Stolfa v Owners Strata Plan 4366

[2010] NSWSC 1507

CITATION:	Stolfa v Owners Strata Plan 4366 & ors [2010] NSWSC 1507
HEARING DATE(S):	15 December 2010
JUDGMENT DATE :	23 December 2010
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
DECISION:	(1) Judgment that second defendants and third defendant pay plaintiff $77,270 (inclusive of interest). (2) Judgment that second and third defendants pay first defendant $64,000 (inclusive of interest). (3) Order that first defendant properly maintain and keep in state of good and serviceable repair common property in strata plan by rectifying the defects to the common property identified in the scope of works, and thereby and for that purpose engage a builder other than the third defendant.
CATCHWORDS:	REAL PROPERTY – Strata Title – management and control – where lot owner’s use of lot causes damages to another lot owner and to walls of other lot being common property – inquiry as to damages – whether first lot owner liable to compensate other lot owner and/or owners corporation to whose lot first owner caused damage – duty of owners corporation to maintain common property
LEGISLATION CITED:	(NSW) Strata Schemes (Freehold Development) Act 1973, s 5(2) (NSW) Strata Schemes Management Act 1996, s 62, s 63(5)
CATEGORY:	Consequential orders
CASES CITED:	Owners Strata Plan 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272 Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] 12 BPR 23,673, [2006] NSWSC 1157 Symes v Proprietor Strata Plan No 31731 [2001] NSWSC 527
PARTIES:	Veronica & Raffaele Stolfa (plaintiffs) Owners Strata Plan 4366 (first defendant) John Hempton & Joanna Kalowski (second defendants) Stephen Hempton (third defendant)
FILE NUMBER(S):	SC 2007/256199
COUNSEL:	M A Ashhurst SC (plaintiffs) PWJ Gray SC w Ms P E Koroknay (second & third defendants)
SOLICITORS:	W G McNally Jones Staff (plaintiffs) David Le Page (second & third defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Thursday, 23 December 2010

07/256199 Veronica Stolfa & Anor v The Owners of Strata Plan No 4366 & 4 ors

JUDGMENT

1 HIS HONOUR: On 26 June 2009, I made the following orders (“principal judgment”):

(1) Declare that the Second Defendants are liable to compensate the Plaintiffs for the reasonable cost of repairing damage occasioned to Unit 2 by the performance of building works in about Unit 1.

(2) Declare that the Third Defendant is liable to compensate the Plaintiffs for the reasonable cost of repairing damage occasioned to Unit 2 by the performance of building works in about Unit 3.

(3) Order that there be an inquiry as to the damages referred to in orders 1 and 2, and that until further order the inquiry proceed before me.

2 In these reasons, for convenience, I shall refer to the first defendant owners corporation as “the Owners Corporation”, the second defendants as “the Hemptons” and the third defendant as “Stephen Hempton”. Together I shall refer to the second and third defendants (but not the first defendant) as “the defendants”.

3 Before the Court now is the inquiry as to damages referred to in order (3). The background to those orders is to be found in paragraphs 99 to 107 of the judgment of 26 June 2009 - which were unaffected by the plaintiffs’ unsuccessful appeal from the order that the proceedings be otherwise dismissed – as follows:

Damage/nuisance

99 It has never been in issue that the works carried out by the Hemptons and Stephen Hempton have caused damage to Unit 2, and that they are liable to make good that damage, although there is controversy as to the extent of the damage caused by the works: not all the damage or defects observable in Unit 2 is attributable to the Unit 1 and Unit 3 works, and some pre-existed them.

100 Mr Stephen Branch, Consultant Structural and Civil Engineer, was appointed as a parties’ single expert to address, inter alia, this issue. He reported that:

· all of the damage described in Section 2.2 of his report could have been caused by the works in Units 1 and 3; but

· some of the damage – such as cracks at wall/cornice junctions, crazed render and cracks at junctions of plasterboard and masonry could have been pre-existing and exacerbated by the works in Units 1 and 3; while

· some of the damage, such as peeling paintwork to ceilings and cracks in render to lintels is unlikely to have been caused by the works in Units 1 and 3.

101 He estimated that rectification works would cost in the range $50,000 to $100,000, depending on the level of repair undertaken and the staging of the works. In cross-examination he conceded that the actual cost might be at the lower end of the range, or even below it; and that most of the requisite repairs would be “putty and paint”. However, the full extent of rectification works required will not be able to be determined until the works on Unit 3 are completed.

102 The Stolfas seek an order directing the Owners Corporation to repair the damage to Unit 2 caused by the Unit 1 and Unit 3 works, and also to exercise its power under s 63(5) to recover the costs from the Defendants. (The Stolfas did not, in their submissions, press for an injunction restraining the installation of steel beams and supports in place of walls that have been or are to be removed in Unit 3). The Defendants acknowledge that they are liable to repair any such damage, and submit that damages are an adequate remedy. They submit that they have always been willing to make good any damage occasioned to Unit 2 by their works, and that the proceedings in that respect have been entirely unnecessary.

103 It is correct that the Defendants have acknowledged that damage to the Stolfas’ unit will have to be fixed, and on 2 August 2007 made an “initial offer” of $5,000 “to be placed in a fund” towards the cost of repairs. However, that offer – which the Stolfas then indicated was in their view inadequate - itself indicated a considerable gulf between what the Stolfas assert is the damage occasioned by the Unit 1 and Unit 3 works, and what the Defendants’ have been prepared to acknowledge. The Defendants contested issues of causation and quantum, even to the extent of seeking (belatedly) leave to adduce the evidence of a separate expert – although ultimately, while the proceedings were adjourned part-heard, their solicitors wrote to the Stolfas’ solicitors, acknowledging liability for repairs – but still leaving unresolved issues of causation and quantification.

104 Strata Schemes Management Act , s 117, provides that an owner or occupier of a lot must not use the lot in such a manner as to cause a nuisance to the occupier of any other lot. The duty of an owners corporation, under s 62, is to maintain and keep in repair the common property and any personal property vested in the Owners Corporation; it is not a duty to maintain property comprised in a lot. Most if not all of the damage in question is to Unit 2, not to common property. It is therefore not apparent that it is the duty of the Owners Corporation – as distinct from the owners of Units 1 and 3 – to effect repairs to Unit 2.

105 Section 63(5), invoked by the Stolfas, provides that if a person required by an order made under the Strata Schemes Management Act to carry out work fails to do so, the owners corporation may carry out the work and recover the cost from the person. It contemplates as a precondition that there be an order, made under the Strata Schemes Management Act , requiring work to be done by a person other than the owners corporation itself. If I were to make an order that the Owners Corporation carry out work in pursuance of its s 62 duty, that would not be an order “under this Act”: although it gives effect to a duty imposed by the Act, the Act does not authorize or provide for such an order; it merely creates a duty, in respect of which the general law provides remedies in this Court. (If there were an order made by an Adjudicator or the Tribunal under the special jurisdiction created and conferred on them by the Act, the position would be otherwise). But in any event, an order that an owners corporation perform works would not be an order that a relevant person from whom costs could be recovered perform those works. And even if it were, the costs could be recovered only from the person against whom the order was made, namely the owners corporation, which would be circular.

106 For all those reasons, the order sought by the Stolfas cannot be made. The next question is whether it is appropriate to make a mandatory order against the Defendants, requiring them to remediate the damage to Unit 2. An injunction at this stage would leave unresolved, and open to further dispute, precisely what works the Defendants would be bound to perform. Even if it identified with specificity the relevant works, it would require their co-operation in selecting appropriate workmen; indeed, it would involve the difficulties that ordinarily deter courts from specifically enforcing building contracts.

107 It seems to me that damages are not only an adequate, but a more convenient, remedy. The Stolfas can prove the reasonable cost of rectification by workmen of their own choice, recover that amount as damages, and have the works performed under their own supervision and control. The amount of those damages will have to be determined on inquiry. The final amount cannot be quantified until after completion of the Unit 3 works. As I have had the benefit of evidence and a view, which inform the issues of causation, it is preferable that, at least for the present, the inquiry proceed before me – although it may become appropriate to order a reference.

4 It is pertinent to observe, first, that the order sought by the Stolfas referred to in [102] of the substantive judgment was for the repair of damage to Unit 2 (not damage to the common property); secondly, that the submission that a mandatory injunction against the defendants should be declined on the basis that damages were an adequate remedy was one made by the defendants; and thirdly, that the conclusion reached in [107] that damages were not only an adequate but a more convenient remedy was founded on the assumption, referred to in [104], that “most if not all of the damage in question is to Unit 2, not to common property”, and I did not then advert to the possibility that, as is now plain, the damage to the external walls, ceiling and floors of Unit 2 is in fact damage to common property and not to the unit. This is because, in accordance with the definitions of “lot” and “floor plan” and s 5(2) in the (NSW) Strata Schemes (Freehold Development) Act 1973, the boundary between the lot and the common property is the upper surface of the floor, the under surface of the ceiling, and the inner surface of the external walls, as at the date of registration of the plan [Symes v Proprietor Strata Plan No 31731 [2001] NSWSC 527, [27]; Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] 12 BPR 23,673, [2006] NSWSC 1157, [18]; Owners Strata Plan 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272, [39]].

5 Pursuant to (NSW) Strata Schemes Management Act 1996, s 62, an owners corporation has an absolute duty to maintain and repair common property [Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157, [3]-[6]; principal judgment, [63]]. Section 63(5) was not applicable, for reasons explained in paragraph 105 of the principal judgment and set out above. However, s 63(4) provides as follows:

An owners corporation may carry out work that is required to be carried out by a person who is the owner, mortgagee or covenant chargee in possession, lessee (or, in the case of a leasehold strata scheme, sublessee) or occupier of a lot in order to remedy a breach of a duty imposed by Chapter 4 and may recover the cost of the work from that person.

6 Chapter 4 relevantly provides, by s 117:

(1) An owner, mortgagee or covenant chargee in possession (whether in person or not), lessee or occupier of a lot must not:
(a) use or enjoy the lot, or permit the lot to be used or enjoyed, in such a manner or for such a purpose as to cause a nuisance or hazard to the occupier of any other lot (whether that person is an owner or not), or
(b) use or enjoy the common property in such a manner or for such a purpose as to interfere unreasonably with the use or enjoyment of the common property by the occupier of any other lot (whether that person is an owner or not) or by any other person entitled to the use and enjoyment of the common property, or
(c) use or enjoy the common property in such a manner or for such a purpose as to interfere unreasonably with the use or enjoyment of any other lot by the occupier of the lot (whether that person is an owner or not) or by any other person entitled to the use and enjoyment of the lot.

7 As mentioned in the principal judgment (at [67]), by-law (5), contained in Schedule 1 to the SSMA, provides that an owner of a lot “must not mark, paint, drive nails or screws or the like into, or otherwise damage or deface, any structure that forms part of the common property without the approval in writing of the owners corporation.

8 Because it was uncontroversial, it was unnecessary in the principal judgment to address in detail the basis of liability of the defendants; however, as appears from paragraph [104] of the principal judgment, the liability arose under s 117(1)(a). That provision imposes no duty in respect of the common property; and while s 117(1)(b) and (c) pertain to use of the common property, they do not regulate the relevant conduct of the defendants, which was in respect of use of their lots. However, s 117(1)(a) imposes a duty not to use their lots in such a manner as to cause a nuisance or hazard to the Stolfas, and that is so notwithstanding that the nuisance or hazard arises from damage to the common property impinging on the Stolfas’ lot.

9 But so far as I can ascertain, unless and until an order is made under the SSMA requiring the defendants to carry out work, the Owners Corporation is not empowered to carry out rectification work and recover the costs thereof from the defendants, in respect of common property. The Owners Corporation has no power to carry out rectification work to the Stolfas’ lot; nor do the Stolfas have any entitlement to carry out rectification works to the common property. Accordingly, it seems to me that were the Owners Corporation to remediate the damage to the common property, it would have no statutory basis for recovering the costs exclusively from the Hemptons and Stephen Hempton, as distinct from a levy pro rata on all the unit holders. However, without resort to statutory rights, at general law the Hemptons and Stephen Hempton would be liable, in nuisance, to compensate the Owners Corporation in respect of damage to the common property caused by their works.

10 According to the orders made on 26 June 2009, this inquiry, strictly, is as to the costs of repairing damage occasioned to Unit 2 (not to the common property). To so limit it, however, would leave unaddressed what now appears a significant component of the problem, namely damage to the common property proximate to but not within Unit 2. The defendants did not oppose the court seeking to achieve a practical resolution of the issues by addressing this matter. The Hemptons and Stephen Hempton did not dispute that they were liable to indemnify the Owners Corporation in respect of its obligation to rectify damage to the common property caused by their works.

11 No attempt has been made to segregate damage caused by the Unit 1 works from that caused by the Unit 3 works. Presumably, because of the familiar relationship between the Hemptons and Stephen Hempton, the defendants accepted that they should be jointly and severally liable for the whole of the damage to Unit 2. No submission has been made that I should endeavour to dissect these damages.

12 In principle, therefore, the position is:

· The Hemptons and Stephen Hempton are liable to compensate the Stolfas in respect of damage to Unit 2;

· The Owners Corporation is obliged to maintain the common property and thus to remediate any damage to the common property, albeit that it was caused by the Hemptons and/or Stephen Hempton;

· If the Owners Corporation struck a levy to fund such repairs, the plaintiffs would be liable for 30% of it and, because such liability has been incurred as a result of the defendants’ breach of s 117(1)(a) and/or nuisance, should be indemnified by the defendants in that respect;

· However because the damage to the common property which the Owners Corporation is liable to remediate was caused by the defendants, they are liable to indemnify the Owners Corporation in that respect.

13 The evidence of the quantum of damage was presented on two bases, one which might be described as the “cost of rectification” approach, and the other as the “diminution in value” approach.

14 The relevant damage was identified by the structural engineer Mr Branch. He also prepared a scope of works for rectification. In a supplementary report, Mr Branch apportioned his scope of works between works agreed to be to common property (Part 1), works agreed to be to Unit 2 (Part 2), and other works - being those on which agreement as to whether they were to common property or the unit had not been reached (Part 3). His evidence was uncontroversial.

15 Evidence of the cost of rectification, in accordance with Mr Branch’s scope of works, was provided chiefly by the quantity surveyor Mr Makin, who was appointed as a parties’ single expert by the court, for the purpose of providing an opinion as to the cost of rectifying the relevant damage. The Stolfas endeavoured to tender quotes provided by a number of building contractors which had been served pursuant to an earlier direction; for reasons given in the ex tempore judgments delivered at the hearing on 15 December 2010, they were rejected, and leave pursuant to UCPR r 31.44 to adduce them was also refused. Nonetheless one of those quotes - from Ferrocon - was admitted for the limited purpose of proving the costs of replacing tiles, if matching tiles were unavailable. The scope of works prepared by Mr Branch provided that if matching tiles could not be obtained, the full wall was to be retiled. But it did not provide for retiling all walls - that is the whole bathroom, as distinct from the affected wall – at least so long as a reasonable (though not identical) match could be achieved. The evidence of Mr Parisi establishes that the same matching tiles are no longer available, but it does not establish that a reasonable match, sufficient to obviate the necessity to replace walls other than the affected wall, is unavailable.

16 Ultimately, in his supplementary report, Mr Makin assessed the costs of rectification, assuming precisely matching tiles were not obtainable, as follows (as at 28 April 2010):

· Part 1 – rectification works to common property $24,170

· Part 2 – rectification works to Unit 2 $51,107

· Part 3 – rectification works to disputed defects $36,043.

17 The impact of the unavailability of precisely matching tiles on this was $1,100, inclusive of GST, in Part 2.

18 As noted above, the Ferrocon quote was admitted for the purpose only of proving the additional cost of replacing tiles, if matching tiles were unavailable. For that, Ferrocon allowed $38,975, plus GST. In contrast to Mr Makin’s report, there is no calculation to explain the basis on which that sum is reached, but it appears to cover removal of all wall and floor tiles and replacement with new selected tiles. I am unpersuaded that such a course is reasonable, particularly in the absence of evidence establishing that a reasonably approximate match, albeit not a precise match, is unachievable.

19 In his written submissions, Mr Gray SC for the defendants has advanced arguments as to why each item included in Part 3 of the assessment is attributable to common property, and not to Unit 2. No contrary argument has been advanced. I accept that those items are referable to common property. Items 9 and 10 involved respectively water damage to ceilings and peeling paint work on ceilings; the ceiling and the paint on it is not within the cubic space of the lot and forms part of the common property. Items 11 and 12 refer to floor tiles in the lobby, bathroom and ensuite; they form an integral part of the floor and are not within the cubic space of the unit but are part of the common property. Item 14 relates to the door threshold; it is either outside the lot or forms part of the floor. Item 16 relates to the sanding and finishing of the timber flooring; the upper surface of the floor is not within the unit, but is part of the common property. Item 20 pertains to peeling paint work to ceilings and cracks in external render to lintels. Even if - which Mr Branch thinks unlikely – these were caused by the Unit 1 and Unit 3 works, the inner surfaces of the boundary walls are not within the cubic space and are not part of Unit 2. Accordingly, all the Part 3 works are referable to common property and not to Unit 2.

20 It follows that the cost of rectification works to Unit 2 in respect of damage occasioned by the Unit 1 and Unit 3 works - inclusive of an allowance for replacement of a whole wall of tiles, where only five are affected, due to the unavailability of a precise match - and inclusive of GST, is $51,107. As that was as at 28 April 2010, interest from that date would be appropriate.

21 As to diminution in value, the Stolfas tendered a report of Mr Vasiliou, valuer, who opined that Unit 2 was worth $1.631 million “as is”, but $1.780 million if all the damage – to Unit 2 and the common property – were repaired. Thus he deduced that the diminution in value occasioned by the damage was $149,000. He reached that conclusion by, first, valuing the property as if it had been repaired at $1.780 million, and then deducting the cost of repairs (using the Makin quote, but substituting the cost of replacement tiles in accordance with the Ferrocon quote), holding costs for four and a half weeks ($10,000, representing a period of delayed settlement while remediation works were effected), and allowing for betterment resulting from the remediation works ($15,000).

22 There are, I think, several problems with this approach. First, it assumes that the purchaser (and vendor) would approach the matter by allowing a dollar for dollar a discount for the costs of repairs. While it must be said that there is some logic to that approach, it does not accord with experience or reality - it being conventionally accepted that the cost of repairs and improvements are reflected dollar for dollar in increased value.

23 Secondly, it includes provision for replacement of all tiles in accordance with the Ferrocon quote, when I have found that such a course would not be reasonable. It would be necessary to substitute Mr Makin’s total provision, of $111,320, in place of the $154,000 assumed by Mr Vasiliou. However, I accept that a corollary of that would be that the provision for betterment of $15,000 allowed by Mr Valiliou would no longer be appropriate. The result would then be rectification costs of $111,320 plus holding costs of $10,000, a total of $121,320.

24 Thirdly, Mr Vasiliou assumes that the purchaser would allow for the cost of repairs to the common property, of some $60,213, but does not take into account that that work would be the responsibility of the Owners Corporation and that the purchaser would have an absolute right to require the Owners Corporation to perform it, with - at worst - 30% of the cost being recoverable from the lot owner, if the whole was not recoverable by the Owners Corporation from the defendants. I do not understand why the cost of remediation of common property which the purchaser would be entitled to have performed by the Owners Corporation should result in a commensurate diminution in value of the lot. On the other hand, I accept that the vexation, inconvenience and uncertainty associated with the necessity of having the Owners Corporation perform those works would have some impact on the price.

25 The defendants tendered a valuation of Mr St Leon, who claimed to focus on diminution in value as distinct from costs of remediation. He observed, in my view correctly, that cost of repairs was not reflected dollar-for-dollar impact on value. He concluded that the condition of the unit would have an impact of about $50,000 on the price that a purchaser would pay. However, this was unsupported by any sales or other objective evidence, and has the appearance of a mere ipse dixit.

26 In any event, at least so far as damage to Unit 2 is concerned, in my view the cost of reinstatement is the preferable approach. The subject property was and is the Stolfa’s home. There is no indication that they have any intention to leave it, or to sell it. They previously owned it in an undamaged condition, and proper compensation is that which enables them to restore it to the condition in which it was. The reasonable cost of repairing the damage to Unit 2 is, therefore, $51,107 (plus interest from 28 April 2010, which increases the sum to $54,500).

27 What then of the impact of the damage to the common property? As has been pointed out, the Stolfas have an absolutely right and the Owners Corporation an absolute liability to remediate that damage. Ordinarily, that might necessitate taking into account that the Stolfas could be liable for 30% of the cost of doing so, being their proportionate unit entitlement. But as it is uncontroversial that the defendants are liable to indemnify the body corporate in that respect, the only provision that need be made in favour of the Stolfas is allowance for the risk, vexation, inconvenience and uncertainty attendant upon the defendants giving that indemnity. As I propose to give judgment against the defendants in favour of the Owners Corporation, that minimises the risk. Nonetheless, I propose to allow 10% of the value of the body corporate works, being $6,000 (plus interest from 28 April 2010, which increases the sum to $6,400), in favour of the plaintiffs in this respect.

28 In principle, it is uncontroversial that the plaintiffs are also entitled to be compensated for removalist expenses and alternative accommodation during the rectification works. The quantum of these, however, is also in dispute.

29 As to removalist expenses, the Bart-Letts quote obtained by the plaintiffs was provided without inspection of the premises and merely assumes 100 cartons. The Ivanov quote relied on by the defendants followed an inspection of the premises, and was for a period of six weeks. Although the evidence as to the duration of the remediation works is slight, Mr Makin thought they would take approximately six weeks; whereas Mr Jalousis, the plaintiffs’ real estate valuer, referred to a period of eight to ten weeks. I prefer the opinion of a quantity surveyor to a real estate valuer on this issue, and accordingly I accept Mr Ivanov’s quote of $4,400 for removalist expenses.

30 As to alternative accommodation, the defendants propose a serviced apartment in a reputable Meriton complex at Bondi Junction, at a cost of $150 per day for six weeks, amounting to $6,300. The plaintiffs’ claim $260 to $492 per night for twelve weeks (amounting to $21,840 to $36,036) plus parking at $25 to $40 per day, totalling $2,100 to $3,360.

31 It follows, from my acceptance of Mr Makin’s opinion that the works would take six weeks, that I would allow only six and not twelve weeks. Given the quality of the accommodation provided by the subject premises, I think the daily rate of $260 - at the lower end of the plaintiffs’ range - is acceptable. While, ordinarily, the rental value of the subject premises might be a good indication, not only is there no evidence of it, but the prospects of a short term lease for six weeks are unrealistic. Temporary accommodation in an apartment is a reasonable solution. The $260 per night is applicable to the Medina Grand Sydney, a 4.5 star facility, for a standard two-bedroom apartment. Car parking there is $25 per day. Under this head, I therefore allow $10,920 for accommodation and $1,050 for parking.

32 The plaintiffs submit that if I were to require the Owners Corporation to remediate the damage to the common property, the satisfaction of a qualified person - for which purpose they propose the structural engineer Mr Branch - be required. While it appears to be common ground that some such mechanism is appropriate, the defendants submit that Mr Branch is inappropriate, because he is a structural engineer and the work involved is not structural engineering. There is considerable force in that objection, but no alternative qualified person has been proposed, and the parties were content to proceed on the basis of a scope of works prepared by Mr Branch. Accordingly, the orders will provide that the remediation works are to be done to the reasonable satisfaction of Mr Branch.

33 Further, the plaintiffs submitted that the work should be required to be done by persons other than Stephen Hempton. Although my mind has vacillated on this question, I have concluded that it is preferable that Stephen Hempton not perform the works, as his involvement is likely to exacerbate the already frosty relations between these neighbours, and it is therefore preferable that the work be done by an independent builder.

34 Finally, the plaintiffs submitted that the orders ought be framed in a manner which would permit all rectification works - those to Unit 2 and those to the common property - to be performed concurrently under the one contract. There is obviously enormous practical sense in this, and the alternative is likely to be more expensive for all concerned. However, the fact remains that the Stolfas are responsible for and entitled to carry out the repairs to Unit 2 according to their wishes, whereas the Owners Corporation is responsible for the repairs to the common property. I do not believe that I can compel either to entrust their part of the works to the other, although by arrangement between them, if achievable, that might be done. The practical course would be for the Owners Corporation and the Stolfas to agree on an appropriate builder to perform all the works concurrently. However, I do not see that I can compel them to do so.

35 The defendants submitted that orders should be framed in a manner which had regard to the circumstance that the Stolfas would be indebted to them for costs of the proceedings, and also pursuant to the undertaking as to damages. Whether there is any liability pursuant to the undertaking as to damages, and if its extent, remains to be established. So far as costs are concerned, there has been no suggestion that they have yet been assessed, and I know not at what stage the assessment process is. The defendants may apply for a stay on the usual grounds if they consider it appropriate.

Conclusion

36 My conclusions may be summarised as follows.

37 The Hemptons and Stephen Hempton are liable to compensate the Stolfas in respect of damage to Unit 2, but not to common property. All the works referred to in Part 3 of Mr Branch’s supplementary report, as well as those referred to in Part 1, are referable to common property and not to Unit 2. The reasonable cost of repairing the damage to Unit 2 is $54,500 (inclusive of interest from 28 April 2010). In addition, the plaintiffs are entitled to $4,400 for removalist expenses, $10,920 for accommodation and $1,050 for parking. They are also entitled to $6,400 (inclusive of interest from 28 April 2010) for vexation, inconvenience and risk in connection with the rectification of the damage to the common property and the defendants’ indemnification of the Owners Corporation in that respect. These amounts total $77,270.

38 The Owners Corporation is obliged to maintain the common property and thus to remediate any damage to the common property, albeit that it was caused by the Hemptons and/or Stephen Hempton. However, the defendants are liable to indemnify the Owners Corporation in that respect. Accordingly, there will be judgment against the defendants in favour of the Owners Corporation for the costs of remediation of the damage to the common property.

39 My orders are:

(1) Give judgment that the second defendants and the third defendant pay the plaintiff the sum of $77,270 (which sum is inclusive of interest from 28 April 2010).

(2) Give judgment that the second and third defendants pay the first defendant the sum of $64,000 (which sum is inclusive of interest from 28 April 2010).

(3) Order that by 31 March 2010 the first defendant properly maintain and keep in a state of good and serviceable repair the common property in strata plan 4366 by rectifying the defects to the common property identified in the scope of works of Mr Branch and described in Part 1 and Part 3 of the Schedule referred to in the letter from David Le Page solicitors to Mr Makin of 2 November 2010 to the reasonable satisfaction of Mr Branch, and thereby and for that purpose engage a builder other than the third defendant.

40 I will hear the parties as to the costs of the inquiry. It will also be necessary to appoint a time to conclude the hearing of the inquiry as to damages under the plaintiffs’ undertaking as to damages. As there is regrettably the risk of further disputation in connection with engagement of an appropriate builder, satisfaction of Mr Branch, and time for the completion of the works to the common property, I will reserve liberty to apply.

**********