PATRONUS HOLDINGS PTY LTD and STAMOR PTY LTD
[2019] WASAT 147
•13 JANUARY 2020
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION ACT) 2011 (WA)
CITATION: PATRONUS HOLDINGS PTY LTD and STAMOR PTY LTD [2019] WASAT 147
MEMBER: MS P LE MIERE, MEMBER
MR D MOROLLA, SESSIONAL MEMBER
MS H PEDERSEN, SESSIONAL MEMBER
HEARD: 25 AND 26 NOVEMBER 2019
DELIVERED : 26 NOVEMBER 2019
PUBLISHED : 13 JANUARY 2020
FILE NO/S: CC 692 of 2019
BETWEEN: PATRONUS HOLDINGS PTY LTD
Applicant
AND
STAMOR PTY LTD
Respondent
Catchwords:
Building Services (Complaint Resolution and Administration) Act 2011 (WA) - Failure of upper floor slab(s) - Understrength concrete used - Failure of serviceability - Order for demolition of building and cost of rebuild - Turns on own facts
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 3, s 5, s 36, s 36(1), s 36(1)(a), s 36(1)(b), s 38, s 38(1), s 49
Home Building Contracts Act 1991 (WA)
State Administrative Tribunal Act 2004 (WA), s 83(1)(b), s 87, s 87(1), s 88(2)
Result:
Application allowed
Category: B
Representation:
Counsel:
| Applicant | : | Mr M Alamin (acting as agent) |
| Respondent | : | No Appearance |
Solicitors:
| Applicant | : | In Person |
| Respondent | : | N/A |
Case(s) referred to in decision(s):
Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613
Diploma Construction (WA) Pty Ltd v South Central WA Pty Ltd [2015] WASC 289
Gemmill Homes Pty Ltd v Sanders [2018] WASC 17
Lewis and Waco Pty Ltd [2016] WASAT 127
Owners of Strata Plan 59377 and Carine Homes Pty Ltd [2014] WASAT 39
The Owners of Strata Plan No 74602 v Brookfield Australia Investments Ltd [2015] NSWSC 191
Total Investments Pty Ltd and Rapley Wilkinson Pty Ltd [2015] WASAT 29
Waldron and Afra Construction Pty Ltd [2013] WASAT 207
Willshee v Westcourt Ltd [2009] WASCA 87
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
The application was heard on 25 and 26 November 2019. An oral decision was delivered shortly after the conclusion of the hearing and an order made that pursuant to s 36(1)(b) of the Building Services (Complaint Resolution and Administration Act) 2011 (the BSCRA Act) Stamor Pty Ltd (respondent), pay $519,946 to Patronus Pty Ltd (applicant).
The Tribunal informed the parties it would provide written reasons for its decision. These are the Tribunal's reasons.
On or about 2 August 2017 the applicant and respondent entered into a Costs Plus Contract for the construction of an apartment complex (property) in Maddington (contract). The complex consisted of a double storey masonry and concrete slab construction with three units on the ground floor and two units on the upper floor.
As the respondent undertook the regulated building service pursuant to a Costs Plus Contract the Home Building Contracts Act 1991 (WA) does not apply. Consequently the only issues before the Tribunal can be and are confined to workmanship issues.
On 7 March 2019 the applicant caused an inspection of the property to be made by Mr Andrew Whittle of Intune Consulting Services (Exhibit 1 page 85). Mr Whittle's report identified what he considered was faulty or unsatisfactory workmanship in respect of the regulated building service carried out by the respondent. At that time the contract and the works were not complete.
The respondent suspended the contract via an email to the applicant dated 13 March 2019.
On about 26 March 2019 the applicant lodged a complaint with the Building Commissioner alleging the respondent did not carry out a regulated building service at the property in a proper and proficient manner or was faulty or unsatisfactory. The applicant identified 51 separate items of complaint.
The respondent responded to the complaint by informing the Building Commissioner that it was prepared to go back to the property, meet with the applicant, get the contract rectified and back on track and go through the complaint items and finish the contract/project. The respondent did not then or subsequently specifically respond to any item of complaint.
The statutory scheme
All following references to sections or parts of legislation are references to sections or parts of the BSCRA Act unless the context indicates otherwise.
Section 5 permits the making of complaints about a regulated building service matter in the following terms:
(1)Subject to the regulations, a person may make a complaint to the Building Commissioner about a regulated building service not being carried out in a proper and proficient manner or being faulty or unsatisfactory.
…
(5)The regulations may make provision as to ‑
(a)who can make a building service complaint; and
(b)any preliminary action required before making a complaint under this section.
(6)A complaint under this section must be ‑
(a)made in a manner and form approved by the Building Commissioner; and
(b)accompanied by the prescribed fee, if any.
A 'regulated building service' is defined in s 3 as:
(a)a building service carried out by a registered building service provider or an approved owner‑builder[.]
If the Building Commissioner decides to refer the complaint to the Tribunal pursuant to s 38, the Tribunal is then empowered under those provisions as follows:
How State Administrative Tribunal may deal with building service complaint
(1)If the Building Commissioner refers a building service complaint to the State Administrative Tribunal, the Tribunal may ‑
(a)if the Tribunal is satisfied that the regulated building service that is the subject of the building service complaint has not been carried out in a proper and proficient manner or is faulty or unsatisfactory, deal with the building service complaint by making a building remedy order; or
(b)otherwise, decline to make a building remedy order.
(2)The State Administrative Tribunal cannot make a building remedy order requiring a respondent who is not a registered building services provider ‑
(a)to do any work of a value estimated by the Tribunal to exceed the prescribed amount; or
(b)to pay any amount exceeding the prescribed amount, unless ‑
(c)the order is made in respect of a building service that has been carried out by the respondent in contravention of the Building Services (Registration) Act 2011 section 7; or
(d)the respondent consents to the order being made.
(3)Unless a greater amount is prescribed by the regulations, in subsection (2) the prescribed amount is $500 000.
(4)Nothing in this section prevents a building service complaint from being dealt with through a compulsory conference or mediation process under the State Administrative Tribunal Act 2004.
Section 36 sets out what a building remedy order may include:
Building remedy order
(1)A building remedy order consists of one of the following ‑
(a)an order that a person who carried out a regulated building service remedy the building service as specified in the order;
(b)an order that a person who carried out a regulated building service pay to an aggrieved person such costs of remedying the building service as the Building Commissioner or State Administrative Tribunal, as the case requires, considers reasonable and specifies in the order;
(c)an order that a person who carried out a regulated building service pay to an aggrieved person a sum of money specified in the order to compensate the aggrieved person for the failure to carry out the building service in a proper and proficient manner or for faulty or unsatisfactory building work.
(2)A building remedy order may require that the order be complied with within a time specified in the order.
(3)A person who is not a building service contractor may arrange for a building service to be carried out for the purpose of compliance by that person with a building remedy order referred to in subsection (1)(a) despite the Building Services (Registration) Act 2011 section 7.
General principles to be applied
Liability
The Tribunal has, pursuant to s 38 of the BSCRA Act power to make a building remedy order if it is satisfied that the regulated building service has not been carried out in a proper and proficient manner or is faulty or unsatisfactory.
The standard of 'proper and proficient' is higher standard of care than 'proper and workmanlike manner' or the reasonable care and skill of a tradesman or contractor.[1]
[1] Waldron and Afra Construction Pty Ltd [2013] WASAT 207 at [14]; approved in Lewis and Waco Pty Ltd [2016] WASAT 127 at [14].
The building contract may be relevant as to what is proper and proficient as it 'defines what the builder was required to do, which informs the issue of workmanship'.[2]
[2] Owners of Strata Plan 59377 and Carine Homes Pty Ltd [2014] WASAT 39 at [23].
The phrase 'not been carried out in a proper and proficient manner or is faulty or unsatisfactory' is a broad expression apt to cover a wide range of deficiencies in the construction of a building which can be taken into account.[3]
[3] Diploma Construction (WA) Pty Ltd v South Central WA Pty Ltd [2015] WASC 289 at [31].
Manufacturer's recommendations may be departed from if the builder otherwise acted in a proper and proficient manner. A product which is performing well, and is suitable for its application, cannot automatically be said to be faulty or unsatisfactory.[4]
[4] Total Investments Pty Ltd and Rapley Wilkinson Pty Ltd [2015] WASAT 29 at [32] – [37].
A mere departure by a builder from its contractual obligations is insufficient to establish the work was not carried out in a proper and proficient manner or was faulty or unsatisfactory.[5]
[5] Total Investments Pty Ltd and Rapley Wilkinson Pty Ltd [2015] WASAT 29 at [32].
Builders are not compelled to search for and install superior products over and above what is adequate for the intended purpose.[6]
[6] Total Investments Pty Ltd and Rapley Wilkinson Pty Ltd [2015] WASAT 29 at [32].
Where the issue is not contractual, the Tribunal should be cautious in regards to ordering remedial work to be undertaken unless the applicant has demonstrated a genuine adverse effect by reason of the building work in question.[7]
[7] Lewis and Waco Pty Ltd [2016] WASAT 127 at [16].
A building service that complies with the Building Code of Australia will not be found by the Tribunal to be faulty or unsatisfactory or to not to have been carried out in a proper and proficient manner except in exceptional circumstances.
Damages or building remedies
Where there is a contractual relationship with the builder, the principles outlined in Willshee v Westcourt Ltd [2009] WASCA 87 will guide and influence the grant of any remedy ‑ which is a statutory not a common law contractual remedy. But where there is no contractual relationship or other nexus with the builder, the Tribunal would generally be disinclined to grant a remedy when no faulty or unsatisfactory work is yet manifest, or likely to become manifest, particularly when there is a substantial time for any claim based on manifest faulty or unsatisfactory work to become time‑barred. In all matters, the particular circumstances of the case would affect the exercise of the discretion.[8]
[8] Lewis and Waco Pty Ltd [2016] WASAT 127 at [17].
Where the complaint is one of workmanship a building remedy order may be made pursuant to s 38 of the BSCRA Act and the Tribunal is able to make orders for work to be performed or monetary compensation to be ordered.
The amount of compensation to be paid is that amount which would put the owner in the position they would have been had the work been performed correctly or properly together with any loss consequential upon the faulty workmanship or breach of contract.
The only qualification to that general principal is that the remedial work sought to be redone must be both 'necessary' and 'reasonable'. What is 'necessary' and 'reasonable' in any particular case is a question of fact.[9]
[9] Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 at [7].
The test of 'unreasonableness' is only to be satisfied 'by fairly exceptional circumstances', for example where the innocent party was 'merely using a technical breach to secure an uncovenanted profit'. Its unreasonableness may be established where the cost or complexity is out of proportion to the benefit to be obtained.[10]
The hearing
[10] Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 at [7].
On 2 July 2019 at a directions hearing which the respondent attended the Tribunal made orders, relevantly, that required the respondent to file with the Tribunal and provide to the applicant all the documents it intended to rely upon at the hearing by 24 September 2019.
On 27 August 2019 the time for the respondent to file its documents was extended to 5 November 2019.
The respondent did not file any expert evidence or any other documents.
At hearing a bundle of documents which included expert reports from Mr Whittle, a builder, a joint report of Mr Whittle and Mr Martelli and reports from Mr Michael Cassie and Mr Tristan Salter, a graduate engineer and a civil structural engineer respectively of RSA Consulting Pty Ltd engaged by the applicant was admitted into evidence as Exhibit 1.
The only expert evidence before the Tribunal was therefore that from the applicant.
The respondent did not attend the hearing and Mr Grant Stacey the representative of the respondent sent an email to the Tribunal dated 19 November 2019 informing the Tribunal that Mr Matheiu Tribut had been appointed as administrator of the respondent. Upon the Tribunal making enquiries of Mr Tribut by telephone on 22 November 2019 it was informed by him that the respondent was not in administration but would possibly/probably be put into administration in 2020.
Mr Mohamed Alamin, an officer of the applicant, represented the applicant at the hearing.
Evidence
Item 1 slab on ground - cracking
The evidence of the workmanship in respect of complaint item 1 being unsatisfactory is contained in the joint report of Mr Whittle and Mr Martelli (Exhibit 1 page 106) and the RSA report (Exhibit 1 page 175). No contrary expert evidence was submitted by the respondent. Similarly no expert evidence as to the appropriate remediation work was advanced by the respondent.
Mr Salter from RSA gave evidence at hearing that the cracks were excessive but within 'code'. He speculated that the extent of the cracking may have been caused by poor compaction of the soil underneath the slab. The Tribunal has no evidence as to what the compaction testing performed prior to the installation of the slab showed. Mr Salter considered the cracking although excessive did not affect the serviceability of the slab and no remedial work was necessary.
Mr Whittle did not disagree that the size of the cracks being 1 millimetre or less meant the cracks were within the Australian Standards 2011 ‑ 2870 but considered the extent of the cracking constituted faulty workmanship and should be remediated.
Items 2, 3, 5 and 6 - suspended slabs upper floor
These complaints relate to the excessive deflections of first floor slab areas and the strength of the concrete used in all of the upper floor slabs. The specified strength of concrete in the engineer's specifications for the property require concrete of strength N32 ‑ E7, for the main slab and N40 for the balconies. The building licence was issued with these requirements.
The evidence from RSA (following testing of samples) was that N25 concrete was in fact used in all areas.
Mr Alamin who represented the applicant in the proceedings also gave evidence that he saw the concrete arrive on site and telephoned Mr Stacey of the respondent and told him that N25 grade of concrete was being delivered. Mr Alamin said that Mr Stacey replied that it was all okay as the following batches would be N32 and that it was not a problem.
Mr Slater gave evidence that the results of the testing that showed the strength of concrete to be between 21 and 24.5 Megapascal Pressure Unit (MPa). The mean value of the cylinder compressive strength (fcm) for the four concrete cores tested was 23.4 MPa which would appear to indicate concrete grade of N20 was used (Exhibit 1 page 176).
From the evidence of Mr Alamin and the test result Mr Slater opined that it is likely that N25 grade of concrete was delivered to site but was weakened by the addition of water. This resulted in the effective fcm of the concrete being that of N20 grade concrete instead of concrete grade N32 or N40. Mr Slater explained that the fcm is required to be reached at 28 days and would or should increase as the concrete set and hardened over time so the coring test results support a characteristic strength of 20MPa. The 7 day test result in Exhibit 1 page 204 also supports this.
Mr Salter in his oral evidence discussed how in his opinion the lower (under strength) concrete had led to the problems with the cracking at the base of the walls, in the walls and in the brickwork (complaint item 10), as shown in the photographs (Exhibit 1 pages 184 to 186). He also said that although the slab(s) may not collapse they fail the serviceability criteria: any tiles laid on them would be likely to pop, they will continue to cause the walls to crack; and will lead to glass in windows breaking.
An issue was raised by the Tribunal with Mr Salter as to whether the problems with the slab(s) deflecting, the cracking of the brickwork and walls, for example, could be caused by a design fault in the engineering specifications in relation to the supporting beam (see Exhibit 1 page 34).
The engineering specifications did not call for shear studs to be used in the supporting beam. Mr Salter confirmed he considered shear studs should have been both required and used to ensure the steel beam worked in conjunction with the concrete to provide the appropriate composite strength required.
He opined that the lack of shear studs in the design was a concern but did not account for the separation of the concrete slab(s) away from the walls (Exhibit 1 page 184), and in particular the cracking in the brickwork directly over the corner of the steel beam where there would be the required strength regardless of the use of shear studs (Exhibit 1 page 187).
It was Mr Salter's opinion that the problems with or caused by the slab(s) are all as a result of the understrength concrete being used and not any possible design fault.
The RSA report (Exhibit 1 pages 192 – 203), addresses what remedial works would need to be undertaken to strengthen the upper floor slab(s) and prevent further deflection and cracking of the walls.
Mr Whittle (Exhibit 1 pages 96 – 105), provided costings for all remedial work including the repairs to the upper slab(s) recommended by RSA of approximately $84,026. The two main costs being $55,924 and $28,102 for repairs to the balconies. This figure does not take into account any other remedial works to repair other damage caused by the understrength slab(s).
At hearing Mr Whittle and Mr Slater described in detail the possible effects such work would have on the aesthetics and use of the building.
The building they said would look different and the space inside the carport would be reduced by the depth of the large 250UC90 and 310UC118 beams and the width of the 100x100x6SHS column that would need to be placed there.
In their discussions they reflected upon who would agree to undertake such a task as it would require the large beams to be manually lifted into place. Mr Whittle had allowed for six men to lift each beam but was not sure that they would be able to lift it safely or that they would be able to manoeuvre it into position. The experts also speculated on the other effects that such works would have on surrounding structures. It was opined by both Mr Whittle and Mr Salter that jacking the first floor slab to remove the excessive deflection and fit the new support beams under would likely cause extensive further cracking to the slab and walls.
The Tribunal asked the experts about the feasibility, desirability and cost of removing the entire upper floor and rebuilding it as an alternative remedy to repairing the upper floor.
Both experts confirmed removing the upper floor and slab(s) and rebuilding them would produce an outcome consistent with the original plans whereas the proposed remedial works would definitely not.
Mr Whittle gave evidence that the cost of removing the upper floor would be $43,878.77 and the cost of rebuilding the upper floor $388,940.62. He said there were the additional costs of removing an area of damaged ground floor slab(s) areas of $3,423.42 and the damaged footings of $445.72. Thus the total cost of removing the upper floor would be $436,688.54 (Exhibit 2).
Item 4 - columns wrong strength of concrete used
The experts' evidence was that they did not know what concrete had been used and could not say if there was any problem or not. The complaint was essentially that the respondent did not produce the documentary evidence to show what strength of concrete had been used in the columns.
Item 7 - concrete pad footing A on south side of front verandah
Mr Whittle confirmed in his written report that the column footing position as constructed is in the wrong place so the column does not land in the centre of the pad footing such that the weight is not distributed evenly. Both experts considered this constitutes faulty or unsatisfactory workmanship.
The remedial work necessary as recommended by the RSA report is to remove the footing and replace it (Exhibit 1 page 167 and page 173). Mr Slater explained why the pad footing cannot just be made bigger as there is a problem with placing a bolt in a cold‑formed concrete joint. However it could be repaired by breaking out a piece of the pad footing and then making the pad footing bigger. Following discussion between the Tribunal and the experts it was agreed that the cost of the two alternative remedies would not be much different in price. The costs of the remedy Mr Whittle said would be $3,640.15.
Remedial work to the columns would still need to be done if the upper floor was removed and the ground floor remained. If demolition of the upper floor occurred then only the pad footing would need to be reinstalled as the cost of the removal of the pad footing would be negligible as it could be done by the same machine and at the same time as the demolition of the upper floor slab(s).
The cost of replacement of the pad footing of the columns only would then be $1,268.48.
Item 8 - SC3 support posts
Mr Whittle gave evidence that item 7 and item 8 refer to the same column location. The issue here was that the base of the columns were not recessed into the footing to allow tiling to be taken smoothly up to the column over the bolts. The remedial cost is included in item 7.
Item 9 - extra C2 post
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 116. No remedial work will be required if the upper floor is demolished.
Item 10 - brickwork issues with upper floor
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 117. No remedial work will be required if the upper floor is demolished.
Items 11, 12 and 19 - upper floor brickwork
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 pages 117 ‑ 122 and 128. No remedial work will be required if the upper floor is demolished.
Item 13 - brickwork in random locations
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 123.
The ground floor will need to be rendered as the brickwork for the upper floor if demolished would be different. The cost of rendering the ground floor would be $25,206.16 (Exhibit 1 page 99).
Items 14, 15, 16, 17 and 18 - various issues with brickwork
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 pages 123 ‑ 128.
These items are included in the cost of the rendering of the brickwork and included in item 13.
Items 20, 21, 22, 23 and 25 - downpipes
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 pages 129 ‑ 133.
The experts in oral evidence agreed that the cost of the remedial work necessary for just the ground floor would be $1,700 to $1,800.
Item 24 - box gutter
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 134.
The evidence of Mr Whittle as to the cost of the remedial work would be $3,922.97.
Item 26 - sofiet linings
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 136.
The evidence of Mr Whittle as to the cost of the remedial work is $79.28 but will be resolved if the upper floor is demolished.
Item 27 - door handles are defective
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 136.
If the upper floor is demolished a lesser number of the door handles will need to be replaced. Mr Whittle considered only about one third would be required for the ground floor being a cost of $235 (Exhibit 1 page 101).
Items 28 and 29 - floor waste
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 pages 137 ‑ 138.
Mr Whittle indicated that if the upper floor is demolished the cost of remedial work would be reduced to $1,702 (Exhibit 1 page 101).
Items 30, 31, 32, 33 and 34
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 pages 139 ‑ 145.
There will not be any remedial work required if the upper floor is demolished.
Item 35 - stormwater pipes
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 146.
The evidence of Mr Whittle as to the cost of remedial work would be $8,542.22 (Exhibit 1 page 102).
Items 36, 37 38 and 39 - doors not to specification
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 pages 147 ‑ 151.
Mr Whittle's evidence is that the cost of installing the correct fire‑rated doors would be $20,882.86 (Exhibit 1 page 103).
Item 40 - facia does not fit the barge board
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 152.
The evidence of Mr Whittle as to the cost of the remedial work would be $883.44 (Exhibit 1 page 104).
Item 41 - Trip L grip to rafter
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 pages 152 ‑ 153.
This item will be partially resolved if the upper floor is removed. The cost for the work on the ground floor only would be approximately half of that calculated for both floors namely $5,905 (Exhibit 1 page 104).
Items 42 and 43 - roof struts not strapped and bolted
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 pages 154 ‑ 155.
This item will be partially resolved if the upper floor is removed. The cost for the work on the ground floor only would be approximately half of that calculated for both floors, namely $421.77 (Exhibit 1 page 104).
Item 44 - rafters extended
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 156.
The evidence of Mr Whittle as to the cost of remedial work would be $843.54 (Exhibit 1 page 104).
Item 45 - roof sisalation and insulation.
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 157.
The cost of the remedial work is included in item 41.
Item 46 - missing nails in PGA strap
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 158.
Cost of remedial work is included in item 41.
Item 47 - ceiling insulation
The issue in respect of this matter relates to the variability of the thickness of the insulation. It is essentially a contractual matter. No specific evidence was provided to the Tribunal as to how much of the insulation was R2 as opposed to R4 required by the contract.
Item 48 - beams in the roof
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 161.
No costings were provided for the remedial work
Item 49 - ceiling joist spacers
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 162.
The cost of remedial work in respect of the ground floor ceilings only is approximately half of that for both floors that is $453.69 (Exhibit 1 page 105).
Item 50 - verandah pitching beams
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 105 but will be resolved if the upper floor is removed.
Item 51 - water meters
The evidence of Mr Whittle as to the unsatisfactory workmanship is at Exhibit 1 page 164.
The evidence of Mr Whittle as to the cost of remedial work is $1,460.34 (Exhibit 1 page 105).
Costs of demolition
During the course of the proceedings the Tribunal sought further costings from the applicant in respect of the demolition of the upper floor and/or the whole of the property. The Tribunal was mindful of the possible findings it could make and wished to ensure that it had all relevant evidence in order to make a decision fairly and according to the substantial merits of the case.
Mr Whittle provided further evidence (Exhibit 3) setting out the cost of:
•demolishing the upper floor only $43,878.77;
•rebuilding like for like $388,940.62
•taking out the damaged slab(s) area $3,423.42
•taking out the damaged pad footings $445.72
The above items were costed as the evidence from both experts particularly in relation to the need to make repairs to areas of the slab(s) and the damaged pad footings was to the effect that if the upper floor was removed remedial works to those two areas would still need to be undertaken if the ground floor remained.
Mr Whittle had already provided costings for the demolition of the property in his scope of works of $71,922.84 (Exhibit 1 pages 94 – 95).
The experts also discussed what work might be necessary in the event the whole of the building other than the ground floor slab was demolished.
They opined that the pad footings for the column (complaint item 7) would still need to be remediated as would the floor wastes (complaint items 28 and 29), the storm water pipes (complaint item 35) and the water meters (complaint item 51.
The experts both agreed that even if the property was to be demolished there would be no cause to remove the ground floor slab and therefore a cost was calculated as to what the applicant had paid for the slab. The items highlighted in yellow on Exhibit 3 are the items the Tribunal concluded related to the installation of the ground floor slab and therefore what the applicant had paid for the construction of the slab.
Monies paid
Mr Alamin of the applicant gave evidence that the applicant had paid the respondent the sum of $508,294.53. Mr Alamin produced a printed record (Exhibit 3) he had received from the respondent listing the items the respondent had paid from these monies. The applicant also gave evidence that at the end of the printed list the five items handwritten had been added by the respondent. The applicant said the respondent had advised him they had been paid and needed to be added to the total of the printed costs. The items total $10,509 exclusive of GST and $11,559 inclusive of GST. This leaves a balance of $23,067 the applicant paid the respondent in anticipation of the further work to be done (Exhibit 3)).
Consideration and conclusion
Item 1 slab on ground - cracking
Neither expert considered the cracking was outside Australian Standards 2011 ‑ 2870. The Tribunal is not satisfied that the regulated building service in respect of complaint item I was not carried out in a proper and proficient manner or is faulty or unsatisfactory work. The Tribunal declines to make a building remedy order and the item of complaint is dismissed.
Items 2, 3, 5 and 6 - suspended slabs upper floor
Mr Slater's evidence was that the results of the testing that showed the strength of concrete to be between 21 and 24.5 MPa. The mean value of the fcm for the four concrete slab(s) tested was 23.4 MPa which would appear to indicate a concrete grade of N20 was used (Exhibit 1 page 176).
In his oral evidence Mr Slater said that it is likely that N25 concrete grade was delivered to the site and water added thus reducing the strength of the concrete grade to N20.
The Tribunal finds that the suspended slab(s) is constructed of concrete grade N25 which was further weakened by the addition of water.
The issue for the Tribunal is not however whether the respondent complied with the specifications of the design engineer but rather whether under strength or the wrong strength concrete grade was used such that the regulated building service was not carried out in a proper and proficient manner or is faulty or unsatisfactory workmanship.
Not following the design or engineering specifications is a contractual issue but may also be a workmanship issue. The contract may be relevant as to whether work was carried out in the proper and proficient manner as it 'defines what the builder was required to do, which informs the issue of workmanship'.[11]
[11] The Owners of Strata Plan No 74602 v Brookfield Australia Investments Ltd [2015] NSWSC 1916 at [39] – [40].
In some instances it could be said that non‑compliance with a specification in a contract could not inform the Tribunal as to a workmanship issue.
However the requirements of the specifications and building licence are relevant in this instance, because they inform the Tribunal as to what is objectively considered to be an appropriate standard or type of material to be used to ensure the structural integrity of the building.
RSA in its report (Exhibit 1 pages 167 – 191) opines that whilst the understrength or lower strength concrete grade will possibly not lead to a failure of the slab(s) such that they will collapse the use of N25 concrete grade does not meet the requirements of the Australian Standard 1170, fails the serviceability requirements (Exhibit 1 page 179), is highly problematic for the long‑term deflection of the slab(s) and would require ongoing excessive maintenance.
The Tribunal accepts the evidence of the applicant's experts that understrength concrete was used in the upper floor slab(s) and is satisfied that the regulated building service in respect of these items was faulty or unsatisfactory.
What remedial work is required?
Following the experts' oral evidence in respect of the proposed remedial works the Tribunal was left with the understanding that if enough money was spent it may be possible to repair or remediate the problems with the upper slab(s) but the actual cost, the change to the dimensions of the Unit 1 carport, or whether any builder would be prepared to undertake the work was not known.
Both experts agreed they had not heard of such work being done before. Mr Slater said the proposed remedial works were theoretical.
The Tribunal therefore heard from the experts about the feasibility, desirability and cost of removing the entire upper floor and rebuilding it.
Both experts confirmed removing the upper floor and slab(s) and rebuilding them would produce an outcome consistent with the original plans whereas the proposed remedial works would definitely not.
The Tribunal is satisfied that to put the applicant in the situation it would have been had the regulated building service been carried out in a proper and proficient manner and was not faulty or unsatisfactory it was necessary for the upper floor slab(s) to be removed and rebuilt.
As the Tribunal is satisfied that the remedial works require the removal and rebuilding of the upper floor it does not need to make findings in relation as to the scope of works or the cost of remedial work complaint items 3, 5, 6, 9, 10, 11, 12, 19, 20, 26, 30, 31, 32, 33, 34, 42, 43 and 50.
Item 4 - columns wrong strength of concrete used
No evidence was submitted by the applicant that there was any problem with the columns.
The Tribunal is not satisfied that with respect to complaint item 4 the regulated building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal declines to make a building remedy order in respect of this item of complaint and it is dismissed.
Items 7 and 8 - concrete pad footing
As the Tribunal has determined the upper floor will need to be demolished the cost of the remedial work will be confined to the replacement of the pad footing which would cost $1,268.48.
Items 13, 14, 15, 16, 17 and 18 - various issues with brickwork
The Tribunal is satisfied that with respect to the above items of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle and is satisfied that the reasonable cost of the remedial work necessary would be $25,206.16.
Items 20, 21, 22, 23 and 25 ‑ downpipes and gutters
The Tribunal is satisfied that with respect to the above items of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be $1,700 to $1,800.
Item 24 ‑ box gutter
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be $3,922.97.
Item 27 ‑ door handles defective
The Tribunal is satisfied that with respect to the above items of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be $235.
Item 28 and 29 floor waste
The Tribunal is satisfied that with respect to the above items of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be reduced to $1,702 if the upper floor was demolished.
Item 35 ‑ storm water drains
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be $8,542.22.
Items 36, 37, 38 and 39
The issue is not simply that the particular type of doors and frames (metal fire‑rated) were specified and a different type was installed (wooden) but rather it is where they are placed in the building that it is a requirement that fire‑rated doors are installed. The specifications require them and the building permit was granted on the basis of fire‑rated doors being installed.
This is an example where the contract and specifications inform the Tribunal as to what building materials were required and the failure to use those results in the building service not being proper or proficient or faulty or unsatisfactory.
The Tribunal is satisfied that with respect to the above items of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The cost of installing the correct fire‑rated doors is on Mr Whittle's evidence $20,882.86 (Exhibit 1 page 103).
Mr Alamin of the applicant produced invoices for the supply of fire‑rated doors but it is not clear if the applicant had paid the respondent for them.
Item 40 ‑ facia does not fit the barge board
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be $883.44.
Item 41 ‑ L grip to rafters
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be reduced to $5,905 if the upper floor was demolished.
Item 44 ‑ rafters extended
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be $843.54.
Item 45 ‑ roof sisalation and insulation
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle as to the cost of the remedial work which is included in item 41.
Item 46 ‑ missing nails in PGA strap
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle as to the cost of the remedial work which is included in item 41.
Item 47 - ceiling insulation
It is unclear if this is purely a contractual matter. In any event the evidence as to how much of the insulation was R2 when it should have been R4 is uncertain.
The Tribunal is not satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal declines to make a building remedy order and dismisses this item of complaint.
Item 48 - beams in the roof
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal does not have any evidence as to the cost of remedial work and therefore declines to make a building remedy order.
Item 49 - ceiling joist spacers
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be $453.69.
Item 51 - water meters
The Tribunal is satisfied that with respect to the above item of complaint the building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
The Tribunal accepts the evidence of Mr Whittle that the cost of remedial work would be $1,460.34.
Conclusion
Section 38(1) of the BSCRA Act confers a discretion on the Tribunal as to whether to make a building remedy order in favour of an applicant, and if so, s 36(1) of the BSCRA Act confers a discretion as to the nature of the building remedy order.
Pursuant to s 36(1)(a) the building remedy order may specify work to be performed or pursuant to s 36(1)(b) of the BSCRA Act the building remedy order can require a sum of money to be paid by a respondent to the applicant.
The exercise of the discretion by the Tribunal cannot be fettered by simply adopting an applicant's election as to their preferred building remedy order.[12]
[12] Gemmill Homes Pty Ltd v Sanders [2018] WASC 179 at [131] and [135] ‑ [140].
The respondent has not participated in these proceedings and has indicated it is no longer operating as a builder and is anticipating going into administration. In such circumstances the Tribunal considers it appropriate to make a monetary order pursuant to s 36(1)(b) of the BSCRA Act rather than a works order pursuant to s 36(1)(a) of the BSCRA Act.
The Tribunal then turned its mind to what was an appropriate amount to award the applicant to carry out the necessary repairs and to put it in the position it would have been had the work been performed correctly the first time.
The Tribunal is satisfied and finds the entire upper floor needs to be demolished for the reasons set out in the proceeding paragraphs.
In the following calculations the Tribunal has rounded the numbers down.
The cost of demolishing the upper floor is $43,878.77 (Exhibit 2). The cost to rebuild the upper floor is $388,940 (Exhibit 2) together with costs of repairs of $3,423.42 to the slab(s) area that will be damaged by the demolishment and the damaged pad footings of $445.72 being a total of $436,687.91. To this will need to be added the cost of the remedial work to the items of complaint on the ground floor (items of complaint 7 (part), 11 and 13, 20 (part), 24, 27 (part), 35, 40, 41 (half), 40, 41 (half), 42, 44, and 49 (half) and 51) the Tribunal has found to be faulty or unsatisfactory being $99,176 (inclusive of GST).
Therefore the cost of demolishing the upper floor and carrying out the necessary remedial work to the ground floor is $535,864 (inclusive of GST).
The Tribunal then considered the cost of demolishing the entirety of the property to compare the costs.
The experts both agreed that even if the property was to be demolished there would be no cause to remove the ground floor slab and therefore a cost was calculated as to what the applicant had paid for the slab. The Tribunal finds the items highlighted in yellow on Exhibit 3 are the amounts the applicant paid for the construction of the slab.
The cost to rebuild the property to the stage it was at hearing is the amount the applicant had paid of $430,607 (excluding GST) together with the additional invoices handwritten in Exhibit 3 of $10,509 (excluding GST) totalling $441,116 less the value of the ground floor slab of $67,763 (including GST) being $373,353 (or $410,687 inclusive of GST) to this needs to be added the costs of demolishing the property of $71,922.84 (including GST) which equals $482,610.
The Tribunal finds the following items would still require remediation work to be carried out even if the property is demolished:
Item 7 footings for the column: $1,268.48 (excluding GST)
Items 28/29 the floor wastes: $1,702 (excluding GST)
Item 35 stormwater pipes: $8,542.22 (excluding GST)
Item 51 water meters: $1,146 (excluding GST)
Being a total of $12,972 (excluding GST and builders margin)
$14,269.20 inclusive of GST
The total of the cost of demolition, rebuilding and remediation work is $496,879.
From the above calculations it can be seen that it is more cost effective to demolish the property (other than the ground floor slab) and start again.
A further sum of $23,067 should be added to this calculated as follows.
The Tribunal is satisfied the applicant paid $508,294 to the respondent (Exhibit 3). The Tribunal is further satisfied the cost of works (as claimed by the respondent in Exhibit 3) was $430,607 (excluding GST). The respondent subsequently deducted $11,559 (inclusive of GST) for further handwritten invoices. The Tribunal finds that an amount of $23,067 was overpaid or is owed by the respondent to the applicant.
Costs
At the conclusion of the hearing the applicant sought an additional order for the payment of the costs of its expert reports and attendances at hearing and an order was made as follows:
1.The applicant has liberty to apply for their costs of the proceeding by filing with the Tribunal and giving to the other party on or before 3 December 2019 a schedule of the costs claimed in sufficient detail to enable the Tribunal to assess and fix any costs which might be awarded, together with any supporting documents upon which the applicant wishes to rely.
2.If the applicant makes an application for costs, the respondent may file with the Tribunal and give to the applicant written submissions opposing the application by 10 December 2019.
3.If the applicant makes an application for costs, the Tribunal will determine the application on the documents, and will fix the amount of any costs awarded.
In support of its claim on 3 December 2019 the applicant filed with the Tribunal four invoices from Intune Consulting Services totalling $8,650 and four invoices from RSA totalling $8,228.39 being a grand total of $16,878.39.
No submissions were received from the respondent opposing the costs order sought by the applicant.
The starting point in any analysis of the circumstances in which the Tribunal will make an order for costs is s 87(1) of the State Administrative Tribunal Act 2004 (WA), which creates the presumption of a 'no costs jurisdiction'. There is however provision in s 87 and s 88(2) of the SAT Act for the Tribunal to award costs.
Section 49 of the BSCRA Act effectively removes the starting position that there should be no award of costs provided by s 87 of the SAT Act. However the provision should not be understood as providing that costs will generally follow the result.
Section 49 of the BSCRA Act is neutral in effect, and should be applied in the manner which is consistent with and reinforces the objectives and procedures of the Tribunal, and any factors will be relevant which point to the justice of the case requiring an award of costs.
The underlying consideration for the Tribunal when determining an application for a costs order will be whether the justice of the case supports moving away from the initial position that each party should bear its own costs.
The Tribunal is satisfied that the objectives of the Tribunal would be advanced and the justice of the case supports an order for the costs of the experts the Tribunal relied upon in coming to its decision.
Orders at conclusion of hearing
At the conclusion of the hearing orders were made dismissing complaint items 1, 4 and 47. An error was made by the Tribunal in accidentally not including the dismissal of complaint item 48. The orders made on 26 November 2019 will therefore be amended pursuant to s 83(1)(b) of the SAT Act and a further order made in respect of costs
Summary of findings
1)The Tribunal is satisfied that the regulated building service carried out by the respondent in respect to complaint items 2 to 46 and 48 to 51 of Complaint No. C171641 were not carried out in a proper or proficient manner or were faulty or unsatisfactory.
2)The Tribunal is not satisfied that the regulated building service with respect to was not carried out in a proper and proficient manner or was faulty or unsatisfactory and declines to make a complaint items 1 and 4 of Complaint No. C171641 building remedy order.
3)Complaint item 47 of Complaint No. C171641 is a contractual dispute and not within the Tribunal's jurisdiction.
4)The Tribunal declines to make a building remedy order in respect of complaint item 48 as no evidence was produced as to the cost of the remedial work.
Orders
1.Complaint items 1, 4, 47 and 48 of Complaint No. C171641 are dismissed.
2.Pursuant to s 36(1)(b) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA), the respondent is to pay to the applicant the sum of $519,946 by 10 December 2019.
3.The respondent is to pay the applicant's expert report costs and attendance at the hearing fees of $16,878.39 by 30 January 2020
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS P LE MIERE, MEMBER
15 JANUARY 2020
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