Tracey v Olinderidge Pty Ltd - [2013] QCAT 401

CITATION:

Tracey & Anor v Olinderidge Pty Ltd & Anor [2013] QCAT 401

PARTIES:	Martha-lee Tracey and Todd Anthony Tracey (Applicants)
v
Olinderidge Pty Ltd and Rodney Wagner (Respondents)

APPLICATION NUMBER:

BDL136-11

MATTER TYPE:

Building matters

HEARING DATE:

9, 10 August 2012, 7, 27 March 2013

HEARD AT:

Bundaberg, Hervey Bay

DECISION OF:

David Lewis, Member

DELIVERED ON:

5 August 2013

DELIVERED AT:

Hervey Bay

ORDERS MADE:

1. The respondents Olindaridge Pty Ltd and Rodney Wagner pay the applicants Martha-lee Tracey and Todd Anthony Tracey the sum of $98,600.00 within 28 days.

2. The applicants must file and serve on the respondents by 6 September 2013, any claim for their costs of the application, together with their submissions on that claim, full particulars of the amounts claimed, and copies of relevant invoices.

3. The respondents may file and serve on the applicants any submissions with respect to the claim for costs by 27 September 2013.

4. Unless the tribunal otherwise orders, the claim for costs will be decided by the tribunal on the papers, and without an oral hearing, not before 27 September 2013.

CATCHWORDS:

Domestic building dispute – severe termite damage – defects in slab construction – defects in termite barrier – whether infestation arose from the defects.

Queensland Building Services Act 1999, s 72(8).

Tracey v Rodney Wagner Olindaridge Pty Ltd [2013] QCATA 048

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Martha-lee Tracey and Todd Anthony Tracey represented by Mrs Martha-lee Tracey in person.

RESPONDENT:

Olinderidge Pty Ltd and Rodney Wagner represented by Mr C M Hall of Hall Lawyers.

REASONS FOR DECISION

The applicants Mr and Mrs Tracey purchased a block of land in the attractive little seaside town of Woodgate, south of Bundaberg, in October 2001, intending to build their home there.
The respondent Olindaridge Pty Ltd (in the proceedings misnamed as Olinderidge Pty Ltd) was a licensed builder, trading as RK & CA Wagner, and Mr Wagner was its nominee and one of its directors.
On 12 November 2001, Mr and Mrs Tracey and Mr Wagner on behalf of Olindaridge as builder signed a contract for it to build a house for them. Construction began at about the same time, and practical completion was reached on 21 December 2001. The house was a typical low set brick veneer building on a concrete slab.
While the builder was the company Olindaridge, the construction was carried out by Mr Wagner and of course the builder’s subcontractors. One of those was Termimesh. Its role was to install a product called termimesh around the perimeter of the slab, and to penetrations in the slab. The product is a stainless steel mesh, which forms part of the physical barrier against termite penetration. The other part of that barrier is the slab itself.
In April 2008, the Traceys noticed odd things about their house. The cornices were dropping in places, and doors were binding. They did not understand the problem. However in September that year they discovered what looked like dirt coming out of the walls, and contacted another builder, a Mr Keith Morgan, who lived nearby. Mr Morgan investigated and found live termites in the wall between the main bedroom and the ensuite. He advised them to contact a pest control contractor.
They attempted to contact Termimesh without success, and eventually engaged Victory Pest Control who treated termites in the bedroom wall, and placed a chemical barrier around the perimeter. However this did not solve the problem and Victory had to return to the premises 8 times from September 2008 to May 2010.
Eventually, in October 2010, Mrs Tracey contacted FMC Australasia, a manufacturer of pest control chemicals and FMC arranged for an employee, Mr Anthony Feez, to investigate. He inspected the house on 6 October and found live termites, concentrated in the ensuite shower base, and widespread evidence of termite activity and damage. He also found what he described as pinholes in the shower floor, which he felt might be a point of entry.
Mrs Tracey then got in touch with Mr Wagner, who arranged for the then operator of Termimesh to inspect the house. Following that, Termimesh arranged for Suresafe Pest Management to treat the problem. A later inspection confirmed that the termites had been killed.
The Traceys contacted the Building Services Authority, but it was not able to take action under its power to direct rectification, given the time that had elapsed since completion of the dwelling.[1] They then arranged for Mr Feez to carry out a further inspection, which he did with Mr Morgan in December 2010. An engineer Mr Rob Marshman was also engaged to inspect the house. These investigations revealed two possible points of entry for the termites, a hole in the ensuite shower floor, and an area around a vent pipe near the main bathroom. Much of the case centred on the significance of these as possible sources of the problem.
[1]Section 72(8) of Queensland Building Services Act 1999 prohibits issuing a direction to rectify more than 6 years and 3 months after completion.
The applicants filed these proceedings in May 2011. Before dealing with the substantive issues, there are two other matters which should be noted. The first concerns the parties to the application. The application as filed named both Mr Wagner and Olindaridge Pty Ltd (mis-spelt) as respondents. Some confusion seems to have arisen about this point, and the tribunal made an order on 29 February 2012 confirming that each was a respondent. Subsequently, Mr Wagner applied for an order dismissing the claim against him, on the grounds that the building contract was with the company, not him personally, and that he was not otherwise liable. The tribunal upheld that claim, and an order was made on 8 May 2012 dismissing the claim as against him.
The applicants appealed that decision, but the matter proceeded to trial before the appeal was decided. The trial decision was reserved, and before it was given, the tribunal upheld the appeal[2] and Mr Wagner was reinstated as a respondent. The tribunal invited the parties to call further evidence if they desired, or to make further submissions. Each party made further submissions. This decision therefore relates to both respondents.
[2] See [2013] QCATA 048.
The second matter concerns the height of the building slab. The applicants discovered after they had filed the application that the Isis Shire Development Guidelines required that the minimum habitable floor height for all dwellings in that area be at a certain height relative to the Australian Height Datum, and that their slab was some 635 millimetres below that height. They therefore amended the claim[3] to include any loss that might flow from this, claiming that the premises were uninhabitable, uninsurable and of no value. Potentially the height problem raised matters unrelated to termites, such as flood risk, insurability, perhaps the risk of a demolition order by the council, and certainly a value issue.
[3] The amended claim of 15 February 2012.
The building plans (for which the builder was responsible) did not refer to this height requirement, and it appears this defect was not adverted to by the builder nor by the council, which approved the plans and ultimately issued a final certificate. During the course of the proceedings, the respondents’ solicitors raised the issue that the council may have some liability in this aspect of the matter and that the council could not be a party to these tribunal proceedings. The applicants’ solicitors therefore filed another amended claim[4], deleting any claim under this head, while indicating that their clients might pursue that matter in another jurisdiction. From then until the experts conclave just prior to the hearing, the matter continued on the assumption that the slab height issue was not part of these proceedings, except perhaps to the extent that it might have contributed to the termite infestation.
[4] On 30 March 2012.
The matter came up at the experts’ conclave where they agreed that the floor level did not comply with the Guidelines, though they did not agree on the builder’s responsibility for that. They agreed it increased the probability of future damage by flooding.
When the matter came on for trial, the respondent’s solicitor raised the question of whether that height issue was to be part of the claim, given its “on again, off again” history. Initially the applicants indicated that they wanted it included. The respondent intimated that if it was allowed to be included he would seek an adjournment, as he had prepared for the hearing in the belief it was not part of the claim, given the second amended claim filed months ago. In the event, the applicants agreed that it was to be excluded (except to the extent that it might be relevant to termites) while reserving their right to raise it in separate proceedings. The hearing proceeded on that basis.
I have set this out in some detail, given that the matter may be the subject of other proceedings, to make it clear that this decision makes no finding on that issue, and these proceedings should not be seen as including that matter as being decided in this application.
Mr Feez’s purpose at the inspection on 2 December 2010 was to attempt to identify a point of entry for the termites. Mr Morgan removed wall sheeting and tiles. The most significant damage noticed there was at the northern end of the ensuite shower base. This base is stepped down from the surrounding slab. Feez noticed widespread termite workings extending up the step down, and running along the angle at the base of the step down. He saw several pinholes in direct association with the termite gallery, and mudding extending down into the holes.
On 14 December Mr Feez returned to the site, and conducted further tests, this time by drilling through the slab in the adjoining bedroom and injecting termiticide solution below the slab. He observed the solution pooling in the shower. On removing more tiles, he discovered a hole in the slab, of about 4 mm diameter. As more solution was pumped, he saw the solution coming out of the hole.[5]
[5] Statement of Anthony Feez, 30 March 2012, and transcript 10 August 2012 from p 24.
Mr Marshman also inspected the hole, and generally confirmed Mr Feez’s description. He also examined photographs taken at the time the slab was poured. As the ensuite shower base is set down, it was necessary to support the surrounding slab with formwork or boxing. Marshman noted from the photographs that the formwork was kept in place by a vertical wooden stakes. He notes that while this is common, when the stake is removed it leaves a void, which creates a flaw in the monolithic slab, and if not dealt with, compromises its integrity. While voids are generally removed by vibrating the slab, this may not be satisfactory in this case. If the stake is removed too soon, and the concrete is then vibrated, it may lose its shape. If the stake is removed later, the concrete may have cured beyond the point where it will flow sufficiently to fill the void. Marshman also noted that the concrete delivery truck had to travel some distance to the site, leaving less time for the finishing before it started to cure.
The recommended treatment then, in Mr Marshman’s opinion, was to apply an epoxy injection to fill the void and restore the integrity of the slab. The builder did not do this. Marshman concluded that it was probable that termites entered the house via this void.[6]
[6] Statement of Rob Marshman, 29 March 2012.
Mr Feez also was of opinion that this was a likely site for termite penetration. In oral evidence[7] he said: “I’ve treated enough houses and got rid of enough termite infestations in homes to know that whenever you have … a recessed shower base that the entry point is often from the recessed area of the shower base.”
[7] Transcript, p 26.
In cross-examination, he said that there was quite distinct mudding and galleries in that area, later describing it as very extensive and very suggestive of active termites.[8] Asked if there was a possibility this was an entry point he said: “I would suggest much more than a possibility. Highly likely,”[9] and later “… all the signs…was (sic) indicative of an entry point. Whether it’s the primary entry point or not, it was still to my way of assessment very much an entry point…”[10]
[8]        Ibid p 29.
[9]        Ibid p 32.
[10]        Ibid p 33.
The respondents do not accept it as established that the hole is an entry point. They relied on reports from an engineer Mr Eric Fox, and a pest expert Mr Christopher Langley. The tribunal ordered an experts’ conclave which produced two reports, one from the engineers and one from the pest experts.
The engineers agreed that there was a hole in the shower slab; that it was most likely due to inadequate vibration during construction; that it had the potential to compromise the slab as a termite barrier; and that rectification in accordance with the relevant Australian Standard may have restored the integrity of the slab. They also agreed that what caused the hole was “completely irrelevant”. While this may be so in the context of compromising the slab, it is still of some relevance having regard to evidence of Mr Langley at the hearing (and the respondents’ submission) to which I will return shortly, and therefore needs some further analysis.
Mr Wagner confirmed that they used timber pegs for the boxing around the showers, 45 by 35 mm in dimension, and that on removal the holes were filled with concrete and trowelled over. He says no holes in the shower recesses were visible during construction.[11] He also says that he would be surprised if the hole travelled through the entire slab, and that the screed applied before tiling would also have filled the hole.[12] He doubts the suggestion that the hole was formed by a form peg, as the hole is smaller.[13]
[11]        Statement 27 April 2012, paragraphs 80, 98 - 102.
[12]        Statement 12 January 2012, paragraph 58.
[13]        Ibid, paragraph 63.
Mr Fox also believes that the hole was not caused by a form peg. In addition to the size issue, he also notes that the hole is at the edge of the recess and therefore would have been under the formwork, and that the hole is neither vertical nor regular in cross section. He believes it is most likely to be a blow hole caused by an air bubble, and the location under the form board is vulnerable to this type of occurrence. He does not believe this indicates negligent construction, and that air holes would not normally extend very deep in the slab.[14]
[14] Report 3 May 2012, paragraphs 26 – 28.
What we do know beyond any serious doubt is that there is a hole in the ensuite shower floor, about 4 mm in diameter[15] at least at the surface, that it extends through the slab (as fluid was able to flow up through it) and that there was a form peg at that point when the slab was poured. Accepting Mr Fox’s comment that areas under formwork are more vulnerable to air bubbles, it seems to me that this would be even more so in an area that is also behind a form peg. It is likely therefore that the hole was caused by a combination of the peg and an air bubble behind it. If the resultant hole was partially but not completely filled by the later vibration, this could account for all of Mr Fox’s concerns, i.e. its location, angle, irregular shape, and smaller size. I find accordingly.
[15]In oral evidence Mr Feez also described it as about the size of a little fingernail. See transcript page 28.
It also follows that there would have been a hole in the plastic vapour barrier (Visqueen) immediately below the location of the hole. The plastic barrier is laid on the ground, and the slab poured on top of that. The peg could not have been driven into the ground without being been driven through the Visqueen. Mr Marshman, in response to Mr Wagner’s statements, says that it makes no sense to assert otherwise,[16] and I agree with him.
[16] Marshman statement 29 March 2012 paragraph 31
Mr Marshman also doubts that the screed would have sufficiently closed the hole or prevented termite penetration. He refers to a lack of bonding to the slab and to shrinkage. He believes it is highly likely there was room for termites to travel between the screed and the slab. The fluid flow observed in December came from beneath the tiles, and occurred before the tiles were removed from the area of the hole, and therefore it could not be said that the investigations had disturbed the screed at that point. Again, what we do know is that there were live termites in the shower in October 2010, fluid was able to flow out of the hole, and when the hole was exposed there was extensive mudding at the location of the hole. There was also extensive damage to the timber in that location.
The respondents’ pest expert Mr Langley stated that as fluid can flow through an aperture too small to admit termites, it may be that the hole was of lesser diameter throughout than sufficient for termite entry.[17] While that could be so, it does not establish that the hole was in fact smaller than the 1mm generally seen as the limit for termite protection. He also suggested in oral evidence that even accepting the hole, the vapour barrier below that would have acted as a termite barrier. His theory was that when Mr Feez injected the solution his pump may have penetrated the concrete but not the Visqueen below, and that the fluid therefore travelled on top of the Visqueen and thence up the hole. He explained the delay in flow back up the hole (there was some 200 litres injected) as perhaps being caused by subsidence in the soil below the Visqueen, allowing a void to form in which the fluid could pool. It is inherent in his thesis that the Visqueen was intact below the hole.[18]
[17] Langley report, 27 September 2011, paragraphs 8.15, 9.3.
[18] Transcript 10 August 2012, page 76 ff.
This theme is taken up by the respondents’ solicitor in his submission, arguing that the vapour barrier acted as a termite barrier, and suggesting that there is no evidence there was a hole in the Visqueen.[19]
[19] Respondents’ solicitor’s submission, 17 September 2012, from paragraph 46.
This proposition depends on one accepting that the drilling through the slab (for the pump) penetrated the concrete but not the plastic sheet immediately below it. This is too fanciful a suggestion to be accepted. The idea that there may have been subsidence springs from speculation, not evidence. The suggestion that there was no hole in the plastic immediately below the form peg hole is at odds with the evidence, as set out above. I do not accept Mr Langley’s proposition, nor the solicitor’s submission.
The second possible entry point identified by the applicants’ experts was at a vent pipe near the main bathroom. This pipe is located within the internal wall frame. It exits the slab in a position where it is at the edge of the vertical rebate.
The design called for a physical termite barrier to the perimeter of the slab, and to the penetrations in the slab. This was achieved by the installation of termimesh, a stainless steel mesh of a gauge sufficiently small to stop termite entry. The mesh is installed through the damp course in the brickwork, and then attached to the vertical or rebated face of the slab, and to its horizontal surface. The adhesion is achieved by use of a modified mortar, the process being known as parging. Where pipes penetrate the slab, collars are installed.[20]
[20] See generally Mr Marshman’s diagram Exhibit 9.
Mr Marshman noted that at the location of the pipe, the mesh was parged to the pipe itself. The proximity of the pipe to the slab edge left no room for the mesh to be parged to the horizontal surface. He said it would be near impossible to install the mesh correctly at this point. He also observed broken concrete there, giving the appearance of not having been adequately vibrated. He said it was highly probable the termite barrier was ineffective at that point.[21] He also noted extensive termite damage at that location.[22]
[21] Marshman statement 29 March 2012, paragraphs 27, 38 – 39.
[22] Ibid, annexure 2, Marshman report of 4 January 2012.

In his statement of 30 March 2012, Mr Feez commented on photographs of Marshman’s, and said that in his experience, damage of that magnitude is usually indicative of an entry point.[23]
[23] Feez statement 30 March 2012, paragraph 26.
Mr Feez had not inspected the vent pipe area at the time of his statement, but he did so before the hearing. He found what he considered were inadequacies in the fixing of the termimesh in that area, and believed termites may have accessed that area due to imperfections in the parging. He says that the barrier is not complete and continuous there, that the termimesh quite visibly sits up off the slab there, and that there is “massive” termite damage in that area.[24]
[24] Transcript, pages 38 ff.
Later he stated that termite mudding coming up under the parging onto the vent pipe further evidenced termite entry there.[25]
[25] Ibid, page 40.
The respondents’ case against these being the entry points rested essentially on two propositions. One is that the ensuite shower hole and the vent pipe have not been shown conclusively as entry points, and the other is that there may have been other causes of entry not related to construction, for example work done when sewerage was connected in 2007, or some other breach of the perimeter. It is convenient to deal with the latter first.
The timing of the events gives an initial attraction to the theory that the connection to the sewerage system triggered the infestation. The house was completed at the end of 2001, with a septic system then being installed. Sewerage was connected some time in 2007. At that point there had been no sign of termite activity. However, termites were found in September 2008, and possibly they were there in April. One can see the temptation to infer a causal connection. The problem for the respondents is that there is no evidence to support it.
Mr Langley noted that as part of the sewerage connection, an external vent pipe was installed which required cutting into an external concrete path. This pipe is affixed to the outside of the brickwork. He noted the timing and thought this disturbance could be related.[26]
[26] Ibid, pages 75, 76.
The respondents’ solicitor examined Mr Marshman about this. Marshman stated that the sewerage was connected externally, as was the pipe. Apart from the concrete path (which was irrelevant as it is not part of the termite barrier), there was no need for any sewerage work to disturb the brickwork or otherwise affect the perimeter, and no sign that it had done so.[27] There was nothing to suggest the sewerage work had had any impact.
[27] Ibid, page 61.
There was no other evidence on this point, and on that basis, I cannot elevate the argument beyond mere conjecture. Both Marshman and Feez also noted that there was no other evidence of breaches of the perimeter.
The respondents’ solicitor’s submission argues that the ensuite hole and the vent pipe have not been conclusively proven as the entry points. In this, he relies on a similar assertion by Mr Langley, and the experts’ conclave report which among other things agreed that the primary point of attack remained undetermined. He cross-examined both Marshman and Feez on this point, and both agreed that they could not say conclusively that these were the primary cause of infestation. The solicitor’s submission goes so far as to suggest that these experts backed away from their initial views.
I do not think that this argument does justice to the experts’ opinions, and confuses the concept of scientific or absolute certainty with the approach to evidence which a tribunal such as this must apply to the issue before it. I do not think either of the applicants’ experts was resiling from his opinion, but merely conceding that they were not at a point where scientific certainty had been attained. I note for instance that when Mr Marshman was pressed as to whether he was moving away from his opinion, he said “I’m just being more politically correct.”[28] I take this to mean that he was simply conceding there was no absolute certainty on the matter.
[28] Ibid, page 50.
Read in full there is no doubt that both Marshman and Feez believed that their conclusions were almost certainly correct, even if not at the level of precision that science might require in another context.
On the other hand, the views of Mr Langley (and to a lesser extent Mr Fox) on the contentious issues seem to me to owe more to hope than to expert analysis. Langley does not advance evidence for his alternative hypotheses, but rather seems to be searching for an answer that does not entail an adverse view of the construction work. When questioned by me as to his theory of a perimeter breach or bridge, he relied on his experience that this was often the case. He conceded it was a statistical analysis, based on other cases.[29] In the absence of evidence in this case, that can carry no weight.
[29] Ibid, page 75.
It is possible that there are other causes of the infestation, as yet uncovered, but if so these are more likely to be within the building than an exterior breach, and therefore as likely to result from faulty workmanship as those already uncovered.
The respondents did refer to the existence of a live termite nest on the property next door, and suggested this might be the source of the problem. There are two difficulties with this. First, Mr Feez points out that the termite treatment by Suresafe in October 2010 involved a chemical which the termites would carry back to their nest, thereby destroying the termites at source. The termites in that nest had not been destroyed.[30] Secondly, they would still have needed an entry point.
[30] Ibid, page 36.
A very considerable body of evidence points to the ensuite shower floor and the vent pipe as being the points of entry for the termites. The only evidence (as opposed to speculation) to the contrary is Mr Wagner’s statement that there were no holes visible in the shower recess at the time of construction. Given that this is contrary to the established facts, it must be discounted. This tribunal must decide on the balance of probabilities, not on scientific certainty. On that basis the evidence is all one way, and I find that these two points are the entry points for the termites and that such entry has resulted from faulty construction.
There is one further matter raised by Mr Fox, to which I should refer. In the expert’s conclave report, there was a difference of opinion as to whether the slab complied with Australian Standard AS 2870. Fox thought that it did comply, notwithstanding the (agreed) 4 mm hole in the shower floor. Mr Marshman was of the contrary view. Mr Fox pursued this at the hearing.[31]
[31] Ibid, from page 67.
As I understood his argument, Mr Fox was saying that a defect such as the hole will occur from time to time, but that this does not mean that the slab does not comply. He believes this slab is otherwise built in accordance with the standard, and therefore it is a complying slab. Further, the relevant termite prevention standard, AS 3660.1 says that a slab complying with AS 2870 is deemed to comply with AS 3660.1, and therefore the builder has complied with his relevant obligations, and would not be liable for a defect such as this. Later in evidence, he said that there had been a move to include further preventative measures in the standards to cover cases where the slab had a defect, but it was felt the cost was not justified simply to cater for the very occasional faulty slab.
I have difficulty accepting the proposition that a slab can be compliant with the standard notwithstanding that it has a defect of this nature. If the standard requires that the slab be free of defects that compromise its performance as a termite barrier, and this slab has such a defect, that, it seems to me means it does not comply in that respect. That the defect occurs only rarely does not lessen its status as a defect. This is quite a different proposition from saying that it may not be worth adding another layer of prevention in the standards.
I note Mr Langley quotes from AS 3660.1 including : “Concrete shall be compacted and cured to resist penetration by subterranean termites, the slab penetrations and perimeter to receive appropriate termite risk management measures.”[32] The standard at clause 2.3.1 also provides that “a concrete slab… shall (a) be designed and constructed so that any cracks passing through the slab … do not exceed 1 mm in width through the depth of the slab.”
[32] Langley Report, 27 September 2011, paragraph 7.11.
It may be that Mr Fox was influenced by his view that the hole may not have been more than 1 mm in width throughout the slab. I also note that the respondent’s solicitor does not advance Mr Fox’s argument in his submission. In any event, I decline to accept Mr Fox on this aspect of the matter, and find that the slab as constructed did not comply, and that the builder was therefore in breach of the relevant codes.
In his supplementary submission, the respondents’ solicitor argues that Mr Wagner should not be found liable, on the basis that he did not owe any duty of care to the applicants. This submission is based on a view of the relevant law as to the liability of a director to a home owner where the contract is with the director’s company. The submission appears to raise the same arguments as were advanced when Mr Wagner brought the original strike out application, and again when that issue was dealt with on appeal. The finding of Member Mr Brabazon QC on that appeal necessarily entails the conclusion that Mr Wagner did owe such a duty of care. Accordingly, it is not open to me to revisit that issue.
I therefore conclude that both respondents owed a duty of care to the applicants, and that, taking into account the facts as found, and having regard to the very serious consequences that would foreseeably follow from such a breach, and did in fact follow, they are in breach of that duty and therefore liable.
It remains to calculate what loss the applicants are entitled to be compensated for.
The building has been extensively damaged. A number of rooms are affected, and the engineers confirm that in some respects the structural integrity of the walls has been compromised to the extent that they should be replaced.[33] The BSA report of 16 November 2011 lists the defects noted at that time, and there are other reports. It will serve no purpose for me to list them again.
[33] See for example Mr Fox’s report of 3 May 2012, paragraph 34.
There are also a number of quotes or other estimates of the rectification costs. These range from Mr Wagner’s estimate of $9,689.62[34] to an estimate of Glen Frankham builder, who estimates it as in the range of $120,000 to $143,000.[35] Mr Morgan, who has perhaps had more to do with the house since 2008 than any other builder, provided two quotes, one for $79,925 in October 2011, and an updated quote for $83,890 in March 2012.
[34] Exhibit RKW9 to his affidavit of 12 January 2012.
[35]I am ignoring other quotes for complete demolition and rebuilding, as these apparently relate to the slab height issue, which is outside the scope of these proceedings as set out above.
Morgan also states[36] that it is very difficult to quantify the rectification costs as the scope of the damage cannot be ascertained until parts of the building are demolished and the full extent of the problem uncovered. He believes it will be at least $80,000, and maybe as high as Frankham’s $140,000. He considers Mr Wagner’s scope of works “completely inadequate”.
[36] Statement of 30 March 2012.
The applicants produced their final claim at the hearing, where they claimed a total of $135,205.[37] However this included claims for alternative accommodation and storage. The amount referrable to building work appears to be $130,000, i.e. roughly midway in the Frankham range.
[37] Exhibit 7.
There is some merit in remitting the matter back to the parties for further information and assessment on this point. However the case has already had a long history and I am reluctant to delay it further. It is impossible to determine this with any precision, but I propose to allow a figure of $93,000, based on the Morgan estimate of March 2012 with an additional allowance of 10% (rounded up) for cost increases and contingencies.
I will also allow something for accommodation as the applicants will not be able to live in the house during reconstruction. Their estimates seem to be based on holiday accommodation, which is more expensive. With some effort they should be able to do better than that, and I will allow 12 weeks at $250, a total of $3000.
I will not allow anything for storage. They should be able to store their furniture and effects in the house during the re-build.
They have also claimed the cost of the Victory Pest Control termite treatment. While that treatment was not completely successful that was not the fault of the applicants, and it was reasonable for them to incur that expense. That amount was $2,600.
Accordingly I assess the total amount of compensation at $98,600.
Before leaving this part of the matter, I mention one further matter raised by the respondents. The respondents’ submission includes a submission that the failure of the applicants to call Mr Morgan or anyone else on the question of rectification costs means that there is no evidence of those costs before the tribunal. This is based on the claim that the tribunal required all witnesses to attend at the hearing, and no order was made dispensing with that requirement. The tribunal order referred to is presumably direction 8 of the order of 29 February 2012, which reads: “Unless the Tribunal otherwise orders all witnesses must attend the hearing in person for cross examination. Any application for a witness to attend the hearing by remote means or by remote conferencing must be made prior to 14 days before the hearing.”
Direction 7 of that order contained a limitation on any party calling evidence not contained in a filed statement.
In this context, there is some doubt as to whether Direction 8 is insisting that all witnesses attend at the hearing (their evidence being excluded if they do not) or rather that the direction is aimed at assuring personal attendance, rather than by telephone. It would not be surprising if the applicants, representing themselves, worked on the assumption that it was the latter, as it may well have been.
The material on rectification costs was available to the respondents, and they could have asked to have any of the relevant witnesses made available for cross examination. The solicitor did not raise the issue at the hearing at all. On any view of the direction, I do not think it is appropriate to allow that point to be taken when it was not raised at the hearing. If it is necessary for me to order that the attendance of these witnesses be excused, then I do so.
The respondents also raised the argument that the applicants should have mitigated their loss. While this issue was not mentioned in their submission, it did arise in various guises in the material before the Tribunal. It opens the question of whether the award should be reduced on the basis of contributory negligence.
There are a couple of relevant factors. One concerns whether the applicants should have had regular inspections. Some of the literature recommends this. The Termimesh warranty “strongly recommends” an annual inspection but it does not appear to be a condition of the warranty. However it is not established whether this would have helped. There was no evidence of external intrusion, and even an annual inspection may not have discovered the problem any sooner than it was.
The respondents also suggest that if the applicants had informed Mr Wagner sooner he may have been able to limit the damage. Mrs Tracey says she rang him in 2008, but he denies that. It is common that there was at least one and perhaps more conversations between them in 2009. The matter does not appear to have been dealt with well by Mrs Tracey, and having seen her in the hearing, I suspect that she is not well equipped to handle what might have needed diplomatic negotiation. Similarly, Mr Wagner did not volunteer to have a look at the issue until it became more urgent in October 2010. Perhaps both were content to leave the matter as Victory was attending to it at that stage.
While Victory was not very successful at solving the problem, Mrs Tracey was not to know that, and she had them back several times over the 2 year period. We should not expect too high a standard from a lay person who understandably puts her trust in people who hold themselves out as experts.
In all the circumstances, I do not consider it appropriate to make any adjustment for a failure to mitigate, or for contributory negligence.
There was a claim for interest. However as the rectification costs have not yet been incurred I do not propose to allow anything for interest.
As the decision was reserved, there was no opportunity for any submission on costs. I propose to make orders to facilitate that, and will reserve that question.