because it may have some relevance to costs, I set out my views on this component of the claim.

The evidence in support of the claim was paragraphs 23 and 24 of the first affidavit of Mr Judge, which in turn referred to an invoice from the owners' then solicitors, Bannermans, in the sum of $1235.96: MJ18(a) and (b), which was ultimately settled in the rounded down sum of $1000. Mr Karagavrilidis resisted the reasonableness and attributability of that claim.

In my view, an evaluation of that evidence revealed that this component of the claim is plainly a matter to do with legal costs and not damages. A claim was made for 78 minutes for drafting a letter of demand, and 138 minutes for drafting a letter to the insurer, as well as related professional costs and disbursements. In my view those are matters for the consideration of a costs assessor, and as such, they did not constitute properly claimed damages in these proceedings as they are more properly characterised as being part of the investigation costs associated with the litigation and as such they are not reasonably claimed against the builder in this case. Since the plaintiff ultimately abandoned this component of the claim, I therefore make no allowance on that account.

Decision on Issues 7, 8 and 9 - Tiling and waterproofing of courtyards

The plaintiff makes claims for the cost of rectification of damaged areas of tiling laid to the outside courtyard areas of Units 4, 5 and 8. The further amended statement of claim that was filed on 15 July 2011 identified the sums claimed as being $17,400 for repairs to the courtyard of Unit 4, $32,770 for repairs to Unit 5, and $44,600 for the repairs to the courtyard of Unit 8. These amounts totalled $94,770. At the trial, an additional claim in an amount of $54,000 was added to these claims on account of revised costs estimates. This produced a total revised claim for these items in the amount of $148,770 in respect of the tiling and waterproofing claims.

The basis of these claims is that in these respective courtyards, on inspection, tiles were found to be drummy, some were found to have lifted, others were cracked, and others were revealed to have been allegedly laid improperly. The plaintiff called evidence from Mr Fowler to that effect. Mr Fowler also said that because of these problems, the end result has been a probable failure of the waterproofing membrane located underneath the tiled areas and over the underlying concrete slab, which provides the ceiling for the basement and car park areas below. The argument as to probable failure arose because there had been no expert inspection of the actual underlying waterproof membrane, as that would have involved excavation or demolition.

Mr Fowler's opinion concerning rectification was that all of the tiled areas of the three courtyards needed to be demolished, the water proofing membrane needed to be repaired or replaced, and new tiles had to be laid after the tile bed areas had been suitably prepared and screeded to allow the tiles to be properly laid.

It becomes necessary to define the areas of the dispute. Mr Fowler's opinion can be divided into the following two categories.

First, there are identified areas where there was inadequate substrate support for parts of the tiled courtyard areas where the tiles had been laid in a fashion that extended into the lawn or garden areas, with the apparent objective of extending the tiled or available entertainment areas beyond the confines of the concrete slabs upon which the main building and the rest of the courtyards are located.

Secondly, it is claimed that in respect of the other areas of tiling laid on the concrete slab, the tiles have been improperly laid in that inadequate expansion joints had been provided at the time of laying, with the result that significant areas of the tiles have become drummy and detached from their fixed positions. It is claimed that this has caused the tiles to lift, become damaged in parts, and most importantly, as a consequence of these factors, the underlying waterproof membrane has probably been compromised so as to enable water to leak into the basement car park area below the underlying concrete slab, thus placing that concrete slab at risk of deterioration by the development of corrosion in the reinforcement, or what is known as concrete cancer , thus requiring that remedial action be taken.

As to the first category, Mr Karagavrilidis candidly and fairly conceded that there were areas of improperly laid tiles that required removal and a resultant clean up of the areas involved. That concession related to the tiled areas that extended beyond the confines of the concrete slab and into the lawn or garden areas.

Mr Karagavrilidis' explanation for this having occurred was that at the time the tiles were laid, the tiling contractor had exceeded his remit. That is a matter for which the builder is nevertheless responsible under the statutory warranty: Pt 2C of the HB Act .

Mr Karagavrilidis acknowledged that those tiles, and the redundant substrate beneath them required removal and the lawn area reinstated. He said it had been his intention to attend to that task, but he had not got around to it at the time he was excluded from the site. The plaintiff tendered an email from the defendant that included an open offer of settlement on that issue: Exhibit "J". I will return to this when considering the disputed issue of quantum of the plaintiff's claim for damages in respect of the tiling claim.

As to the second category, the analysis is more complicated as the evidence concerning the cause of the identified problems is polarised.

At one end of the spectrum, Mr Fowler has proffered the opinion that the cause of the tiling problems in those areas was the failure to provide adequate expansion joints at the time the tiles were laid, which subsequently led to the development of cascading problems of drummy tiles, the detachment of some tiles, the cracking of others and probable failure of the underlying waterproof membrane.

At the other end of the spectrum, Mr Karagavrilidis claimed that apart from the conceded areas of defect in respect of the tiles that were laid beyond the limits of the slab, there were no defective or unworkmanlike characteristics within the expansion joints when the tiles were laid. He proffered the explanation for the problems found on the subsequent inspections of the other areas on the slab as being most probably due to a failure of materials as a result of outdoor temperature variations, such as excessive periods of heating from the sun and then cooling, including by the application of water to cool the tiles. He said this was part of ordinary wear and tear. He maintained that the problems found on those subsequent inspections were not due to any unworkmanlike laying of the tiles or improper use of materials.

Mr Karagavrilidis' point was, essentially, even certified materials had their limits when used properly, and the defendant did not have an absolute liability for the failure of those materials. Instead, the defendant's liability only arose if it could be shown that the problems were due to a failure to perform the works in question in a workmanlike manner, and that the materials used to carry out the work were not suitable for the purpose for which they were used: s 18B(a) and (b) of the HB Act .

Exhibit "J" comprised an email dated 27 January 2011 from the defendant to the plaintiff's solicitor. It dealt with settlement issues overall. In that regard, I have excluded it from my consideration of quantum except insofar as it contained an admission by the defendant that some of the tiling areas of Units 4, 5 and 8 were in need of replacement. The admissions in respect of those areas were qualified by the words " agreed to " and " as discussed with Mr Judge ". Those qualifying words were vague and were not further explored or explained by the parties through evidence. I make no critical conclusions from that fact, and I simply record it in order to confirm my view that the admissions that are within Exhibit "J" do not enable any specific tiling areas to be identified, or any monetary conclusions to be drawn on quantum. Instead, such conclusions must be derived from the remainder of the evidence.

Before addressing the quantum of this component of the claim, it is necessary to refer to and evaluate the relevant evidence for the liability of the builder on the tiling issue.

In my view, the appropriate starting point for the required analysis is to consider the implications of the email Exhibit "J". I consider this email to reasonably permit the inference that the tiling work in question was admittedly defective concerning the plaintiff's claims in respect of Units 4, 5 and 8, such that the remedial work proposed by Mr Fowler was required.

Having reached that conclusion, this still leaves open the questions as to whether, based on Mr Fowler's opinions, all of the remedial works he has described as being necessary, arise because the initial work was at least in some undefined respects, carried out in an unworkmanlike manner, including use of inappropriate materials so as to render the tiling unsuitable, and therefore requiring removal and replacement, as claimed by the plaintiff.

To a degree, the argument put forward by the plaintiff has a superficial attraction, however, the argument must be examined for its applicability to the circumstances of the works and to the issues in the case.

The first matter to be addressed at this stage of the analysis is the extent of the defective tiling work that was conceded by the defendant. The question here is whether it can be reasonably inferred, from the fact that defective tiling existed at the location of what I shall describe as the garden perimeter of the courtyard, that the problems revealed in the remainder of the tiling works were therefore also caused by defective workmanship.

I do not consider that the conclusion sought by the plaintiff as summarised in the preceding paragraph necessarily follows from the admissions drawn from Exhibit "J'. I consider the questions are quite separate and I propose to deal with them on that basis. I consider that the cause of such failure requires a separate analysis, which I will proceed to outline in the paragraphs that follow.

At the outset, I consider that I must accept Mr Fowler's opinion that the proper remedial approach to the defective state of the tiling in the courtyards requires that such tiling be removed in its entirety, the underlying waterproof membrane appropriately repaired, followed by the tiling beds being prepared, screeded and the removed tiles then replaced with new ones.

That conclusion still leaves open the question as to whether these measures are required as a result of the original work having been carried out in an unworkmanlike manner, or because unsuitable materials were used or inappropriately used, leading to an unsuitable result.

Putting aside the matter of the superfluously laid tiles in the garden or lawn areas, which are not relevantly in issue here, the opinion of Mr Fowler was that in each instance, the tiles in each of the courtyards, on the slab portions, had been laid incorrectly, and in an unworkmanlike manner.

Mr Fowler's opinion was that at the external courtyard at each of Units 4, 5 and 8, the tiles were drummy, some tiles had lifted and de-bonded at the right boundary, and some tiles had been replaced with different coloured tiles. He identified the total area as comprising 200 square metres, That evidence suggested that some attempts at rectification had already been undertaken in those areas, at least insofar as different coloured replacement tiles had been fitted. That work, or its timing, was not further described in the evidence.

Mr Fowler described the remedial works as requiring complete stripping, demolition and dumping of the tiles, surface preparation, waterproofing, bedding for new tiling, the provision of expansion joints, an allowance for some miscellaneous costs, and a 25 per cent mark up for the builder.

He initially identified the cost of this work as being $316.25 per square metre, which totalled $94,770 for 200 square metres. In evidence, without objection, he updated that cost to include an additional $54,000, an amount which he derived from a consideration of the tender quotations that comprised Exhibits "G" and "H". The revised total of the works for the whole of the estimated 200 square metres was therefore said to involve an amount of $148,770. That equates to the equivalent of $743.85 per square metre including all the rectification components identified by Mr Fowler.

Mr Karagavrilidis was quite critical of these figures, describing them as involving " robbery ".

Mr Karagavrilidis put forward an alternative costing of $145 per square metre, which equated to a total cost of $29,000 for 200 square metres, a vastly different amount to that embodied in the plaintiff's revised claim.

Before addressing the issue of quantum I propose to examine the preliminary question of causation because it is necessary to determine whether in fact the builder's liability arises under s 18B of the HB Act before the question of damages arises to be assessed. This requires an evaluation of the evidence that could be reasonably invoked to provide links in the chain of causation.

That evaluation must start with the state of the tiling at the time the builder left the premises, which was presumably when the private certifier provided his certificate on 12 October 2006, at which time it must be presumed that the premises were in a state of completion, as was certified by Mr Boyce on that date.

The first indication in the evidence that there was any problem with the outside tiles at the premises was the February 2008 report from RHM Consultants Pty Ltd, which identified a problem in the tiles of the Unit 2 courtyard as being drummy, with delaminating skirting tiles on the eastern end of the courtyard and at the northern brick wall. The suspected cause was noted to be differential movement between building elements and inadequate fixation to the substrate in that area. The full extent of that problem was not documented, and the suspected cause was not further explained. It is relevant to note that those problems do not form part of the claim by the plaintiff in these proceedings. In my view the discrete area described in the February 2008 RHM report does not reasonably permit the inference that whatever the cause of the problems then seen at Unit 2, the same problems were at play in respect of the damage described by Mr Fowler at Units 4, 5 and 8 in 2011.

It is also important to observe that the RHM report dated February 2008 made reference to inspections of the property which comprised the other Units in the complex, including Units 4, 5 and 8 which are the subject of these proceedings. No such defects or problems were recorded or noted in the RHM report of February 2008 with respect to the tiling of the courtyards of those units, as is now claimed.

The context of the RHM February 2008 report was that it was prepared following an inspection of the premises at the request of the owners on 12 February 2008. That inspection was in the presence of the respective owners and tenants of the units, and was carried out for the purposes of identifying any " outstanding construction related defects affecting the individual strata units and common property ".

The February 2008 RHM report identified water penetration into the basement car park from shrinkage cracks in the overlying concrete podium slab, through pipe penetrations and through the perimeter walls of the basement car park. The evidence was that shrinkage cracks occur in concrete structures and the fact that they occur does not necessarily mean the concreting was carried out in an unworkmanlike manner. It seems the water from the pipe penetrations and the perimeter walls are not raised as relevant issues in this case. The inference is that these problems have been addressed and repaired at some stage after they had been detected. Accordingly, I infer that the described water leakage through the pipe penetrations has been repaired.

Section 3.15 of the RHM report dated February 2008 referred to " numerous other defects that were identified during the inspection ... [which were] ... clearly outlined in Section 2.1 and Section 2.2 " of the report. No tiling defects were noted in those sections of the report other than the defects recorded with respect to Unit 2, which are unrelated to these proceedings, and to which I have already referred.

I infer form the structure and content of the February 2008 RHM report, and from the 22 appended photographs to that report, that at the time of the inspection of the premises on 13 February 2008, which was some 15 months after the premises were certified to have been completed, that there were no visible defects in the tiling of the courtyards at Units 4, 5 and 8, either with regard to the pattern of laying of the tiles, their colour, the nature and placements of expansion joints, drummy tiles, lifted tiles and de-bonded tiles. I infer from the context and purpose of the inspection which produced that report, that if such problems had existed at that time, they would have been detected and recorded in the course of the RHM inspection carried out at that time as the very purpose of that report was to carry out a critical evaluation for defects.

It is also pertinent to note that in the meantime, back in December 2007, the owners had engaged the building rectification and waterproofing consultants BRW to quote for the work of injecting cracks in the ceiling of the basement car park to " reduce the ingress of water ": MJ11. The time when water was first observed to be ingressing into the car park was not recorded in the evidence. That quotation, which was dated 20 December 2007, also recommended that the membrane, presumably the waterproof membrane, at the base of the stairs of Unit 8 be removed and replaced: MJ11, page 2.

RHM re-issued its February 2008 report in June 2008 with some minor amendments. There is no evidence that an additional inspection had been carried out by RHM in the meantime, and no additional material of that kind had been provided which had an impact on the tiling claim which is the subject of these proceedings.

On or about 8 July 2008, which was some 21 months after completion, an inspection of the premises by a representative of the NSW Office of Fair Trading took place in the presence of Mr Michael Judge and Mr Karagavrilidis. The resultant schedule of defects that was prepared following that inspection contained 16 photographs. Only 1 of those photographs showed any tiled area, which was to the balcony of Unit 10. That photograph was illustrative of another problem that is not an issue in this case. There was no record made of any tiling problems or complaints with regard to Units 4, 5 and 8, which are the subject of these proceedings.

The next recorded occasion on which an inspection of the premises for defects took place was on 11 February 2010, which was some 40 months after completion of the building. This was on the occasion when Henry & Hyams, structural engineers, inspected the premises for defects: MJ30(b). On this occasion it was noted that there was " a small tiled area which has significant cracking ". The location was not further described, but the photograph on page 5 of the report of Henry & Hyams shows what I infer from photographs 12 and 13 in Mr Fowler's report, to be the courtyard of Unit 8, or the equivalent location in either of the courtyards of Units 4 or 5. The following comments were made in the Henry & Hyams report in relation to that defect;

" Cause: We believe that these tiles have been laid on a bed of mortar which has been placed on the ground / fill material. The tiles span over the suspended slab and retaining wall onto the fill. This is extremely poor workmanship with a lack of duty of care, as these tiles would have always cracked and become a significant trip hazard.

Remediation: We recommend removing and relaying these tiles to stop at the edge of the suspended slab."

In evidence Mr Karagavrilidis conceded the area of defect identified in the preceding paragraph and accepted that it should be rectified. I will return to this issue in determining quantum in respect of the tiling claims.

The only other photograph of tiling in the Henry & Hyams report was on the last page, but that photograph was not in connection with a defect of the tiling. The tiles were incidentally shown in that photograph,

The next recorded occasion on which the premises were inspected was by RHM Consultants on 14 May 2010, which was some 43 months after completion of the works. This led to a further RHM report dated May 2010: Exhibit "E". It was that report which identified the tiling issues which are the subject of this component of the claim: Exhibit "E", items 4.1, 5.1 and 8.1.

RHM was of the opinion that the cause of the problems with these tiled areas was as follows;

"- Unaccommodated thermal expansion of the tiling due to the failure of the original builder to install sufficient perimeter or internal control joints within the floor tiles;

- Unaccommodated movement due to shrinkage effects of the concrete substrate;

- Failure of original builder to adequately prepare concrete substrate prior to the application of the tile adhesive;

- Failure of bond between tiles and adhesive;

- Use of incorrect adhesive by original builder"

It is pertinent to note that the builder disputed those conclusions. No reasoned proof based on material analysis was proffered concerning the allegation that incorrect adhesive had been used.

There was no explanation in the evidence as to how the " small " area of defect in the tiled area of the garden that was observed by the Henry & Hyams' inspection on 11 February 2010, could have gone on to much larger areas on the slab portion of the 3 courtyards in question, just 3 months later at the time of the RHM inspection on 14 May 2010. In my view this is a matter of some significance to an evaluation of the causation evidence.`

It was the May 2010 RHM report which first identified approximately 20 square metres of drummy and lifted tiling in the courtyard of Unit 4, approximately 10 square metres of similarly affected tiling in the courtyard of Unit 5, and approximately 45 square metres of affected tiling in the courtyard of Unit 8. In all this it appears to have involved an approximate total of 75 square metres.

There is no evidence of the inspection, maintenance, usage, or repair history of those areas of tiling before May 2010 or between 11 February 2010 and 14 May 2010. There is no evidence as to how long those defects were extant before the May 2010 inspection took place. Neither is there any evidence as to the timing of the repair works to the tiling which resulted in the placement of different coloured tiles, as has been noted for the first time on Mr Fowler's inspection of 18 March 2011.

Relevant to the point made by Mr Karagavrilidis concerning the causation of these problems, four consecutive summers had passed since the works had been originally constructed, i.e. 2006, 2007, 2008 and 2009.

In a subsequent Scott Schedule dated February 2011,and which was attached to Mr Judge's Affidavit Exhibit "B" at MJ35(a), RHM identified the scope of the rectification works in respect of the tiling defects as follows:

"1. Remove all affected cracked, drummy and uplifted tiles and screeding to the affected courtyard areas (45m2).

($1,620.00 materials - $36/m2 for tile, screed and removal)

2. Prepare concrete substrate in accordance with manufacturer's recommendations and install new sand cement bed with falls to the match existing adjacent tiles. Bedding material/labour.

($1,260.00 @ $28/m2)

3. Install a new proprietary liquid applied waterproofing membrane system to the affected areas of the concrete slab with a determination detail at the interface of the existing waterproofing membrane system in accordance with the manufacturer's specifications.

$2,250.00 (materials/labour - $50/m2) - ($220 for installation of termination detail between existing membrane system)

Install new tiles to match existing with suitable perimeter and internal control joints. ($3,150.00 supply and labour @ $70.00/m2)

... $9,350.00"

Whilst there is no reason to doubt the existence of the damage shown to exist in the tiling as described in the May 2010 RHM inspection report, and the 18 March 2011 inspection report by Mr Fowler, the critical question remains as to what caused these problems.

On the one hand, Mr Karagavrilidis claimed these problems, with the exception of the tiles that went beyond the area of the concrete slab and for which he conceded liability, were simply due to the effect of temperature variations over time causing successive expansion and contraction, therefore resulting in the lifting and cracking of tiles. He claimed this was not due to the absence of proper expansion joints or tile laying methods and materials. Put simply, Mr Karagavrilidis argued that the disputed area of tiling failed because of environmental factors rather than being due to a failure of proper workmanship or a failure to use proper materials. He claimed the tiles had been correctly laid in every respect, save for the three smaller areas he had conceded beyond the concrete slab on the garden side in each of the three courtyards in question.

On the other hand, Mr Fowler maintained that the tiles had been laid incorrectly with insufficient and inadequately located expansion joints and inadequate materials.

On this issue the plaintiff bears the onus of proof to show that the defects in question were caused by defective workmanship and materials ineffective for the task: s 5E of the CL Act .

Mr Fowler's reasoning on the causation issue seemed to be that since the defects in dispute had arisen within the period of the s 18B HB Act statutory warranty, based on his experience, the cause must have been due to an unworkmanlike manner of construction using techniques and materials not suitable for the purpose for which those materials had been employed because his expectation was that such problems ought not have eventuated in the time frame in which they were observed on inspection.

It is therefore necessary to examine the basis of Mr Fowler's opinions.

It is clear that the formation of Mr Fowler's opinions on the defective tiling has proceeded along the analytical pathway of first noting the tiling defects he described, and then assuming that such defects were as a result of unworkmanlike construction, with inadequate materials unsuitable for the intended purpose, in breach of the statutory warranty.

In particular, Mr Fowler appears to me to have assumed that there has been a failure to lay the courtyard tiles properly in that the expansion joints were not appropriate. He appears to have further assumed that the method of fixing of the tiles was incorrect either because they were not appropriately bedded down or glued, or both, because otherwise, the fixings would not have failed, the tiles would not have become drummy, and they would not have lifted, moved or cracked.

That analysis appears to me to invoke a res ipsa loquitur analysis, which translates to the plain language notion that the tiles must have been fixed in an unworkmanlike manner or by using materials incorrectly, including incorrect materials, for otherwise, the fixing of the tiles would not have failed. That analysis is superficially attractive, and on its face it is not inherently or glaringly improbable. However, it still needs to be critically evaluated.

The first matter that comes to mind in that evaluation is that in coming to that view, Mr Fowler appears to have focussed upon the failure of the tiling during the period of the statutory warranty, using that fact as the performance standard of the work and for the materials. In my view, in doing so, Mr Fowler has not satisfactorily explained and excluded other possible relevant causation scenarios that relevantly arise for consideration on the available evidence.

The need for the plaintiff to consider and exclude those other scenarios, and to inculpate a probability based alternative causation scenario that is consistent with breach of the statutory warranties under Pt 2C of the HB Act , arises because, as the plaintiff has acknowledged, it bears the onus of proving the causation of its claimed losses: s 5E of the CL Act .

In that context, it is appropriate to examine those other relevant factors in addition to those that have been focussed upon by Mr Fowler. These matters include, amongst others, those considerations invoked by Mr Karagavrilidis, and which need to be evaluated in conjunction with a causation analysis.

The first such factor is the matter of the location, method of construction and provision of expansion joints in the tiling works under consideration. In answer to Mr Fowler's criticisms, Mr Karagavrilidis stated that the tiling provided for expansion joints located every 3 metres, which seemed to me to provide a higher standard of design and workmanship than the location of such joints every 4.5 metres, as was explained by Mr Fowler to be the requirements of the relevant standard. I accept Mr Karagavrilidis' evidence of the placement of expansion joints at every 3m of the tiling works. It therefore seems to me that the location of expansion joints does not seem to be a relevant factor on a causation analysis as they were adequately located.

The second such factor is the depth of the expansion joints. Mr Karagavrilidis explained that the joints were of adequate and effective depth, including the thickness of the tiles. Mr Fowler did not produce any measurements that would tend to discount the accuracy of Mr Karagavrilidis' evidence. In the absence of such contradictory evidence, I see no proper basis upon which I should not prefer the evidence of Mr Karagavrilidis on the issue of whether or not the expansion joints in the tiles were of a proper depth.

The third such factor is the question of the method of filling of the expansion joints that Mr Fowler had observed. Mr Fowler stated that the joints had not been filled with the appropriate flexible and expandable material and in an appropriate pattern, whereas Mr Karagavrilidis was adamant that the required material had in fact been installed appropriately. In rejecting that proposition, Mr Fowler relied upon his observation that there were no signs of that material which he had expected to have remained adherent to the tiles at the time of his inspection. In that regard, he was of the opinion that it was unlikely that the material could have been installed and removed without a trace, whereas Mr Karagavrilidis' view was to the contrary, and claimed that the expandable material had in fact been installed and must have been removed. In my view, in expressing his opinion contrary to that of Mr Karagavrilidis, Mr Fowler did not seem to have regard to the fact that someone had earlier carried out some kind of remedial work on the tiling to the courtyards, such that non-matching tiles has been installed. In my view, once it is recognised that other unexplained work had been carried out on the tiling, absent detailed evidence of the nature, scope and detail of that work, Mr Fowler's criticisms of Mr Karagavrilidis' explanation must be significantly discounted because it is not clear as to what other work was done, when that was done, and with what causative effect.

The fourth such factor is the possibility that tiles and fixing materials for outside tiling, whether this was the cement bedding or the fixing glue, can and do fail at extremes of use due to environmental factors. Mr Karagavrilidis explained that this could occur due to environmental factors, such as exposure to extremes of variations in outside temperature in the summer months. Mr Karagavrilidis explained that a failure due to those factors could be due to either the heat on the tiles from the summer sun alone, or that factor combined with natural climatic cooling, either with or without the additional application of water on the tiles to cool them.

The fifth such matter is the unexplained matter of the absence of any observed signs of damage to the tiled areas in question for almost 4 years, despite the fact that in that period, a number of professional inspections and investigations had been conducted for the purpose of identifying defects that could be arguably due to a breach of the statutory warranties provided by the HB Act . In my view, in this context, it remains unexplained as to how the defects observed by RHM Consultants in May 2010, were not seen or recorded as being evident to investigatory or lay observation of the premises in the preceding 43 months.

The sixth such factor is a combination of the foregoing matters.

Having reviewed these matters, I consider that the evidence of Mr Fowler to have been unduly dismissive of the alternative considerations and possibilities that could be relevant to a causation analysis. In my view he has not given due regard to a consideration of factors, the presence of which would be inconsistent with an analysis of causation that links the damage to the tiling found in May 2010 and a view that the works had been carried out in an unworkmanlike manner, and / or by the use or improper use of materials.

In that regard, I consider that the foregoing analysis requires that I discount and reject the causation opinion proffered by Mr Fowler. In view of the factors of doubt that I have identified, I consider that the plaintiff has not proven the causation issue on the balance of probabilities to the satisfactory exclusion of other possible causes of tiling failure. In this regard, I consider that Mr Karagavrilidis has pointed to alternative causation considerations that have been reasonably raised and not relevantly excluded, and in themselves, not inherently improbable.

In my view, it follows, that the plaintiff has failed to discharge the onus upon it to prove that the tiling problems in the courtyards of the premises, other than those conceded by the defendant, were relevantly caused by a failure of workmanship or materials for which the defendant should be held to be responsible.

Consistent with the view I have taken on causation, I consider that the plaintiff has not demonstrated an entitlement to damages in respect of the whole of the tiling works as claimed.

It therefore remains to assess the liability of the defendant for damages in respect of the conceded areas of defective tiling beyond the boundaries of the concrete slab, at the location of the garden side of each of the courtyards in contention. Before doing so it becomes necessary to consider the competing quantum arguments in respect of this conceded component of the works.

Mr Karagavrilidis submitted that in respect of each of the three courtyards, the required rectification works simply involved removing the excess areas of tiling, detailing the edges of the concrete slab which should limit the area of the tiling with new tiles, and to then clean up and restore the garden or lawn element of the areas concerned. He claimed this would involve an expense of about $300 per courtyard. Putting aside Mr Karagavrilidis' suggested quantum, that approach seems to be consistent with the approach recommended in the 11 February 2010 assessment carried out by the consultants Henry & Hyams.

The plaintiff argued it was entitled to reinstate the entire area of the incorrectly tiled areas by preparing a concrete underslab to extend the area of the tiling to the presently albeit defectively supported and laid areas.

In my view that is an incorrect approach. In that regard, I accept Mr Karagavrilidis' argument that the original plan did not extend that far and it was never intended that the tiles should extend to those areas. Furthermore, there is no evidence that the approval for the tiled areas extended that far. In this regard, no evidence was called to rebut Mr Karagavrilidis' assertion. In awarding damages the calculation should not involve an assumption which extends beyond what I infer from Mr Karagavrilidis' evidence, to be the approved area. To take the approach argued by the plaintiff, namely to allow for the extended area beyond that approved, would be wrong and involve the condonation of unapproved works.

" C3.15 Openings for service installations

Where an electrical, electronic, plumbing, mechanical ventilation, air-conditioning or other service penetrates a building element (other than an external wall or roof) that is required to have an FRL with respect to integrity or insulation or a resistance to the incipient spread of fire , that installation must comply with any one of the following:

(a) Tested systems .

(i) The service, building element and any protection method at the penetration are identical with a prototype assembly of the service, building element and protection method which has been tested in accordance with AS 4072.1 and AS 1530.4 and has achieved the required FRL or resistance to the incipient spread of fire .

(ii) It complies with (i) except for the insulation criteria relating to the service if -

(A) the service is a pipe system comprised entirely of metal (excluding pipe seals or the like); and

(B) any combustible building element is not located within 100 mm of the service for a distance of 2 m from the penetration; and

(C) combustible material is not able to be located within 100 mm of the service for a distance of 2 m from the penetration; and

(D) it is not located in a required exit ."

Mr Fowler went on to say that in his opinion the builder had therefore consequently failed to properly supervise the construction of the fire penetrations in contravention of the BCA and s18B(a), (b), (c), (e) and (f) of the HB Act .

Mr Fowler described the scope of the remedial works he considered were necessary. He said this required a temporary decommissioning of the relevant plumbing elements, the removal and replacement of the plumbing lines and then the installation and certification of the required fire collars at an estimated cost of $17,600.

Mr Fowler based his opinion in that regard on an assumed complete absence of fire collars within the slab and on the content of a discussion he had with a fire certifier, as well as on his own inspections and experience. The content of that discussion, and therefore the opinion to which it relates, must in my view be discounted because it was not minuted or detailed in the report and remains opaque to analysis. In my view, fairness requires that I have no regard to it.

Mr Karagavrilidis denied that he had not installed appropriate fire collaring. This raised a factual question as to whether or not fire collars were in fact installed. If fire collars had in fact been installed, that conclusion would necessarily require that this component of the plaintiff's claim be rejected.

Having heard the evidence of Mr Karagavrilidis on the issue, I reject the claim for the cost of installing fire collars. I do so for the reasons that follow.

I accept the evidence of Mr Karagavrilidis that he installed fire collars of the Cougar type shown in Exhibit "N". I considered his evidence on this issue was inherently plausible and not glaringly improbable.

It is readily apparent from the photographic and oral evidence that Mr Fowler has adopted an incorrect factual assumption concerning the alleged absence of fire collars. Photographs 81 and 83 show the partially obscured green coloured bases of two fire collars which show how they could be thinly covered by cement from a concrete pour onto underlying formwork.

Mr Fowler had also assumed, from the absence of any sign of a fire collar base around the protruding piping installations, that no fire collars had been installed. However, when the evidence of Mr Karagavrilidis is examined, including his evidence of the various blue, green and grey fire collards he produced as samples, photographs of which are contained in Exhibits "M", "N", "O" and "P", a very different picture emerges.

I am satisfied from the evidence of Mr Karagavrilidis, that he not only knew the importance of installing fire collars, but I am also satisfied that they were in fact installed as he had claimed.

I have come to this view on an acceptance of his evidence in which he described having had to drill the slab to relocate some plumbing locations and the concomitant need to install alternative fire collars, i.e. the grey or longer variety typified by Exhibit "N", which he demonstrated, to the replacement installations where the originally placed plumbing had to be moved to a more convenient or comfortable position. Photograph 83 attached to Mr Fowler's report seems to corroborate that view as it shows the green base of a redundant fire collar near what appears to be a relocated plumbing pipe, although there is no visible sign of the Cougar type fire collar in that, or any other photograph.

Mr Karagavrilidis described how the grey fire collars that he had fitted were placed in the upside down position, or with the superfluous stabilisation flanges removed where that was appropriate, because of the fitting space when the plumbing was fitted to the described locations in the slab. He explained that this was why the bases of the fire collars were not evident on inspection from below. In my view, this served to explain how Mr Fowler and the RHM consultants had made their assumptions concerning the absence of fire collars.

Mr Karagavrilidis described a number of methods by which fire collars had been installed, contrary to the assumption made by Mr Fowler. These were first, as outlined above and secondly, using a modified sleeve insert taken out of a fire collar housing in the manner that he had demonstrated from the witness box, taking the fire rated material and wrapping it around a PVC pipe if that method was required at a particular location. Mr Karagavrilidis offered to provide a demonstration of the effectiveness of his methods for fire protection using his fire collar system. That offer was not further pursued. I accept that Mr Karagavrilidis' long experience in the building industry using those materials led him to give correct evidence on this issue. I consider that such experience placed Mr Karagavrilidis in a good position to give practical and authoritative evidence on the appropriate use of fire collars in the manner he described.

I make the observation that Mr Karagavrilidis' evidence as to the presence of concealed fire collars could have been readily traduced by the plaintiff if there had been destructive testing of a sample of one or a selected few of the 40 or so locations where it had been assumed that there was no fire collar. Such testing could have served several purposes. It could have provided cogent factual evidence of the absence of a fire collar at that location if that was the fact. This would have served as a basis for the drawing of inferences. It could also have been used as a cost estimation exercise to serve as a multiplier to seek to more accurately quantify the plaintiff's claim if there was a proper basis for finding no fire collars had been fitted. That said, I draw no adverse inferences from the absence of such testing.

In coming to the view I have outlined on the fire collar issue, I have not overlooked the evidence in reply given by Mr Fowler. In that evidence he was critical of Mr Karagavrilidis' evidence of the fitting of the Exhibit "N" or Cougar type fire collars from above, referring to fire testing data that he had consulted for the basis of that opinion. It was not clear to me from that evidence as to what the fire testing actually involved, and whether it replicated the type of installations that were involved in this development. I consider that I must therefore discount that evidence.

In deciding whether or not to accept Mr Karagavrilidis' evidence to the effect that he had installed fire collars as was required I gave consideration to Mr Fowler's evidence in which he explained the difficulty of fitting a Cougar type fire collar after the concrete slab had been poured and cured.

There is no dispute this would have required drilling a core hole through the slab for each of the required fittings where a relocated pipe was to be fitted if the location at the time of pouring had to be relocated as described in the evidence of Mr Karagavrilidis. It was also not disputed that a Cougar type fire collar could have then been fitted from above, in the upside down position, although Mr Fowler questioned the method of fixation in such circumstances. In my view, nothing turns on whether the flange was in the upside down position as the evidence discloses that the principal purpose of the flange is to assist with a stable positioning of the device for the purposes of a concrete pour.

The criticism that would be levelled at the probability of the Cougar type device having been employed on this site is that the bulbous section of the device was wider than the base which may have required the drilling or excavation or both, of a hole with a wider diameter. In my view I should discount that consideration on the state of the evidence. This is because the manner of creation of the hole for fitting the collar in the way described by Mr Karagavrilidis was not fully explored in the evidence in sufficient detail to fairly sustain such a criticism.

In this regard, the evidence simply disclosed that a suitable hole would be fashioned, and the device fitted. Mr Fowler implied that this process was inadequate in that there would have been no packing provided by concrete poured around it to hold it in place to make it effective. I consider that a criticism based on that evidence cannot be sustained in this instance because it was not fully explored in the cross-examination of Mr Karagavrilidis.

In my view, on a commonsense analysis, it was not implausible that holes could have been drilled and excavated in the slab as required, suitably fashioned from above without needing to penetrate the base of the slab to a width that enabled a Cougar type fire collar to be placed in the hole from above to rest at the base of the hole, and to then be secured by a pour of concrete or cement to hold it in place around the pipe it was required to protect. If those steps were taken, the result would be the appearance of the base of the slab as shown in the photographs, which was assumed by Mr Fowler and the RHM report to show an absence of fire collar installations.

Whilst the process I have outlined involves speculation, and could not permissibly base a finding that such a course was in fact followed, it is a useful analysis to test the logic or plausibility of Mr Karagavrilidis' evidence that fire collars had been installed, and the validity of the criticisms of that evidence made by Mr Fowler.

Mr Fowler had simply assumed that fire collars were not installed. Since Mr Karagavrilidis' evidence on the installation process was not explored to the point of contradiction, I consider the foregoing analysis as being an appropriate means by which to test the plausibility of Mr Karagavrilidis' evidence that he in fact installed fire collars.

In reviewing the foregoing evidence, I have concluded Mr Karagavrilidis' practical based factual evidence that he had appropriately used Cougar fire collars as a remedial measure is to be preferred, compared to Mr Fowler's assumption based evidence that no fire collars were used. I consider that Mr Karagavrilidis' evidence indicating his familiarity with the appropriate use of fire collars was an adequate basis upon which to accept his factual evidence that he not only used fire collars as he had claimed, but that he had sufficient knowledge and experience to authoritatively state that his use was appropriate and not unworkmanlike or in breach of BCA cl C3.15(a).

Whilst Mr Karagavrilidis advanced a number of alternate methods of retro-fitting fire collars, that is, from below and using fire rated gryprock box surrounds, that was not factual evidence of what he did. In my view that evidence was merely preferred as to mitigation of damages in the event that the findings on the fire collar issue went against the defendant. Accordingly, it is not necessary that I analyse Mr Fowler's criticisms of that evidence concerning possible alternative measures.

The end point of the analysis is that the plaintiff must show that fire collars have not been fitted as required, or that fire collars, either all 40, or an identified proportion or number of them, have not been fitted as required by BCA cl C3.15(a).

The evidence discloses that the Cougar type device is an approved device. In my view, there is no cogent evidence either suggesting or reasonably inferring that fire collars were not appropriately fitted as required by BCA cl C3.15(a).

The foregoing analysis indicates that it is not necessary to pursue an analysis of whether a proportion of the plaintiff's claim should be allowed in respect of the claim for fire collars as there is no evidence to justify such an approach to assessment. The position would have been different if testing other than by the visual inspection employed by the experts, had revealed that either one or more installations were non-compliant with BCA cl C3.15(a).

In my view, the plaintiff's claim for the installation of fire collars must be rejected as the plaintiff has not discharged the onus of establishing that there were no fire collars installed at the premises as claimed, so as to cause a relevant claimable loss: s 5E of CL Act .

Decision on Issue 13 - Cracking to driveway retaining wall

The plaintiff makes a claim in the amount of $3602.50 for the cost of repairs to cracking found in the wall adjacent to the driveway of the premises. During construction of the premises the builder had covered the wall in question with fibre cement sheeting which the plaintiff criticised as representing faulty workmanship. The builder disputed the claim for rectification.

The claim is based on the opinion of Mr Fowler to the effect that he felt the fibre cement sheeting had been used to cover defects in the underlying masonry retaining wall structure. It appears that Mr Fowler had based his opinion, at least in part, on p 25 of the RHM report dated May 2010, which claimed the work in question was not carried out in a proper or workmanlike manner in breach of s 18B of the HB Act .

Mr Fowler was of the opinion that the builder had " failed to properly supervise the construction and rectification " of the underlying wall, in alleged contravention of s 18B(a), (b), (c), (e) and (f) of the HB Act . The structures in question are identified in photographs numbered 91 - 98 attached to Mr Fowler's report dated 31 March 2011.

Mr Fowler's perspective appears to have been one of aesthetics in that he stated that the placement of the sheeting " was unusual and not a consistent finish to the premises ." In my view that aspect of his opinion is an aesthetic consideration which is a function of subjective taste which is unrelated to structural considerations. I accept Mr Karagavrilidis' evidence that the fibre cement sheeting was applied not only for considerations of aesthetics but also for considerations of moisture control and ease of maintenance, evidenced by the placement of a separate component of fibre cement sheeting at ground level to permit easier and less destructive access to the drainage system at the base of the retaining wall if the need arose.

In my view, the italicised portion of Mr Fowler's report which I have cited in the preceding paragraph reveals the reasoning behind his opinion on this issue to be in part flawed. Mr Fowler has incorrectly assumed that the fibre cement sheeting was an attempt on the part of the builder at rectification of a defect, whereas it was in fact part of the original structure and was designed at the time of construction to produce a smooth finish to the exterior surface of the wall, as was in my view cogently explained by Mr Karagavrilidis.

Mr Fowler appears to have derived his assumption that the fibre cement sheeting was applied to cover a defect from his investigatory inspection at which the fibre cement sheeting was removed to reveal a cracked retaining wall. In my view, the evidence does not support Mr Fowler's assumption that these were rectification measures aimed at covering defects. The position would have been different if the crack was shown to have more probably than not been there at the time the fibre cement sheeting had been first applied.

In that regard, I accept the evidence of Mr Karagavrilidis to the effect that the fibre cement sheeting was applied at that location in order to obtain a smooth cosmetic finish, and not to cover defects in the wall. I accept the evidence of Mr Karagavrilidis that the cracking in the masonry of the retaining wall was as a result of ground movement and the effect of ground water on the wall over time, and due to the effect of the drainage of moisture behind the retaining wall. Of themselves, these were matters which had nothing to do with alleged faulty workmanship as was claimed.

Whilst I accept Mr Karagavrilidis' evidence that he had constructed the fibre cement sheet covering as a means of achieving appropriate moisture control management in the area in question in conjunction with the placement of drainage arrangements behind and at the base of the driveway wall, that is not the end of the analysis.

Mr Fowler's opinion was that there was a faulty drainage system in place behind the retaining wall. I accept Mr Karagavrilidis' claim that the drainage pipe in question as shown in photograph 96 attached to Mr Fowler's report was not blocked with foreign material as was claimed by Mr Fowler, but instead had agricultural drainage material located within the piping which was discoloured by naturally occurring silt in the agricultural drainage material which may have given the misleading appearance of a blockage when that was not the case.

I consider that Mr Karagavrilidis was in a better position than Mr Fowler to relate the relevant facts concerning this item. Mr Karagavrilidis was able to speak about the contemporaneous design and construction process whereas Mr Fowler's perspective was in the context of a fault seeking investigation on 18 March 2011 seeking to attribute blame for what he had assumed to have been a faulty construction.

Whilst I find that the cracked wall and the moisture issues observed by Mr Fowler were due to ground conditions and ground moisture behind the retaining wall, as was explained by Mr Karagavrilidis, and whilst these have not necessarily been shown to be due to a defect in construction, supervision or workmanship as was alleged, nevertheless, a water seepage problem was evident at the site. This issue requires further analysis.

I accept as reasonable Mr Karagavrilidis' explanation that the retaining wall had moved over time due to ground conditions and water movement behind the retaining wall. I also accept his view that these factors had caused the wall to crack due to ground movement. I consider that analysis to be a reasonable and acceptable explanation for the occurrence of the crack. This raises the question as to whether the defect shown on Mr Fowler's inspection, almost 5 years after construction had been completed, was due to faulty construction, especially where there was some movement of the retaining wall and resultant cracking, or was to be expected as ordinary wear and tear due to ground conditions, as was explained by Mr Karagavrilidis.

If Mr Fowler's criticisms of the builder concerning this component of the works is sustained, it would be reasonable for rectification work to be carried out on the retaining wall and for the fibre cement sheeting to be removed and dumped in favour of repairing, grouting, rendering and painting the masonry structure as described by Mr Fowler, at an estimated cost of $3602.50.

Returning to the analysis, aesthetics aside, Mr Fowler's criticisms of the discolouration and deterioration of the fibre cement sheeting, and the drainage of moisture at the foot of the retaining wall need to be addressed.

Mr Karagavrilidis sought to dismiss the issue by arguing that the discolouration in question was due to the presence of pollutants and algae. In my view that is not a sufficient answer, especially where algae is concerned.

The issue here is whether the drainage arrangements were adequate. In my view, accepting Mr Fowler's evidence on this point, the drainage arrangements were not consistent with the works having been carried out in a suitable and workmanlike manner.

This was because the drainage pipe was left in a position that left moisture to be collected at the base of the wall and to drain away down the driveway. In my view that was not an acceptable arrangement consistent with a workmanlike finish. I accept Mr Fowler's opinion in that regard. At the very least, the arrangement produced a slip hazard, aesthetics aside.

I accept Mr Fowler's opinion that as moisture was left to drain through the wall either along its body or at its base, this suggests that the drainage arrangement was not adequate. I accept Mr Fowler's evidence that there should have been waterproofing provided at the back of the wall and an adequate drainage arrangement at the base of the wall that carried accumulated moisture away to a drain rather than through the wall and onto the driveway.

It follows from this analysis that the plaintiff's claim in respect of Issue 14 has been made out. Accordingly, I allow the sum of $3602.50 in respect of this item, as was claimed.

Decision on Issue 14 - Repairs to garage retaining wall

The plaintiff made an initial claim in the amount of $2543.75 for the cost of repairs to the garage retaining wall of the premises. The claim was revised upwards during the course of the hearing by $3956.25 to a revised amount of $6500. The builder disputed that claim.

The plaintiff's claim is based on the opinion of Mr Fowler, which was to the effect that on his inspection of the premises on 18 March 2011, there were signs of water leakage though the base of the retaining wall relating to Unit 9, with associated staining deposits on the garage floor. He viewed these imperfections as representing inadequate construction and plumbing arrangements. He considered this was due to an alleged failure to apply waterproofing at the rear of the garage wall in contravention of the necessary construction requirements. Although no actual water leakage was observed, it was assumed that the water had leaked in the manner described, as distinct from being deposited on the floor by some other means.

Mr Fowler claimed that the observation in question indicated that the builder had " failed to properly supervise the construction of the plumbing penetrations " of the underlying wall, in alleged contravention of s 18B(a), (b), (c), (e) and (f) of the HB Act .

Mr Fowler's reference to " plumbing penetrations " seems obscure in relation to this item as there are no such penetrations evident. I consider that this description by Mr Fowler appears to be an error.

Mr Karagavrilidis rejected Mr Fowler's analysis, and stated that there was adequate placement of drainage at that location. He rejected the suggestion or feasibility of waterproofing a porous shotcrete wall from behind at the time of construction as being impossible to achieve. He also pointed to the fact that the garage floor in question was located some 3.5m below ground level and that was the source of the moisture, and this was not a failure of construction or workmanship.

In his evidence disputing the claim, Mr Karagavrilidis drew attention to several factors, including that of the location of the wall in question, or more properly, the garage floor, as being some 3.5 metres below ground level. He also pointed out that there was adequate drainage through agricultural lines that had been appropriately placed to lead to drainage pits that were respectively behind and near the wall in question. Mr Karagavrilidis stated that there would inevitably be some water in the area during periods of heavy rain, and that water would take time to drain along the agricultural drain lines to the appropriately placed large drainage pits that led such water away to storm water drains. He described the drainage in that process as being of a slower process when using agricultural drainage lines and rejected the assertion of faulty workmanship. He pointed to the absence of any surface damage to the porous shotcrete covered wall in question as evidence that served to demonstrate that there was no relevant damage to the wall that required either repair or rectification work.

In my view Mr Karagavrilidis' evidence on these matters should be accepted. I have reached that conclusion because I prefer Mr Karagavrilidis' factual explanation of the method of construction to Mr Fowler's analysis, particularly as Mr Karagavrilidis' evidence is supported by the fact that no relevant damage, including to the paintwork, has been demonstrated at the location in question. That in my view indicates that the drainage arrangements were working adequately, as was claimed by Mr Karagavrilidis.

In my view, the assumptions inherent within Mr Fowler's opinions on this issue have not been made out. It follows that the claim that rectification works are required to be undertaken to the garage wall in question has not been made out. In my view, signs of past water stains on the garage floor, without more, does not necessarily constitute a proper basis for inferring defective workmanship on this issue.

Alternatively, allowing for the possibility that I may be found to have erred in reaching this finding, I also record my finding that even if a breach had been demonstrated, no causally relevant damage has been shown to exist requiring rectification.

Decision on Issue 15 - Remedial brickwork

The plaintiff makes a claim for the cost of rectification to unfinished brickwork in the sum of $893.75. The claim is based upon the 18 March 2011 observations of Mr Fowler when he inspected the site, and the earlier RHM observations upon which he had relied when forming his own opinions. Mr Fowler observed that near Unit 6 " approximately 4 metres of the rear brick fence to the unit was missing its top coarse (sic for course)".

Mr Fowler considered that the top course had not been constructed along a 4m length. He described this circumstance as a contravention of the BCA and s 18B(a), (b), (c), (e) and (f) of the HB Act . In support of that claim he attached photographs 100, 101 and 102 to his report. The absent brickwork is also shown in photographs appended to the earlier reports.

Accepting that a layer of 4m of brickwork fencing is missing at the place described, Mr Karagavrilidis denied that the top course of the fence had been left incomplete or was never laid. He stated that the missing brickwork had in fact been properly laid, and that any defect that had been found subsequent to the work and his departure from the premises had been due to vandalism and as such was not due to faulty workmanship. Whilst I accept Mr Karagavrilidis' explanation in that regard, there is no evidence as to when the damage to the brickwork occurred due to such vandalism. I must therefore assume the rectification to the damage was left incomplete after it had been damaged. This was in contravention of the BCA and s 18B of the HB Act . In my view the plaintiff has established that the missing brickwork was a relevant defect due to faulty workmanship for which the builder is responsible.

On 10 December 2010 the issue of the missing brickwork was earlier minuted and acknowledged by Mr Karagavrilidis as a defect that he would address: Exhibit "B" MJ36(b). I infer that meant he would fix that defect.

On quantum, I consider Mr Fowler's estimate of rectification costs of $893.75, whilst apparently high, was not excessive when it is considered that such repairs would require the carrying out of a relatively small job with a significant mark-up by the contractor who would be engaged to carry out the work. I therefore allow the amount of $893.75 for this item.

Decision on Issue 16 - Cost of tender and supervision of rectification work

The plaintiff made a claim of $8140 for the cost of managing the process of the invitation of tenders for rectification works, as well as for the review and assessment of the tenders and for recommendation of the appropriate tender for assessment. A claim is also made for the cost of supervision and execution of the proposed works. The defendant acknowledges that some costs of this kind might be reasonably incurred if the underlying claim was accepted, but the defendant resists the reasonableness of the claimed costs as being excessive.

The detail of the claim comes from Annexure A to the affidavit of Mr Judge sworn on 5 July 2011, and is based on Mr Fowler's recommendation.

There is no direct or detailed evidence of the supervisory time involved with such claimed expenses, although I infer from Mr Fowler's specified hourly rate that the work would involve some 30 hours of supervision to be applied in a staged fashion, at the rate charged by a civil or structural engineer. It appears to me that this component of the claim is somewhat arbitrary and excessive in its quantification, and in that regard, I accept the submission made by Mr Karagavrilidis.

I consider that it would be reasonable for the tender and the execution of any required remedial works to be supervised, particularly since the premises are no longer a building site and are instead, now premises where retired persons reside. However, the supervision would necessarily be limited to the items that I have allowed, which involves far less supervisory work than that which has been claimed by the plaintiff.

In those circumstances, I consider it would be reasonable for a degree of assessment and supervision to be allowed for in the cost of rectification. That said, I consider the amount of $8140 as claimed, to be excessive and out of proportion to the works that are actually required. I consider that a more modest allowance of $2000 would be more appropriate for this item of claim, especially given the lack of specificity of the suggested hours to be applied to the particular component tasks, and given that not all the claimed works are properly claimable. I consider that a global amount of that order for the supervision of the tender process, and the supervision and execution of the works by retaining a builder or a clerk of works would be the appropriate approach in this regard. I consider that the sum of $2000 is a reasonable allowance in that regard.

Summary

My assessment of the plaintiff's claim for damages is summarised in the following table:

Issue

Plaintiff's revised claim

Defendant's position

Award

1.

$5764.00

$1500

$5764

2.

$2530.00

Not required

$1441

3.

$4151.40

Not required

$Nil

4.

$1710.00

Not required

$Nil

5.

$3916.00

Not required

$Nil

6.

$Nil

Not required

$Nil

7.

$17,400.00

$300

[See adjustment to items 7, 8 & 9 below]

8.

$32,770.00

$300

[See adjustment to items 7, 8 & 9 below]

9.

$44,600.00

$300

[See adjustment to items 7, 8 & 9 below]

Adjustment to items 7, 8 & 9

$54,000.00

Not required

$7,500

10.

$55,000.00

Not required

$Nil

11.

$2131.25

Not required

$300

12.

$17,600.00

Not required

$Nil

13.

$3602.50

Not required

$3602.50

14.

$6500.00

Not required

$Nil

15.

$893.75

Not required

$893.75

16.

$8140.00

Not required

$2000

TOTAL

$260,708.90

$21,501.25

The plaintiff has therefore succeeded in establishing an entitlement to a damages award in the amount of $21,501.25.

Interest

Following receipt of further submissions on 8 August 2011 concerning interest calculations, I award pre-judgment interest on the sum of $21,501.25 in the amount of $1993.85 as calculated in the Appendix .

Disposition

Of its claim for damages in the amount of $260,708.90, the plaintiff has made out an entitlement to an award of damages in the sum of $21,501.25. When interest in the amount of $1993.85 is added to that sum, this yields a total verdict and judgment sum in the amount of $23,495.10 including interest.

Costs

As the defendant has been largely successful in defending the plaintiff's claim, considerations arise as to the appropriate order for costs in these circumstances. I will therefore hear the parties on the appropriate orders for costs before determining that issue if the issue cannot be dealt with by consent in the meantime.

Orders

I make the following orders:

(1) Verdict and judgment for the plaintiff in the sum of $23,495.10 including pre-judgment interest;

(2) I will hear the parties on the question of costs if the parties cannot agree on the appropriate order for costs;

(3) The exhibits may be returned;

(4) Liberty to apply on 7 days notice if further orders are required.

APPENDIX

INTEREST CALCULATIONS

1. Relocation of Garbage Room - $5769

24/05/08 - 05/03/09

(285 days) @

10%

$450.07

06/03/09 - 30/06/10

(482 days) @

9%

$685.06

01/07/10 - 31/12/10

(184 days) @

8.5%

$246.98

01/01/11 - 12/08/22

(224 days) @

8.75%

$309.52

Total Interest from 24/05/08 to 12/08/11 = $1691.63

2. Rectification of Common Stairs - $1441

20/03/09 - 30/06/10

(459 days) @

9%

$163.09

01/07/10 - 31/12/10

(184 days) @

8.5%

$61.75

01/01/11 - 12/08/11

(224 days) @

8.75%

$77.38

Total Interest from 28/03/09 to 12/08/11 = $302.22

3. Total Interest - $1993.85

[$1691.63 + $302.22]

**********

Decision last updated: 12 August 2011

Medium Neutral Citation:	Owners Corporation SP 77788 v VK Buildings P/L [2011] NSWDC 91
Hearing dates:	28, 29 July, 1, 2, 3, 4 and 5 August 2011
Decision date:	12 August 2011
Jurisdiction:	Civil
Before:	Levy SC DCJ
Decision:	1.Verdict and judgment for the plaintiff in the sum of $23,495.10 including pre-judgment interest; 2.I will hear the parties on the question of costs if the parties cannot agree on the appropriate order for costs; 3.The exhibits may be returned; 4.Liberty to apply on 7 days notice if further orders are required. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	BUILDING CONTRACTS - claim by owners' corporation against builder seeking to recover costs of rectification works covered by statutory warranty under Pt 2C of the Home Building Act 1989
Legislation Cited:	Building Code of Australia Civil Liability Act 2002, s 5E Development Control Plan 40 Environmental Planning and Assessment Act 1979, s 121B & s 121H Home Building Act 1989, Pt 2C Uniform Civil Procedure Rules 2005, r 14.2(1), Sch 5, cl 5(c)
Category:	Principal judgment
Parties:	Owners Corporation SP 77788 (Plaintiff) VK Buildings Pty Limited (Defendant)
Representation:	Mr R Zikmann (Plaintiff) Mr G Karagavrilidis, by leave (Defendant) Gary I Castle & Partners (Plaintiff) Mr G Karagavrilidis, by leave (Defendant)
File Number(s):	2010/235839

Nature of case	[1] - [3]
Procedural background	[4] - [10]
Issues	[11] - [12]
Evidence overview	[13] -[23]
Facts	[24] - [47]
Decision on Issue 1 - Relocation of garbage room	[48] - [51]
Decision on Issue 2 - Rectification of stairs	[52] - [60]
Decision on Issue 3 - Intercom security system	[61]
Decision on Issue 4 - Gutters, flashing, downpipes	[62] - [71]
Decision on Issue 5 - Consultant's fees	[72] - [75]
Decision on Issue 6 - Legal, insurance expenses	[76] - [78]
Decision on Issues 7, 8 and 9 - Tiling	[79] - [168]
Decision on Issue 10 - Repairs to garage roof	[169] - [181]
Decision on Issue 11 - Rectification of guttering	[182] - [194]
Decision on Issue 12 - Install fire collars to pipes	[195] - [223]
Decision on Issue 13 - Garage driveway wall	[224] - [242]
Decision on Issue 14 - Garage retaining wall	[243] - [251]
Decision on Issue 15 - Remedial brickwork	[251] - [256]
Decision on Issue 16 - Supervisory fees	[257] - [261]
Summary	[262] - [263]
Interest	[264]
Disposition	[265]
Costs	[266]
Orders	[267]

Issue	Plaintiff's revised claim	Defendant's position	Award
1.	$5764.00	$1500	$5764
2.	$2530.00	Not required	$1441
3.	$4151.40	Not required	$Nil
4.	$1710.00	Not required	$Nil
5.	$3916.00	Not required	$Nil
6.	$Nil	Not required	$Nil
7.	$17,400.00	$300	[See adjustment to items 7, 8 & 9 below]
8.	$32,770.00	$300	[See adjustment to items 7, 8 & 9 below]
9.	$44,600.00	$300	[See adjustment to items 7, 8 & 9 below]
Adjustment to items 7, 8 & 9	$54,000.00	Not required	$7,500
10.	$55,000.00	Not required	$Nil
11.	$2131.25	Not required	$300
12.	$17,600.00	Not required	$Nil
13.	$3602.50	Not required	$3602.50
14.	$6500.00	Not required	$Nil
15.	$893.75	Not required	$893.75
16.	$8140.00	Not required	$2000
TOTAL	$260,708.90	$21,501.25

24/05/08 - 05/03/09	(285 days) @	10%	$450.07
06/03/09 - 30/06/10	(482 days) @	9%	$685.06
01/07/10 - 31/12/10	(184 days) @	8.5%	$246.98
01/01/11 - 12/08/22	(224 days) @	8.75%	$309.52

20/03/09 - 30/06/10	(459 days) @	9%	$163.09
01/07/10 - 31/12/10	(184 days) @	8.5%	$61.75
01/01/11 - 12/08/11	(224 days) @	8.75%	$77.38