TRENGOVE and CELEBRATION NOMINEES PTY LTD - [2012] WASAT 65

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: BUILDERS' REGISTRATION ACT 1939 (WA)

CITATION: TRENGOVE and CELEBRATION NOMINEES PTY LTD [2012] WASAT 65

MEMBER: MS C WALLACE (MEMBER)
MR R AFFLECK (SENIOR SESSIONAL MEMBER)
MR R TRAVERS (SESSIONAL MEMBER)

HEARD: 14 MARCH 2012

DELIVERED : 21 MARCH 2012

PUBLISHED : 3 APRIL 2012

FILE NO/S: CC 1193 of 2011

BETWEEN: BARTON TRENGOVE
SUSAN TRENGOVE
Applicants
AND
CELEBRATION NOMINEES PTY LTD
Respondent

Catchwords:

Tribunal's discretion to decide appropriate remedy - Irretrievable breakdown of relationship - Whether order to remedy or order to pay is appropriate - Mitigation of loss - Owners' lack of building knowledge - Finality in litigation

Legislation:

Builders' Registration Act 2004 (WA), s 12A
Building Cose of Australia
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 11(1)(d), s 38, s 43
State Administrative Tribunal Rules 2004 (WA), r 40(2)

Result:

Applicants unsuccessful in obtaining order to remedy
An order to pay awarded as more appropriate remedy

Category: B

Representation:

Counsel:

Applicants: Self-represented
Respondent: Mr P Monaco

Solicitors:

Applicants: N/A
Respondent: GV Lawyers

Case(s) referred to in decision(s):

Holloway and Perreau [2010] WASAT 192
Nelson v Mardesic (1998) 22 SR (WA) 42

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

Mr and Ms Trengove sought an order to remedy from the Tribunal in relation to a number of workmanship complaints following the building of their home by Celebration Nominees Pty Ltd. Celebration Nominees Pty Ltd contended that the Tribunal ought, in its discretion, to make an order to pay, as the more appropriate remedy.
The matters relied upon to support the contention that an order to pay was the appropriate remedy included: that the relationship between the owners and builder had irretrievably broken down; an order to remedy is usually made to benefit the builder, and the builder, in this case, did not wish to avail itself of that benefit; and an order to remedy would not achieve finality in the litigation. The owners asserted that an order to remedy was the more appropriate remedy on the following bases: the relationship between the parties had not broken down; it was appropriate and expected in the industry for builders to rectify their own workmanship; they were entitled to choose a remedy rather than have a remedy imposed upon them; they are not builders and do not have competence in building matters and, therefore, it would be unfair to expect them to supervise third party contractors; and it would be difficult to find a third party contractor willing to perform remedial works.
The Tribunal found that the more appropriate remedy, in the circumstances of the case, was an order to pay. The Tribunal found that the relationship between the parties had irretrievably broken down and, thus, if an order to remedy was made, it may not achieve finality in the litigation. The Tribunal also found that it was not necessary, in order to make an order to pay, that owners required a certain level of competence in building matters. Upon the evidence before the Tribunal, it was also found that there were third party contractors available and willing to perform the remedial works, the scope of which had been agreed by both parties' independent experts who had also identified the reasonable third party costs. Those agreed costs were therefore awarded to Mr and Ms Trengove.

Introduction

This application relates to a complaint filed with the Building Disputes Tribunal (BDT) by Mr and Ms Trengove (owner applicants) against Celebration Nominees Pty Ltd (respondent builder) on 31 May 2011 which has been transferred to the State Administrative Tribunal (Tribunal) by the Building Commissioner pursuant to s 11(1)(d) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act). The Tribunal is able to deal with the matter under s 38 and/or s 43 of the BSCRA Act which allows the Tribunal, if so satisfied, to make orders as appropriate, whether it be an order to remedy or an order to pay.
The complaints raised by the applicants in their original complaint filed with the BDT related to workmanship in respect of their home built by the respondent, as well as a contractual claim for compensation in the amount of $20,000 for loss of income and $400,000 in damages. Following a second mediation before Member Aitken on 1 December 2011, it was ordered in order 1 that the mediation was terminated on the basis that the applicants had withdrawn the claims for $20,000 for loss of income and $400,000 for damages, and the remainder of the claims were to go to a hearing. Thus, the matter proceeded as a workmanship only claim.
Although the Tribunal will be making orders pursuant to the provisions of the new legislation to which it has referred, given that this is a legacy matter, that is, it is one which was filed with the BDT prior to the enactment of the new legislation, the Tribunal will apply the relevant provisions of s 12A of the Builders' Registration Act 1939 (WA) in determining the workmanship complaints.
This matter has had some history in the Tribunal before reaching a final hearing. It first came before Senior Member Spillane on 23 September 2011, at which time orders were made programming an inspection of the applicants' property by the respondent to enable it to file a response to the applicants' claim. The matter was then listed for mediation before Member Aitken on 10 November 2011, which was adjourned to a further mediation on 1 December 2011, at which time, as already mentioned, the contractual claim was abandoned by the applicants. The matter then came back before Senior Member Spillane on 12 December 2011 and various programming orders were made to prepare the matter for final hearing. The matter was listed for a three day hearing before this panel.
The parties were called in for another directions hearing on 25 January 2012 to enable further programming orders to be made in relation to the experts attending a compulsory conference and producing a joint expert report. The intent was that if the experts agreed entirely or in relation to a number of issues, they would either not be required to attend the hearing or their evidence would be reduced, thus, of course, enabling the Tribunal to reduce the hearing time and the costs to the parties.
A further directions hearing took place on 15 February 2012 requested by the applicants' solicitors who had recently formally gone on the record. Various matters were required to be addressed, including adjourning the initial date for the compulsory conference and attending to programming orders in relation to the primary issue which was ultimately the subject of submissions and evidence at the hearing, being whether the applicants are entitled to obtain an order to remedy or whether the respondent is correct in its submission that an order to pay is appropriate in the circumstances of the case.
The parties' experts attended the compulsory conference on 20 February 2012 which was facilitated by Sessional Member Burgoyne, being a legal practitioner, registered builder and quantity surveyor. A joint statement of the experts was then filed with the Tribunal on 27 February 2012 which showed agreement between both parties' experts as to the required remedial work to rectify the items of workmanship complaint and the third party costs estimated to perform that work, as well as various preliminary items and third party builder overheads (20%), with the ultimate total agreed amount being $44,858.77.
The parties then attended a further directions hearing on 1 March 2012 at which it was ordered that the matter would proceed to final hearing to determine the single issue as to whether the Tribunal should make an order to remedy and/or an order to pay and any related issues. At that time, the third day of the hearing was vacated. It was at this directions hearing that it was raised for the first time by the solicitors for the applicants that the remedial work agreed by the experts in their joint report would, in the submission of the applicants, require an amended building licence to be submitted to the City of Armadale. It was submitted on behalf of the applicants that they would therefore be seeking an order from the Tribunal directing the respondent to undertake that task. On the basis that, if the Tribunal made an order to remedy, it would not specify or dictate to the builder the manner in which the remedial work was required to be undertaken, it was directed by the Tribunal that no such further evidence on the point was required.
Following that directions hearing, the applicants filed further reports of their experts dated 2 March 2012 in relation to the matter of the requirement for an amended building licence. In addition, on 6 March 2012, the Tribunal received a copy of a letter sent by the applicants' solicitors to the respondent's solicitors which was a curious document in that it appeared to contain, in effect, the applicants' evidence which would no doubt be given at the hearing, and a settlement offer to the respondent. The letter was not marked either 'without prejudice' or 'with prejudice' and, therefore, pursuant to r 40(2) of the State Administrative Tribunal Rules 2004 (WA), it would ordinarily be deemed to be without prejudice and therefore should not have come to the attention of the Tribunal. In addition, not only was it copied to the Tribunal but it was also copied to the Building Commission, Regulatory Compliance and to the City of Armadale. It contained within it assertions which were yet to be tried in the proceedings. The receipt of that correspondence necessitated a further urgent directions hearing on 7 March 2012.
Concerns were expressed at that directions hearing by the Tribunal as to why a settlement offer and a letter in the terms of the 6 March 2012 correspondence would be copied to the Tribunal as well as to third parties prior to the final hearing. The solicitors for the applicants submitted that the correspondence was necessary because of the issue in relation to the requirement for an amended building licence. Although the Tribunal was willing, albeit with some hesitation, to allow that evidence to be given on the basis that it was properly articulated and quantified, it did not explain the necessity for a settlement offer to be made, the terms of which were made aware to the Tribunal and to third parties.
The receipt of this letter necessitated obtaining direction from the President of the Tribunal. The direction from the President enabled the current panel to continue to sit at the final hearing, given that the rules of the Tribunal allow open offers to be made known to the Tribunal but that, given that the offer itself had no relevance to the proceedings other than in relation to costs, the settlement offer would not be referred to or considered by the panel in deciding the substantive matter. That direction was communicated to the parties, and an order was made allowing the applicants to file further expert evidence on the issue of the requirement for an amended building licence by close of business on 8 March 2012. That further evidence was then received.
Needless to say, a large volume of material has been filed in relation to these proceedings which encompasses three hearing books which have been considered by the panel. In addition, submissions were made by and on behalf of the parties, and evidence was provided by the parties themselves, as well as oral evidence from the applicants' builder expert.
It is not necessary for the Tribunal to repeat in great detail the contents of the documents which have been provided to it, nor the submissions made by the parties' representatives. However, the Tribunal will address briefly some relevant background facts and the positions of the parties, focusing on what they say in relation to the primary issue being decided by the Tribunal.

Background

The contract entered into by the parties was a lump sum building contract dated 19 November 2005 in the amount of $160,641. It appears that work commenced building the home at No 12 Isaba Parkway, Seville Grove on or about 16 May 2006 and that practical completion was achieved in or about early November 2006.
Preliminary notice of the applicants' complaints was sent to the respondent on 16 May 2011 which was quite detailed and included a number of complaints in relation to various workmanship items, including:
•the concrete slab;
•the timber frame structure;
•the colorbond roof structure in relation to the tie down system;
•breach of termite barrier;
•lack of an anticon installed under the roof sheeting;
•various defective workmanship in relation to the roof, a front veranda, the garage roof, the front entrance and various windows; and
•a number of items in relation to the interior of the house.
The preliminary notice also included copies of various reports obtained by the applicants. It also included the claim for loss of income and earnings and the claim for damages which, as mentioned, was subsequently withdrawn. A formal complaint form was then filed with the BDT by the applicants on 31 May 2011. The redress sought in that claim in relation to the workmanship complaints was that the house be demolished and rebuilt.
The applicants filed a number of expert reports but ultimately relied on two of their experts, being Mr Norm Cunningham, a registered builder, and Mr Andrew van der Meer, a structural engineer. It is unnecessary for the Tribunal to refer to that expert evidence in any detail, particularly given that the parties' experts have filed a joint statement. Suffice to say that the applicants' experts, in their initial reports which appear in volume 1 of the hearing book, identified that the cracking and movement in the structure, one of the main concerns of the applicants, appeared to be caused by inadequate tie down of the roof, which needed to be remedied.
Mr Cunningham's report dated 13 January 2011, which no doubt formed the basis of the list of complaints which the applicants provided by way of preliminary notice, listed a number of defects throughout the home, and in conclusion at page 30, Mr Cunningham stated that he found the house to be a 'wellappointed design, however there are a few problems with regards to finishes' as detailed in his report. He recommended that a structural engineer check all supporting steel within the roof area to verify construction had been carried out to the original approved structural engineer plans.
Mr van der Meer then provided the applicants with a report dated May 2011. He also noted various anomalies which had already been identified by the applicants' other experts and, in relation to the roof, noted that it needed to be properly tied down. His advice to the applicants was that all remediation work should be supervised by a registered builder. Thus, at that time, it did not appear that Mr van der Meer's view was that the house was structurally unsound or that the remedial works were required to be certified by a structural engineer.
The respondent engaged Mr Neville Harrison as its independent expert to prepare a responsive report. That report was prepared and filed with the Tribunal on 27 October 2011. Mr Harrison is a registered builder and was for a number of years a builder member of the BDT. There is no need to reiterate in any detail that report, other than to note that, in relation to a number of the complaints, they were confirmed by Mr Harrison and he set out what he recommended was appropriate remedial work. From the Tribunal's reading of that report, it appeared to concur in some important respects with the reports of the applicants that, in essence, although there were some defects or remedial work required, including additional tie downs to the roof, the home was otherwise structurally sound. This is the reason the respondent has submitted it chose not to retain an expert structural engineer in order to defend these proceedings.
It appeared therefore to the Tribunal, based on the expert evidence put before it, that the position may well be that the experts were, in effect, in agreement with one another and it was therefore important to identify whether that was the case prior to the hearing, such that the parties could benefit from their experts' exclusion at the hearing.
The Tribunal therefore directed the applicants' two experts and the respondent's sole expert to attend a compulsory conference on 24 February 2012 before Sessional Member Burgoyne. The intent of the compulsory conference was for the experts to discuss and report on what remedial works were required and at what cost by a third party contractor, as well as identifying and costing any necessary additional costs, such as the applicants being required to vacate their home. Those matters then formed the joint expert statement which was signed by all of the experts in attendance at that conference. That joint expert statement showed agreement between the experts in relation to all of those matters.
The ultimate costs associated with the agreed remedial works to be carried out by a third party and related costs were in the amount of $44,858.77. The agreed expert statement dated 27 February 2012 lists all of the relevant items of workmanship requiring remedial work, what work is required and at what cost. It is clear from a review of the report that the experts turned their minds to including a 20% builder's margin. The statement also included an amount in relation to preliminaries, which incorporated items identified by the respondent's expert in Schedule 2 of his report of October 2011. Those preliminaries therefore included the costs of a removalist to pack and unpack furniture into a sea container, the hire of the sea container including delivery and pick up, accommodation of the applicants for a period of two weeks, disposal of rubbish, and so forth. It was open, of course, to the experts during the compulsory conference to identify any additional costs which they believed should also be included in circumstances where an order to pay may be made by the Tribunal.
As already referred to, following receipt of the joint expert report, the Tribunal was informed by the applicants' legal representative that it was then discovered by the applicants' experts that there was an omission in relation to identifying and estimating costs associated with obtaining an amended building licence from the City of Armadale. What followed was the filing of various additional documents from the applicants' experts. A number of documents were filed with the Tribunal on 6 March 2012 including letters from Mr van der Meer stating, for the first time, that, because of the inadequate vertical restraint to the roof framing of the applicants' home, the structure was therefore deemed to be 'structurally unsound' and that the remedial work agreed by the experts did not comply with the approved building licence plans, and the floor slab reinforcement would not comply with the 'Australian Code' recommendations.
Also attached to the 6 March 2012 letter was a letter from the City of Armadale in response to a letter received by it from the applicants dated 27 February 2012. A copy of the letter sent to the City of Armadale by the applicants has not been provided to the Tribunal, but it appears that the applicants informed the City of Armadale of various matters in relation to the structural soundness or otherwise of their home and potentially other matters. Also attached was a copy of a letter dated 6 March 2012 from SGIO Insurance to the applicants in a similar vein to previous correspondence with the applicants' home insurer. The applicants have, as they had previously, informed their insurer that their home was not structurally sound and, on that basis, their insurance policy was cancelled. This appears to be a statement made by the applicants which was, until very recently, not what the applicants' experts had concluded in their reports.

Further correspondence was then provided to the Tribunal from the applicants' experts dated 8 March 2012. Mr Cunningham's correspondence asserted that if remedial work is carried out in accordance with the joint expert statement, the work will not comply with the contract drawing comprising the building licence, because steel and timber beams have been installed by the respondent in the wrong positions in some places. Mr Cunningham stated that applications will need to be made to the City of Armadale to revise the building licence drawing, a structural engineer will be required to sign off on the rectified work, and that the estimated cost to obtain the amended building licence would be, in his view, $12,000.
In Mr van der Meer's 8 March 2012 letter, he simply agrees with the contents of Mr Cunningham's letter of 8 March 2012, other than in relation to the costs of obtaining an amended building licence, which he estimates are approximately $4,000. Given the lateness in raising this issue, the respondent's expert was not required to file a written response.

Parties' submissions

The Tribunal will now refer to the parties' positions in relation to the issue as to whether the applicants can enforce an order to remedy on the respondent or whether it is more appropriate that the Tribunal award an order to pay reflecting third party costs. The applicants' representatives filed an amended submission in relation to this issue on 29 February 2012 and also relied on the evidence of Mr Trengove and of the applicants' experts in relation to this matter. The applicants' position effectively is the following:
•An order to remedy in preference to an order to pay is the usual position on the basis that it is the more appropriate remedy and in this regard the applicants refer to Nelson v Mardesic (1998) 22 SR (WA) 42 (Nelson) at [48], and they submit that it is the more appropriate remedy because it puts the innocent party in the position they would have been in had the contract been properly performed without unnecessarily burdening the innocent party.
•It is not possible to force a remedy upon a party entitled to it and sought by it.
•The applicants submit that the relationship with the respondent has not irretrievably broken down and that they maintain faith in the respondent to properly perform the remedial works.
•The applicants are not builders and do not have building experience and therefore it would be unjust to require them to engage third party contractors to carry out the rectification work.
•Mr Trengove has given evidence that it is very difficult to find a builder who will undertake the remedial works.
•The applicants' experts, in effect, say that it is normal industry practice for builders to undertake remedial work where there are workmanship issues in relation to their building performance, and the respondent should not be in the industry of being a registered builder if it is not prepared to do so.
The respondent has also filed written submissions in relation to this issue on 28 February 2012 and also relied upon the evidence of Mr Hancock, on behalf of the respondent, in relation to this matter. Again, the Tribunal will not rearticulate those submissions in detail but will refer to them in summary as follows:
•An order to remedy is open to the discretion of the court or tribunal as in other cases, including those of specific performance.
•Orders of the nature of remedial action in building matters are not usually appropriate in circumstances where the relationship between the parties has irretrievably broken down.
•Contrary to what the applicants have asserted, an order to remedy in this context is available for the benefit of the builder in order to ensure that applicants mitigate their loss.
•The respondent noted that, in Holloway and Perreau [2010] WASAT 192, it was seen as more appropriate to make an order to pay rather than an order to remedy, given a number of factors, including the breakdown of the relationship between the owner and the builder. The respondent relies on a number of matters in relation to the breakdown of the relationship between the parties, including that the applicants initially sought demolition of their home.
•The applicants are more than able to engage subcontractors to undertake the remedial work and subcontractors will be available to do the work.

Consideration

The issue for determination for the Tribunal is one single issue; that is, what is the appropriate remedy in the circumstances of this case. Although there was evidence that has been belatedly allowed in relation to the issue of the building licence, that merely relates, in the view of the Tribunal, to an order to pay, because it potentially affects what should be awarded to the applicants. It therefore remains that there is one substantive issue to be decided. The Tribunal will therefore deal with the issue regarding the building licence following the consideration and determination of the question of what is the appropriate remedy.

Mitigation of loss

It is not in contention between the parties that, in building matters, in the past, the BDT, and now in present times, the Tribunal, an order to remedy is often made on the basis that it is determined to be the more appropriate remedy. This is for a number of reasons, but one of the significant reasons is, of course, to ensure that applicants mitigate their loss. That this is an important principle in any litigation cannot be in contention. It was also a matter referred to in Nelson, to which the applicants have referred and sought to rely.
Page 48 of Nelson, to which the written submissions of the applicants refer, states that the general practice has been to grant an order to remedy in preference to an order to pay on the basis that the more appropriate remedy is that which puts the innocent party in the position it would have been in had the contract been properly performed without unnecessarily burdening the party in breach. The applicants have unfortunately misquoted that part of the decision in Nelson by substituting the words 'without unnecessarily burdening the party in breach' with the words 'without unnecessarily burdening the innocent party'. That is not what that decision states and it is not, in fact, what the position is. One of the primary and clear intents of an order to remedy is to adhere to the principle of mitigation of loss and to not unnecessarily burden the party, being the builder, by forcing it, if it is in breach, to incur significant costs to cover a third party performing remedial work. There are, of course, benefits to owners in requesting an order to remedy, such as achieving continuity and avoiding a lack of confusion if further remedial works are required by having only one contractor perform works at their home.
However, as was noted in Nelson and many other cases, a primary reason for encouraging owners to seek an order to remedy, whilst not compelling them to do so because ultimately it is their choice which remedy they wish to seek, is to ensure that they are mitigating their loss. There is also the risk that, if owners elect an order to pay, they may only be entitled to the costs to the builder rather than third party costs and, given that risk, the BDT, and now the Tribunal, often encourages owners to seek an order to remedy, thus to minimise this risk.

Irretrievable breakdown of relationship

At the heart of this issue as to what order is appropriate is, of course, the question as to whether the relationship between the parties has irretrievably broken down. In relation to this issue, the Tribunal is guided by the Nelson case, as it sets out a number of factors which the Tribunal ought to consider in determining this question. The fact that, in this case, it is the builder asserting that the relationship has broken down does not matter. The principles equally apply whether it is a builder or an owner making the assertion. This is an important consideration for a number of obvious reasons, including the primary one, namely, to ensure some finality in litigation. If a tribunal were to order remedial work in circumstances where the relationship between the parties has irretrievably broken down, it is likely not to result in finality of the disputes arising between those parties.
The Tribunal looks to the relationship between the parties and whether the owner has lost confidence in the builder, the willingness or otherwise of the builder to perform remedial works, whether it has performed remedial works which have been unsatisfactory, whether the builder has been refused access, and whether, for example, the extent of the remedial work itself evidences perhaps a lack of competence or ability on the part of the builder which justifies the owner losing confidence in the builder's ability.
The Tribunal has had consideration in this regard to both Mr Trengove's evidence at the hearing and Mr Hancock's evidence. It has also taken into consideration relevant matters such as the various submissions made on behalf of the parties in these proceedings, as well as communications passing between the parties and third parties. The applicants essentially submit, and gave evidence, that they still have faith in the respondent's ability to perform the remedial works in a competent and tradesmanlike manner. Mr Trengove has given evidence that he has merely informed his insurer and the City of Armadale of the current structural unsoundness of his home because he is under an obligation to do so and not because of any lack of faith in the builder. Mr Hancock gave contrary evidence. His evidence was to the effect that he has no doubt that, whatever remedial work the respondent performs, the owners will never be satisfied and that further dispute between them will logically follow.
The Tribunal, in consideration of the evidence available to it in relation to this issue, finds that the relationship between the parties has irretrievably broken down. The Tribunal does not accept the evidence of Mr Trengove that the applicants maintain their faith in the respondent's ability to perform the remedial work to their satisfaction. The matters and findings of fact which the Tribunal has considered and made which support this conclusion include the following:
a)When the applicants first filed their complaint with the BDT, they sought the demolition of their home. This was despite the fact that they had already obtained expert reports which did not suggest that demolition was required to remedy the defects found. Indeed, the expert report of Mr Cunningham stated that, in his view, the home was welldesigned but that there were a few problems with regard to 'finishes'.
b)The applicants have continued to assert that the house is structurally unsound and have informed their insurer and other parties of this matter, despite the fact that, until very recently, their own experts had not expressed that view in their written reports.
c)The applicants intend to pursue disciplinary action against the respondent, which also supports the contention that they have concerns in relation to the respondent's workmanship and ability to satisfactorily undertake work on their home or generally in the industry.
d)The applicants require the remedial work undertaken by the builder to be supervised by their experts. The fact that the works require close supervision by their experts again supports a finding that they have little to no faith in the builder's ability. Such a requirement is also in clear contradiction to an order to remedy whereby the performance of the works are ordinarily at the discretion of the builder.
e)In the applicants' solicitor's letter of 6 March 2012, in para 12, it is submitted that the builder does not know how to rectify the work in accordance with the contract documents and building licence, and therefore has taken the view that it is easier to 'pay off the owners as little as possible and let them sort out the mess'. This is again a further indication of the owners' view of the builder. The statement is made despite the owners' own independent experts attending a compulsory conference where they agreed third party costs which, in their view, were fair and reasonable and reflected market rates. Despite that fact, the owners still hold the view that they are, in fact, being cheated by the builder.
f)The builder was willing and able to undertake important remedial works in line with what had been recommended by the applicants' own independent experts, and was denied access, and those offers were rejected (the Tribunal refers to hearing book pages 511 and 512; 521 523). Mr Trengove's evidence as to why he refused the offers, which included the respondent arranging for an independent structural engineer to attend the site, was that his 'feeling' was that the remedial works would be, in his words, 'botched' by the builder.
g)Both in Mr Trengove's evidence before the Tribunal and in his correspondence which forms part of the hearing books, he uses language indicative of an owner who has little, if any, faith in their builder. For example, in the applicants' claim for damages which forms part of the complaint filed with the BDT (hearing book page 111), they say that the builder has tried to 'obtain an unfair advantage' over them, has treated them in an 'oppressive manner', and that they believe that they have been 'cheated out of a quality built home' by the builder. In the view of the Tribunal, these expressions betray a derogatory view of the builder and support the contention that the relationship between the parties has broken down.
The above does not indicate to the Tribunal that the owners maintain faith in the builder's abilities. In fact, what it does evidence is the opposite. It is evidence to support the contention and the evidence of Mr Hancock that, in fact, the relationship has irretrievably broken down.

Owners' lack of building knowledge

The Tribunal will now consider some of the other matters which were raised by the applicants in relation to this issue. Firstly, that the applicants are not builders and do not have building experience and therefore an order to pay would not be an appropriate remedy. This submission is based on the premise, which the Tribunal does not accept, that owners need to be registered builders, or have a certain level of competency in relation to building matters, before this Tribunal should make an order to pay.
The applicants have not been able to identify any case law to support this contention and none is known to the Tribunal. In any event, the Tribunal does not accept Mr Trengove's evidence that, in relation to building matters, he does not 'have a clue'. Indeed, Mr Trengove gave evidence of arranging quite extensive works to his home, including significant exterior paving, the construction of a large patio/pergola and the fitout of the laundry. In addition, Mr Trengove often made important decisions based on his own 'feeling' rather than relying on independent expert reports provided to him. If he, indeed, did not 'have a clue' in relation to building matters, he would not have conducted himself in this manner. In any event, the point is moot because Mr Trengove has given evidence that his intention is to engage Mr Cunningham, who is a registered builder, to supervise the remedial works. This option is clearly available to Mr Trengove, whether it is the respondent who performs the works or a third party. The Tribunal therefore does not accept the contention, either in fact or in law, that an order to pay is inappropriate for this reason.

Difficulty obtaining a third party contractor

The last submission which the applicants appear to rely on as supporting the contention that an order to pay is inappropriate is the submission that it would be extremely difficult for the applicants to engage a registered builder who would be willing to perform the remedial work. Essentially, the submission is that damages is not an adequate remedy for this reason. The Tribunal notes in this regard that the applicants chose not to rely on the evidence of any third party builders to support this contention. The only evidence, therefore, before the Tribunal in relation to this matter was that of Mr Trengove and of Mr Hancock.
Mr Trengove's evidence does not support this contention. His evidence was that he had contacted at least two third party builders who appeared willing to perform the remedial works. Mr Trengove gave evidence that one of those builders had given a verbal quote to him over the telephone based on expert reports he had provided to that builder, but that no inspection of the home had been undertaken. Mr Trengove also gave evidence that another builder had told him that they were also willing to provide him with a quote to perform the works on the basis that he gave that builder one week's notice. Mr Trengove did not pursue making arrangements for that builder to provide a quote. The Tribunal is satisfied, based on that evidence, which was corroborated by Mr Hancock's evidence, that there are third party builders willing and able to perform the remedial works.
As a final matter, the Tribunal notes that a unique characteristic in this case is that the builder is willing to pay reasonable third party costs and is not claiming that, due to the irretrievable breakdown of the relationship, the owners should only be entitled to the costs to it to perform the remedial works. This adds further support that this is an appropriate remedy, because it removes the risk, which tribunals attempt to avoid, that owners will only be awarded the costs to the builder. That risk falls away in this case, because what is being offered is third party costs. In addition, the builder is willing to pay those reasonable and necessary third party costs as agreed by the applicants' own experts.
The Tribunal, therefore, in its discretion, and having considered the above factors and evidence, has formed the view that, in the circumstances of this particular case, the more appropriate remedy is an order to pay reflecting third party costs.

Appropriate amount

The applicants have attempted to assert, despite the joint expert statement agreeing the reasonable amount of third party costs, that the actual costs which will be borne by the applicants is in excess of that amount. In the applicants' written submissions, it has been put to the Tribunal that it should add a further 20% to what has been agreed by the parties' independent experts. There does not appear to be a basis in law for such an arbitrary mark up and none was identified by the applicants' solicitors in those written submissions. The only evidence before the Tribunal in relation to this matter was that of Mr Trengove where he informed the Tribunal that, in his conversation with a third party builder, who had not inspected the home but who had been provided with the applicants' independent expert reports, he provided a preliminary verbal quote in the amount of approximately $58,000. The third party builder who provided that preliminary quote did not attend the Tribunal to give evidence to substantiate it and provide a proper basis for it.
The Tribunal does not accept that the preliminary verbal quote provided by a third party builder who has not inspected the home and whose evidence has not been tested, is sufficient to challenge the reasonableness of the amount estimated by the parties' independent experts in these proceedings (such amount which has been itemised, substantiated, and which has been prepared following inspections of the home by those experts). Indeed, it is a curious position for the applicants to assert that the costs that their own independent experts agreed upon during the compulsory conference they now dispute are reasonable. In the Tribunal's view, this is another example of the applicants forming their own view on matters, despite opinions to the contrary being given to them by their own independent experts.

The last matter which needs to be addressed by the Tribunal in relation to what is the appropriate amount by way of an order to pay is the matter in relation to whether it is necessary to obtain an amended building licence or to provide to the City of Armadale amended certified drawings. Letters have been provided to the Tribunal by Mr Cunningham and Mr van der Meer, albeit that Mr van der Meer's letter simply agrees with Mr Cunningham's views, other than in relation to costs. Mr Cunningham also gave oral evidence at the hearing in relation to this matter. Essentially, therefore, the main evidence in relation to this matter was that of Mr Cunningham.
The Tribunal has concerns in relation to the credibility of Mr Cunningham in relation to this matter. When questioned as to Mr Cunningham's expertise and thus ability to give this evidence, it became apparent to the Tribunal that Mr Cunningham has very limited experience in relation to residential construction and particularly in relation to the necessity or otherwise for amended building licences/drawings. His lack of expertise, and thus credibility, can be highlighted by the fact that, in Mr Cunningham's letter of 8 March 2012, he estimated the costs which would be incurred by the applicants in relation to this matter to be $12,000. When questioned on this point by the Tribunal, Mr Cunningham suggested that the costs would actually be in the realm of $2,000. There was no explanation as to the deviation by $10,000. In those circumstances, in the Tribunal's view, that evidence is unreliable and cannot be accepted.
The Tribunal accepts the submissions made on behalf of the respondent that the building licence requires the builder to build according to the Building Code of Australia and that this has been done, and thus, there is no breach of the building licence necessitating the applicants to obtain an amended licence. In addition, if there is now a requirement by the City of Armadale that amended drawings are required to be submitted, the Tribunal finds that this may be as a result of communications received by the City of Armadale from the applicants contending that their home is structurally unsound. The applicants have consistently made these assertions to a number of third parties, including to their insurer. This is clear from the correspondence copied to the Tribunal and to the City of Armadale from the applicants' solicitors dated 6 March 2012. In any event, the applicants have simply not established their case in this regard and, therefore, due to the lack of any probative evidence to support this contention, it cannot be accepted by the Tribunal.

Conclusion

In conclusion, therefore, the Tribunal finds, in its discretion to do so, that the appropriate remedy to be awarded in this case is an order to pay and that the reasonable necessary costs which should be reflected in that order are those as set out in the joint expert statement of 27 February 2012 in the amount of $44,858.77.

I certify that this and the preceding [52] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS C WALLACE, MEMBER