Pilipczyk & anor v Commissioner for Fair Trading, NSW Office of Fair Trading

[2007] NSWADT 85

CITATION:	Pilipczyk & anor v Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 85
DIVISION:	General Division
PARTIES:	APPLICANTS Efim Pilipczyk Pty Ltd t/as Homes By Us Efim Pilipczyk RESPONDENT Commissioner for Fair Trading, NSW Office of Fair Trading
FILE NUMBER:	063320; 063333
HEARING DATES:	26 & 28 February 2007 2, 5 & 27 March 2007
SUBMISSIONS CLOSED:	27 March 2007
DATE OF DECISION:	13 April 2007
BEFORE:	Handley R - Acting Deputy President
CATCHWORDS:	Home Builder - suspension of contractor licence - Home Building Act - home builder - suspension of contractor licence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Home Building Act 1989
CASES CITED:	Briginshaw v Briginshaw (1938) 60 CLR 336 Building Services Corporation v McIlveen (Commercial Tribunal of NSW, unreported, 18 February 1997) Director-General, Department of Fair Trading v Cohen [1999] NSWFTT 2 Director-General, Department of Fair Trading v Cohen [2000] NSWFTT 3 Director-General, Department of Fair Trading v O’Connell [2000] NSWFTT 20
REPRESENTATION:	APPLICANTS E Olsson, Senior Counsel RESPONDENT G Elliott, Counsel
ORDERS:	The decision under review is set aside and, in substitution therefor, the Applicants, Efim Pilipczyk and Efim Pilipczyk Pty Ltd t/as Homes By Us, are each to be issued with a caution in respect of improper conduct in relation to construction work at 40 Risdon Crescent, Kariong.

REASONS FOR DECISION

1 This matter involves applications by Efim Pilipczyk and Efim Pilipczyk Pty Ltd t/as Homes By Us – Architects and Builders (‘HBU’) for the review of decisions made by the Commissioner for Fair Trading, NSW (‘the Commissioner’) to suspend the contractor licenses held by Mr Pilipczyk and HBU for a period of six months.

The Facts

2 On 31 March 1992, Mr Pilipczyk, who is also a registered architect, was granted an endorsed contractor licence (no 28922C) under s 26 of the Home Building Act 1989 (‘the 1989 Act’) authorising him to undertake and supervise residential building work within the category of ‘general building work’.

3 On 28 June 1996, HBU was granted a contractor licence (no 75452C) under s 20 of the 1989 Act, authorising it to undertake residential building work within the same category. Mr Pilipczyk is a director and the nominated supervisor of HBU.

4 On 26 June 2002, HBU entered into a Building Contract with Albert and Donna Falzon to construct alterations, including an adjoining garage and a second storey, to their house at 40 Risdon Crescent, Kariong for the sum of $171,500. Work commenced about July 2002 and continued until February 2003, when HBU ceased work on the Contract due to Mr and Mrs Falzon’s non-payment of a progress claim. At this stage, the construction work was only partially completed.

5 Mr and Mrs Falzon complained that the standard of the construction work carried out by HBU was poor, and commissioned, amongst others, Alfred Frasca, of Alfred Frasca & Associates Pty Ltd, Consulting Structural Engineers, to inspect the work and prepare a report. Mr Frasca inspected the property on 1 April 2003 and 3 May 2003, and prepared a report dated 16 May 2003 (‘the Frasca report’). Mr Frasca identified (report p 35) “many building, structural and stormwater defects and non-compliance with BCA, Australian Standards and Council Conditions of Approval”. He recommended that the existing alterations and additions be demolished and the work reconstructed.

6 In response to this report, HBU commissioned John Price, Building Consultant, then of Tyrrells Property Inspections, to inspect the property and prepare a report on the work carried out. Mr Price inspected the property on 30 October 2003 and subsequently prepared a report (undated). Mr Price concluded that Mr Frasca’s report was “inaccurate and does not reflect the true condition of the partially completed building”; he found Mr Frasca’s claims “to be grossly over exaggerated and an unreliable assessment of the present condition of the building work” (report p 7). Mr Price said (report p 8):

“In my opinion the building has been constructed to an acceptable standard, in a workmanlike manner, except for some minor items considered normal for this type of construction and usually rectified during completion of the building works.”
7 HBU also commissioned Chris Bratby, Consulting Structural Engineer, to inspect and report on the structural defects alleged in the Frasca report. Mr Bratby also inspected the property on 30 October 2003, and subsequently prepared a report dated 30 January 2004. Mr Bratby concluded that there were some items, which he detailed, requiring rectification, but “found no grounds for any wholesale demolition of any part of the work” (report p 5).

8 HBU also obtained a response to complaints about electrical work and pest control treatment carried out on the property from the respective contractors.

9 On 16 December 2003, Mr and Mrs Falzon complained to the Office of Fair Trading (‘the OFT’) about the work carried out by HBU. On 20 January 2004, Peter Stubbs, Principal Building Inspector with the OFT, inspected the property and prepared a report signed on 19 July 2004 (‘the Stubbs report’). Noting that the building work was in progress and incomplete, Mr Stubbs concluded:

“In reviewing the consultant reports associated with the dispute and my own observations and research it is my opinion that this property is fit for purpose providing the rectification work noted in this report is carried out.

All the defects noted by the consultant reports are able to be easily rectified by a suitably qualified builder.”

10 Due to the disparity between the Frasca and Stubbs reports, the OFT commissioned John Lewer, Building Consultant, to inspect the property and prepare an independent assessment. Mr Lewer inspected the property on 19 and 24 August 2004, and prepared a report dated 8 December 2004 (‘the Lewer report’). Mr Lewer recommended that extensive rectification work be undertaken, including the removal and rebuilding of the front and rear concrete decks. He also recommended that the builder, bricklayer and concreter be asked to show cause why their licences should not be revoked.

11 On 14 December 2004, the Stubbs and Lewer reports were sent to Mr Pilipczyk for comment. Mr Pilipczyk’s solicitors responded on 28 January 2005. The matter was then considered by Paul Dengate, the OFT’s Co-ordinator of Building Inspections, who, on 16 March 2005 recommended that a ‘Notice to Show Cause’ should be issued to Mr Pilipczyk and HBU.

12 On 12 May 2005, a delegate of the Commissioner issued both Mr Pilipczyk and HBU with a ‘Notice to Show Cause’ why disciplinary action should not be taken against them under s 56 of the 1989 Act on the ground that they were guilty of improper conduct. Because the OFT had received further reports on which it sought to rely on, and because of delays caused by proceedings between the parties in the Consumer Tenancy and Trader Tribunal (‘CTTT’), the District Court and the Federal Magistrates Court, the time for HBU to make submissions was extended. On 15 June 2006, Mr Pilipczyk made oral submissions to the OFT.

13 By letters dated 14 August 2006, a delegate of the Commissioner notified Mr Pilipczyk and HBU that he was satisfied that HBU had breached a statutory warranty under s 18B(a) of the 1989 Act by failing to perform building work at 40 Risdon Crescent, Kariong, in a proper and workmanlike manner and in accordance with the plans and specifications set out in the Building Contract. The delegate stated that such a breach of a statutory warranty constituted “improper conduct” pursuant to s 51(1)C of the 1989 Act, constituting a ground for the Commissioner to take disciplinary action under s 56(c).

14 As Mr Pilipczyk was a director and the nominated supervisor of HBU at all relevant times, and was ultimately responsible for defective building work carried out by HBU, the delegate was also satisfied that Mr Pilipczyk was guilty of improper conduct under s 54(1) and s 53(1)B. Accordingly, there were grounds for taking disciplinary action against Mr Pilipczyk under s 56(c) of the 1989 Act.

15 The delegate noted that HBU had held a licence since 28 June 1996 and, apart from the current proceedings, there have been no other complaints against it. The delegate said:

“6.3. I have taken into account that the contract was terminated before its completion and thus my findings only relate to work that was not performed in a proper and workmanlike manner or in accordance with the plans and specifications set out in the contract. Building work which were [sic] regarded as incomplete have been excluded from my findings. The primary issue here is that the holder of a contractor licence has an obligation and responsibility to carry out work in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract. Whilst the willingness to rectify and actual rectification of any defective work is taken into consideration when determining appropriate disciplinary action to be taken, the primary focus for a licence holder should be that all the building work is carried out in accordance with the statutory warranties so that there is no defective work to rectify.

6.4. There has been a number of building reports prepared in relation to the building work. I have relied primarily on the Lewer report as Mr Lewer was engaged by the Office as its independent expert to provide comprehensive details of the defects in the building work. The Lewer report has stated that amongst other things, the brickwork to rear balcony and the balcony slabs, walls and columns needed to be demolished and re-built. Theses are defects of a very serious nature. It is apparent that the Lewer report had taken into account the opinion expressed in the Bratby report that the brick veneer overhang (item 4.1.8) was structurally adequate and that the mortar at the base of the brickwork had adequate strength to support the brickwork. I have noted and agree with the comment in paragraph (f) of item 4.1.8, at page 16 of the Lewer report, that “it is not for the builder to construct work that does not comply with the deemed-to-satisfy provisions (of the BCA) or with the tenets of good workmanship and then ask an engineer to certify that the structure will not fail.”

16 The delegate concluded that HBU’s conduct warranted “the taking of very firm disciplinary action against it”, with the primary aim of protecting the public from contractor licence holders who do not comply with the provisions of the Act. The delegate therefore determined, pursuant to s 62(e) of the 1989 Act, to suspend HBU’s and Mr Pilipczyk’s licences for a period of six months from service of the notice of determination. The Tribunal subsequently stayed those determinations pending the outcome of this review.

The Relevant Legislation

17 Section 18B(a) of the 1989 Act implies the following (statutory) warranty by the holder of a contractor licence in every contract to do residential building work:

“a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract”
18 Pursuant to s 51(1)C, the holder of a contractor licence who is authorised by the licence to do residential building work “is guilty of improper conduct if the holder ... (c) breaches a statutory warranty”. Pursuant to s 53(1)B, the holder of an endorsed contractor licence or a supervisor certificate who has control over the carrying out of residential building work, is guilty of improper conduct if a breach of a statutory warranty occurs in the course of doing that work. Pursuant to s 54(1), an officer of a corporation that is the holder of a contractor licence is guilty of improper conduct if the holder breaches a statutory warranty and, pursuant to s 54(4), disciplinary action for improper conduct may be taken against such an officer.

19 Section 56 provides that the Director-General (defined in s 3 as meaning the Commissioner) may take disciplinary action against the holder of a contractor licence on the ground that “the holder is guilty of improper conduct”. Section 62 states that the Director-General may do any one or more of the following:

“(a) determine to take no further action against the holder,

(b) caution or reprimand the holder,

(c) make a determination requiring the holder to pay to the Director-General, as a penalty, an amount not exceeding $11,000 (in the case of an individual) or $50,000 (in the case of a corporation) within a specified time,

(d) vary the authority held by the holder, by imposing a condition on the authority, including a condition requiring the holder to undertake a course of training relating to a particular type of work or business practice within a specified time,

(e) suspend the authority for a period not exceeding its unexpired term,

(f) cancel the authority,

(g) disqualify the holder, either temporarily or permanently, from being any one or more of the following:

(i) the holder of any authority, or any specified kind of authority,

(ii) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority,

(iii) an officer of a corporation that is the holder of an authority.”

Issues

20 There are two issues for the Tribunal to decide: first, whether either Mr Pilipczyk or HBU is in breach of the statutory warranty implied by s 18B(a) of the 1989 Act and therefore guilty of “improper conduct”, and if so, second, what is the appropriate disciplinary action to take against Mr Pilipczyk and HBU.

The Evidence

Efim Pilipczyk:

21 Mr Pilipczyk provided a detailed statement dated 6 February 2007 and gave oral evidence at the hearing. He is an architect and builder. Mr Pilipczyk stated that he first met Mr and Mrs Falzon in early 2001 and, on 2 May 2001, was engaged by them to prepare architectural drawings for a second storey for their existing single storey house, and for an attached garage and loft over the garage. Mr Pilipczyk prepared the drawings, various amendments were made after discussions between the parties and, in early June 2001, Mr and Mrs Falzon informed Mr Pilipczyk that they were satisfied with the proposed design. They subsequently submitted the drawings (which Mr Pilipczyk said Mr Falzon had amended) to Gosford Council with a development application. In about July 2001, Mr and Mrs Falzon asked Mr Pilipczyk for a quotation for the construction costs based on the drawings he had prepared. On 9 July 2001, he provided a quotation for this totalling $172,211.

22 Gosford Council granted development consent on 22 November 2001. On about 15 March 2002, Mr Falzon phoned Mr Pilipczyk and told him that if he reduced his quotation by $2,212, he would get the job. Mr Pilipczyk submitted a revised quotation dated 15 March 2002 for the amount of $171,500, which Mr and Mrs Falzon accepted on about 21 March 2002. This quotation was based on drawings dated 18 August 2001.

23 Mr and Mrs Falzon subsequently applied to Gosford Council for a variation of the development consent, mainly affecting the roof structure. Mr Pilipczyk said he did not learn of this until about 7 May 2002, when Mr Falzon showed him the new approval of that date, expecting that the variation would be undertaken by HBU at no extra cost. Mr Pilipczyk informed Mr Falzon that a new costing would have to be prepared for the roof change, which was provided to Mr and Mrs Falzon about 26 June 2002. They accepted the variation a few days later. Work commenced on the site about early July 2002.

24 Mr Pilipczyk said that work on the building went ahead with Mr and Mrs Falzon requiring a number of variations to the original contract. Initially, Mr and Mrs Falzon made the progress payments when requested, although on one occasion in late November 2002, with Mr Falzon insisting on a reduced amount. On 29 January 2003, Mr Pilipczyk issued Mr and Mrs Falzon with a tax invoice, part of which they disputed. On 7 February 2003, Mr Pilipczyk issued a further invoice, which Mr and Mrs Falzon did not pay. From there on, relations between the parties deteriorated and HBU gave Mr and Mrs Falzon notice of suspension of works on 14 February 2003 pending their rectification of alleged breaches of the Contract.

25 In his statement, Mr Pilipczyk described the proceedings arising out of the dispute taken by the parties in the CTTT, the District Court and the Federal Magistrates Court. In my view, most of this evidence is not relevant to the current matter and I have not therefore referred to it.

26 In cross-examination, Mr Pilipczyk was questioned about the work undertaken on the property, compliance with the relevant building standards, and the quality of the workmanship. Mr Pilipczyk said in broad terms, he does not accept the complaint of poor workmanship by either him or HBU. He said it is permissible to depart from the Building Code of Australia (‘BCA’) where necessary. Moreover, with an existing building, if the plans cannot be strictly adhered to, he has a discretion to do the best he can with it. However, he accepts that some rectification work needed to be undertaken to meet the requirements of the BCA and he would have liked the opportunity to do so. He did not have this opportunity because work was suspended on the site following non-payment of his invoice.

27 Mr Pilipczyk attributed many of the problems encountered in the course of the building work to the original building – the first storey - being out of square and out of level. For example, he said this caused problems with the concrete slabs and the level of the top of the hob and the brickwork over the hob on the rear deck. The top of the hob follows the floor line, whereas the bottom of the slab follows the line of the brickwork below.

28 Mr Pilipczyk was questioned about specific alleged defects listed in a Schedule prepared by the OFT (‘the OFT Schedule’). I have summarised his response to these alleged defects in the List of Alleged Defects set out below, where the evidence of the expert witnesses who gave evidence at the hearing is also summarised.

The Expert Witnesses:

29 It was agreed between the Tribunal and the parties that the three expert witnesses – Mr Lewer, Mr Price and Mr Bratby – would give evidence concurrently. Before doing so, they were asked to meet separately, outside the hearing room, and discuss the following questions: (1) Do the experts agree whether there are any breaches of the relevant Australian Building Codes and Australian Standards? (2) If so, identify those breaches by reference to the OFT Schedule. (3) With reference to that Schedule, is the workmanship of a proper and workmanlike standard? (4) If there are breaches of the relevant codes/standards, what is the level of seriousness of those breaches?

30 The expert witnesses spent approximately five hours discussing these matters and, in particular, identifying areas of agreement and disagreement. In the hearing room, first, each of the expert witnesses was invited to make a short oral statement (of about five minutes) with any general comments on the work carried out by HBU. It was open to Counsel to ask brief general questions after each witness had made his statement, and, after all the witnesses had made their general statements, the witnesses were invited to ask questions of each other. Second, the witnesses were each asked to comment on the alleged defects set out in the OFT Schedule relied on by the Commissioner, on an item by item basis, with it being open to Counsel to ask further questions of the witnesses on each item.

31 Set out below is a brief summary of the general comments by each expert witness, followed by ‘Comments on the List of Alleged Defects’ from the expert witnesses and Mr Pilipczyk in respect of each item relied on by the Commissioner. For ease of reference, I have followed the item numbers used in the OFT Schedule. It will be noted that not all item numbers appear in the List. This is because the Commissioner no longer relies on all items included in the OFT Schedule, and those items not relied upon are not referred to.

32 John Lewer. Mr Lewer is a building consultant who was commissioned by the OFT to prepare an independent assessment of the property. Mr Lewer said that on inspecting the property, he could see there were issues of level and square, and he learned later that the existing building was out of square by 30 mms. It was immediately apparent that the new brickwork did not conform with the existing brickwork, and it appeared that the new brickwork had increasingly gone out of alignment with the existing building. It was clear that the work carried out was out of square. Mr Lewer said Mr Pilipczyk could have followed the existing building. As it turned out, by trying to address the problem, he made the situation worse.

33 Mr Lewer said that in general the work carried out was not of a high standard and that in his opinion, the concreter, the bricklayer and the carpenter had let the builder down quite dramatically. The structure does not conform to the relevant building codes and does not comply with the statutory warranty imposed by the 1989 Act.

34 In answer to questions from Ms Olsson, Mr Lewer acknowledged that he was engaged as an independent expert and his duty is to be impartial. His brief was to look at the defects listed in the Frasca and Stubbs reports. He did not have either Mr Price’s or Mr Bratby’s report, although there was information in his brief about Mr Bratby’s findings. Mr Lewer had no information from the builder, nor did he interview the builder.

35 John Price: Mr Price is a building consultant who was engaged by HBU to respond to Mr Frasca’s report. He said there was general agreement between the expert witnesses about whether the majority of items breach the BCA, but not about the degree of seriousness. He said that in his opinion, the most serious breach is the lack of flashing as a consequence of the cavities not being of the required width. The result of this is that water running into the cavity could end up in the kitchen ceiling. Most other breaches are of a low level of seriousness and can be easily rectified. Mr Price said with the majority of items, the builder had not gone outside the BCA, but had attempted to deal with defects in the original structure, which was out of square and not level. The defects made the builder’s job difficult.

36 Chris Bratby: Mr Bratby is a consulting structural engineer in the area of residential construction, who was engaged by Mr Pilipczyk’s solicitors to prepare a report. Mr Bratby said the builder had to make the most of an awkward situation. With the exception of one item (the brick piers in the garage), no significant demolition is required and the work undertaken is structurally sound.

Comments on the List of Alleged Defects

37 Item 1. Mortar joints contain pits and voids. Mr Pilipczyk said that the brick cleaner had used a high pressure mortar hose to clean the bricks. Some pitting is inevitable in the cleaning process, but he denied that there was any excessive pitting that would allow for water penetration. The experts were unable to agree whether there was a breach. Mr Lewer said, in his opinion, the cleaning had not been done competently. There were some holes in the mortar that he said could be rectified. Mr Price said the method of cleaning bricks used was the most common one, involving the high pressure use of water and a mild acid solution. The “blowouts” were not significant and some of the voids were caused by the use of scaffolding. There was no breach of the BCA. It is normal for builders to carry out pointing to patch up such pitting and voids later. Mr Bratby said there were no resulting structural defects.

38 Item 2. Mortar joints are of variable thickness. Mr Pilipczyk stated that the thickness of the mortar is within the tolerance permitted by the standard, bearing in mind that the size of bricks varies. When shown photos of the thickness of the mortar in some joints during cross-examination, Mr Pilipczyk accepted that there had been breaches of the standard – as a result of discrepancies in the existing building – but contended these were not gross breaches. The experts agreed there was a breach of ‘AS 3700 – 2001 Masonry structures’. Mr Lewer said AS 3700 provides for mortar thickness of 10 mms, plus a tolerance of plus or minus 3 mms. The breaches of the standard were mainly over the hobs on the front and rear decks, where the joints exceed the standard by up to 17 mms. Mr Lewer said the real problem was defective hobs, with mortar being used to fill up the consequent void. Mr Price agreed that some joints do not comply with the standard. However, the builder had problems caused by the existing building being out of level. In his opinion, skirting tiles around the balcony would hide the thickness of the mortar joints around the hobs. Mr Bratby said the brickwork he saw on site did not raise any structural concerns.

39 Item 3. The brickcourse on each side of the first floor sliding door is irregular. Mr Pilipczyk said this occurred because the original building was out of square and the original brickwork slightly out of level. Adjustments were made in the lower brickwork on top of the slab by using half bricks and thicker mortar, which would be hidden by skirting tiles and a screed of mortar on top of the slab, to ensure the brickcourses would be level above windows and door heads. Mr Pilipczyk considered this an appropriate way of addressing the problem. The experts agreed there was no breach of the BCA but said there was poor workmanship. Mr Lewer said the problem was a function of the level problem. He acknowledged that the brickwork does not breach the standard, but said the problem needs to be resolved. Mr Price said there had had been no breach, there was no consequence, and so no rectification was required. Skirting tiles, if laid properly, would overcome the problem. Mr Bratby made no comment.

40 Item 4. The brickcourse at the top of adjacent doors on the first floor is not level. Mr Pilipczyk said this was because that the doors, one of which is sliding, with the other being hinged and swinging, have different heights. The experts agreed there was no breach, only poor workmanship. Mr Lewer said this is an aesthetic issue. In cross-examination, he agreed the doors were not in the same frame of brickwork. Mr Price said the problem was not serious, and Mr Bratby made no comment.

41 Item 6. The mortar mix does not match. Mr Pilipczyk said there was a change in the sand because the sand from the first delivery became unavailable. Mr Falzon was made aware of the problem and had no objection. Mr Pilipczyk said the new delivery of sand was mainly used with the second level brickwork and was blended with some of the original sand to get as close to the original as possible. He agreed there is a minor discrepancy in colour, but said when looking at the building, there is no appreciable difference in the colour of the mortar. The experts agreed that the problem was a result of poor workmanship but was not a breach of the BCA. Mr Lewer said there is a difference in the colour of the mortar but agreed the original colour was difficult to match. This could, however, be addressed with pigments, oxides or different sands. Mr Price considered the match of mortars was probably as close as possible. Mr Bratby made no comment.

42 Items 7, 8 and 9. The wall ties are at too great an angle, not properly embedded in the mortar, and spaced more than 300 mms apart. Mr Pilipczyk acknowledged that some wall ties are slopped and not in accordance with the BCA standard, which requires a slope of no more than 10 degrees. However, those not complying are located in a localised area and are as a result of the building being out of square, it therefore being necessary to adjust wall cavity widths. It was his intention to consult Mr Bratby about this before finishing the affected walls with plasterboard. With regard to spacing, Mr Pilipczyk said this problem would have been identified and rectified prior to completion. Additional remedial ties can be inserted using a special tie that has a spiral end, which can be drilled into the brickwork. The experts agreed there was a serious breach of AS 3700, and the BCA, and poor workmanship. However, this could be rectified relatively easily.

43 Item 10. The outside edge of the end portion of a brick veneer wall overhangs the concrete hob on the upper storey. Mr Pilipczyk stated this was another problem caused by the existing building being out of square. To rectify this problem, formwork was created, and a mortar hob constructed for this section and allowed to cure, before brickwork was built above it. Mr Price said this was an engineering issue for Mr Bratby. Mr Bratby said this was a satisfactory way to deal with the problem and he considered the mortar formwork to be structurally adequate. However, he said it was disappointing that the hob was not in line with the brickwork. This was evidence of poor workmanship in the construction of the hob. Mr Lewer agreed.

44 Item 11. The corner of the garage wall overhangs the concrete footing. Mr Pilipczyk stated this work was in accordance with brick corbel detail under AS 3700. The experts agreed this was a breach of AS 3700, was poor workmanship, but was not serious. Mr Price referred this problem to Mr Bratby. Mr Bratby said this was an isolated and limited defect that was not structural. Mr Lewer said the footing was in the wrong place and the problem needs fixing.

45 Item 12. The garage walls are not plumb. Mr Pilipczyk stated he carried out a number of checks during construction and found that the brickwork was within acceptable tolerances. The experts agreed this was a breach of AS 3700, of moderate seriousness, and poor workmanship. Mr Bratby said replacing the brick piers in the garage with wider piers (see Item 38) would also fix this problem. Mr Lewer agreed. Mr Price made no further comment.

46 Item 13. Brickwork under the first floor deck has inadequate mortar. Mr Pilipczyk explained that this work was unfinished. They were unable to finish the top brickwork course below the slab because, at the time, formwork for the slab was in place preventing the bricklayer from inserting mortar for the front of the bricks at this level. His intention was to point this level of brickwork afterwards. The experts agreed this was a breach of AS 3700, poor workmanship, but not serious. Mr Bratby said this was not of structural concern. Mr Lewer agreed, but said the work should have been completed at the time. Mr Price said the work was incomplete.

47 Item 14. The cavity created on the western wall was too wide for the ties. Mr Pilipczyk stated the cavity width in this localised area was a result of the existing structure being out of square. His intention was to discuss further stabilising options with his structural engineer, but he did not have an opportunity to do so before work ceased. In cross-examination, Mr Pilipczyk said the recommended width of a cavity is 55 mms. This cavity was about 85 mms. He agreed that if, as a result of a wider cavity, a tie was fixed too close to the edge of the timber, the timber might split under lateral pressure. He emphasised that he had not had the opportunity to finish the job. The experts agreed that this was a breach of AS 3700, poor workmanship, with serious consequences. However, as with items 7, 8 and 9, this can be rectified.

48 Item 15. The damp proof course (‘dpc’) for the rear kitchen wall does not run the full width of the brickcourse. Mr Pilipczyk said this refers to brickwork built on an existing suspended slab and he understood no dpc was required. He understood that only flashing was required for this window, which is what he installed. The experts agreed that this was a breach of AS 3700 and poor workmanship, but without serious consequences. Mr Lewer considered it might be difficult to get rid of moisture. Holes could be drilled in the flashing but this was poor practice. Mr Price considered the problem was minor and thought any moisture would evaporate. Mr Bratby made no further comment.

49 Item 17. Lack of weepholes under windows. Mr Pilipczyk agreed that the windows do not have weepholes, but said they could be installed. He recalled having discussions with Mr Falzon regarding windows in the existing building not having weepholes. Mr Falzon wanted the windows to match, so Mr Pilipczyk did not install weepholes. The experts agreed this was a breach of AS 3700, poor workmanship, with serious consequences. Neither Mr Lewer nor Mr Bratby wished to make any further comment. Mr Price said this was relatively easy to rectify.

50 Item 18. Lack of slip joint on right side of garage. Mr Pilipczyk stated that the engineering plans only show a vapour barrier; a further note shows where the Alcor layer should be and was placed. In cross-examination, Mr Pilipczyk disputed that a slip joint was required in that location. The experts were unable to agree. Mr Bratby said the brickwork at the point in question is not load-bearing and he considered it complied. Mr Lewer said it was not a substantial issue, but the slip joint should have been included. Mr Price said that although this appeared to be a breach of the specifications, it was of little or no consequence.

51 Item 19. The front, first floor deck is not of the size specified in the Council approved plans. Mr Pilipczyk stated the slab was formed up directly over the existing structure. Any deviation in size is a result of the existing building not being square. In cross-examination, Mr Pilipczyk said with an existing building, if the plans cannot be strictly adhered to, he has a discretion to do the best he can with it. He said the deviation – 100 mms on the left and 55 mms on the right – is not a significant departure from the plans, although it is beyond the 10 mms tolerance permitted by the BCA. The experts agreed this was a technical breach of the plans and specifications, but not poor workmanship and not serious. Mr Bratby said this was an example of where the builder had to make a “call” because he could not match the plans with the existing building. The solution adopted had the least adverse impact. Mr Lewer disagreed that the breach was as a result of existing work. Mr Price thought the breach was of no consequence and noted that the builder had tried to match the slab overhang at each end of the deck.

52 Item 23. The piers beneath the balcony arches are L shaped and not rectangular as specified in the Council approved plans. Mr Pilipczyk said the north-eastern arches were built as per the plans and found to be structurally inadequate. He discussed the options with Mr Falzon and it was agreed that the shape and dimensions of the piers should be changed to L shaped to provide additional bulk and strength. In cross-examination, Mr Pilipczyk said the arch originally built had collapsed although it was not clear whether this was because the arch lacked support or because the bricklayer had removed support for the arch prematurely. The Council inspected the new work and approved it on the inspection certificate. Mr Pilipczyk questioned whether the arches were required to comply with AS 3700, since the arches were reinforced. The experts agreed this was a technical breach of the plans and specifications, but not poor workmanship and not serious. Mr Bratby noted the builder had made a decision to overcome a weakness in the plans. Mr Lewer noted that while what was drawn in the plans was not what was built, the builder adopted the proper solution. Mr Price agreed.

53 Item 24. Arches do not comply with relevant building standard. Mr Pilipczyk stated that the design of the piers and arches was changed after the structure of the north-eastern arches was found to be structurally inadequate. Mr Pilipczyk acknowledged that he did not document the variation he agreed with Mr Falzon as he should have done. The experts said this problem was unresolved. An engineer needs to do the necessary calculations and an inspection would probably be required. Mr Bratby said the arches are not load-bearing except for their own weight. They have apparently been satisfactory now for four years. Mr Lewer and Mr Price said they could not tell if the arches are structurally adequate – they repeated that an engineer needs to undertake the necessary calculations.

54 Item 28. The cavities are not of the required width. Mr Pilipczyk said the cavities vary because of the Alcor waterproofing. He does not accept that the cavities are encroached; the BCA does not apply to this. The experts agreed this is a breach of the BCA, poor workmanship and serious. Mr Lewer noted that the concrete from the pour had extended across the cavity and, in some places, touches the floor joists. As a consequence, water running into the cavity may end up in the kitchen ceiling. He was not aware of any cavity flashing on the rear wall, although he agreed there is cavity flashing on the front wall. Mr Price said cavity flashing could be installed above the concrete hob on the rear wall: this is one of the hardest problems to rectify and would probably take two to three days. Mr Bratby made no comment.

55 Item 29. Brick veneer wall overhangs deck and cavity. This problem is similar to those identified in items 10 and 28. Mr Pilipczyk and the experts relied on their previous comments.

56 Item 30. Ends of decks protrude beyond brickwork. Mr Pilipczyk said good building practice requires a drip line beyond the line of the brickwork. In any event, the edge of the deck is not finished and would have been waterproofed and tiled. The experts agreed this was a breach of the plans and poor workmanship, but without serious consequences.

57 Item 35. Timber stud for wall frame overhangs edge of floor. Mr Pilipczyk stated that he was unaware of this at the time work on the site was suspended. He said he would have cut out the intruding tarp and addressed this problem, with the advice of an engineer if necessary. This was a localised problem affecting only a metre or two of a wall that is 12 ms long. The experts agreed this was a breach of ‘AS 1684.2 – 1999, Residential timber-framed construction’, poor workmanship, but without serious consequences. Mr Bratby said the wall in question is not a supporting wall. The framing is only to prevent the brickwork blowing sideways. He is satisfied that it is adequate. Mr Lewer said the problem needs fixing but can be easily remedied, although he would like to see some calculations on this first. Mr Price agreed the problem can be fixed.

58 Item 38. Garage piers are not of required width. Mr Pilipczyk said this was a variation on the verbal instructions of Mr Falzon, of which there is no written evidence. Mr Pilipczyk said the piers are not in breach of the BCA because they are closer together. The experts agreed this is a breach of the BCA, poor workmanship, and with serious consequences. The existing five piers must be demolished and new piers built of the correct size.

59 Item 40. The concrete slab for the garage floor is not of the required thickness. Mr Pilipczyk stated that localised variations in the thickness of the slab might, arguably, fall within the degree of tolerance permitted by ‘AS 3727 Sub base preparation’. He noted that Mr and Mrs Falzon appear to be using the garage and there is no evidence that the slab has failed. In cross-examination, Mr Pilipczyk agreed that according to the plans, the slab was required to be 100 mms thick. The degree of tolerance permitted is plus or minus 10 mms. Mr Pilipczyk did not accept that the slab was only 80 mms thick in places. The experts agreed that this is a breach of the plans and poor workmanship; it is questionable whether there could be serious consequences. Mr Bratby noted the slab thickness measured at 80 mms was at only one point of the slab. He said he is unable to say how the slab will perform but speculates that it could perform “OK”. Mr Lewer said he is unable to say how the slab will perform without further calculations. Mr Price said an engineer should calculate whether the slab is of sufficient thickness.

60 Item 42. Additional braces required at cantilevers of trusses. Mr Pilipczyk stated: “The top plate was installed and used to tie the ends of the trusses more easily during erection.” He maintained that the method used provides the same strength as blocking the trusses. In cross-examination, Mr Pilipczyk said that cross-braces have been installed across the trusses. Council has inspected these. There is a one metre section where he has yet to fix these before the plasterboard is attached. The experts agreed this is a breach of the MiTek specification, poor workmanship and serious. Mr Bratby said the trusses should comply with the MiTek specification – this can be remedied. Mr Lewer and Mr Price agreed.

61 Item 44. Many trusses out of plumb. Mr Pilipczyk said he was aware that a number of bottom chords of the trusses needed adjusting. This work was incomplete and would have been carried prior to the installation of plasterboard linings. In cross-examination, he disputed that to leave the trusses like this was poor workmanship. The experts agreed this is a breach of the MiTek specification, poor workmanship and serious. They all said this problem could be rectified relatively easily.

Paul Dengate

62 Mr Dengate is the Co-ordinator, Building Inspections, and has been employed in the Home Building Services section of the OFT since 2003 and, otherwise, by the OFT since 1998. Prior to that he had worked with the Department of Housing since 1989 and previously with the State Rail Authority. Originally, he qualified as a carpenter, although he has never worked in private practice. Mr Dengate said he wrote the report dated 16 March 2005 recommending ‘Show Cause’ action against HBU and Mr Pilipczyk on the basis of reports from Mr Frasca, Mr Catali and Mr Lewer, and on the evidence of others who had talked to the owners. He did not himself go to the site. He was not aware that Mr and Mrs Falzon occupied the ground floor of the house throughout the building work.

63 Mr Dengate said he gave more weight to Mr Lewer’s evidence since he appeared more independent. Either the owners or the builder employed the other experts.

Applicants’ Submissions

64 Ms Olsson, for Mr Pilipczyk, noted that the Commissioner, who bears the onus of proof in these proceedings, had withdrawn a number of items previously relied on. Twenty seven remaining items were pursued. Of these, 17 were either considered not serious by the experts or were items where they were unable to agree. The remaining 10 items all involved matters where Mr Pilipczyk acknowledged further work was required.

65 Ms Olsson said that cl 29 of the Building Contract for the construction work on the property specifies a “defects liability period” of 13 weeks from the completion of the work during which the owner can give the builder a list of defects which the builder must rectify. In most building contracts, some items will require rectification. Ms Olsson noted that Mr Pilipczyk suspended work on the property because Mr and Mrs Falzon did not make the required progress payments. Mr and Mrs Falzon have now discontinued their claims in the CTTT and the District Court in respect of defective work. Mr Pilipczyk had every intention of completing the Contract.

66 Ms Olsson submitted that, being disciplinary proceedings, the Tribunal must be ‘comfortably satisfied’ that each item relied on by the Commissioner has been made out (Briginshaw v Briginshaw (1938) 60 CLR 336 (‘Briginshaw’)) and that it amounts to a breach of the statutory warranty. In this instance, because the contract was incomplete, findings of breach can only be made with the greatest care where there is unambiguous evidence that the builder considered particular work to be complete and not requiring any further work. Mr Pilipczyk has not had any opportunity to rectify any defects. Mr and Mrs Falzon occupied the house throughout the building work and continue to occupy the house. If there had been any significant failure as a result of the building work, the parties would be aware of this.

67 With regard to the expert evidence, Ms Olsson noted the “plethora” of expert evidence and opinion in this case and, often, the spectrum of views. Where this is the case, for example in relation to items 1, 10, 18, 24, 29 and 35, the Tribunal should not be comfortably satisfied that the Applicants were guilty of improper conduct. Ms Olsson submitted that in reviewing Mr Lewer’s comments, it should be noted that his qualification is as a builder and not as a structural engineer. On occasion, he expressed views outside his area of expertise and assumed the role of advocate.

68 Ms Olsson said there were seven items in the OFT Schedule that the experts considered to involve technical breaches but were not serious: items 11, 13, 15, 19, 23, 30 and 35. In the case of five items – items 2, 3, 4, 6, and 40 – the experts in conclave disagreed as to the level of seriousness. She submitted that where there was no agreement or where no rectification was warranted, the Tribunal would have difficulty making findings adverse to the builder. Moreover, a minor departure from a Code or Standard should not be interpreted as amounting to a breach of the statutory warranty, especially where the builder has not had the opportunity to rectify defects in accordance with the terms of the Building Contract. Ms Olsson said Mr Pilipczyk “does not resile from the fact that some rectification work was and is required”. Mr Pilipczyk acknowledged some departures from the plans and gave cogent explanations. The appropriate time to judge whether there has been a breach of a statutory warranty is when the work is complete and the builder has had the benefit of the defects liability period.

69 With regard to any penalty, Ms Olsson submitted that the key consideration is that of proportionality viewed in relation to the conduct as a whole. The intention of these proceedings is to protect the public rather than to punish the Applicants. Suspension, cancellation or disqualification from holding a licence should be reserved for the most serious cases. In Mr Pilipczyk’s case, he has successfully run his business since 1996 and this is the first occasion on which improper conduct has been alleged against him or HBU. He has no record of disciplinary action. Indeed, in the past, HBU has been a finalist on four occasions and on one occasion a winner in awards for quality building. There has been no suggestion that Mr Pilipczyk has been dishonest or fraudulent or in any way reckless with respect to the manner in which he carried out the work. He has acknowledged that there are matters requiring rectification and has said that he would have attended to these but for the termination of the Contract. The Commissioner now relies on only half the matters originally charged against Mr Pilipczyk, which militates against affirmation of the penalty imposed. Ms Olsson submitted that, in the circumstances, there should be no adverse findings against Mr Pilipczyk and the community would not be served by taking action against the licenses of either Mr Pilipczyk or HBU.

70 In her submissions in response to those of the Commissioner, Ms Olsson noted that Mr Stubbs expressed the view that the work is incomplete, and that all the defects can easily be rectified. Mr Price considered the work was of an acceptable standard and Mr Bratby considered most of the work structurally adequate. Ms Olsson said the BCA allows for acceptable solutions where problems arise. The ultimate test is whether the certifying authority issues a Certificate of Compliance. In Mr Pilipczyk’s case, most of the breaches were technical departures from the BCA. The fact that in some instances instructions from the owners varying the plans were not recorded in writing, as required by the Building Contract, does not mean that instructions were not given.

Respondent’s Submissions

71 Mr Elliott, for the Commissioner, submitted that the standard of proof to be applied is the balance of probabilities, subject to the considerations referred to by Dixon J in Briginshaw. There are two separate issues to be determined: first, whether the work was carried out in a proper and workmanlike manner and, second, whether it was in accordance with the plans and specifications. Some items are by their nature completed at the time the work is done. The items pursued by the Commissioner are those where the experts state there is a breach. The test is not whether the work can be rectified or repaired, but whether it has been done properly in the first place. The Commissioner is not required to prove that the building will fall down, or even that the defects were structural, but that the work was not done in a proper and workmanlike manner.

72 Mr Elliott submitted that the phrase ‘proper and workmanlike manner’ is to be interpreted in accordance with its plain meaning, requiring work to be performed at a level expected of a competent builder.

73 Mr Elliott noted that the Building Contract included the plans for the work to be carried out and the development consent granted by Gosford Council, the terms of which required that the work be carried out in accordance with the BCA, which in turn refers to a number of Australian Standards referred to in evidence by the experts, for example, AS 3700 and AS 1684.2. Thus, breaches of these standards also involve breaches of the Contract and amount to improper conduct pursuant to s 51(1)(c) of the 1989 Act.

74 Mr Elliott said the Commissioner relies on the evidence of Mr Lewer, an independent witness who provided a thorough analysis and detailed explanation of the items pursued by the Commissioner:

“Mr Lewer said in general the work was not to a high standard. He said, in particular, the work performed by the concreter had let the applicant down; ending with a structure that does not conform with the code or the warranties in the contract.”
75 Mr Elliott submitted that the issue of rectification is of considerably less importance in a disciplinary case than in a civil claim. In the former, the primary issue is whether the work was performed properly and in accordance with the contract.

76 Mr Elliott made the following comments on particular items in the OFT Schedule:

Item 1 : while the actions of HBU were possibly in line with industry practice (according to Mr Price), the pits and voids in the mortar joints still breached AS 3700-1998. Hence this was a breach of the statutory warranty implied by s 18B of the 1989 Act because the work, being a breach of the BCA, was a breach of the plans and specifications set out in the Building Contract.

Item 2: the experts agreed this was a breach of AS 3700 although they did not agree on whether poor workmanship was involved. The Commissioner, relying, in particular, on Mr Lewer, submits it was poor workmanship.

Items 3, 4 and 6: the experts agreed that there was no breach of the BCA but said there was poor workmanship. The Commissioner submits there was a breach of the statutory warranty.

Items 7, 8 and 9: the experts agreed there was a serious breach of AS 3700 and the BCA and poor workmanship. Had the wall ties been placed correctly in the first place, there would be no need for rectification. The Commissioner submits there was a breach of the statutory warranty.

Item 10: the Commissioner submits the “make up” hob was not constructed in a proper and workmanlike manner and, as a result, there was a breach of the statutory warranty.

Item 11: the experts agreed there was a breach of AS 3700 and poor workmanship, although not a serious breach.

Item 12: the experts agreed there was a moderately serious breach of AS 3700 and the BCA and poor workmanship, but that the problem could be fixed by replacing the brick piers (see item 38).

Item 13: the experts agreed there was a breach of AS 3700 and poor workmanship, although not a serious breach.

Item 14: the experts agreed there was a serious breach of AS 3700 and poor workmanship, but see items 7, 8 and 9.

Item 15: the experts agreed there was a breach of AS 3700 and poor workmanship, although not a serious breach.

Item 17: the experts agreed there was a serious breach of AS 3700 and poor workmanship. It was not up to the builder and owner to depart from the requirements of AS 3700.

Item 18: the conclave reached no agreement. Mr Lewer “would not criticise the builder in this instance for his interpretation of the plan”.

Items 19 and 23: the experts agreed this was a technical although not serious breach of the plans and specifications, but not poor workmanship.

Item 24: the conclave reached no agreement. However, all agreed that an engineer’s opinion was required to check the arches were safe. The Commissioner submits the arches should have been certified safe by an engineer before construction, and not doing so was a breach of AS 3700.

Item 28: the experts agreed there was a serious breach of AS 3700 and poor workmanship. The issue of remediation is a side issue. The decks were not properly laid and they invaded the cavity. Many of the breaches in this case come down to a lack of care in the way the decks were laid out and constructed.

Item 29: as for items 10 and 28.

Item 30: the experts agreed this was a non-serious breach of the plans, and poor workmanship.

Item 35: the experts agreed there was a breach of AS 1684.2 and poor workmanship, although not a serious breach. The Commissioner contends this should have been remedied before the walls were fully built and the roof was put on.

Item 38: the experts agreed there was a serious breach of the BCA and poor workmanship, requiring demolition of the brick piers in the garage and erection of new piers in accordance with the BCA.

Item 40: the experts agreed this was a breach of the plans involving poor workmanship, although they could not agree on the consequences.

Item 42: the experts agreed there was a serious breach of MiTek’s specifications and poor workmanship. The Commissioner contends this should have been remedied when the trusses were installed and before the roof was covered.

Item 44: the experts agreed there was a serious breach of MiTek’s specifications and poor workmanship. The trusses should have been put back into plumb before the trusses were loaded and before the roof was put on.

77 With regard to sanctions, Mr Elliott referred to Building Services Corporation v McIlveen (Commercial Tribunal of NSW, unreported, 18 February 1997) (‘ McIlveen ’), where the Commercial Tribunal said, at p 29:
“The object of the sanctions under ... the Act is to protect the public and not to punish. The concept of public protection is wide; it embraces fitness, the maintenance of standards, public confidence and deterrence both of the particular builder and others in the same occupation: Colling v Building Services Corporation (1994) 1 NSWBLR 187 at 193.”
78 Mr Elliott submitted that in assessing the appropriate sanction, the Tribunal is entitled to have regard to the number of breaches and instances of poor workmanship, as well as the failure of the builder to recognise these. Notwithstanding the debate about the extent of remedial work required, had the work been done in a proper and workmanlike fashion in the first place, a number of disputes with the owners could have been avoided. Mr Elliott submitted the case requires some sanction to be imposed, and that suspension for six months was justified.

Discussion and Findings

79 The first issue to be determined in this case is whether Mr Pilipczyk and HBU are guilty of ‘improper conduct’. Pursuant to s 51(1)C of the 1989 Act, this turns on whether they have breached the statutory warranty imposed by s 18B(a) to perform work – on the house at 40 Risdon Crescent, Kariong – “in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract”. If Mr Pilipczyk and HBU are found to be guilty of improper conduct, then the second issue is whether, pursuant to s 56, disciplinary action should be taken against them and, pursuant to s 62, what form that disciplinary action should take.

80 I agree with the Commissioner’s submission that the words “proper and workmanlike manner” should be accorded their ordinary, plain language meaning, which I take to be the standard expected of a competent builder who performs the work with reasonable care and skill: McIlveen, p 6.

81 The applicable standard of proof is the balance of probabilities, subject to the requirement in proceedings such as these, where adverse findings made against a person will have serious consequences for the person, that the Tribunal must be ‘comfortably satisfied’ when making relevant findings on disputed questions of fact: Briginshaw at 362 (per Dixon J); Director-General, Department of Fair Trading v Cohen [1999] NSWFTT 2, at par 23(c) (per Judge KP O’Connor, Chairperson); Director-General, Department of Fair Trading v O’Connell [2000] NSWFTT 20, at p 5.

82 In making its findings on whether the builder has performed the work in a proper and workmanlike manner, the Tribunal must be guided by the expert evidence, of which, in this case, there is a significant amount. However, the Tribunal was assisted by the three experts called to give evidence concurrently, after lengthy discussion between them beforehand to identify areas of agreement and disagreement in relation to specific questions which they were asked to consider, set out above. I have relied on that evidence, summarised above, in making my findings.

83 I note that the Commissioner no longer seeks to rely on all the defects set out in the original decision dated 14 August 2006. Of the 49 defects set out in the OFT Schedule, the Commissioner now presses 27. I also note that the work required under the Building Contract was only partially completed. Work was suspended due to Mr and Mrs Falzon’s non-payment of a progress claim. As Ms Olsson pointed out, there was provision under the terms of the Building Contract for a “defects liability period” of 13 weeks from the time of the completion of the work, during which the owner can give the builder a list of defects that the builder must rectify. I accept Mr Pilipczyk’s evidence that, but for the suspension of work due to Mr and Mrs Falzon’s non-payment of the progress claim, he intended to complete the Contract, and recognised that there were various defects he would need to rectify.

84 Turning to the 27 items relied on by the Commissioner, instead of going through these individually, I have had regard to the evidence and submissions set out above and have grouped these according to similarities emerging from the evidence.

85 In the case of items 1, 10, 18 and 24, there was no significant agreement between the experts in conclave. Item 1 (pitting in the mortar joints) is commonly rectified after the bricks have been cleaned. Item 10 (edge of brick veneer wall overhangs hob) appears to be the consequence of poor workmanship in the construction of the hob. The evidence indicates that this poor workmanship has given rise to many of the problems encountered by the builder. Item 18 (lack of slip joint) was agreed to be of little consequence. Item 24 (arches) requires engineering calculations to determine the structural adequacy.

86 In the case of seven items – items 11 (corner of garage wall overhangs concrete footing), 13 (brickwork under deck has inadequate mortar), 15 (damp proof course too short), 19 (first floor deck not of specified size), 23 (balcony piers are L shaped not rectangular), 30 (ends of decks protrude beyond brickwork) and 35 (timber stud overhangs edge of floor), the experts agreed that there were non-serious breaches of the relevant Australian standard or the plans and specifications, and, in most instances, excepting items 19 and 23, poor workmanship. Items 15 and 35 can probably be remedied.

87 In the case of items 2, 3, 4, 6 and 40, there was some agreement. With item 2 (thickness of mortar joints), the experts agreed there was a breach of AS 3700, but they could not agree on whether there was poor workmanship. With items 3 (irregular brick course), 4 (brickcourse not level) and 6 (mortar mix does not match), the experts agreed there was no breach of AS 3700, but there was poor workmanship. With item 40 (thickness of concrete slab), there was agreement that there had been a breach of the plans and poor workmanship, but no agreement on the seriousness of the consequences. Items 2, 3 and 6 are open to remedial work, although there was disagreement as to how satisfactory this would be. Item 6 gives rise to an aesthetic problem about which there were differences of opinion.

88 In the case of 11 items – items 7, 8, and 9 (wall ties), 12 (garage walls not plumb), 14 (cavity wall too wide for ties), 17 (lack of weepholes under windows), 28 (cavities not of required width), 29 (brick veneer wall overhangs deck and cavity), 38 (garage piers of incorrect size), 42 (additional braces required at cantilevers of trusses) and 44 (trusses out of plumb), the experts agreed there was a serious, or in the case of item 12, moderately serious, breach of the relevant Australian standard or specification, and poor workmanship. In the case of all items, it appears that work can be undertaken to address the defect. In the case of item 38, the existing garage piers need to be demolished and replaced with piers of the correct dimensions. However, the evidence indicates that had the work been done properly in the first place, these problems would not have arisen.

89 While acknowledging that Mr Pilipczyk has not had the opportunity to rectify defects identified by the owners in accordance with the terms of the Building Contract, the picture presented by the above evidence, while not as bad as that suggested by the decision under review, does, nevertheless, lead me to be comfortably satisfied that there has been poor workmanship by Mr Pilipczyk and HBU, of a kind which would not be expected of a competent builder exercising reasonable skill and care.

90 I am therefore comfortably satisfied that both Mr Pilipczyk and HBU are guilty of a number of breaches of the statutory warranty to perform work in a proper and workmanlike manner because of breaches of the relevant Australian standards, of the BCA, and the Council approved plans and specifications. This is especially the case in relation to the concrete decks. The poor workmanship in the construction of the decks cannot itself be rectified and gave rise to a number of other problems. While these other problems can, for the most part, be addressed with remedial work, although there was some disagreement among the experts about whether this would be satisfactory, the poor workmanship in the decks is a constant. More generally, the fact that a significant number of defects can be remedied does not, in my opinion, detract from the fact of serious breaches of the relevant Australian standards or specifications in relation to 11 items.

91 Thus, in my view, there was a breach of the statutory warranty by both Mr Pilipczyk and HBU. The Tribunal must therefore consider the second issue, whether disciplinary action should be taken and, if so, what from that should take. In doing so, it should be noted that the object of sanctions under the legislation is to protect the consumers of home building services and not to punish. However, as the Commercial Tribunal acknowledged in McIlveen, at p 29 “[t]he concept of public protection is wide; it embraces fitness, the maintenance of public standards, public confidence and deterrence both of the particular builder and others in the same occupation”. Other relevant factors in considering an appropriate penalty were identified by the Fair Trading Tribunal, comprising Judge KP O’Connor, Chairperson, in Director-General, Department of Fair Trading v Cohen [2000] NSWFTT 3 (‘Cohen (2000)’), at par 45:

“a) the nature, width and extent of the contraventions

b) the loss or damage and prejudice in consequence of the contraventions

c) the circumstances in which the contraventions took place

d) whether the licensee has been found to have engaged in any similar conduct

e) the presence of fraudulent or dishonest intent and deliberation on the part of the licensee

f) the extent of carelessness or wilfulness of the conduct

g) the efforts made to correct the situation and what measures have been taken by the licensee

h) what consciousness the licensee (a) had (b) displayed, of its obligations under the relevant statute and to the owners

i) the effect upon the licensee

j) antecedents

k) attitude, building history and future compliance

l) the penalty range.”

92 In the present case, I note the defects relate to one Building Contract only, and the evidence indicates that the defects can, for the most part, be remedied or, at least, addressed. There is no evidence as to any loss, damage or prejudice as a result of the contraventions. This would not be expected in a case such as this where the construction work is not complete and the builder has not had the opportunity to rectify problems identified.

93 Mr Pilipczyk, who is also a registered architect, was granted an endorsed contractor licence in 1992 and has operated his business as HBU since HBU was granted a contractor licence authorising it to undertake residential building work in 1996. There is no evidence of any other complaints or disciplinary proceedings against either Mr Pilipczyk or HBU, and there is evidence that HBU has been a finalist on four occasions, and on one occasion a winner, in awards for quality building. There is no suggestion that Mr Pilipczyk has been dishonest or fraudulent, or reckless in the manner in which he carried out the work. He has acknowledged that there are matters requiring rectification, although I note he often expressed a different view to the experts on the cause of the problems he experienced with the construction work, attributing much of the blame to the existing building being out of square and out of level. Mr Pilipczyk has not, however, had an opportunity to complete the work under the Building Contract or to undertake any required rectification.

94 Obviously, the suspension of Mr Pilipczyk’s and HBU’s licence is likely to have a significant effect on their reputation. With regard to the range of sanctions, I note that the Commissioner now relies on 27 of the 49 defects relied on in the original determination and that there was agreement among the expert witnesses who gave evidence concurrently at the hearing, that 11 of those items were serious or, in one case, moderately serious. I also note that rectification work can be undertaken to address those problems.

95 I accept that the sanction imposed must be proportional to the conduct as a whole: Cohen (2000), at par 62. In my view, the conduct in this case is not as serious as was found in the decision under review and, in exercising the Commissioner’s power to take disciplinary action under s 56 of the 1989 Act, a more appropriate sanction than suspension is to caution or reprimand Mr Pilipczyk and HBU, as permitted by s 62(a). I therefore determine that a caution should be issued to both Mr Pilipczyk and HBU in respect of improper conduct in relation to construction work at 40 Risdon Crescent, Kariong.

Decision

96 The decision under review is set aside and in substitution therefor the Applicants, Efim Pilipczyk and Efim Pilipczyk Pty Ltd t/as Homes By Us, are each to be issued with a caution in respect of improper conduct in relation to construction work at 40 Risdon Crescent, Kariong.