New South Wales Supreme Court CITATION : Craftsman Homes Australia Pty Limited & 3 Ors v TCN Channel Nine Pty Limited & 2 Ors [2006] NSWSC 519 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 8-19 November 2004, 7-15 February 2005, 22-23 March 2005, 12 & 15 April 2005 JUDGMENT DATE : 2 June 2006 JUDGMENT OF : Smart AJ at 1 DECISION : See paras 1075 to 1077 CATCHWORDS : Defamation - Two National telecasts (Promo & Program) - Imputations in context - ambit of imputations - defence of substantial truth and matters of public interest - extended review of construction of four houses - statutory defence of comment in NSW and corresponding defences in other States and Territories - proper material for comment, public interest, comment of defendant, of servant or agent and of stranger - facts sufficiently stated or identified - Trespass at Edmondson Park - Mr Cox lessee of premises - whether his companies had sufficient title to sue - bad instance of tort - compensatory, aggravated and exemplary damages awarded - Trespass at the Mosses - whether Ilvarity in possession at time of alleged trespass when off site for over 18 months - construction of building agreement - Ilvarity not in possession and at best entitled to possession when suspension of contract ceased - insufficient title to sue - False Representation and Misleading and Deceptive Conduct established - These causes of action available - plaintiffs not limited to damages for defamation and trespass but double counting avoided - Operation of s 65A of Trade Practices Act and corresponding State Acts - Promo was advertising - Causation under legislative causes of action - false representations etc enabling greater attack on plaintiffs by telecaster enhancing program Criminal Code Act Compilation 1913 Defamation Act NSW Environmental Planning & Assessment Act Fair Trading Act 1987 (NSW) LEGISLATION CITED : Home Building Construction Act [1989] Occupational Safety & Welfare Act Environmental Planning and Assessment Act Queensland Defamation Act 1889 Trade Practices Act 1974 (Cwth) Workcover and Occupational Safety and Welfare Act Bellino v Australian Broadcasting Corporation (1995-1996) 185 CLR 183 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 Enzed Holdings Ltd v Winthen Pty Ltd 57 ALR 167 Gray v Motor Accident Commission (1998) 196 CLR 1 Greek Herald Pty Limited v Nikolopoulos (2001) 54 NSWLR 165 Harris v Digital Pulse Pty Ltd (2002-2003) 56 NSWLR 298 at 342-346 Harris v McKenzie (1987) 9 NSWLR 139 Hawke v Tamworth Newspaper Co [1983] 1 NSWLR 699 Horwitz Grahame Books Pty Ltd v Performance Publications Pty Ltd (1987) 8 IPR 25 Hunt v Star Newspaper Company Limited 1908 2 KB 309 Jones v Schiffmann (1971) 124 CLR 303 Lamb v Cotogno (1987) 164 CLR 1, Lloyd (1985) 3 NSWLR 728 Marks v GIO Australia Holdings Ltd & Ors (1998) 196 CLR 494 McIntosh v Lobel (1993) 30 NSWLR 441 CASES CITED : Musca v Astle Corp Pty Ltd (1988) 80 ALR 251 NSW Aboriginal Council v Perkins (1998) 45 NSWLR 340 Newington v Windeyer (1985) 3 NSWLR 555 Newcastle City Council v Royal Newcastle Hospital 100 CLR 1 Pervan v North Queensland Newspaper Co Ltd (1994) 68 ALJR 1 Peter Walker and Son Ltd v Hodgson 1909 1 KB 239 Polly peck (Holdings) PLC v Trelford 1986 1 QB 1000 Radio 2UE v Parker 29 NSWLR 448 Re Ku-Ring-Gai Co-oP 36 FLR 134 Sattin v Nationwide News (1996) 39 NSWLR 32 Sims v Wran 1984 1 NSWLR 317 TCN Channel Nine Pty Limited v Anning (2002) 54 NSWLR 333 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Wheat v C. Lacon and Co Ltd 1966 AC 552 XL Petroleum v Caltex Oil (1985) 155 CLR 448 Yorke and Anor v Lucas (1985) 158 CLR 661 PARTIES : Craftsman Homes Australia Pty Limited (First Plaintiff) Ilvarity Pty Limited T/as Craftsman Homes Northern Rivers & Craftsman Homes South West Sydney (Second Plaintiff) & Frederick Robert Cox (Third Plaintiff) v.TCN Channel Nine Pty Limited (First Defendant) (TCN9) Mike Munro (Second Defendant) & Ben Fordham (Third Defendant) FILE NUMBER(S) : SC 20085/02 (P) J Garnsey QC & B Kinsella COUNSEL : (D) B McClintock SC & M Richardson SOLICITORS : (P) G Donaghy & Co (D) Gilbert & Tobin IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST SMART AJ Friday, 2 June 2006 CRAFTSMAN HOMES AUSTRALIA PTY LIMITED (First Plaintiff) ILVARITY PTY LIMITED T/as CRAFTSMAN HOMES NORTHERN RIVERS and CRAFTSMAN HOMES SOUTH WEST SYDNEY (Second Plaintiff) and FREDERICK ROBERT COX (Third Plaintiff) v. TCN CHANNEL NINE PTY LIMITED (First Defendant) (TCN9) MIKE MUNRO (Second Defendant) and BEN FORDHAM (Third Defendant) INDEX PAGE Introduction 1 Trespasses – Edmondson Park & The Mosses 3 The Defamations and Imputations 4 Defamation Defences 10 False Representation or Misleading and Deceptive Conduct 11 Defences to False Representation etc 13 Mr and Mrs Moss 14 18 Nov 99 – 24 June 00 14 27 June 00 – 8 July 00 23 Mr Nowlan 34 13 July 00 – 15 Sept 00 36 HOW Claim & Aftermath 38 3 May 02 – 23 Dec 02 42 3 Feb 03 – 7 May 03 55 Sundry Matters 57 Monteith Report & Evidence 68 Neil Report & Evidence 80 Weir Reports 81 The Plaintiff's Evidence as to Mosses 82 Mr McDonald 83 Mr Crandon 84 Mr Harley 91 Mr Cox 92 Mr Chaseling 116 Plaintiff's Contentions 141 Referee's Report 144 McDonald Report superseded 147 Some Findings as to Crandon report and evidence 147 Defendants' Comments Upon Plaintiffs' Responses to Alleged Justification of Imputations – Moss 149 Mrs Moss Not Called 156 Conclusions as to Mosses' Home 156 Unfitness to remain in Building Industry – Mosses 157 Mr and Mrs Allan 163 The late Mr Allan's statements 163 Mrs Allan 166 Mr Crandon 169 Mr Lee 171 Mr Harley 175 Mr Chaseling 178 Mr Cox 178 Footings Piers and Bearers 183 Shoddy Building 184 The Vimpanys 187 The Brickwork 188 Cleaning of bricks 191 Meter Box 192 Error by Vimpanys - Lifting Tiles 193 Mr Chaseling 194 Mr Cox 194 Shoddy Building 200 Unfitness 202 The Willoughbys 204 McLisky Report 204 Crandon Report 206 Aungle Report 207 Dept of Fair Trading 209 Mr Cox 211 Mr Chaseling 215 Mr Crandon 215 Shoddy Building 219 Unfitness 220 Overall View 221 Truth 222 Unfitness 222 Incompetence & Shoddy Building Practices 222 Width of Imputations 224 Public Interest 230 Contextual Truth 232 Comment 232 Facts Truly Stated or Sufficiently Identified 237 Opinions Honestly Held 243 Public Interest 244 Statutory Defence of Comment in NSW 244 Statutory Defence of Comment Queensland 246 Tasmania 247 Western Australia 248 Comment at Common Law 248 Conclusions as to defamation defences 251 Trespass – Edmondson Park 251 Is Mr Munro Liable for the Edmondson Park Trespass 263 Damages for the Edmondson Park Trespass 264 Alleged Trespass at the Mosses 272 False Representation and Misleading and Deceptive Conduct 276 Damages 297 Verdicts 308 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DEFAMATION LIST SMART AJ Friday, 2 June 2006 CRAFTSMAN HOMES AUSTRALIA PTY LIMITED (First Plaintiff) ILVARITY PTY LIMITED T/as CRAFTSMAN HOMES NORTHERN RIVERS and CRAFTSMAN HOMES SOUTH WEST SYDNEY (Second Plaintiff) and FREDERICK ROBERT COX (Third Plaintiff) v. TCN CHANNEL NINE PTY LIMITED (First Defendant) (TCN9) MIKE MUNRO (Second Defendant) and BEN FORDHAM (Third Defendant) JUDGMENT Introduction 1 These proceedings for trespass and defamation arise out of the entry, by a ruse, of a TCN9 reporter (Ben Fordham) and TCN staff into premises leased by Mr Cox at Edmondson Park on 22 February 2002, the entry by the same reporter and TCN staff upon premises owned by Mr and Mrs Wayne Moss at Alstonville earlier in February 2002, a promotional film screened on TCN 9 on A Current Affair (ACA) on 26 February 2002 (the promo) and the program screened on TCN 9 ACA on 27 February 2002 (the program). There are also claims based on alleged false representations and alleged misleading and deceptive conduct. 2 All three plaintiffs are engaged in the building industry. The first plaintiff carries on the business of a franchisor, with franchises throughout Australia. The second plaintiff carries on a building business in the Northern Rivers and South West Sydney regions, operating under the umbrella of the first plaintiff. The third plaintiff, Mr Cox, was the managing director of both companies. During the proceedings reference was often made to the second defendant as Craftsman Homes (CH) and Ilvarity and less frequently Craftsman Homes Northern Rivers. 3 In 2002 Ilvarity and Mr Cox operated from premises at 250 Jardine Avenue, Edmondson Park, a little south of Liverpool and Craftsman Homes Australia Pty Ltd did so to a lesser extent. All the plaintiffs also operated from office premises at Alstonville. The premises at Edmondson Park comprised a spacious house on a five acre block which was used in part as a Sydney office for the Craftsman Homes companies and by Mr Cox. He was the lessee of that property and resided there for four or five days during the week. His permanent residential dwelling was in the Lismore District. His daughter Desley, who did some of the paper work for the business also resided at the Edmondson Park premises in 2002. 4 The first defendant (TCN Nine) is the proprietor of Channel Nine, a major television network operating throughout much of Australia. The second defendant, Mr Munro, was the presenter of ACA. The third defendant, Mr Fordham, was the reporter for the relevant segment. ACA is shown on most nights at 6.30pm immediately after the national news in what has been described as "prime viewing time". 5 The defendants decided to run a segment on ACA which was critical of the building work and conduct of Craftsman Homes Northern Rivers ("CHNR") and Mr Cox following on interviews with a number of building owners who were very dissatisfied with the work performed by or on behalf of CHNR. Representatives of TCN Nine endeavoured to arrange an interview with officers of CHNR, and particularly Mr Chaseling, a senior officer. There was some correspondence. The officers of CHNR at Alstonville wanted to know the questions to be raised so that they could refresh their memories from the files and reacquaint themselves with all the details. This did not appeal to the ACA staff and an impasse developed. 6 The ACA staff decided that they wanted to speak to Mr F R Cox, the principal behind the first and second plaintiffs and confront him with a number of allegations which reflected adversely upon him and CHNR. Mr F R Cox was thought to be unlikely to agree to such an interview. Perhaps TCN Nine primarily wanted to show viewers the chief executive of the offending company. Sarah Stinson, a lady employed or retained by TCN Nine telephoned CHNR at Alstonville and discussed with Ms J Santin, a sales lady, building two houses in that area. Ms Stinson insisted that she needed to speak to a builder and to see someone in Sydney. This was a stratagem. Ms Santin told Ms Stinson that her (Santin's) boss was in Sydney and gave Ms Stinson Mr Cox's telephone number. Ms Stinson telephoned Mr Cox and made an appointment with him for her and her husband to discuss the construction of a Craftsman home. The Trespasses – Edmondson Park & The Mosses 7 On the appointed day (22 February 2002) Ms Stinson arrived at the Edmondson Park premises accompanied by a man now known to be Mr Ben Fordham. They discussed the strategy they would use. Ms Desley Cox admitted them to the house. They were expected and they gave the appearance of a young couple interested in building a home. Ms Stinson was carrying a bag in which there was a camera and recorder. They were not obvious. After introductions and pleasantries in which no mention was made that Ms Stinson and Mr Fordham were from TCN Nine, Ms Cox took them through to the office area of Mr Cox. There were further introductions and while the correct names were used there was no hint that Ms Stinson and Mr Fordham were from TCN Nine. Mr Fordham apologised for leaving his phone on, explaining that he was working and not supposed to be there. Ms Stinson and Mr Fordham indicated that they were interested in building in Lennox Head or 'that sort of area'. During some further discussion Mr Fordham's mobile telephone rang and while Ms Stinson and Mr Cox talked, Mr Fordham attended to his telephone call. Mr Fordham walked across to the front door of the house and admitted a TCN Nine crew with a camera (or cameras) and a microphone (or recorder). Mr Fordham walked across from the front door, stood in front of Mr Cox's desk in the office area and said, "Fred, I just want to ask you a couple of quick questions, we're from A Current Affair". 8 Mr Cox was shocked and horrified by the deceitful ambush and ropeable. He decided to listen and see what was going to transpire. When Mr Fordham made assertions about the Mosses' contract and buildings Mr Cox declined to comment, left the office area and telephoned Mr Chaseling and talked with him. After that Mr Cox told Mr Fordham, Ms Stinson and the television crew to leave. Mr Cox said that Mr Fordham and the television crew stood outside the front door for quite some time. At the front door Mr Fordham sang out "Fred, we would like to give you a chance to tell your side of things if you want to come out here and have a chat, probably better than running away" and "Fred, Fred come out and have a chat, we are not going to stitch you up." Mr Cox did not believe this last remark. He believed that if he went out there he "would be stitched up really well." The evidence of Mr Cox on these points was not contradicted, but it was contended that neither of the companies could sue in respect of the trespass as neither was in possession of the premises. Mr Cox was the tenant. 9 That is a brief summary of the principal trespass. CHNR relied on a further alleged trespass. It allegedly occurred when Mr Moss took Mr Fordham and the Channel 9 television crew onto his property to show and explain the allegedly faulty building work performed by CHNR. It and Mr Cox relied on the terms of the building contract under which CHNR was given exclusive possession of the property of Mr and Mrs Moss. The defendants contend, amongst other matters, that there was no trespass. It will be necessary to examine the contract and the events which occurred. The Defamations and Imputations 10 I have seen the promo and the program several times. The promo began with Mr Munro introducing the item followed by snatches from film which had been taken by TCN9. Ian Vimpany, Wayne Moss, Gloria Vimpany and Noel Allan (now deceased) were dissatisfied building owners and a remark is attributed to each of them. 11 The second part of the promo records conversation between Messrs Fordham and Cox after Mr Fordham had obtained access to the Edmondson Park premises. Text of Promo: 1. Mike Munro Well he's an award winning builder but you certainly wouldn't know it looking at some of his work; tomorrow night we investigate some of his shoddy practices which have left home owners high and dry. 2. Ian Vimpany Within 2 months of moving in here these tiles have fallen off. 3. Wayne Moss This problem is a result of the floor being put down incorrectly. 4. Gloria Vimpany I nearly had a nervous breakdown when they did it. 5. Noel Allan I think I have had over 100 complaints, I mean we can't list them all here with you. 6. Wayne Moss I cannot believe that anyone can build something like this and remain in business. 7. Ben Fordham Have you given up? To Vimpany 8. Ian Vimpany Yes we've given up. 9. Video of "Craftsman Homes" signage 10. Voice Over 11. Fred Cox I'm sorry. 12. Ben Fordham Can we just ask you a couple more quick question? 13. Fred Cox No. 14. Ben Fordham You don't want to answer the questions, you want us to go? 15. Fred Cox Get out or I'll call the police. 16. Mike Munro Ben Fordham with that investigation tomorrow. 12 The program contains the presenter's introduction, some conversation between Messrs Fordham and Cox, statements of the dissatisfied building owners, observations of Mr Fordham, further conversation between Messrs Cox and Fordham, conversation between Miss L Wilton, a former employee of the second plaintiff and Mr Fordham, further statements by the dissatisfied building owners and the presenter's concluding remarks. The accompanying visual images reinforced the complaints. Text of Program: 1. Mike Munro Now to a builder who's won several awards during his twenty years in the business. But all that is cold comfort to some of his latest customers because they claim that he has left them with their dream homes that are riddled with faults and it can take years to get commitments to fix them 2. Ben Fordham Are you signing up a new business in Sydney? 3. Fred Cox Am I? 4. Ben Fordham Mmmmm 5. Fred Cox Why? 6. Ben Fordham Well you've left a trail of devastation on the North Coast of New South Wales. 7. Fred Cox I don't think I have, I've got nothing to say to you. 8. Ben Fordham Are you proud of the houses you build? 9. Fred Cox Yep. 10. Ben Fordham All of them? 11. Fred Cox Yep 12. Ben Fordham Fred Cox may be proud of his handiwork but some of his customers are far from satisfied. 13. Wayne Moss What is behind us here is nothing more than a litany of errors and mistakes that no self respecting trades person would ever do. 14. Noel Allan In all I think we've had over 100 complaints I mean we can't list them all here with you. 15. Gloria Vimpany I've nearly had a nervous breakdown over the bricks because it was a great disappointment. This was the last home we're going to build and we really want to get it right. 16. Ben Fordham But according to Gloria and Ian Vimpany Craftsman Homes Northern Rivers made obvious mistakes. For starters they say the brickwork was supposed to be this colour (indicating) but many were laid the wrong way around. 17. Gloria Vimpany We went to a lot of trouble to get these to get really nice bricks that we liked, we paid a lot more for them and to have them so poorly laid was a great disappointment. 18. Wayne Moss We have a patio which has been put down on fibro sheeting which was mounted on green timber. The green timber has shrunk leaving a brick wall hanging in mid air. 19. Ben Fordham Wayne and Jacquie Moss have been waiting more than two years for their home to be completed on the New South Wales North Coast. 20. Wayne Moss This ah problem here is a result of the floor being put down incorrectly. The floor has buckled and it is also pushed the wall right out of align. 21. Jacquie Moss They totally ignore us they have not replied we have pages and pages and pages of grievances and [points] that we wanted addressed not one has ever been answered. 22. Wayne Moss At the last minute they rushed back and they put these engaged piers in and this is what we've got as a result of it. These engaged piers are a complete waste of time they are doing absolutely nothing to strengthen this wall. 23. Ben Fordham The Mosses halted payment so now Craftsman Homes Northern Rivers is taking them to Court. They've launched a cross claim seeking damages over delays and poor workmanship. The matter is listed for hearing next month. 24. Jacquie Moss It's placed an enormous strain on our whole family we just wanted to be on our block of land in our own home and to get on with our lives. 25. Fred Cox The Moss's is not up for comment I'm sorry. 26. Ben Fordham They've been waiting two years to get into their place. 27. Fred Cox Well. 28. Ben Fordham I've had a look at it and it's a disgrace. 29. Fred Cox I'm sorry. 30. Ben Fordham Can we just ask you a couple more quick questions? 31. Fred Cox No, and if you don't leave I will call the Police. 32. Ben Fordham You want us to go? 33. Ian Vimpany The whole wall was left very messy covered in cement um … I've taken it on myself to clean the top part of the wall. But the bottom half of the wall I've left so we can show what a mess they did leave the bricks in and that appears right around the house in places. 34. Leanne Wilton He treated his customers like they were nothing um yeh he was just horrible. 35. Ben Fordham Why did you start to have concerns? 36. Leanne Wilton I noticed him ripping up documents, variations the clients had done um denying he ever said things he did. 37. Ben Fordham Leanne Wilton used to be a sales rep for Fred Cox but says she quit after a heated argument over her allegations he was overcharging clients. 38. Leanne Wilton One client actually did a handshake deal on some fill that was needed on his block to raise it to a floor level and they agreed that it would cost five thousand dollars um it actually blew out by about seven thousand dollars Fred never phoned them to tell them that it was actually blowing out so they just basically got a bill to say its now thirteen grand instead of five. 39. Ben Fordham But he knew all along that it was going to be thirteen thousand? 40. Leanne Wilton Oh yeh definitely oh yeh. 41. Ben Fordham What would happen if a customer complained? 42. Leanne Wilton If ever anyone hassled him about when they were getting to site then they would be put to last he'd go and start somebody else's. 43. Ben Fordham So people who complained were punished? 44. Leanne Wilton Oh definitely yeh. 45. Noel Allan Well before the house was started they submitted the wrong plans to the council. 46. Ben Fordham Noel and Ann Allan are also unhappy customers. 47. Noel Allan Let me show you an example of one of the problems we had with our house. The foundations are completely off centre to the footings and the bearers on top of the footings are completely off centre to the foundation blocks. 48. Ben Fordham They took Cox to the Fair Trading Tribunal and rectification work was carried out on a number of areas. Including the foundations. The Tribunal accepted a report by an engineer hired by Craftsman who declared that the rectified piers were adequate. 49. Noel Allan They say that's a proper concrete footing but it cannot be because I dug under there and put a bit of timber there's nothing there it only laying on top of the sand. 50. Ann Allan If you bought a brand new car and it was scratched and dinted and all that sort of thing you'd want a different car wouldn't you? 51. Ben Fordham The allegations we've put to Craftsman Homes Northern Rivers have all been rejected but Fred Cox refuses to give any further comment on camera despite our offers. 52. Wayne Moss Fred you know um the system very well you were right it did take two years, you could keep us off the job for two years but we will eventually get this house built. 53. Mike Munro We want to make it clear that Fred Cox runs only the Craftsman Homes Northern Rivers franchise in New South Wales. We are certainly not casting doubt on any other Craftsman Homes' franchises. 13 During the trial pursuant to s 7A of the Defamation Act 1974, Kirby J ruled that the first plaintiff was not capable of being identified in the two matters published and directed verdicts against the first plaintiff in respect of both publications. The jury found the following imputations were borne out by the promo: Of the second plaintiff - (a) that the second plaintiff was guilty of shoddy building practices Of the third plaintiff - (b) that the third plaintiff was guilty of shoddy building practices (c) that the third plaintiff was incompetent as a building contractor (d) that the third plaintiff was unfit to be allowed to remain in the business of building residential houses. 14 The jury found the following imputations were borne by the program as to the second and third plaintiffs - (a) that (each of) the second and third plaintiffs constructs homes that are riddled with faults (b) that (each of) the second and third plaintiffs is not competent in the business of building residential houses Defamation Defences 15 As to the promo the defendants rely on the following defences: (i) substantial truth of the imputations in relation to a matter of public interest (in NSW – s15, Defamation Act ) and as to States and Territories other than NSW the comparable defences in those States. (ii) Contextual truth under s 16 of the Defamation Act NSW . No separate contextual imputation is pleaded but the defendants rely on the substantial truth of any of the plaintiffs' imputations as "swamping" any of the other imputations not found to be a matter of substantial truth. (iii) In NSW on the statutory defences of comment and comment of a stranger and the comparable interstate defences. 16 As to the program the defendants rely on the following defences: (i) Substantial truth of the imputations in relation to a matter of public interest (NSW) and as to States and Territories other than NSW, the comparable defences. (ii) In NSW contextual truth under s 16 Defamation Act, NSW; also on the substantial truth so found of any of the plaintiff's imputations as "swamping" any of the other imputations not found to be a matter of substantial truth; and on this additional pleaded contextual imputation: "The second and third plaintiffs were unfit to be allowed to remain in the business of building residential houses." This contextual imputation is pleaded to be a matter of substantial truth and to relate to public interest and accordingly the publication of any of the plaintiff's imputations found to be untrue would not further injure the plaintiff's reputation. The roughly comparable Polly Peck plea is made for the interstate jurisdictions. This plea follows the judgment of O'Connor LJ in Polly Peck (Holdings) Plc v Trelford 1986 1 QB 1000 at 1032: "Where a publication contains two or more separate and distinct defamatory statements, the plaintiff is entitled to select one for complaint, and the defendant is not entitled to assert the truth of the others by way of justification." and "Whether a defamatory statement is separate and distinct from other defamatory statements contained in the publication is a question of fact and degree in each case. The several defamatory allegations in their context may have a common sting, in which event they are not to be regarded as separate and distinct allegations. The defendant is entitled to justify the sting and once again it is fortuitous that what is in fact similar fact evidence is found in the publication. What I have said in the context of justification can be applied by a parity of reasoning to fair comment …" (iii) On the statutory defences of comment and comment of a stranger in NSW and on the comparable interstate defences. False Representation and Misleading or Deceptive Conduct 17 It was alleged that the first defendant by the third defendant and a female and the third defendant on or about 22 February 2003 knowingly falsely represented to the plaintiffs and each of them that the third defendant's name was John Stinson and that he was a prospective customer of the plaintiffs (or of one or more of them) and was seeking an appointment and meeting for the third defendant under that name and Sarah Stinson his wife with Mr Cox to discuss and obtain advice concerning the construction of a Craftsman home, intending to deceive each of the plaintiffs. It was alleged that in reliance upon the representation each of the plaintiffs agreed to the meeting and suffered loss and damage (para 13A). 18 The plaintiffs alleged that prior to 21 February 2002 the defendants by Mr Fordham requested the plaintiffs to grant an interview but thereafter failed and refused to meet all the conditions requested by the plaintiffs and in particular to provide particulars in writing of the questions to be asked to enable the plaintiffs to have available the relevant files (para 13B). 19 The plaintiffs alleged that the first defendant by itself, its servants or agent, Mr Fordham in trade and commerce engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (TPA) and of s 42 of the Fair Trading Act 1987 (NSW) (FTA) (para 13C). 20 The plaintiffs further alleged that Messrs Munro and Fordham have aided, abetted, counselled, procured and induced and been directly and indirectly knowingly concerned in, the contravention by the first defendant of TPA, s 52 and FTA, s 42 within the meaning of TPA, s 75B and FTA, s 61 and were liable in damages for those contraventions (para 13C). 21 The plaintiffs further alleged that by publishing to the defendants by Mr Fordham the matters attributed to them in the promo and the program each of Wayne Moss, Jacquie Moss, Ian Vimpany, Gloria Vimpany and Noel Allan, in trade and commerce engaged in conduct that was misleading and deceptive in contravention of FTA, s 42 and that the defendants have aided, abetted, counselled, procured and induced and been directly or indirectly knowingly concerned in, the contravention by those persons of FTA, s 42 within FTA, s 61 and were liable in damages for those contraventions (para 13D). 22 The plaintiffs alleged that by reason of the trespass at Edmondson Park and at the Mosses' property and by the contravention of TPA, s 52 and FTA, s 42, the plaintiffs have suffered loss and damages (para 13E). 23 The plaintiffs claimed (para 14): (a) Damages including aggravated and exemplary damages, for defamation (b) Damages, including aggravated and exemplary damages, for trespass to property (c) Damages, including aggravated and exemplary damages, for fraudulent misrepresentation at common law (d) Damages, including aggravated damages, pursuant to TPA s 82 and FTA, s 68. (f) Costs. Defences to False Representation etc 24 The defendants denied the matters alleged in the paragraphs of the Third Amended Statement of Claim dealing with the alleged false representation and the alleged misleading or deceptive conduct (paras 13A, 13B, 13C, 13D, 13E and the damage claimed, para 14). In further answer to paras 13A, 13B, 13C and 13E the defendants say that any publication was a prescribed publication made by a prescribed information provider within the meaning of s 65A, TPA and that by reason of that provision they are not liable to the plaintiffs. 25 The defendants denied that Mr Ben Fordham was a servant or agent of Mr Mike Munro, but admitted that Mr Fordham is an employee of the first defendant (Channel 9). 26 Before discussing the various causes of action and the defences it is probably better to deal with the evidence relating to the three properties covered by the promo and the program and a fourth property not so covered. Those properties were the subject of much of the evidence. That evidence was at the heart of the plea of justification, particularly that relating to the Mosses. Mr and Mrs Moss 18 Nov 99 – 24 June 00 27 The summary which follows outlines most of the major events in the extended history of the contract between the Mosses and CHNR, the construction of the Mosses' house and the evidence as to it. Generally, a chronological approach has been adopted, but there are some exceptions. The Mosses entered into a contract with CHNR about 18 November 1999 for the construction of a substantial brick veneer home extending over two levels and comprising three bedrooms, dining, lounge and rumpus areas, a family area, kitchen, bathroom, en suite off the main bedroom with, on the lower level, garages and a workshop area. The contract price was $250,569. The home was to be built on a large rural residential allotment (about 3 ha) owned by Mr and Mrs Moss and known as Lot 1, Teakwood Drive Alstonville. The land was elevated, enjoyed good views and sloped. Also erected on the land in reasonably close proximity to the site of the proposed house, but about 100 metres separate from it, was a large shed. People moving in and around the shed and the grounds would not interfere in the construction of the house. The contract provided for payments of specified amounts as various stages of the works were completed. 28 Building approval was given by Ballina Shire Council about 10 January 2000 and the initial completion date was 10 July 2000. Substantial completion of the house by that date was important so that Mr and Mrs Moss did not become liable for the impending Goods and Services Tax, which would be payable on goods supplied and work carried out after 1 July 2000. 29 Mr Moss said that prior to signing the contract on 18 November 1999 he and his wife engaged in extensive discussion with Mr Cox as to how the house was going to be built and how the Mosses would maintain access to the property because they had a shed on it and equipment stored in it at the property. On the day the contract was signed they read through the contract and, after referring to a clause (cl 19), which purported to give exclusive possession of the land to CHNR, pointed out that they (the Mosses) required access. They had to be there to maintain the property of 6½ acres and they needed to get access to personal equipment in the shed all the time. Mr Cox replied that this would not be a problem. 30 Mr Moss said that during the conversation with Mr Cox on 18 November 1999 they spoke about Mr Moss having to supply water within 6 metres of the house. Mr Moss organised to get the water tanks and the water connected. He also needed access to the water. Mr Moss said that he mentioned that the Mosses were also supplying the vacuum cleaner, the ducted vacuum system and arranging to have the air conditioning put through the place and that he needed access to attend to these matters and instal the air conditioning. (see pp 5 & 6 of tender of CHNR of 17 November 1999). The tender of the builder did not include "Power to site", "Water to building site" and "Extension of services to your block." The tender provided, "Water tanks and pressure pumps supplied by owner, stormwater line within 10m of house, additional stormwater line and water return line by owner". 31 Mr Moss said that in their preliminary discussions with Mr Cox the Mosses accepted his recommendation that the appropriate flooring was red iron bark and that was included in the tender (p3 Interior Features). 32 The Mosses decided to have standard grade flooring as distinct from select grade, but on the basis that Mr Moss would be able to go through the boards and pick out those with defects and place them aside to be put under wardrobes and cupboards, so that the defects would not be visible. The selection was to take place when the flooring was delivered to the site and before it was fixed. Conversations to this effect took place before the contract was signed. 33 Mr Moss said that at the time of signing the contract Mr Cox stated that it would take 12 to 16 weeks to complete the house, depending on the weather. Mrs Moss was keen to get into the house and made that clear to Mr Cox. 34 As the Court appointed referee found, in proceedings between Ilvarity and the Mosses, the Progress Payment Schedule (Exh Q2) formed part of the contract. That finding was correct and there is no need to rehearse the evidence as to that as it was accepted in these proceedings. 35 Work started at the site on Australia Day 2000. Mr Moss said that the works proceeded slowly and that during January/February 2000 there were very few Mondays and Fridays when the work force turned up. On some fine days work did not proceed. 36 The tender of CHNR of 17 November 1999, part of the contract, provided: "Pioneer Kirribilli double height bricks with red oxide to natural mortar, light raked or flushed joint." 37 Mr Moss detailed the reasons why the Mosses specifically wanted that brick. In November 1999 the Mosses confirmed that that brick was available in sufficient quantities with Pioneer. 38 Shortly before the bricks were due to be laid CHNR notified the Mosses that the bricks which they had selected were not available and that they should select another brick. This proved to be a burdensome and unsatisfactory task. They chose a brick known as "Port Regal" which was a single height brick and, from the sample the Mosses obtained, it was as close as they could get to the colour of the original brick. When the replacement bricks arrived on site the Mosses were not satisfied with them. They were not uniform in colour; indeed, they varied considerably in their initial face colour. They told Mr Cox that they could not have these bricks as they would not give them the finish which they required. 39 Mr Moss said that Mr Cox and Mr Cullen of Egmont Marketing, the brick supplier, proposed that the bricks would be supplied and they would have them painted in the same colour as the original brick. This would cover up the marked variation in colour. The Mosses did not accept this proposition immediately. They did not want a house which required repainting. The only colour which matched was Molasses. Reluctantly they agreed to a variation dated 25 February 2000. It reads: "Tuffcoat paint finish to external brickwork N/C" 40 Mr Moss said that prior to entering into the building contract he discussed with Mr Cox that electricity would have to be connected to the shed and the pressure pump behind the shed, because the water supply was coming from the shed and the water from the house roof was going to be put in the tanks. Mr Moss said that the Mosses received a variation for $1200 for connecting the power and that he spoke to Mrs Helen Cox, stating that this was included in the contract. She said that CHNR had only made an allowance. They did not cost it. She said that if the Mosses did not pay it CHNR would stop work. 41 Mr Moss was relying on this tender entry (p5) under the heading "Client requested variations to plans and specifications": "Under ground electrical mains to house & shed allowance $1100 including trenching and back filling." 42 It would seem from the tender that while it was not the responsibility of CHNR to have power brought to the site, it was the responsibility of CHNR to connect the power once it had been brought to the site. The contract allowed an amount for connecting the electrical mains to the house and shed in the nature of a provisional sum. If the work cost more than $1100, the Mosses would have to pay the difference, and if it cost less the Mosses would be entitled to a credit. 43 The "After Contract Variation" of CHNR of 24 March 2000 reads: "Electrical allowed 3 phase underground electrical mains to the house, single phase electrical mains to shed 3 phase meter board to house Not allowed (any upgrades required to be arranged with and paid to electrician) 3 phase upgrade to shed, sub-board to shed, upgrade house meter box for 3 phase to shed or power to tank." 44 Mr Moss said that after receipt of the variation claim of $1200 he repeatedly approached CHNR about resolving the matter. The works did not proceed in the meantime. Mr Moss said that they (the Mosses and CHNR) thrashed out an agreement whereby CHNR would put the three phase power to the house as that was required for the air conditioning and the three phase meter box for the house. There would only be a single phase for the shed. If Mr Moss wanted that upgraded Mr Moss was to pay the electrician direct. He was also responsible for vacuuming the power trench. Mr Moss did so in April 2000. He was on site to do that and the electrician helped him pulling the three phase cables through to the shed. Mr Moss back-filled the power trench. 45 Mr Moss was also on the site arranging and installing a ducted vacuum system, which was the responsibility of the Mosses. He noticed particularly in the kitchen, that CHNR was setting the window height below where they required the benches to be. Mr Moss said that when he told Mr Chaseling that the windows had been put in at the wrong height and that they would have to be raised, Mr Chaseling replied that if Mr Moss wanted the windows raised he would have to pay for it. Mr Moss stated that CHNR was responsible. The conversation became very heated. It was specified (p4 of tender) that the kitchen cupboards would be 950mm high and the base of the windows was below that height. 46 CHNR's agreement to raise the window heights was conditional upon the Mosses accepting the increase in the split between the first and second floor. Mr Moss was unhappy about the condition as CHNR had made both mistakes (wrong window height and making the split between the floors too great). Mr Chaseling said that if the Mosses did not accept the trade-off CHNR would stop work. Mr Chaseling knew that the Mosses wanted to get the house finished. That is why they accepted and signed the variation of 27 April 2000 raising the window head height to 2400mm on specified windows. At the meeting which resolved those matters Mrs Helen Cox was also present. She and Mr Chaseling said that they would change the supervisor. They queried whether Mr Creighton was up to the job. They said that Brett Harley would be the supervisor and that that should solve the problem. The Mosses pressed for a completion date. Mr Chaseling promised that he would have two gangs of carpenters on the job the following week. This did not happen. 47 In their letter of 30 April 2000 to CHNR, the Mosses set out some 18 issues based on their observations where the works executed were unsatisfactory. The letter referred to the problems with the bricks, securing red iron bark for the stairs, the window heights. Many of the complaints raised matters of significance. I will not detail them all. 48 Mr Moss complained that there was excessive excavation and that this led to him having to bear considerably more expense as appreciable back filling and compression of the soil were required at the entrance into the garage and so the driveway could be poured. The retaining wall had to be higher. The downstairs rumpus room area which Mr Moss had to complete would require additional sheeting. At least six courses of bricks around the lower section of the house would not have been necessary if the excavation had not been so excessive. Mr Moss said that Mr Chaseling never offered to him to pour 200mm of concrete over the downstairs area. Mr Moss said there was no feasible way of doing that and meeting building requirements. 49 Mr Moss complained that the foundations were laid incorrectly under the BBQ area and balcony at the back, resulting in brick walls being put in the wrong place and brickwork being left too short. The walls went across where the toilet window was to be. The wall was subsequently cut back and the toilet window correctly positioned. Mr Moss said that CHNR knocked down the wall and erected the second wall on new foundations within the one day. Mr Moss said that the digging out underneath that foundation and the placing of concrete underneath the wall (after it had been constructed) took place in about July 2002 and not straightaway in 2000, as Mr Chaseling had suggested. 50 Mr Moss stated that the walls under the stairwell were located in the wrong place. The toilet doorway was positioned in the incorrect place within the wall. The position of the door was relocated and the brick wall was removed. 51 Mr Moss stated that on the plan of the lounge (part of the Great Room) the low wall shown did not reflect the amendment which had been made. On p6 of the tender the following is written "Extend wall in Lounge with cut out and rounded edges." Mr Moss explained that the wall was meant to be 1.8m high with a 300mm section going through to the ceiling at the end of the wall. This was a pre-contract alteration to the plans and thus priced into the plans. It was not a post-contract variation. It is a pity that the plan had not been updated to accord with the tender. 52 Mr Moss complained that due to the extent of the delay in getting the roof on and the wet weather, mould and fungus was starting to grow on the framing timber. The mould and fungus was primarily in the frame around the lower garage area where the water was pooling. Mr Moss, who had extensive experience of timber and how it behaved, said that if fungus becomes established within timber such as used for framing this house, there is a distinct possibility that a fungus will continue to grow. When the fungus dries out it takes an excessive amount of moisture out of the timber, causing the collapse of the timber. 53 In late April 2000 Mr Moss began work on garden retaining beds and steps at the rear of the Mosses' property. These had not been part of the plans and work approved by Ballina Shire Council. In his letter of 10 May 2000 Mr Chaseling wrote: "The brickwork at the rear of the home (stairs etc) which has been placed by workmen other than our tradespeople, it seems not to be placed on footings and could therefore be subject to structural problems. I have concerns that Council may have problems at there (?their) frame inspection with this brickwork in its current state". 54 Mr Moss explained that the retaining walls actually arose from the house and spread out so they abutted up against the structure tower of the house and moved away from it. 55 Mr Moss said that he spoke with Mr Chaseling afterwards and told him that the matter about the retaining walls was between him (Moss) and the Council and that it was not a matter which should concern CHNR. One of the difficulties was that the works being carried out by Mr Moss linked up with the contract works. The contract gave possession of the site to CHNR. 56 On 6 June 2000 Mr Moss met with Mr Chaseling and told him that the quality of the brickwork was below standard. There were bulges in the walls, holes in the mortar; the brickwork needed a lot of remedial work and was not ready to be painted. In their letter of 7 June 2000 the Mosses wrote of the poor alignment of bricks, holes in mortar, missing mortar, joints of different thickness, bulging mortar, corner bricks not lining up with walls. The specified flush finish had not been achieved and the standard of craftsmanship was poor. The south facing wall in the dining room had a bulge in the middle about two-thirds of the way up. The vents at the front of the house below bedrooms 2 and 3 were not centred in the brick walls. The vents under the entry were too high, with the timber showing behind. These defects were corrected in 2002. The vents were pulled out and centred. Mr Moss strongly disagreed with Mr Chaseling's evidence that the "vents were laid in the most appropriate fashion". Mr Chaseling's evidence is incorrect. 57 Mr Moss said that other issues were raised at the meeting of 6 June 2000 and that they were in substance set out in the letter of 7 June 2000. Amongst the complaints, the Mosses raised the finishing of the back deck and the non-compliance with the manufacturer's recommendations. Having regard to the Mosses' complaints it can readily be understood why Mr Cox did not want to make a copy of Mr Crandon's initial engineering report of 10 August 2000 available to the Mosses. I will return to this later. 58 The Mosses stated that, because no scaffolding had been supplied for the guttering and roofing contractors, the job had been delayed for a week. The Mosses wrote: "We have recorded diary notes of days when no work took place. These can easily be checked against weather records to verify that most of those days were fine and ideal working conditions. It is also noted that during the rain both the carpenters and the bricklayers worked. A pattern seems to have emerged where every Friday there are no workers on site." 59 The letter, after noting the completion date of the contract of 10 July 2000, concluded: "It is our understanding that GST and other expenses incurred after the expiry date of the contract is claimable by us against you as an expense incurred as a result of Craftsman not fulfilling their legal obligation." That sentence would not have endeared the Mosses to CHNR. 60 By letter of 13 June 2000 the Mosses advised CHNR that they had engaged a building consultant, Mr Terry Hollyoak, who was preparing a report on the work done so far. The Mosses requested that all work to rectify the brickwork cease except for a small sample area to be prepared to achieve the finish specified in the contract. They wrote "We need to agree on the standard and finish achieved." The letter stated that all decks had not been constructed in accordance with the manufacturer's specification, listed some seven matters requiring attention and sought an onsite meeting with CHNR with Mr Hollyoak attending. 61 The letter of 13 June 2000 raised a number of other alleged defects in the work done and specified some of the steps which needed to be taken. Mr Moss said that the observations in the letter as to the building work at the site were accurate. 62 Mr Moss said that the decks were completely demolished and rebuilt but not satisfactorily, when CHNR returned to the site in 2002. Mr Moss said that when CHNR initially built the decks, they only filled the lower sections of the columns and the upstairs section was a column with a 100x100 softwood timber post going up through the middle of the column to support the roof above. As at February 2005 two columns at the front entrance of the house had not been filled. 63 By June 2000 there was significant conflict between the Mosses and CHNR in a number of areas. Many of their complaints are embodied in letters they wrote to CHNR, dated 30 April 2000, 7 and 21 May 2000, 7, 13 and 24 June 2000. Over all the defects indicated insufficient attention being paid by CHNR to the requirements of the job, poor planning and poor supervision of tradesmen and subcontractors. 27 June 00 – 8 July 00 64 This was a job which had to be inspected at various stages and a certificate issued that particular works had been completed. The inspection and the issue of the certificates was undertaken by the Principal Certifying Authority, Mr C J Nowlan, a principal of Contech Building Consultants Pty Ltd. CHNR appointed the Principal Certifying Authority. Mr Nowlan had carried out a footing inspection on 9 February 2000 and a ground floor slab inspection on 7 March 2000. He later issued the requisite certificates. On 27 June 2000, at the request of CHNR, he performed an on site framing inspection to determine whether the work had reached Stage 3, that is, completion of brickwork, roof covered, plumbing and electrical rough-in and the building generally was ready for internal linings. If Stage 3 had been reached a payment of 25 per cent of the contract price became due. After inspecting about a third of the building, Mr Nowlan stopped the inspection, taking the view that Stage 3 had not been reached. There were works which needed to be done. Mr Brett Harley, the supervisor, agreed that the inspection was probably a couple of days premature. Stage 3 involves a house being at lock-up stage or virtually at that stage. The house under construction was not at that stage. 65 Mr Moss said that on 28 June 2000 Mr Chaseling handed Mr and Mrs Moss a demand for payment in the sum of $62,642.25. That sum was stated to be "Now Due". The demand contained the endorsement: "Please Note That In Accordance with Our Contract (section 4) Payment must Be Made Within 7 Days From The Date of This Letter." The demand appeared to come from Mr Cox, as "F Cox" was typed at the bottom of the demand. Mr Cox said that his daughter signed it on his behalf. 66 Mr Moss said that Mr Chaseling stated that he knew that Stage 3 had not been reached and that payment was not due at that point in time, but if the Mosses paid it before the end of the month they would avoid paying GST. Mr Moss said that he told Mr Chaseling that the payment definitely was not due and that they would not be paying it until it was due and that he (Moss) was concerned about the legality of the Mosses paying for work which was still to be done and not paying GST and whether they were in breach of any legislation or laws. 67 Mr Chaseling gave a different account of events. He said that after the Moss' letter of 24 June 2000 listing defects and complaints he and Mr Smith from the office of CHNR met Mr Moss on site, explained each of the variations to be made and as ordered and had Mr Moss sign them. Mr Chaseling insisted that Mr Moss sign the variations so the works could proceed. Mr Moss was fairly non-committal. Mr Chaseling stated that Mr Moss was told that over the preceding few days Fred Cox and he (Chaseling) had visited every CHNR site and had taken photographs for their records for the changeover to GST and that they had to issue invoices to people on the basis of works completed as at 30 June, that some of these invoices would be split because they had not reached progress payment stages but the value of the works and material on site were not subject to GST. 68 Mr Chaseling said that at that meeting of 25 or 26 June 2000 he told Mr Moss that he would be receiving his third progress claim for Stage 3 without a GST component in it because the plasterboard was ready to be delivered and although the project would not be entirely to lock up stage on 30 June it would be shortly afterwards. 69 Mr Chaseling said that Ms Desley Cox sent out progress claims to every client who had a job under construction as of 30 June 2000 by mail. He said that the first time he saw the Stage 3 claim was in early July 2000. 70 Mr Chaseling stated that he told Mr Moss that CHNR did not expect to be paid the amount claimed until the works the subject of Stage 3 were completed. That would be about 10-14 days after the issue of the invoice Mr Chaseling stated that he said to Mr Moss although CHNR was "issuing the invoice now it is going to save you some six odd thousand dollars in GST" and whilst the house was not completely to that stage "it will be in the next week to ten days and that's when we would expect the payment to be made." Stage 3 had not been reached. The house did not reach Stage 3 until September 2002. 71 I am unable to determine whether Mr Chaseling handed the demand for the third progress payment to Mr Moss or whether it was sent to Mr Moss in the post. By the end of the third week of June 2000 relations between Mr Moss and Mr Chaseling were tense. Mr and Mrs Moss were very dissatisfied by what they regarded, with substantial justification, as the dilatory and substandard work of CHNR and Mr Chaseling thought that Mr and Mrs Moss were being excessively particular and unreasonable in their expectations. 72 Both Messrs Moss and Chaseling agree that in about late June 2000 there was a discussion about progress payment No 3. Mr Chaseling, who was exasperated with the Mosses over their complaints and for wanting a good job was anxious to obtain a substantial sum of money for CHNR. He sought a Stage 3 certificate from Mr Nowlan. If issued, this would at least, at first blush, entitle the builder to press for progress payment No. 3. It was obvious and realised by Mr Chaseling, that there were going to be difficulties about the Mosses paying GST because of the slow progress of the works. It was probably thought by CHNR that by issuing the progress payment demand most of the difficulties with GST would be overcome. 73 The GST problem could have been approached in another and more cumbersome way, that is, by valuing the work done. CHNR saw the premature issue of the third progress payment demand and its payment after all the work required for a Stage 3 certificate had been done as solving, at least part of the problem and CHNR's need of money from a difficult client. Mr Moss was correctly wary of an arrangement that smacked of a possible fraud on the revenue and required him to pay money before it was truly due. Under the contract the third progress payment became due once the Stage 3 works had been completed, that is they had reached the ready for internal linings stage. This was a disturbing ploy on the part of CHNR. 74 Mr Moss gave evidence of an extended conversation and meeting about 28 June 2000 about the many defects which he alleged existed. The brickwork loomed large. Mr Moss said there were still pits in the brickwork, a number of bricks around corners were badly aligned, some sections of mortar were missing and a fair amount of mortar left wiped over the face of the bricks. Mr Moss stated that Mr Chaseling was insistent that that the brickwork was ready to paint and that painting was going to begin the following Monday. If the painting did not proceed, the scaffolding would come down and the Mosses would have to pay for the erection of further scaffolding. There were a number of split boards or damaged boards in the walkways in the house. These could have been placed in areas where they would have been hidden by cupboards. 75 There was also a discussion about locks. As it was approaching lock up time Mr Moss requested CHNR to fit the locks which he had available. Mr Chaseling said that they would not do so; they would be using their own locks. Mr Moss requested a key, stating that he had to get in to do some work and for the air conditioner. Mr Chaseling declined, telling Mr Moss that he would have to make an appointment to get in. 76 Mr Moss believed that it was at this meeting he pointed out to Mr Chaseling the wall along the outside of the verandah barbecue area at the back of the house was shown to have engaged piers on the plan and none had been built there. The wall was a retaining wall and at one point retained soil up to 4 metres high. It was only a single skin brick wall. 77 Mr Moss said Mr Chaseling handed him a bundle of documents termed "variations". In truth they were cost quotations for possible variations being considered by the Mosses. 78 Mr Moss stated that the plumber had started to rough in the plumbing throughout the house. The Mosses had not been consulted about the positioning of the taps. Mr Moss expressed disappointment that they were not given the opportunity to ensure that floorboards with defects were placed in areas hidden by cupboards. Some such floorboards were placed in walkways. 79 Mr Moss said that he had a further conversation with Mr Chaseling after the meeting of 28 June 2000. Mr Moss stated that he said to Mr Chaseling that they (the Mosses) were coming up against too many problems and that it might be better if they took over the house from lock up and they terminated the contract at that point. Mr Chaseling refused, saying that CHNR would enforce the contract. 80 Mr Moss said that during that further conversation Mr Chaseling reaffirmed a message left the previous day, suggesting that the Mosses buy the gyprock left on site so they could avoid paying $500 GST on it. Mr Moss indicated that they were not interested and that CHNR could remove the gyprock sheeting while so much rectification work had to be done before the framing could be passed. Mr Chaseling and Mr Moss each asserted that the other would be trespassing if he entered the site. 81 On 30 June 2000 the Mosses, fearful that linings would be installed to cover up numerous deficiencies in the house which CHNR seemed reluctant to remedy (or had declined to remedy) and that the brickwork would be painted without rectification of the defects, served a notice of suspension of works by their solicitors. The letter read: "This letter is to serve as written direction … that our clients wholly suspend the progress of the works immediately: The works referred to is the construction of a dwelling upon our client's land at Teakwood Drive … Pursuant to clause 5.01 of the Building Agreement you are required to cease work immediately and vacate the site of the work." The Mosses thought that they had no other choice. CHNR and Mr Cox contended that the alleged fear had no reasonable basis. 82 Mr Chaseling said that after receiving the notice suspending the works CHNR removed the scaffolding and made the building secure. CHNR barred access to the garages downstairs and refused Mr Moss' request for a key to get into the property. 83 On 3 July 2000 Mr Cox and Mr Moss were present at the site. Mr Moss said that Mr Cox, using his fists, stormed towards him and said that if the Mosses caused him any trouble he would keep him off the site and out of the house for two years, adding "and a grim reaper will come and visit you." Mr Cox denied that this was said. Mr Cox was angry with Mr Moss and tried to bring Mr Moss to accept what CHNR wanted, including a lesser standard of work. Mr Moss said that in addition to Mr Cox's threats, on 7 July 2000 Mr Chaseling told him that, if the Mosses litigated, he would tie them up for over 2 years. 84 On 4 July 2000 Mr Moss spent a lengthy period (up to 2 hours) at the site pointing out defects in the house to Mr Nowlan. Emphasis was placed by Mr Moss upon the footings, the walls and the engaged piers. There were many other matters raised by Mr Moss. Some of these are set out in the letter of 14 August 2000 from the Mosses to the Building Surveyors and Allied Professions Accreditation Board. 85 Between February 2000 and July 2000 there had been an alteration to the footings. When Mr Nowlan made his inspection in February 2000 he inspected the original footings. Mr Nowlan, when asked, said that he had not inspected the footings under the existing wall at the rear of the dwelling. At the site meeting and inspection on 4 July 2000 the Mosses pointed out that there had been a change to the foundations. Mr Nowlan explained that the wall shown on the original footing would have obstructed a window in the amenities area on the ground floor level. The wall was moved some 500mm to enable the window to function correctly. Mr Nowlan assessed that the brickwork above it was not load bearing as it just enclosed the subfloor of the rear verandah. Mr Moss queried whether the depth of the footing at the point of alteration was adequate. Mr Nowlan thought that it was. 86 During the site meeting on 4 July 2000 Mr Nowlan was shown the suspended concrete slab at the front entry and asked if he had inspected the reinforcement prior to pouring. Mr Nowlan replied, "No." He should have been notified so he could inspect. The formwork had failed and caused at least 100mm deflection in the base of the slab. 87 According to Mr Moss, Mr Nowlan indicated that he would not be withdrawing his footing or slab certificates. Mr Moss pointed out numerous defects or shortcomings in the areas below the floor, which he believed should have been noted in Mr Nowlan's report of 27 June 2000 but were not. Mr Moss pointed out that above the floor there were numerous defects which needed to be rectified, apart from those which Mr Nowlan had listed. These included the meter box protruding into the wall and pushing the studs out of line by 20mm, incorrect stud spacing (being not as specified in the contract), broken and missing noggings, lack of support under Grinder Truss, flooring not nailed around the walls and, in some cases, no joist to which to nail flooring, brick ties not nailed off and incorrect sliding cavity doors. 88 The Mosses told Mr Nowlan that the core filled columns supporting the verandah areas had not been vibrated and that they understood that this was necessary to provide a termite barrier. The Mosses also stated that there were numerous other areas where the termite protection was not visible. 89 The Mosses asked if they could be provided with all documentation and reports on inspections as they were going to terminate the contract with CHNR and needed to know what had to be done to rectify the existing problems. Mr Moss said that Mr Nowlan informed them that he was employed by CH and would need to get their approval to give the Mosses the documentation. Their solicitors would have to formally request such documentation. 90 Mr Moss said that during the meeting of 4 July 2000 he discussed with Mr Nowlan the work he had done at the back of the building. Mr Nowlan commented that that work was not on the plans and asked what footings were underneath it. Mr Moss said that he explained that he had used a conventional brick footing, that it was a waffle type construction which was transferring the load down towards the base of the footings and that it was not a vertical retaining wall. Mr Moss said that Mr Nowlan stated that he had had no experience with brick footings and that he would have to make some enquiries as to what was required with brick footings. 91 Although he had not mentioned the matter in his evidence in chief, Mr Nowlan said in cross-examination, that he believed that he mentioned the garden retaining walls and steps to the Mosses and asked them if they had any details about the footing or the structure. Mr Nowlan said that Mr Moss said "No" and that he had erected it. Mr Nowlan said that he could not recall whether he indicated that he was going to issue a stop work order. I find that Mr Nowlan did not so indicate. If he had, Mr Moss would have reacted. 92 Later on 4 July 2000 or possibly 5 July 2000 Mr Nowlan telephoned Mr Chaseling. Mr Nowlan said that he raised the structure built by Mr Moss at the back of the house. Mr Nowlan said that Mr Chaseling could have said that he was taking some photographs of it. 93 Mr Moss said that in a conversation in mid 2000 Mr Chaseling told him that Mr Nowlan had placed a demolition order on the works being built by Mr Moss. Mr Moss was not sure of the date, but it was probably after the meeting with Mr Nowlan on the site on 4 July. 94 Mr Chaseling in his evidence in chief said that he had not discussed the Moss' work and the stopwork order with Mr Nowlan. Mr Chaseling said that when he was on the site with Mr Nowlan (possibly on 27 June 2000) he may have pointed to the Moss' work and said, "That's not our work, we are not responsible for that." There was no other discussion. 95 I find it hard to accept, and I do not accept, that there was no prior discussion between Messrs Chaseling and Nowlan about the issue of a stop work order as to the work being done by the Mosses at the rear of the house (steps and garden retaining walls). By letter bearing date 4 July 2000 Mr Chaseling wrote to Stephensons Solicitors (then acting for the Mosses): "Re W Moss and Mrs J Burrows-Moss, Lot 1 Teakwood Drive Alstonville Please find attached a letter from the Building Inspector for the above-mentioned job. This letter is self explanatory and we look forward to your client's compliance to the inspector's requirements. Would you please provide us with copies of the information to be supplied to the Building Inspector for our files?" The letter bears the notation FAXED 8/7/00 96 The figure "8" has been written over an earlier figure which is not easy to read. It could have been "4". The attached letter from the Building Inspector appears to be from Mr Nowlan bearing date 6 July 2000 addressed to Craftsman Homes. That letter, after referring to a recent frame inspection continues: "During the course of the inspection a number of issues were noted which require attention prior to work proceeding on the lining of internal walls of the building. Please find enclosed a copy of the site inspection sheet detailing the outstanding items. In addition to the above, the inspection noted that rear access stairs and planter boxes have been installed which were not detailed on the approved plan. The inspection was unable to determine the existence and adequacy of any footing support to the stairs as constructed. As you would be aware that as the appointed Principal Certifying Authority for the development I am responsible for the issue of a Compliance Certificate at the completion of the project. The Compliance Certificate certifies that the building is structurally adequate and as such I am unable to verify the adequacy of the rear steps/garden beds. It is also noted that the suspended entry porch slab ahs (sic) been placed, however an inspection by this office [of the steel] was not undertaken [before the slab was poured]. Accordingly, in view of the concerns regarding the construction of the rear stairs/planter boxes you are directed to cease work on the project until: 1. Submission of a Structural Engineer's report certifying the adequacy and integrity of the footing support to the structure, or 2. Remove the structure and re-construct on footings designed and installed in accordance with AS 2870 – Residential Slabs & Footings." 97 The site inspection sheet referred to in this letter bearing date 6 July 2000 was that of Mr Nowlan bearing date 27 June 2000 and headed Building Inspection Report. It lists some eight matters to be rectified. Unfortunately this report was incomplete. It neither listed all the matters to be rectified nor stated that it was incomplete. 98 On 7 July 2000 a meeting was held in the offices of the solicitors for the Mosses involving the solicitors, the Mosses, Mrs Cox and Mr Chaseling, but no settlement was reached. Mr Moss believed that after the meeting Mr Chaseling handed him a copy of Mr Nowlan's stopwork letter and report. The meeting was followed by a letter of 7 July 2000 from the solicitors for the Mosses to Ilvarity in these terms: "We refer to the meeting held at our office earlier today attended on your behalf by Helen Cox and John Chaseling. We are instructed that you have failed to execute the works in accordance with the Tender document and the plans and specifications. We are further instructed that despite our clients pointing out to you and/or your representatives a number of serious defects and deviations from the tender and plans and specifications, those breaches have not been rectified and in fact further breaches have continued to occur. Our clients are of the view that execution of the works in accordance with the tender and plans and specifications is an essential term of the contract and accordingly they now have the right to terminate the contract effective immediately. This letter is to formally advise you that our clients hereby terminate the contract. They now require that you forward to our office within seven (7) days of the date of this letter all plans and specifications, site inspection reports for the footings and slab and all building and development approvals issued by Ballina Shire Council." 99 Mr Moss said that on 8 July 2000 he telephoned Mr Nowlan and advised that the Mosses were looking to take over the job. Mr Moss asked Mr Nowlan for a comprehensive list of things required to get the house to pass the framing inspection. Mr Nowlan declined, explaining that there was a conflict of interest and he was employed by the builder. Mr Moss told Mr Nowlan he was not prepared to leave the matter at that. Mr Nowlan agreed that Mr Moss telephoned him, but gave a different version of events. Mr Moss advised that since the inspection on 4 July 2000 further items had come to light and requested re-inspection. Mr Nowlan said that he could not do so that afternoon as he had a prior sporting engagement. Mr Nowlan said that Mr Moss became irate, accused him (Nowlan) of being aligned with Mr Cox and CH to his detriment. Mr Nowlan responded telling Mr Moss that this was not the case and terminated the conversation. 100 There is substance in both versions. It is not in doubt that Messrs Nowlan and Moss spoke, that Mr Moss had found further defects which he wanted to show Mr Nowlan, that Mr Nowlan could not make an inspection on 8 July due to a prior engagement, that Mr Moss wanted a list of all that had to be done to bring the works to Stage 3 and that Mr Nowlan, having been retained by CHNR, felt he was being dragged into a conflict of interest situation and declined. That made Mr Moss angry and he accused Mr Nowlan of being aligned with Mr Cox and CHNR. At that stage Mr Nowlan had not fully thought out his position and what he should do when a spirited contest developed between the owner and the builder, and the owner, in effect, asked him for ammunition to use against the builder. Mr Nowlan 101 I interrupt the narrative to record the further action taken by the Mosses against Mr Nowlan and its outcome. 102 The Building Surveyors and Allied Professions Accreditation Board Inc, upon a complaint made by the Mosses found allegation 2 sustained, namely, Mr Nowlan's inability to carry out a satisfactory inspection to determine if work complies with the necessary Standards and Plans and Specifications. The Board in its reasons wrote: "Allegation 2. 1. In relation to the inspection by Mr Nowlan of the framing, Mr Nowlan should have a) issued no written direction and advised the builder to call for a further inspection when works are ready for inspection, or b) issued a detailed inspection report listing all apparent items which require attention, or c) Clearly notated that the report was a partial or incomplete report. It is considered that Mr Nowlan's letter of 6th July should have identified some more of the items revealed on the inspection of the 4th July, in particular 2. Alteration of the foundations, as identified by the complaints, without inspection, and 3. The issue in relation to the brick engaged piers It is considered that Mr Nowlan's letter of 6th July should have clearly indicated that the inspection report on the framing was not a complete list of defects or the fact that other agreements had been made with the supervisor" 103 Mr Nowlan consented to the Board reprimanding him as to Allegation 2. This avoided a hearing before the Administrative Decisions Tribunal. Mr Nowlan said that he accepted the reprimand for commercial reasons – the process was proving costly. However, it is difficult to see any sustainable answer to the Board's reasons. 104 Allegation 1 (against Mr Nowlan) was also sustained. That was in these terms: "His apparent conflict of interest with his role as a Certifier and his need to maintain a working relationship with Builders for repeat business." 105 The Board had earlier found that while all parties (Nowlan, Ballina Shire, the Mosses and CH) were of the opinion that Craig Nowlan was the lawfully appointed Principal Certifying Authority, he had not been so appointed. The Board referred to s 15, Code of Conduct, which requires the Principal Certifying Authority to: 1. at all times safeguard the interests of the public, and 2. be objective, impartial and free of any conflict of interests in the performance of their professional duties and 3. bring due care and diligence to bear upon the discharge of their duties. 106 The Board considered that there was a reasonable likelihood that "the accredited certifier will be found guilty by the Tribunal of unsatisfactory professional conduct. In relation to Allegation 1 Mr Nowlan consented to and was issued with a caution. While Mr Nowlan did not accept that his conduct warranted a caution he said that he accepted it for commercial reasons. It is hard to disagree with the Board's view. 107 I have dealt with these matters at some length because as he gave his evidence Mr Nowlan seemed strongly supportive of the builder and hostile to the Mosses. He was also strongly supportive of the builder in June-July 2000. A person discharging the role of the Principal Certifying Authority has a difficult task in keeping the balance between a builder some of whose work is sub-standard and an unduly particular building owner, especially when the Principal Certifying Authority depends upon the builder for further work. I have some sympathy for Mr Nowlan. Messrs Cox and Chaseling were abrasive, assertive and aggressive. Mr Moss was abrasive, stubborn and forceful. 108 It was not seriously disputed that Mr Nowlan did not have the power to issue a stop work order. It is a pity that Mr Nowlan concerned himself with an aspect of the dispute between CHNR and the Mosses rather than concentrating on whether the works complied with the Plans and Specifications and whether they had been adequately and correctly executed. Mr Nowlan said that he believed that he had a responsibility to ensure that all works proceeded in accordance with approved documentation. 13 July 00 – 15 Sept 00 109 After the confrontation between Messrs Moss and Nowlan, the Mosses promptly sought the assistance of the Health and Building Department of Ballina Shire Council and requested an inspection of the house being built for them. Inspections took place on 13 and 20 July 2000. On 25 July 2000 Ballina Shire Council by Mr A Weir, a building surveyor, issued a report. That report mentions many defects including deficiencies in the footings, the front entry patio slab and the masonry walls. The report concluded: "Prior to work proceeding the matters identified in this report are required to be addressed and the dwelling to be re-inspected by officers of the Council's Health and Building Department prior to the fixing of the internal wall linings." This report underlines the unsatisfactory nature of much of the building work and confirmed the substance in Mr Moss' complaints. The report and the work would have made any building owner unhappy. 110 By letter bearing date 27 July 2000 to the Mosses solicitors, the solicitors for CHNR asserted that the alleged breaches of contract, which were not admitted, were not such as would entitle the Mosses to terminate the contract. CHNR's solicitors further asserted that the purported termination of the contract amounted to a wrongful repudiation of the contract. It reserved whether CHNR would terminate the contract or seek specific performance of the contract. CHNR's solicitors wrote that in the meantime the works remained suspended pursuant to the notice issued by the Mosses and that no work should be undertaken on the site until the matter was resolved. 111 CHNR's solicitors asserted that $64,402.25 was due and payable to it and demanded payment within seven days, otherwise proceedings would be instituted and interest claimed. They stated that they had received instructions to lodge a caveat. This was lodged within a few days. CHNR was not entitled to lodge that caveat. 112 By letter of 9 August 2000 CHNR's solicitors protested at the Mosses having erected an "owner builder" sign on the premises and stipulated that no works should be undertaken on the site and threatened injunction proceedings if any work commenced. By letter of 31 August 2000 CHNR's solicitors pointed to cl 19.01 of the contract, alleging that it granted to CHNR exclusive possession of the land. The letter continued: "… by reason of your client's failure to pay within 14 days the Progress Payment requested 27 June 2000 our client hereby suspends the works wholly until your clients' default is remedied." 113 On 15 September 2000 CHNR issued a statement of liquidated claim against the Mosses out of the District Court at Lismore alleging that in accordance with their agreement CHNR on 27 June 2000 sought from the Mosses progress payments for Stage 3 of the building works undertaken for $62,642.25. CHNR also sought payment of invoice dated 23 June 2000 for $1,760 for site works. A total of $64,402.25 was claimed together with interest pursuant to cl 8.04 of the agreement at the rate of 20 per cent from 6 July 2000 to date and continuing at $35.28 per day. HOW Claim And Aftermath 114 During about August 2000 the Mosses made a claim on the insurer, Home Owners Warranty (HOW). Their claim was supported by a report from Mr Terry Hollyoak, an experienced building expert. Lee Du Vernet & Associates (Mr Larry James) were appointed to investigate and report. After making an appointment with the owners to inspect the premises and assess the work done, Lee Du Vernet & Associates contacted CHNR, but its officers declined to discuss the building works. Lee Du Vernet & Associates have written that they were advised by CHNR's solicitors not to carry out their assessments under the circumstances and they threatened to obtain an injunction to prevent Lee Du Vernet & Associates carrying out their inspection. HOW instructed them to continue. A new appointment was made with the owners and the builder was advised and invited to attend that inspection. Lee Du Vernet & Associates were again contacted by CHNR's solicitors, who stated that they were preparing an injunction and that the injunction would be served that afternoon. This did not eventuate. 115 By letter of 14 September 2000 HOW served a Notice of Intention To Inspect on CHNR, marked for the attention of Mr F R Cox. That letter elicited an immediate but undated response from CHNR signed by Mr Chaseling and addressed to HOW. CHNR sought to deflect attention from its work and to stop the inspection. 116 CHNR advised that the Mosses' job had "been placed on a notice by the building inspector due to faulty and un-approved works which have been carried out by The Owner." CHNR's letter continued: "We have been provided a copy of the alleged defects provided to you by the owner from a report by a Terry Hollyoak. This report has been challenged and litigation is now on foot to force the owner to comply with the terms of the contract. We say that many of the alleged defects are items, which are in the course of normal construction practice and will be attended to when the works resume and the frame inspection has been completed. We believe it is premature for you to go to the expense of securing another report at this stage. That report would only concur with those provided to Ballina Council, which also states that the faulty workmanship is only in the areas that the owner has illegally carried out unauthorized and un-inspected works." 117 It was untrue and misleading for Mr Chaseling to write that the faulty workmanship was only in the areas that the owner has illegally carried out unauthorised and uninspected works. The diversionary tactics failed. 118 The inspection occurred on 18 October 2000. 119 In cross-examination Mr Chaseling agreed that the last paragraph of his letter contained a false statement. He sought to explain it as a typographical error. He said that he intended to say in his letter that there was faulty work "but there is also workmanship in the area illegally carried out by the owner." That explanation was untruthful. 120 There was another erroneous statement in that paragraph. No reports were provided to Ballina Council. Mr Chaseling said that the letter should have referred to a report provided by Ballina Council. 121 Mr Chaseling accepted that Mr Weir's report on behalf of Ballina Shire Council had very considerable criticisms of the quality of the work CHNR had carried out. Mr Chaseling conceded that even if the words "to Ballina Council" in the last paragraph of his letter read "by Ballina Council" that was still incorrect as nowhere in the Council report did Mr Weir state that the faulty workmanship was only in the areas where the owner had illegally carried out unauthorised and uninspected works. Mr Chaseling sought to explain his false statement by saying that he was mistaken. That was a euphemism. Mr Chaseling said that in his response to HOW he was more interested in the situation where there was an order issued by the owner and a do not proceed order issued by the building inspector. Mr Chaseling was seeking to divert attention from the faulty work of CHNR and put off any inspection of that work and divert attention to the matters he mentioned. He gave this evidence: "Q. It was a knowing falsehood that you told Home Owners Warranty to persuade them not to have another inspection of the property because you feared the inspection would confirm the defects pointed out by Mr Weir in his report? A. That's correct." 122 Mr Chaseling said that when HOW wanted to inspect the premises he sought legal advice and gave instructions to the solicitors to tell Lee Du Vernet that if they persisted with their intention to carry out an inspection CHNR would exercise its rights to obtain an injunction to stop them. 123 Mr Chaseling said that he did not recall asking CHNR's solicitors to prepare an injunction, that Mr James was premature in carrying out any inspection and that normally HOW did not become involved in disputes until the job was completely finished and handed over to the owner. Mr Chaseling was concerned about the claim HOW might ultimately make against CHNR. 124 Mr Chaseling agreed that the site inspection by Mr James on 18 October 2000 resulted in a reasonably amicable meeting between the disputing parties. The Mosses, Mr Hollyoak, Messrs Chaseling and Harley were present. Mr Moss said that throughout the inspection Mr Chaseling agreed to provide engineers' certificates, engineers' reports, termite inspections and reports as apt in respect of almost every point that was mentioned. Mr Moss could not recall any points which were not resolved by some proposed action by CHNR, except that relating to the work done by Mr Moss at the back of the building. 125 The terms of the report of Mr L James of 30 October 2000 bear out the substance of Mr Moss' recollection. Mr James' report revealed an appreciable amount of defective work requiring rectification and recommendations as to what should be done. In the last paragraph of the letter of 30 October 2000 of Lee Du Vernet & Associates this appears: "In summary, the builder had chosen to enlist the services of a practising structural engineer and a licensed termite control company who independently assessed the situation. The builder has undertaken to make the necessary repairs following receipt of these reports. The builder has further agreed to rectify other problems as recommended by our assessor." 126 Mr Chaseling said that this was the substance of what he said to Mr James on 18 October 2000 and what he agreed to do. Mr Chaseling said that irrespective of Mr Nowlan's order CHNR had committed to take care of the problems raised. 127 The letter of 30 October 2000 of Lee Du Vernet & Associates concluded: "It appears that we have no alternative but to await the receipt of these reports when perhaps a further assessment will be necessary." Thereafter not much happened for many months. Part of the reason for this was that the Mosses desired to cross-claim in the District Court proceedings and there was very considerable delay in the delivery of their Scott Schedule listing their complaints and claims. The HOW claim stalled in view of the pending District Court proceedings. 128 Mr Chaseling did not recall seeing a report written by Mr Crandon, the engineer engaged or to be engaged, but the "termite type people" had returned to the site and prepared several documents which were later forwarded to Mr Hollyoak (the Mosses' building consultant). The promised rectification did not occur. 129 Mr Moss said that he was not aware of any structural engineer being engaged between October 2000 and February 2002 and that no items of work were carried out in that period. Mr Moss said that they (the Mosses) had possession of the site and they were not approached by any engineer to make an inspection. 130 Mr L Neil, an architect and project manager, who had been in the building industry in excess of 40 years and had handled all sorts of work from the smallest to the largest, inspected the works in February 2002 and prepared a report. He confirmed the existence of the defects mentioned in the earlier reports, that is that of Mr Hollyoak and that of Ballina Shire Council. Mr Neil's report was damming of the works executed. His report catalogues many defects and deficiencies. He specified the cause of the faulty works thus, "inadequate supervision of sub-contractors and a lack of diligent inspections by the certifying consultants." He wrote: "Rectification/works required. All areas identified must be rectified, such rectification inclusive of inspecting footings for adequacy, plumbing and aligning brickwork, re-building frame sections on ground floor, first floor framing, upper floor frame and roof framing. This remedial work may well require the majority of the as constructed work to be demolished to enable satisfactory completion of the work to date" Mr Neil estimated the cost of rectification at $175,000. 131 The Mosses noticed on a couple of occasions that ACA did programs on builders and that the problems encountered by others were no worse than the ones they had encountered. In probably late 2001 they approached Channel 9 which, over a period, developed an interest. During his interview by Mr Fordham on 19 February 2002 he (Moss) pointed out a number of matters that worried the Mosses. Mr Moss believed that he did so accurately. Mr Moss said that on 19 February 2002 the Mosses had sole access to the house. The doorways had been barred but Mr Moss had the means whereby he could get into the property. The only keys and locks in existence were in sliding doors which had pieces of wood behind them so that they could not be opened with the key. As at 19 February 2002 the last time anyone from CHNR came on the property was in October 2000 with the inspection of Mr James. From October 2000 to February 2002 Mr Moss worked on the property at least 3 days per week doing maintenance through the summer months. With about 6½ acres there was much to be done. His tools and equipment were stored in the shed. He had to go to the shed to carry out his jobs. 3 May 02 – 23 December 02 132 On 3 May 2002 the cross claim in the District Court proceedings was referred by the District Court to Mr George Zakos, Construction Consultant, under Pt 28B r 2(1) of the District Court Rules 1973 for inquiry and report on the matters in the Schedule annexed to the Order for Reference. The subsequent history until 13 September 2002 is contained in the Referee's report dated 26 November 2002. 133 The matters in the Schedule were: (a) the whole of the proceedings arising from the Notice of Cross Claim filed by the Mosses (b) the Scott Schedule claiming defective workmanship; filed by the Mosses (c) the Scott Schedule in Reply filed by CHNR (d) Experts reports filed with the Court in respect of each of the parties' Scott Schedules The parties additionally requested that the following questions be answered: Q1: What stage the construction has reached in terms of the agreement if that is able to be determined? Q2: Whether the construction is defective and if so to what extent? Q3: Whether the construction should be demolished? Q4: What the cost is of (a) remedying the defects (b) demolishing the construction and rebuilding it to the stage it has reached (c) the cost to complete the construction once either the defects have been demolished and rebuilt to its present stage. (sic) 134 On 24 May 2002 the referee gave directions. They included that the experts for both parties were to meet and provide by 4 June 2002 a joint report indicating areas of agreement and disagreement. That was done. 135 On 5, 6 and 7 June 2002 an Experts Conclave was held attended by the referee, Mr McDonald for CHNR and Mr T Hollyoak for the Mosses. Following the completion of the conclave the referee prepared and distributed a "Schedule of Agreements". This summarised the experts' agreement and position as to many of the items contained in the Scott Schedule. Both during the pre-conclave meeting and during the conclave there was a degree of "give and take" or "horse trading". That was practical and sensible. The referee wrote that the conclave considerably progressed the evidence to enable him to make a finding in respect of each of the questions 2, 3 and 4. As to question 3, whether the building should be demolished, the experts were in agreement that the building did not need to be demolished to make good any defects. This rendered Q4(b) redundant. 136 During the three day conclave of 5-7 June 2002 serious attempts were made by the parties to resolve as many disputes as possible. The Mosses lifted the suspension of the works and requested CHNR to complete the works under the contract. 137 By letter dated 5 June 2002 the solicitors for the Mosses wrote: "The suspension [of 30 June 2000] is by this letter ended and our clients require your client to complete the works described in the agreement … … For the avoidance of doubt it is accepted that the Agreement is still on foot, and that more particularly it was not brought to an end by the letter from Messrs Stephensons dated 7 July 2000." 138 The reference was adjourned in the hope that all matters would be resolved. That proved not to be the case. The final hearing date was 13 September 2002. By letter dated 9 September 2002 the Mosses' solicitors advised that the Mosses would not be seeking a Referee's finding that the construction should be demolished. Thus no finding was required for Questions 3, 4(b) and 4(c). On the morning of 13 September 2002 the Mosses advised that the cross-claim would be discontinued with costs reserved. CHNR did not object to this application. The referee was no longer required to make findings in relation to the matters referred to him in the Schedule of the Orders of Reference but, to answer the remaining questions; findings still had to be made as to whether the work carried out by CHNR was defective. Following the agreements reached between the experts at the conclave of 5-7 June 2002 the referee wrote in his report of 26 November 2002: "I find that as at 27 June 2000, the following items of work to be: (a) Defective work carried out by Craftsman Homes: 1, 5, 6, 9, 10, 12, 13, 15, 16, 18, 20, 21, 22, 23, 25, 28, 29, 30, 32, 33, 34, 35, 37, 38, 41, 42, part 44, 45, 48, 49, 57, 59, 60, 61, 63, 64, 66, 67, 70, 71, 74, 75, 76, 77, 78, 79, and 81; (b) Incomplete work yet to be carried out by Craftsman Homes: 8, 17, 36, 39, 40, part 44, 46, 47, 50, 51, 52, 55, 56, 62, 72, and 73; I make no findings in respect of the following items as (c) Items 19, 24, 31, 43, 53, 58 and 65 were already covered by other items in the Scott Schedule; (d) Items 3, 7, 11, 14, 26, 27, 68 and 69 were withdrawn by Mr Terry Hollyoak; and (e) Experts required further information on items 2, 4, 54, 89 and 82 before they could formulate a proper opinion." 139 At para 43 of his report the referee continued: "As the defects were agreed between the experts I am of the view that whilst there were numerous defects, there were certain agreed defects that would have prevented the installation of internal linings until these defects had been rectified." The referee then listed some 10 defects as in the main preventing the works from having reached Stage 3. 140 The referee concluded: "I find that due to the defects that existed as at June 2000…the works had not reached Stage 3 Schedule B and the Progress Payment Schedule contained in the contract." 141 I return to what was happening outside the conclave. Shortly after the Mosses lifted their suspension CHNR returned to the site and commenced working. Substantial work was undertaken until approximately August 2002. Further disputes developed between the parties. CHNR alleged that the Mosses had not made the appropriate colour and material selections. CHNR appears to have approached this matter in a peremptory way and the Mosses made their selections but took a little longer than CHNR wished. By letter of 7 June 2002 CHNR's solicitors stated that it would be demolishing the unauthorised works constructed by Mr Moss, claiming CHNR had an obligation to do so. This was an incorrect assertion. The Mosses' solicitors advised that Ballina Shire Council did not require the demolition of those works. 142 By letter of 14 June 2002 the Mosses advised of the withdrawal of their consent to the appointment of Craig Nowlan as Principal Certifying Authority. The Mosses instructed CHNR to use Ballina Shire Council as the PCA. CHNR, by its letter of 17 June 2002, advised that it intended to continue with Craig Nowlan as the PCA and that should they wish Ballina Council to perform these duties there would be substantial additional inspection fees payable by the Mosses. 143 By letter of 28 June 2002 CHNR sought payment by return mail of $62,642.25 for the Outstanding Progress Claim and $1,760 for the site works, a total of $64,402.25. By letter faxed on 1 July 2002 the Mosses' solicitors raised the issues of variations, selections, Mr Nowlan, site access by the Mosses, the caveat placed on the title and the completion dates. By letter of 5 July 2002 CHNR wrote to the Mosses "Please note we have approval to install the linings …". By letter of 11 July 2002 CHNR corrected that to read "Please note that we have reached the point where we can seek approval to install the linings. …". 144 On 16 July 2002 Mr Moss, Mr Chaseling and Mr Willis (the Regulatory Manager of Ballina Shire Council) met to resolve outstanding issues as to the PCA and the works constructed by Mr Moss at the site. 145 On 17 July 2002 Mr Nowlan issued Compliance Certificates as to the footings and the slab. The inspection dates specified were 9 February 2000 and 7 March 2000. The certificates stated that the works mentioned complied with the plans and specifications. 146 By letter of 19 July 2002 to the Mosses, CHNR's solicitors asked that the Mosses "attend to payment of the outstanding progress payment due within 7 days." By letter of 30 July 2002 CHNR sought payment by return mail. 147 Mr Harold Bradford of the Department of Fair Trading, Building Branch, conducted an investigation on 25 and 26 July 2002. He met with Mr Moss and separately with Messrs Chaseling and Lovell of CHNR and Mr Crandon. Mr Bradford recorded: "Some issues were addressed by the engineer and the builder had satisfactorily rectified others. Given that the owners have withdrawn the court actions against the builder and the builder is now back on the site correcting alleged defects and completing the contracted work there is no reason to take any further action in this matter." 148 Mr Bradford made this note of his conversation with Mr Moss on 29 July 2002: "Phoned Mr Moss and advised him of the outcome of the inspection in that no further action is contemplated by the DFT and that the contract should now be allowed to continue the proper inspections and certifications as required by the contract. Mr Moss fully agreed with this proposal." 149 Mr Moss could not recollect this conversation, but did not deny that it occurred. He said that this telephone call may very well have taken place. I think it did. 150 Mr Moss said that on 31 July 2002 he met with Mr Chaseling and Mr Weir, Health & Building Inspector, Ballina Shire Council, to resolve the controversy over the work Mr Moss was carrying out at the back of the house. Mr Weir told Mr Moss that he should disconnect the work he was carrying out from the house for a distance of about one metre and that the Council would deem what remained as being landscaping and it would be dealt with accordingly. Mr Moss said that Mr Chaseling agreed that if Mr Weir's directions were implemented, that would be acceptable to CHNR. Mr Moss said that he carried out the work specified by Mr Weir promptly. That resulted in the concrete slab at the top of the stairs disappearing. Mr Moss did not convey Mr Weir's advice to Mr Nowlan or arrange for the Council to do so. Mr Moss said that at this point he regarded Mr Nowlan as being out of the picture. Mr Moss said that he was not aware that CHNR still regarded Mr Nowlan as the relevant certifier. 151 By letter of 1 August 2002 to the Mosses CHNR, after referring to a site meeting on 31 July 2002 attended by Messrs Moss, Chaseling and Weir, wrote: "Council have issued a verbal instruction requiring the owners to remove the re-inforced concrete which has been placed at the rear of the verandah. They also require the removal of the rear concrete patio deck and approximately one metre of brickwork which will disconnect the un-approved staircase and plantar boxes constructed by Mr Moss from the dwelling. It is noted that the remaining work will be considered by Council as 'landscaping' and that these works are not to be reconnected to the dwelling in the future." There does not seem to be any difference of consequence between what Mr Moss and Mr Chaseling understood. However, Mr Chaseling recorded that it was his understanding that Council required a re-inspection at the completion of the demolition. 152 Mr Moss said that CHNR attended at the site from June to August 2002. At a distance he observed the demolition of the verandah at the back and the two front patios built on timber and their reconstruction, some rectification work on either side of the front steps and the pouring of the front steps. The garage doors were fitted and an attempt was made to fix up the loose bricks in the vents around the front of the house. The front door, which had been blown in was repositioned. CHNR cut in the flooring which buckled, cut the boards down and re-laid the flooring in sections of the house. 153 Mr Moss made the following complaints about the work done by CHNR in 2002: (a) Soft wood was used as bearers when reconstructing the back decks, the bearers were not properly attached to the wall of the house; (b) no flashings were provided to the wall of the house and along the backs of the decks; (c) the levels and straightness of the back deck are inadequate; (d) no provision of tie downs onto the footings from the back deck; (e) use of broken and damaged materials in the reconstruction of the back deck; (f) CHNR filled the columns on top of the pine timber with concrete. This led to considerable compression of these bearers and cracking of the floor decking on top of the decks. The columns at the front of the house are still some 50mm out of alignment; (g) there was no evidence of an attempt to prevent termites entering the house from the columns in the deck; (h) no flashings were provided when the window in the front main bedroom was repositioned; the water still travels underneath that window which sits on top of the flooring; the deck in front of the window holds water when it rains and about 10mm is received. The water drips down through the middle of the deck; (i) the securing of the bearers to a pole plate underneath the deck was inadequate. The bearers hang down from the bottom of the pole plate. It should have been below the bearer with the bearer sitting on top of the pole plate. (j) In attempting to refix the vent bricks liquid nails were used in some cases instead of mortar; (k) the termite barrier around the house has not been rectified; (l) numerous other defects; Mr Moss claimed that the list was just too endless to rattle off from his mind. 154 On 13 September 2002, being the day of the final hearing before the referee the parties entered into an agreement for Mr Zakos to determine whether at that date the works had reached completion of Stage 3. Mr Zakos was to act as an expert and the parties were bound by his determination. On 18 September 2002, Mr Zakos issued his determination that at the time of his inspection on 13 September 2002 (with Messrs Hollyoak and McDonald) the works had reached the completion of Stage 3 as described in the building contract. 155 Mr Moss, after detailing the defective work that existed after the further work, said that they (the Mosses) thought they had no choice but to make the Stage 3 Progress Payment as they were advised during the District Court proceedings that defective work was not a reason for terminating or withholding payment. The defective work clause (presumably cl 12) was meant to take care of that. The Mosses understood that they could not legally refuse to make payments because of defective work. They believed that they had to accept Mr Zakos' ruling. 156 By letter of 11 November 2002 the solicitors for the Mosses forwarded their cheque for $62,642.25 being Stage 3 progress payment. The solicitors stated that the Mosses' payment "does not prejudice or waive any of their rights in regard to any defective or unsatisfactory work identified to date or subsequently." 157 When pressed to explain the delay between Mr Zakos' determination on 18 September 2002 that Stage 3 had been reached and payment on 11 November 2002 of the third progress payment, Mr Moss said: "Because we asked Craftsman to present us with an invoice which was relevant for the current third stage payment. We didn't consider the invoice which was issued to GST for work that had not been done at that point in time would be a valid invoice for us to pay some two years later after GST became valid. We fully anticipated that the work done in 2002 incurred GST." CHNR never gave the Mosses a further invoice. Mr Moss said that they received correspondence, he believed from CHNR, saying there was no GST payable and that the sum payable was as per original invoice. 158 The solicitors, in their letter of 11 November 2002, confirmed the Mosses' request that CHNR allow the Mosses to occupy the shed at the rear of the property whilst the dwelling is being completed. The solicitors noted that CHNR was remaining off the site and stated that the Mosses required CHNR to return to the site and recommence works immediately. 159 By letter of 15 November 2002 to the Mosses CHNR noted that an amount of $1760 was still outstanding in respect of the site works and advised that interest in the amount of $29,003.02, being calculated from 10 July 2000 to 12 November 2002 was due in accordance with the building agreement. Prompt payments of both amounts were required. 160 CHNR wrote: "Upon receipt of the above outstanding amount we will be in a position to proceed in accordance with the Building Agreement. In respect of the certification we are advised by the Private Certifier that there are matters in respect of the unapproved works which need to be addressed by the owners and it would be prudent for you to contact Mr Nowlan direct to resolve these matters. At this point of time his cease work notice is still in effect and we cannot place the lining until the owners have complied with Mr Nowlan's requirements. We will not agree to the Owners occupying the shed." The reference to "matters in respect of the unapproved works which need to be addressed by the owners" is obscure. Mr Nowlan was required to deal with the works the subject of the approved plans and specifications. 161 Mr Moss agreed that at no stage had a certificate issued as to the completion of the framing and that he had not asked the Council to provide such a certificate to CHNR. Nor had CHNR arranged with Mr Nowlan to provide such a certificate. It was for CHNR to obtain a compliance certificate to the extent that one was necessary. 162 The Mosses did not convey directly to Mr Nowlan that he did not have the power to issue an order. However, Mr Moss said that it was conveyed through the proceedings and complaints lodged with the Department of Planning. Mr Moss said that he received a letter from Mr Nowlan that he (Moss) was not to communicate with him, but with his solicitor. 163 As previously stated Mr Nowlan had no power to issue a stopwork order and in doing so exceeded his authority. Still less was he entitled to do so to suit the interests of CHNR. That was the effect it had and CHNR endeavoured to make maximum use of it. 164 On 30 October 2002 the solicitors for the Mosses served a notice on the solicitors for CHNR that the caveat which CHNR had placed on the Mosses' land would lapse upon the expiration of 21 days after the service of the notice unless an order extending the operation of the caveat was obtained from the Supreme Court and lodged with the Registrar-General within that period. There is no evidence of such an order being obtained. 165 As a result of the referee holding that the works were not at Stage 3 as at 27 June 2000 there was, by agreement, a verdict for the Mosses on the Statement of Claim and an order that CHNR pay the costs of the Mosses' of the Statement of Claim. There was a dispute as to the costs of the cross-claim. This was argued before the District Court on 18 December 2002. The judge awarded the Mosses the costs of their cross-claim because of the extent of the defective work by CHNR before the suspension of the works by the Mosses. The referee's report had found in favour of the Mosses in relation to the majority of the 82 defects which comprised the basis of their composite defence and cross-claim. The defects were such that they prevented the works from having reached the stage at which payment was due to CHNR. The Mosses had defended the claim on the same basis as they prosecuted the cross-claim. There was thus a substantial overlap of the Mosses' costs in the statement of claim and their costs in the cross-claim. 166 CHNR's application for leave to appeal was refused and it was ordered to pay the Mosses' costs of the summons for leave to appeal. The effective date of the determination pursuant to Pt 40 r 3 is 17 September 2003. On 16 December 2003 the Costs Review Panel affirmed the determination of the costs assessor of $67,644.29. 167 On 19 December 2002, being the day after the determination as to costs made by the judge in the District Court at Lismore, the solicitors for CHNR sent to the Mosses' solicitors a "Tax Invoice dated 19 December 2002 addressed to your client in relation to the costs our client is entitled to claim from your client as a result of your client's suspension of the works dated 30 June 2000." 168 That Tax Invoice claimed $118,172.75 made up as follows: Cost of overdraft interest @ 13.5% pa to 6 June 2002 (no GST) $ 18,222.65 Balance due at time of suspension of works 30/6/2000 $ 69,784.15 Extra scaffolding due to suspension (inc GST) $ 4,500.00 Court costs (inc GST) $77,070.10 $178,340.80 Management Time (inc GST) $ 8,800. 00 Less paid November 2002 $ 62,642.25 $115,698.55 GST on Unpaid Balance ($69,784.15 - $62,642.25) $ 714.20 Unpaid Site Costs Pre 30/6/00 (no GST) $ 1,760.00 $118,172.75 169 The Tax Invoice bore this notation: "Please Note That In Accordance With Our Contract Payment Must be Made Within 7 Days From The Date of This Letter." 170 The claim for $77,070.10 for Court Costs by CHNR was audacious when on the previous day CHNR had agreed to pay the Mosses' costs of the statement of claim and CHNR had failed in its bid for its costs of the cross-claim and it had been ordered to pay the Mosses' costs of the cross-claim. The litany of defects as at 27 June 2000 meant that Stage 3 had not been reached and that the money claimed by CHNR was not due. It should not be assumed that the suspension by the Mosses was other than justified in the circumstances. 171 It is difficult to avoid the conclusion that CHNR was harassing the Mosses. The bold approach of CHNR continued. By letter of 23 December 2002 to McLachlan Chilton, the solicitors for Royal and Sun Alliance (the HOW insurer), CHNR'S solicitors advised that the District Court proceedings between their client and the Mosses, had been concluded but did not mention the result. They also advised that the building agreement between the parties was still on foot and that they were instructed that their clients would fulfil their obligations under the building agreement. 172 They wrote that the works were presently suspended pursuant to the PCA's notice relating to the unauthorised defective works built by the Mosses at the rear of the dwelling and that they were instructed to make an application to the Consumer Trader Tribunal (sic) pursuant to the provisions of the Home Building Act to have those defective works removed. 173 CHNR's solicitors further wrote: "In relation to the comments in the letter of Hosie and Partners dated 9 December 2002 that … their clients have concerns as to whether any future works will be properly performed by Ilvarity Pty Limited. In these circumstances it is likely that a claim will be made against Royal and Sun Alliance in regard to the builders defective workmanship once the works have been completed. We are instructed to reject those comments. As at the date of this correspondence the parties agree that there a(re) no defective works in this dwelling." 174 The letter is incorrect or incomplete in a number of respects: (a) The parties were not agreed that there were no defective works in the dwelling. The Mosses were still rightly complaining about defective work (b) It was not unsustainable for the Mosses' solicitors to assume that CHNR would in future perform defective work given the volume of defective work executed in the past and the apparent lack of detailed supervision of the previous work of sub-contractors (c) The PCA had no power to suspend the works in the existing circumstances (d) The letter does not mention the oral directions given by Mr Weir, his eminently practical directions and Mr Moss' prompt compliance with them (e) The letter does not mention the doubts surrounding the alleged appointment of Mr Nowlan. 175 It is hard to resist the conclusion that CHNR was seeking to use the works built by Mr Moss to divert attention from their own poor performance of the construction of the Mosses' house with its many defects rather than performing its own obligations. CHNR sought to capitalise on what Mr Moss did to overcome its own lack of satisfactory performance. 3 Feb 03 – 7 May 03 176 In their letter of 3 February 2003 CHNR's solicitors returned to the attack, threatening to make application to the Consumer Trading and Tenancy Tribunal to have the works constructed by Mr Moss demolished if the Mosses did not consent to and pay for the demolition of such works by CHNR. CHNR'S solicitors complained that the Mosses had refused to provide it with proper directions in relation to the building works and material selections and had not signed and returned the After Contract Variation Notice. 177 This letter crossed with one of 3 February 2003 to CHNR's solicitors from the Mosses' solicitors stating that as at 20 November 2002 CHNR had not returned to the site when they (Mosses' solicitors) had confirmed that a continued failure to return to the site would be taken as repudiation. CHNR had not returned to the site as at 3 February 2003. The letter of the Mosses' solicitors recorded that the only work done since June 2002 was to finish off the work the builder was required to do in order to obtain payment for Stage 3. 178 The Mosses, as foreshadowed in their solicitors' letter of 3 February 2003 treated CHNR's conduct as repudiatory and accepted the repudiation. By letter of 10 February 2003 to CHNR'S solicitors Mosses' solicitors advised that their clients thereby terminated the building agreement dated 18 November 1999 and that such termination took effect immediately. 179 By letter of 12 March 2003 to the Mosses' solicitors headed "Without Prejudice" (but which is not such a communication) CHNR's solicitors wrote that they were instructed to reject the purported termination by the Mosses of the building agreement and that CHNR remained ready, willing and able to fulfil its obligations under the agreement once the Mosses had remedied their breaches of the agreement. Reference was again made to the PCA suspending works on the site. That provided no basis for the stand by CHNR. 180 By letter of 13 March 2003 to the Mosses' solicitors, the solicitors for CHNR enclosed copy of Notification of a Building Dispute which they had forwarded to the Department of Fair Trading seeking: "1. An order that the defective and unauthorised works constructed by the owner on the subject site be removed. 2. An order for the appointment of a mediator to facilitate communication between the builder and the Owner during the remaining term of the agreement." 181 By letter of 21 March 2003 to CHNR's solicitors the Mosses' solicitors stated that as the building agreement had been terminated, the orders sought in the application to the Consumer Trading and Tenancy Tribunal were irrelevant. In another letter of that date the Mosses' solicitors wrote that the issue that remained outstanding was whether the termination entitled either party to damages. The Court would not order specific performance of this building agreement. 182 On 7 May 2003 Ballina Shire Council issued a report of an inspection carried out on 9 April 2003 by the Council's Building Surveyor, Mr A Weir. He was accompanied by Mr Moss. Mr Weir's report identifies a significant number of serious defects. It would trouble any building owner. They cannot be brushed aside. The house remains incomplete. The Mosses and their children have lived in a large converted shed at the rear of the property since about February 2004. Sundry Matters 183 Clause 5.02 of the contract provides that the contractor may suspend the progress of the works wholly or in part upon delay of more than 14 days in making a progress payment after submission of same or upon the proprietor unreasonably withholding money from a progress payment due to the contractor. Clause 5.02 requires the contractor to exercise such suspension by written notice. There are difficulties in the drafting of the contract. In the circumstances of the present case it was reasonable for CHNR not to return to work until payment of the third progress payment. They committed no breach of the contract by so delaying. 184 Mr Moss said that they expected CHNR to resume work even though it had not been paid. That was unrealistic. He had no idea what CHNR would or would not do. After the payment of 11 November 2002 the Mosses waited in anticipation. Mr Moss acknowledged that the building industry becomes frantic in the period before Christmas and that the industry tends to close down for the Christmas/New Year break. 185 In the earlier mentioned letter of 3 February 2003, the Mosses' solicitors, after noting an earlier request to return to work, stated that if no good reason was advanced within three days for not completing the works with due diligence, they anticipated receiving instructions to treat CHNR's conduct as repudiatory and to accept the repudiation. Even making allowance for the building industry being very busy immediately prior to Christmas and the Christmas/New Year holiday shutdown, CHNR's failure to return to the site by 3 February 2003 and proceed with the works amounted to repudiatory conduct. A delay from about 12 November 2002 to 3 February 2003 cannot be justified for this partly completed job. 186 There are a number of other matters in Mr Moss' evidence to which I should refer; many arose in cross-examination. 187 As to weather conditions Mr Moss believed that mostly the days were fine and that very often when rain fell it did so in the afternoon and did not prevent work during the day. Access to the house could be, and was obtained, when it was raining. Once the house reached lock-up stage the internal trades could continue. In cross-examination Mr Moss agreed that in the period up to July 2000 he did not keep detailed records of rain on the site for every day. He was relying on his observations. There was a distance of about 18 metres from the kerbing and guttering where the sealed road ended across to the front of the house. There was no sealed road to the house from the kerb. It was effectively a dry driveway. The site of the house had been partially excavated and there was no grassy covering in the excavated area. The soil was red soil, which, in wet conditions, adheres to footwear. 188 Mr Moss agreed that in August 2000 it was not the Mosses' intention of letting CHNR back to finish the job, nor were they prepared to have any dealings with Mr Nowlan as certifier. 189 Mr Moss denied that he and his wife had failed to co-operate in selecting colours and materials and denied the allegations of Mr Chaseling to this effect. 190 Mr Moss agreed that there were weather stains on the floorboards and that these were made by weather after 7 July 2000. In response to a question from me Mr Moss said that the cause of the stains on the floorboards was that there was no flashing underneath the doors. Mr Moss agreed that he may have said, pointing to the floorboards, "This is the result of a storm that we had and it's blown the bottom of the window in because it hasn't been fixed at the bottom correctly." That is what the tape records. At the time he suspended the works the fixing of the window had not been completed. Mr Moss said that the water had blown across the floor. He said the water flowed across the floor at both front doors because of the lack of flashing. 191 Mr Moss said that it was obvious that the fixing of the window had not been completed by the builder as at 7 July 2000 and that it could move to permit the entry of water in moist and windy conditions of sufficient severity. Mr Moss accepted that their suspension of the works stopped the builder going back on site and doing any work. Mr Moss said that after the suspension there were some heavy rains with some wind from the south east. The tape records Mr Moss telling Mr Fordham: "This is the front of the house and it's been blown in by a storm we had some 12 months ago. It shows that the bottom of the window has never been fixed, no flashings underneath this window. We would have continued have (sic) problems with water stains and water blowing across this floor after the house was completed and after the floors were completed." Mr Moss was talking of events after 7 July 2000, the date of the purported termination. 192 Mr Moss said that every time the Mosses put in a complaint CHNR delayed the job. He said that when Mr Cox referred to them being kept out for two years he understood that as simply being that he could tie things up and keep the Mosses off the job. He did not understand that that would be the period it would take to resolve their disputes in litigation. 193 Mr Moss said that the Council was the relevant certifier. There was considerable debate as to this. During the period from June to November 2002 the Council did not want to undertake this role and had advised that it would not do so. However, Planning NSW had written to the Council saying that the Council could not decline to act. Mr Moss has not asked for written confirmation that the Council could and would act as certifier, because the Mosses had not been in a position to proceed with the works. In 2004 Mr Weir had told him in conversations that the Council would have no option but to proceed, albeit reluctantly, as certifier. Apparently, the Council has not made a final decision whether it will act as the PCA. See Exh BW. 194 Mr Moss was shown a document entitled "Joint Expert Witness Report, District Court Matter 139 of 2000 at Lismore Court – 12 September 2002." This referred to the Scott Schedule and listed in summary form the defects alleged along with a comment. Against the great majority of the items the comment was "No longer in issue." Against other items, the comment indicated that work was in progress or required or that further checking was required, or that the item was incomplete. That report was a precursor to the agreement signed the following day for the referee to determine whether Stage 3 of the Works had been reached. 195 The proceedings were due to be further heard on 13 September 2002 by the referee. It seems that the Joint Expert Witness Report of 12 September 2002 was typed by Mrs Chaseling from notes supplied by Mr McDonald. Mr McDonald said that his notes were made after he and Mr Chaseling had inspected the property. Mr McDonald gave this description (T534): "We took photos of every item and then I went back to the Chaseling's house and I had written notes on a pad … and she typed them on the computer while I was in the house. 196 This evidence suggested that Mr Hollyoak was not present when that report was being compiled. In his evidence in chief (T532) Mr McDonald said that after the experts conclave of 4 and 5 June 2002 and after CHNR had been given time to carry out some repair work, he had a further meeting with Mr Holllyoak and/or Mr Zakos. The question whether the work had reached Stage 3 was discussed. Mr McDonald said that he and Mr Zakos considered a number of items in relation to that and so did he (McDonald) and Hollyoak. Mr McDonald said that a document (mfi 4, later Exh BU – the Joint Expert Witness Report of 12 September 2002) was prepared by him in conjunction with Mr Hollyoak and Mr Zakos. Mr McDonald said that he provided a report to Mr Zakos. 197 Mr McDonald said that the items listed in the Joint Expert Witness Report of 12 September 2002 were listed on a document which he considered with Mr Hollyoak and/or Mr Zakos. Mr McDonald could not recall writing notes on it. Mr McDonald gave this evidence: "Q: Did you see anyone else writing? A: Mr Hollyoak would have and Mr Zakos would because I can recall sitting at the table but most of the items I felt were no longer an issue, they had been resolved and I can't recall making notes on it. Q: That document you are looking at, mfi 4 isn't the actual document that notes were made on? A: No. Q: The columns 'Comment' were not completed in the document you saw notes being made on? A: That's right." 198 In an interlocutory judgment of 18 February 2005 some of the background to the preparation of the Joint Expert Witness Report of 12 September 2002 was traced, particularly in paragraphs 10, 11, 12, 15, 16, 17 and 18. 199 It was not suggested that Mr McCall, the Mosses' solicitor, was present at the meeting of Messrs McDonald, Hollyoak and Zakos. It was paragraph 7 of his affidavit in the District Court proceedings which was read, by leave, in these proceedings that provided a sufficient basis for the admission of the Joint Expert Witness Report of 12 September 2002. Because of his illness and inability to attend to give evidence, My Hollyoak was unable to be questioned about the report. 200 I accept the evidence of Mr Moss that he did not see that report prior to signing the document headed "Agreement For Reference" dated 13 September 2002 (Exh AX), which appointed Mr Zakos as an expert to determine whether the construction of the house for the Mosses had reached Stage 3. 201 Mr Moss said that he did not see the Joint Expert Report of 12 September 2002 until 2004 at a meeting with Mr Harold Bradford of the Fair Trading Department, Building Branch, attended by Messrs Cox and Chaseling with the latter producing that document and stating that everything had been rectified. 202 Mr Moss said that on 13 September 2002, on legal advice, he gave instructions to withdraw the cross-claim in the District Court proceedings. He and his wife were anxious to preserve their rights in respect of work carried out by CHNR before and after 13 September 2002. Mr Moss refuted the suggestion that, when he withdrew the cross-claim he was satisfied with the work performed as a result of Mr Zakos' rulings. Mr Moss understood from the legal advice that he received that the fact some defects remained did not prevent the construction being classed as having reached Stage 3. He also understood that, with the builder having returned to the site, the question of defects should be left until the builder had finished work. The defects which existed at 13 September 2002 were substantial and the position is set out in the reports on which the defendants relied. 203 By 12 September 2002 Messrs McDonald and Chaseling may have regarded the issues as to many of the defects as having been resolved. That was not the position of the Mosses. The words "No longer in issue" contained in the Comments Column did not represent an abandonment of the Mosses' claims as to defective work, but reflected the Mosses' decision to discontinue their claims at that stage pending possible further work at the site by the builder. There was a discontinuance of the Mosses' claims not a verdict for the builder on them. 204 Mr Moss was cross-examined about the delay of 18 months in delivering a Scott Schedule as to the Mosses' claim in the District Court. Mr Moss seemed to be suggesting that much of the delay was that of his previous solicitors. The delay was excessive but I do not think that this was due to any lack of belief by the Mosses in their claims. The Mosses depended on others to inspect the premises, report and formulate their claims. Of course, that delay of about 18 months largely explained why it took so long to resolve some of the disputes of the Mosses and CHNR. 205 Mr Moss agreed that HOW had not paid out the claim made by the Mosses. He believed that HOW were contesting their claim because of "res judicata in the District Court." Mr Moss understood that HOW was claiming that the matters had been heard in another jurisdiction and could not be heard again. 206 Mr Moss agreed that he had sought to recover the rent paid for premises rented from November 2000 to February 2004 at Alstonville at a cost of $260 per week, totalling $43,400. He also agreed that in February 2004 he converted the shed on Lot 1, Teakwood Drive at a cost of about $54,000 so the family could live there. That sum had subsequently increased as the project was ongoing. The amounts mentioned were part of the moneys he was seeking to recover from HOW. Mr Moss said that he had not quantified his claim against HOW. 207 Mr Moss said that the Mosses, with the advice of their solicitor, decided not to get a structural engineer to look at the steps he was building because Mr Nowlan had no authority to issue an order and the steps were only partially completed. Mr Moss said that on numerous occasions he told Mr Chaseling that Mr Nowlan had no authority to issue an order, the first occasion being in August 2000. The matter was discussed at the time of Mr James' inspection. 208 In response to the suggestion that the Mosses were, in the period from September 2002 to February 2003, endeavouring to set CHNR up so they could terminate the contract. Mr Moss replied: "We were following the legal processes as far as I am aware … if a termination … eventuated … that would have been an acceptable outcome." 209 The Mosses wanted the job completed in a good and workmanlike manner with due diligence, or the contract brought to an end, probably preferring the latter. That would not be surprising having regard to the illicit financial demands which had been made by CHNR and the delays. 210 Mr Moss said that he telephoned ACA and after a number of telephone calls between them, he spoke to Ms Sarah Stinson and told her of the troubles experienced by the Mosses. She explained that single complaints would not justify a program, but if there were a number of people who had grievances, that might justify one. Mr Moss replied that he knew of a number of people who were not happy with CHNR. When Mr Moss started having problems he made some enquiries and got in touch with other people for whom CHNR had built houses, having made up a list from various sources. He provided a list of names and phone numbers to ACA. Mr Moss could not recall whether he provided ACA with any other documents such as copies of building reports or the contracts. 211 Mr Moss said that at the time ACA did the filming the Mosses had suspended the contract and thought that they had terminated it. They were not letting CHNR back on the site at that point. Mr Moss was aware that CHNR maintained that the termination was not valid, but he thought CHNR was out of the picture as a builder and that there was no longer a contract in existence. 212 Mr Moss said that when he contacted ACA the Mosses were being thwarted at every turn and they were desperate to get some action so that they could proceed with the house. Mr Moss said that they did not necessarily want to harm CHNR. They had a vested interest that CHNR stay in business. If CHNR was harmed or went out of business the Mosses stood to lose a lot of money. 213 Mr Moss said that he did not know any good things to say about CHNR. He knew that the material he had provided was critical of CHNR and he could not see how it could be presented in a way in which they would appear to be doing their business properly. Mr Moss accepted that if the material he provided went to air people would draw the conclusion that CHNR were perhaps not adequate builders and that it would not do Mr Cox's reputation any good. 214 Mr Moss agreed that the film showed the back stairs which he had constructed. He said that he told Mr Fordham that that was work he had carried out and that he did not want any of the back stairs shown, or any of the work he had carried out as they did not relate to the Mosses' grievances with CHNR. 215 Mr Moss agreed that he intended to convey that CHNR had threatened to keep the Mosses off the job for two years and that that was an action taken entirely by CHNR and Mr Cox. Mr Moss said that Ms Stinson and Mr Fordham were well aware that the Mosses had suspended works under the contract. 216 Mr Moss confirmed that the Mosses had not engaged another builder to complete the works. He said that from the quotes received for rectification works it seemed that the cost of rectification work was perhaps greater than the value of the building which had been erected. At that point the Mosses were looking at pursuing a HOW claim so that they could proceed and have the money to carry out the rectification work. They had the remainder of the contract price to complete the house. 217 There were some issues which did not reflect well on Mr Moss. He acted unreasonably in expecting Mr Nowlan to cancel a team sporting engagement on the weekend and attend at the construction site while Mr Moss pointed out further defects and when Mr Nowlan refused, accusing him of not looking after the Mosses' interests and preferring those of CHNR. 218 Mr D T McPhie was in Year 12 at Ballina High School in February 2002. He was in the woodwork class of about ten boys taken by Mr W Moss. Mr McPhie's father was a plasterer who did sub-contracting work for various builders including CHNR. Mr McPhie said that during class on 22 February 2002 Mr Moss told him that he was going to gather together all the people that were unhappy with the homes built by CHNR and get CHNR on A Current Affair. Mr D McPhie said that Mr Moss explained all the faults in his house under construction. Mr McPhie remembered Mr Moss stating that the floorboards were "all cracked up and splayed up" in his house. Mr McPhie said that Mr Moss stated that when he took CHNR to A Current Affair they would put Fred Cox out of business and it would put his Dad out of business as well. Mr McPhie's father was to do the plastering at the Mosses' house, but it never got to that stage. 219 Mr McPhie said that there were other students in the class when this was said. Mr McPhie said that he was called to the Deputy Principal's office to write a statement setting out what had happened. That statement reads: "On the 22nd of Feb in my wood work class I was told by Mr Moss that he would be apearing (sic) on a current afairs (sic) about the craftsman homes case, he told me that he's (sic) house has'nt (sic) been built propley (sic) on a number of ocasions (sic). On this same Day he also asked me if my father still worked for craftsman homes, I told him, as far as I know he is, he replied to me that this A current afairs (sic) case will put him out of bisness (sic)." Mr McPhie had difficulty in expressing himself. But he was doing his best to tell the truth. 220 Mr Moss denied that he used the words alleged. A stern letter of complaint was written to the School Principal by the solicitors for CHNR and a copy was sent to the District Superintendent of Schools. Another teacher was appointed to take the class. Mr Moss said that he suggested this. Mr McPhie said that during the year he sought help on a number of occasions from Mr Moss as to problems he was having with his Year 12 Project and received quite a degree of assistance. 221 Mr D McPhie said that he had not spoken to anyone from Craftsman Homes. Mr Moss probably did mention the impending program in class. He was very worked up about what had happened and expected the ACA program to have an adverse effect on CHNR. There was probably also some reference to Mr McPhie's father with the implication that he too might be affected. I am not able to find exactly what was said, but Mr D McPhie was upset about what took place in class. In the stark form in which the matter was raised before this Court, Mr Moss did not believe that he could have used words to the effect attributed to him. Probably, Mr Moss did mention the faulty work of CHNR in building his house along with some details, the adverse effect the impending ACA program was likely to have on CHNR and also on those who did work for them. Mr Moss had some difficulty in accepting that he had misconducted himself. 222 While he saw the works involved in building the Mosses' house through the eyes of an exacting observer who expected a great deal by way of quality workmanship, Mr Moss did not strike me as deliberately untruthful. Because of his daily attendance at the site and his keen and critical (perhaps over critical) observation he had a better knowledge than any of the executives and employees of CHNR of what had happened and the defects which existed. He received substantial support from some of the expert witnesses, for example, Mr Monteith and Mr Neil and from the reports of Mr A Weir, Mr Hollyoak and Mr L James and the determination of the referee, Mr G Zakos. 223 The defendants relied principally on a number of expert reports and the oral evidence of some of the authors to establish that the Mosses' house was an example of shoddy building practice, was riddled with faults and was proof of the incompetence of CHNR and of Mr Cox in building residential homes. The defendants also relied on the evidence of Mr Moss which I have briefly summarised. Reliance was also placed on all this evidence by the defendants to establish that Mr Cox was unfit to be allowed to remain in the business of building residential houses. Monteith Report and Evidence 224 The most detailed report was prepared by Mr Neil Monteith, an impressive witness with over 50 years experience in the building industry. He began as an apprentice carpenter and joiner in 1951. He commenced his own construction company in 1959 and operated his own building construction company for 16 years, building churches, hotels, home units and undertaking major renovations of commercial premises through to 1975. Between 1975 and 1985 he was general manager of Chadwick Industries Pty Limited, a major specialist contractor in metal and membrane roofing and ceiling systems throughout New South Wales. He has conducted a building consultation practice since 1985. Since 1999 he has been a pre-qualified building assessor with NSW Public Works and Services and the Department of Fair Trading. He holds a current · Practising Certificate Australian Society of Building Consultants · Roof Plumbers Licence · Certificate in Urban Pest Control · Clerk of Works Certificate · Builder's Licence 225 Mr Monteith's report is based on an inspection on 7 October 2004. Mr Monteith described the dwelling as being located on a sloping site with excavation carried out to site the dwelling. It has a brick veneer walling system with timber flooring over timber bearers and joists with a raised section over the garage and adjoining areas with Hyne beam joists. The contract is a non-standard agreement. It is weighted markedly in favour of the builder. Mr Monteith has attached to his report 60 coloured photographs which illustrate the points he was making and the defects he identified. The incomplete structure was at lockup stage. 226 The defendants relied on the serious defects covered by the whole report and submitted that it revealed unsatisfactory work on a large scale. They drew attention to the following: (i) Para 2.1.3 – The nailing of softwood battens to the side of the hardwood joists to support ends of timber flooring boards. Thus the ends of floorboards are supported on softwood battens of less density than the adjoining hardwood joists and rely on nails in shear to support the battens which will also have variable shrinkage compared to the hardwood joists. This was not carried out in accordance with the applicable standards (see photograph 6) (ii) Para 2.1.7 – The sub-floor under the front landing has collapsed. The corrugated iron formwork has deformed because of excessive spans and the use of old and rusting corrugated iron sheeting. A temporary support under the formwork seems to have been ineffective. The addition of a masonry pier under the centre of the slab intended to add stability may not provide the essential structural stability for the entire system (See photographs 10, 11 and 12) (iii) Para 2.1.10 – Inadequacies in the termite protection system including installation of termite shielding in some walls at a height which was above the timber, ineffective termite capping on engaged piers and non-compliance with Australian Standards (See photographs 16-23). (iv) Para 2.3.1 – Sundry deficiencies in the flooring including lack of provision for expansion within the overall body of the floor, displacing of the timber frame work resulting in some movement being transmitted. There was a lack of stability in the secret nail system. (v) Para 2.3.5 – The absence of flashing at the sliding aluminium doors to the balconies permitted water entry under the sill and did not satisfy the building code. Water staining on the timber floors was visible. There was no flashing located between the outer sill brick and the end of the floor boards. (vi) Para 2.3.7 – The timber trusses over the main bedroom designed to transfer load thrust to the top plate were incorrectly positioned. (vii) Para 2.4.1 – Misalignment of the hip rafters on the roof which do not meet the corners of the fascia is a prominent eyesore although not a structural issue. The valley gutter does not conform with SAA HB39-1992 and has insufficient throat capacity. This could lead to leaf and hail blockages and thence to an overflow (viii) Para 2.4.2 – Series of defects identified in the external brickwork including severe irregularities in the plane of the brickwork, the absence of fully bonded closure bricks to the bed joints in the ventilating masonry openings resulting in loose bricks, distortion to aluminium sills due to mortar being placed tight under the sills, all cement mortar sills require removing and rebuilding, an add-on wall extension at the rear of the dwelling of poor workmanship, poor workmanship in the construction of the walls, the mortar work and the sills, and ill-formed articulation joints, lack of provision in the brickwork for over flashing to the balcony at all the balcony abutments with the external masonry walling, failing to build in a cavity flashing which extended out sufficiently to over flash the membrane turn-up around the balconies. (ix) Para 2.4.3 – The use of concrete filled support columns supported by an inadequate base of compressed fibro floor sheets sitting on timber floor framing. 227 Mr Monteith was critical of the balcony decking. His report referred to sagging and irregularities and noted that there was no detail attached to the contract documents to show how the area was to be constructed. He thought that additional supports would be required to the front edge of the balconies to provide adequate support. 228 Mr Monteith concluded that there were a significant number of areas where defective work was evident. There was much poor workmanship and an evident lack of understanding of the dynamics of construction and the requirements of the Codes and Standards as they applied to this project. The photographs attached to Mr Monteith's report underline these deficiencies. 229 In cross-examination Mr Monteith agreed that before the certification stages or before the practical completion or pursuant to notice after practical completion or within a relevant defects liability period defects are often rectified, but he pointed out that there are times when defects have gone past a stage where they can be rectified at a later date (T822). 230 As to the bracing shown on the drawing referred to in 2.1.2 of his report Mr Monteith agreed that if an engineer advised in writing that no bracing was required for the soundness of the structure in the position shown in posts 1 and 2, a builder could reasonably disregard that requirement on the plans as making no material difference to the soundness of the structure. The defendants pointed out that Mr Monteith had responded that only a bold builder would do so in the absence of an express written instruction and that there was no evidence of a written or oral instruction from an engineer as to disregarding the steel support post system. 231 Mr Monteith confirmed that it was his understanding that the floor was laid about four years ago and that in that time the timber floor joists had provided adequate support. However, it seems that the house was unoccupied and the floor would not have been subject to much use. In the normal course the floor would have been fixed and sealed four years ago. Any distortion in the timbers, e.g., drying out would most likely have been as a result of the timber lying about for four years. 232 As to the faulty use and fixing of the timber joists and battens in the flooring, Mr Monteith said that the system of timber joint add-ons to support the floor which was wood was not one he had seen before. He said that the use of the Australian Standard in the Building Code was mandatory except where there is an approved alternative tested system. While it was not impossible to rectify this defect it would be very difficult. It would involve taking up the floor, removing the softwood beams and not damaging the floor. This was impracticable. CHNR would not have attempted this expensive and difficult exercise. 233 As to floorboards cut short of joists rectification would involve replacing a lot of the floor or, probably endeavouring to bolt another hardwood section on the existing joints to provide the support. This latter alternative could end up being satisfactory. Mr Monteith said that the defect of the floorboards cut short of the joists and the incorrect positioning of the joints was not affected by the events of late June and early July 2000 (the suspension and the termination). This error occurred on the day the floor was put down. 234 The eccentric bearing (or loading) of twin bearers located on the outer edge of the masonry engaged pier (2.1.5) was regarded by Mr Monteith as poor building practice. It was not suggested that it was good building practice but CHNR contended that it would not affect the structural stability of the dwelling. Mr Monteith said there was nothing evident at the time of his inspection to suggest that the pier was overturning or anything like that. Mr Monteith accepted that the pier had been in position for some four years and, he imagined, was still sitting on the footing. 235 As to 2.1.6 Mr Monteith believed that the floor was totally supported on the softwood joist. The mixing of hardwood and softwood joints (as here) is poor building practice. Hardwood should be used on the lower floor construction. 236 As to 2.1.7, the sub-floor under the front stair landing, Mr Monteith's main concern was that the design provided for a simple supported slab. As soon as a pier was put in the middle underneath it, the slab required something on top (possibly steel) to stop the cracking. He doubted if this had been done. This would ultimately be left to an engineer to investigate and advise. He might have doubts but he would have to accept the engineer's determination. 237 As to 2.1.8, cut down bearer at support, this could be rectified by putting in an additional bearer. 238 As to 2.1.10, that the termite protection was totally inadequate, a builder would be required to carry out the necessary rectification work as it was supposed to obtain a termite protection certificate. Mr Monteith was uneasy about this matter as he gained the impression from the different types of material used that there had been a second and futile attempt to rectify some of the defects. 239 Despite the assertions of the senior officers of CHNR that it would do the necessary rectification works, I do not accept that this is so. Items not involving appreciable expense may be done. Messrs Cox and Chaseling made it clear that they were "fed up" with Mr Moss and his complaints. They regarded Mr Moss as being too particular for a project home. 240 As to the galvanised tie downs (2.2.2 in the Monteith Report), Mr Monteith thought that it would not be a simple task to tension the tie downs. Mr Monteith thought it might be simpler to put a new tie down the cavity rather than try to tension one that is already there. Mr Monteith could not tell whether the ties had been tensioned at any stage and then become loose over a four year period. 241 As to the faulty southern garage vehicle door, (with its gap between the brick reveal and the edge of the door), there was no difficulty in discarding that door and replacing it with a new door. 242 As to the upper level internal flooring (2.3.1 of report) Mr Monteith concluded that the strip flooring was laid without allowing sufficiently for timber expansion. An allowance should be made every 6 metres for expansion of the timber. The strip flooring ran for 18 metres. A 15mm gap was insufficient. The floor loads were not sitting down on the joists. There were two problems. The existing secret nail system had lost its stability and the timber expansion had to be accommodated. The flooring problem could be rectified by taking up relevant parts of the flooring and ensuring that gaps are left. He estimated that about fifty per cent of the flooring boards would be affected. It was not an easy assessment to make. He doubted if it would be less and it could be more. 243 Where twin Hyne beams have been used to support load bearing walls no blocking pieces had been installed between the two beams, but they could probably be pushed in somehow and eventually fixed. Mr Monteith did not detect any structural problems from any failure to instal blocking pieces. 244 Mr Monteith agreed that one of the sliding doors was loose. He could not move the others. Mr Monteith said that there was an absence of flashing in a position which was effective to repel unwanted water. He could not "tell when the moisture occurred but the moisture was indicative of water coming from underneath the sill of the windows of a very regular pattern coming through to the floors." The sliding doors had to be removed and fitted correctly. 245 Mr Monteith was aware that some remedial work in relation to wall framing had been carried out. 246 Mr Monteith wrote that a number of minor installation problems were evident with the roof trusses (2.3.7 of report). Of importance was the "incorrect handing of two of the roof trusses over the main bedroom." They were incorrectly positioned, but he did not see any obvious structural problem resulting. Rectification would involve taking off the roof and the roof battens, turning the trusses around and putting everything back again. Mr Monteith guessed that rectification may be possible by insetting other members on the trusses. As he was not a structural engineer he felt he could not answer questions as to this. 247 Mr Monteith observed a misalignment of the rafter over the rear barbecue area where the metal roof hip capping is approximately 100mm offset from the actual corner of the fascia (2.4.1.1 of report). This is unsightly as the photographs demonstrate. Mr Monteith said that he did not observe any structural problem concerning the roof, but it was poor aesthetically. 248 Mr Monteith noted that the valley gutters have a distance of approximately 70mm between the cut valley sheets (2.4.1.4 of report). Mr Monteith said that using 70mm was incorrect, that he was not suggesting the valleys were undersize but the throats in the roof sheets in the valley were undersize. They could be cut back relatively easily. 249 Mr Monteith was critical of the poor workmanship evident in the laying of the bricks. He did not accept that the bricks chosen were of poor quality and showed irregularities of surface or shape to make it difficult for bricklayers to lay. He stated that at most external corners of the brickwork there was an irregularity evident to one face of the corner which presented as a slightly out of square return. It was normal trade practice for brick corners to be built up by stepping back both faces, which ensures that each face is on the correct plane. The faults could be rectified by removal and relaying of bricks. This would involve a fair bit of demolition. Mr Monteith did not foresee any structural problems. 250 As to the masonry walling to the south side of the entry (2.4.2.7 – 2.4.2.9 of report) there were severe irregularities in the plane of the brickwork. There were twists in the brick panels. Mr Monteith thought that probably the whole of the wall had to be demolished and rebuilt. Mr Monteith said that he saw no structural problems arising from the irregularities. 251 There was a severe irregularity in the vertical plane in the projecting wall outside the kitchen and dining area. (2.4.2.10 – 2.4.2.12 of report). The irregularity could be rectified by demolishing and relaying the bricks. He observed no structural problems in the projecting wall. 252 It was possible to rectify the defect referred to in 2.4.2.13; ventilating masonry openings in front wall rear bedroom - two do not have fully bonded closure bricks to the bed joints leading to the supported course of bricks above becoming loose. Mr Monteith was not sure which method of rectification should be adopted. 253 Mr Monteith commented that at all windows a cement mortar sill has been applied to the header bricks. At a number of these mortar sill installations the mortar has been placed tightly under the aluminium sill. Where this has happened timber shrinkage has lowered the aluminium window and caused distortion to the aluminium sill. The contractor did not provide the required space between the underside of the sill and the top of the rendered sill. All cement mortar sloping sills evince very poor workmanship. Mr Monteith rejected the suggestion that the window sills had shrunk. He thought that all cement mortar sills required removing and rebuilding to a straight and true line with even gaps at sill line. Mr Monteith said that this work could be done. There was a problem where the distortion in the aluminium is permanent. Will it come back to a straight line? 254 Mr Monteith reported that at the rear of the dwelling near what he called the barbecue area but in the sub floor area, there appears to be a purported extension to the brick wall. The attempt to extend the wall resulted in a totally unacceptable construction with very poor workmanship. Mr Monteith could accept that the surface finish of the bricks could have been affected by demolition of whatever structure was there previously, if it was laid up against it. Mr Monteith did not accept that the gap between the new and the old bricks had been necessary nor the apparent lack of connection of the new bricks into the old brickwork – see photographs 48 and 49 in Mr Monteith's report. 255 Mr Monteith wrote (2.4.25) that the articulation joints to the masonry walling were ill-formed and did not comply with the requirements of the Building Codes. For the most part the joints were just straight butt joints with no movement gap except for one joint, which apparently had been cut in with a saw. Articulated joints accommodate movement in the brickwork. It may be brought about by foundation movement. Control joints accommodate brick growth or movement. Mr Monteith was dubious about the value of some of the rectification work which had been done. He saw no cracking of the brickwork. Mr Monteith rejected the suggestion that the joints he saw were sufficient for their intended purpose. 256 Mr Monteith further wrote (2.4.2.28 of report) that at all the balcony abutments with the external masonry walling there was no provision in the brickwork for over-flashing to the balcony. Good building practice required that at the time of laying the brick walling there be built in a cavity flashing which extended out sufficiently to over-flash the membrane turn-up around the balconies. Mr Monteith stated that it would be possible to retrofit the flashing by cutting through the bricks and putting a new flashing system in. 257 Mr Monteith was critical of the construction of the columns and fascias (2.4.3 of his report). He was instructed that the columns were concrete filled and contained hold down bolts for the roof framing. Photograph 52 shows a hold down bolt from the column above. Mr Monteith observed that in several positions the support columns had been founded on compressed fibrous floor sheets (photographs 53 and 54). The manufacturer's technical manual shows concrete filled columns supported on a concrete base. At several bearing points of the columns on the compressed fibro sheeting displacement has taken place and cracking has occurred. The problem will transfer to any tiles fixed in these areas (photograph 54). Mr Monteith did not believe that the columns were incomplete. They had been installed in their final position and the structural part was complete. They had not been painted or dressed. He was not referring to structural stability. 258 Mr Monteith wrote (2.4.3.8 of the report) that at a number of areas around the fascias over the balconies the blue board sheeting was distorted or out of plumb and that this was due to inadequate framing. 259 Mr Monteith wrote that the normal treatment over blue board framing is a thinly applied surface coating to provide a smooth level plane and that the current construction would require building up considerably to provide an acceptable finish and this is not normally recommended. 260 Mr Monteith agreed that with enough time and money being spent on the work an acceptable finish could be achieved. 261 In 2.4.4 of his report dealing with balcony decking, Mr Monteith wrote that sagging can be seen on the outer edge over the barbecue balcony. There were some irregularities locally where there were sheet exposed edges (photograph 58). The blueboard facing under the exposed edge of the decking was not adequately supported at the lower edge and lacked stiffness. Mr Monteith rejected the suggestion that the sagging was caused by exposure to the elements and asserted that there was insufficient support under the edge of the balcony to keep that in position. This could be rectified readily. 262 It emerges from Mr Monteith's evidence that some of the defects he identified could be rectified fairly readily and were unlikely to be unduly costly. Rectification of some of the other defects appeared to be a major undertaking and very costly. During his cross-examination it was frequently put to Mr Monteith that the particular defect under consideration did not or would not affect the structural stability of the house and, in some instances, that an assessment by an engineer would have to be made. While structural stability is very important and it was right for questions on that topic to be put, this is not the only consideration. Questions of appearance cannot be ignored. I share Mr Monteith's surprise that trusses were wrongly installed, especially when they were clearly labelled. 263 Mr Monteith was an honest and reliable witness with extensive knowledge of building issues and good building practice. He was balanced and fair minded and did not adopt the role of the advocate. He did not come across as expecting too much of CHNR and readily made concessions which were appropriate in cross-examination. His assessments of the position in relation to the many items on which he expressed opinions were correct. 264 During the course of Mr Monteith's cross-examination I raised with Senior Counsel for the plaintiff that evidence had been led on behalf of the plaintiff that all defects in the building would be rectified prior to the completion or within the defects liability period and that there was very little by way of evidence as to what actually had to be done, and the cost. There was the further question of what was likely to be done. Mr Monteith had pointed out that anything can be rectified, assuming the cost of demolishing and re-building is no barrier. 265 Senior Counsel pointed out, correctly, the issue was whether what happened in the Moss saga justified the imputation. Senior Counsel said that he was not going to contend that rectification would cost a little or a lot in the light of what had happened. He contended that if the evidence was that, notwithstanding the differences between CHNR and the Mosses, CHNR was prepared to go back and rectify all defects, it mattered not what it was going to cost and that the question of the cost of rectification was not a matter which should be taken into account in evaluating the statement that CHNR was prepared to go back and rectify the defects satisfactorily. 266 Senior Counsel said that this was especially so in the circumstances of the present case. He continued (at T830): "…one can characterise the history as a muddle or worse, but certainly it is one of the more complicated sagas of building, of the administration of a building contract with collateral proceedings that one could have imagined … Your Honour may not be able to say whose fault it is but what it does not prove (is) the truth of the imputations. … It is because of that that I have resisted the temptation to add another two weeks to this case because of quantification." 267 Messrs Cox and Chaseling were costs conscious. They had to be as project builders. They also exhibited a strong dislike of the Mosses, their many complaints and their insistence on work of good quality. The work of some of the sub-contractors was poor. Mr Monteith's assessment that there was inadequate supervision of the work which was done was correct. Messrs Cox and Chaseling did not like being questioned and resented having the defects pointed out. They thought that the Mosses were being too particular. 268 The real, as distinct from the professed, attitude of CHNR was such that the majority of the major defective work was very unlikely to be rectified satisfactorily. At best a second rate patch up job of some of them may have been attempted. Some of the minor defects may have been rectified where CHNR was unlikely to incur significant expense or it was able to prevail on subcontractors to return to the site. Neil Report and Evidence 269 I have earlier referred to the report of February 2002 of Mr L Neil on all of which the defendants relied. They drew attention to the following: (a) "The masonry walls are generally extremely poor standard being out of alignment and of plumb, nominated engaged piers are free standing and not structurally sound;" (b) "Numerous locations of ant capping have been installed, the base level of timber members, are not full width of walls, nor turned down, rendering them ineffective;" (c) "Bed perpend jointing in masonry is of extremely poor quality;" (d) "FRC columns are either poorly filled with unvibrated concrete or have a timber stud installed as the supporting medium, these are structurally inadequate; (e) "Numerous inadequacies exist in the wall framing to ground and first floor, first floor framing and roof framing, with extreme loads bearing on one stud which is in turn deflecting and causing the support underneath to deflect, continuity of loads to the footings is inadequate;" (f) "There exist numerous inadequate load support conditions in the roof truss installation;" (g) "The window installation is poor in almost all units;" (h) "… construction generally does not conform to the BSA and/or Australian standards;" 270 The defendants submitted that the report of Mr Monteith completed well after CH's attempts at rectification in 2002 and the report of Mr Neil before such attempts were sufficient to prove the truth of the shoddy building imputations. They were not the subject of substantial challenge in cross-examination. There was a large measure of consistency between the reports and evidence of Messrs Neil and Monteith. However, the Experts Conclave did not take as dim a view of the work as Mr Neil but the conclave and Mr Zakos did take the view that there was a lot of defective work and also incomplete work. Weir Reports 271 The defendants also relied on the reports of Mr A Weir, a building surveyor with Ballina Shire Council, pointing out that many of the items referred to by Mr Weir are also referred to by Mr Monteith, for example: (a) the absence of a bracing system; (b) the mixture of hardwood and softwood joists; (c) collapsed sub-floor; (d) vent bricks; (e) termite protection; (f) tie downs; (g) absence of flashing on balcony sliding doors; (h) brickwork irregularities; (i) articulation joints; (j) columns sitting on fibro sheeting. There is a substantial degree of correspondence between the defects listed by Mr Weir and those listed by Mr Monteith. 272 The defendants pointed out that a comparison of Mr Weir's report of July 2000 with his report of May 2003 and Mr Monteith's report of October 2004 reveals that little or negligible work was done to fix the serious defects when Ilvarity returned to the site in 2002. This was despite the quite substantial works carried out by Ilvarity in 2002. 273 The defendants submitted that the evidence in the reports just mentioned justified the imputation that as to the construction of the Mosses' home Ilvarity and Mr Cox had been guilty of shoddy building practices. The defendants discounted the evidence given on behalf of the plaintiffs and to that I will turn. 274 I have earlier referred to the report of Mr L James and the advice he received from those representing Ilvarity as to obtaining engineering advice and retaining a licensed Termite Control Company. Part of the report of 3 August 2000 of Mr T J Hollyoak was admitted into evidence. He was not able to be cross-examined because of his ill health and I have kept this in mind. The absence of testing is important. Mr Hollyoak was also involved in the experts conclave. Many of his views were accepted by the conclave and the referee. The Plaintiffs' Evidence as to the Mosses 275 The plaintiffs relied, in particular, on the reports and evidence of Mr M J McDonald of Abbott Design Pty Ltd, the reports and evidence of Mr R J Crandon, the evidence of Messrs Cox, Chaseling and Harley of CHNR and the Joint Experts Report of 4 June 2000 (of meeting of Joint Experts) and that of 12 September 2002. Of course, the parties also relied on all the exhibits and all the evidence. Mr McDonald 276 Mr M J McDonald holds qualifications in Local Government and Civil Engineering and is an accredited structural practitioner, an accredited civil practitioner and an accredited registered building practitioner. He has had extensive experience in a wide range of Local Government engineering works including roads, bridges, culverts, community buildings, sewerage reticulation systems and town planning. Since 1980 he has been a private consulting engineer and builder and has had experience in a wide variety of projects. 277 In his report of 24 April 2002 Mr McDonald has written that the house is sound and well constructed. The home was only to "lock up" stage, or Stage Three of the Building Agreement Schedule. He refers to major works at the rear of the home which appear defective, not Council approved and are not attributable to the builder. His estimate of the rectification cost of the defects attributable to the builder was $1959.98 and GST. Mr McDonald continued: "In addition there is some damage to the T & G flooring. This damage would not have occurred, and consecutively these repairs to the flooring would not now be necessary, if the works had continued to completion two years ago. My estimate to rectify the damaged T&G flooring is $2340 & GST. Therefore the total cost of rectification so that the work on this home can recommence is $4299,98 & GST. These amounts do not include a builder's overhead allowance nor builder's profit margin. I have estimated the value of the work completed to date is $265,000 not including a builder's overhead allowance nor a builder's profit margin or GST as the work was completed prior to the 30th June 2000 and the introduction of GST. I estimate that after the minor rectification work required on the home, that the cost to complete the home in accordance with the Building Agreement will be $112,239.00 including GST. This amount does not include a builder's overhead allowance nor builder's profit margin. … there are no major structural defects attributable to the Builder in this home. The home inside, outside and in the sub-floor area is free from debris, clean and well presented. I found no evidence of any foundation failure, brickwork or concrete cracking, structural movement, roof failure, timber bowing or framing deterioration. It is a solidly built and structurally sound home." Mr McDonald was very critical of the Scott Schedule of defects prepared on behalf of the Mosses. 278 The contrast between the report of Mr McDonald on the one hand and that of the Council, that of Mr L Neill and that of Mr Monteith on the other hand is marked. I do not accept Mr McDonald's assessments. Mr McDonald is prepared to accept a much lesser standard of work as being reasonable or good building practice. During the experts' conclave he seemed to accept that many of the items which Mr Hollyoak classed as defects were, in truth, defects. While I appreciate the pre-eminent importance of a building being structurally sound, matters of appearance and aesthetics are also important. In parts, Mr McDonald's report of 24 April 2002 is that of an advocate for the builder. 279 I proceed on the basis of the Referee's Report. It adequately summarised the position. That report, by implication, does not accept many of the views expressed in Mr McDonald's report. Stage 3 had not been reached and there were defects of consequence. Mr Crandon 280 Mr R J Crandon, a chartered professional engineer, was employed in Local Government engineering for 18 years with a final position of Shire Engineer at Nymboida Shire Council, a rural Shire south of Grafton and extending up on to the tablelands. In 1979 he established a private engineering practice centred on Lismore and extending from the Queensland border to the Clarence Valley and out to the tablelands of Tenterfield. He has been involved in road and bridge construction, including soil mechanics and soil investigations as a precursor to design work. As to domestic dwellings, he was fully aware of what was required in the determination of soil profile classification ranging from stable to problem soils on a construction site. Mr Crandon was asked by CHNR to produce the necessary engineering documents to satisfy Ballina Shire Council and did so, having investigated the site. Mr Crandon could not specify the times when these events occurred. 281 On 8 August 2000 at the request of Mr F R Cox, Mr Crandon made a visual inspection of the works, accompanied by Messrs Creighton and Harley (building foremen) for the purpose of examining and assessing any structural defects. Mr Crandon prepared a written report dated 10 August 2000 addressed to CHNR and marked for Mr Cox's attention. 282 The first version was discussed between Messrs Crandon and Cox and Mr Cox wanted the section dealing with Rear and Front Balconies and that dealing with Roof Trusses deleted. He crossed them out. Mr Crandon agreed to rewrite the report, making the amendments desired by Mr Cox. 283 Item 4 – Rear & Front Balconies (Photo) was recast. This item originally read: "4. Rear & Front Balconies (Photo 4a – b) The method of construction and framing of these balconies does not concur with the manufacturer's James Hardies' Specifications, see enclosed. Floor joists – 45mm specified but 35mm used – may be structurally adequate but the reduced width does not permit the construction of the joint specified. Weatherproofing top of joists – alcore flashing over all joists is not in place. This is required to stop rotting of timber, Compressed sheeting jointing – 5mm gap required, foam bed & sealant required. All sheets are butted tight. In general all balcony decking should be reconstructed in accordance with Manufacturer's Specifications." 284 This was altered to read: "4. Rear & Front Balconies (Photo 4a – b) The alternative method adopted and partially in place should be detailed explicitly before certification or approval can be issued. These works must conform with BCA." There was no reference to the manufacturer's specifications in the text and they were not enclosed. However, under photo 4a on the sheet enclosed with the letter are the words "Not in accordance with Manufacturer's Spec" and under Photo 4b are the words "no footings." These are photos of the balconies. 285 The deleted Item 9 initially read: "9. Roof Trusses (Photo 9) I doubt the adequacy of the trusses now in place to carry the load of the air-conditioning ducting. There is evidence of midspan deflection of the bottom chords of the trusses." Photo 9 was also omitted from the report. The paragraphs in the report were re-numbered. 286 The report dealt with a number of other matters about which there were queries. Mr Crandon wrote that the siting and founding of the building was in accordance with the plans and specifications, that the bearer to the front foyer stepdown was structurally adequate to carry all loads implied and that the methods of fixing and support were adequate. As to bearer/ledger support to front balcony, the method of balcony support against brickwork and head over doorway was inadequate. There was a need to remove end blocks and carry a combined head and ledger unit in continuous support of the balcony. At the back of the fuse box the stud and bottom plate had been cut out to permit access. The defect had to be bridged and strengthened before sheeting. The jointing finish of the bricklaying was adequate to take "Tuffcoat" application. As to the wall variation at the rear of the house, the relocated footing to carry the doorway brickwork was adequate for the loads implied. 287 In his report Mr Crandon placed some emphasis on the work being carried out by Mr Moss. Mr Crandon wrote that the rear stairway and planter boxers being completed by others should be removed and rebuilt in accordance with the Building Code of Australia. The existing rear, single leaf brick walling, which was being filled against by others needed to be reinforced to support all loads implied. 288 The overall effect of the report as amended was that there were no problems of consequence with the work carried out by the builder and that only relatively minor works were needed to rectify and supplement what the builder had done. However, the works carried out by others raised serious difficulties; some needed to be demolished and rebuilt. A retaining wall needed to be reinforced because of filling by others. It was not intended by Mr Crandon that the report be comprehensive and deal adequately with all outstanding structural issues. 289 Mr Crandon stated that Mr Cox did not like Item 9 in his initial report. Mr Crandon agreed that he was aware that Mr Cox was going to use the amended report in his dispute with the Mosses, or people acting on their behalf. Mr Crandon agreed that the amended letter withheld information but he pointed out that Mr Cox was aware of the position from the initial letter. The report, as amended, was to be used to repel the Mosses' criticisms and not reveal the position as to the trusses. 290 Mr Crandon stated that Mr Cox told him that he would fix up the items, the subject of the omissions, but those items had not been fixed up at the time he issued the amended report (Exhibit BC). The stated purpose of the report was to examine and assess any structural defects evident in the residence still under construction. That was not its true purpose. 291 In re-examination Mr Crandon sought to explain the changes to his initial letter of 10 August 2000. As to item 4 dealing with the front and rear balconies, Mr Cox had explained that the balconies were still under construction and eventually would evolve "into something that will comply and that the work was being completed under the Building Code of Australia (BCA), which has some degree of variation, Hardies (the manufacturer) taking a conservative point of view in construction. The BCA, which is the ultimate standard has an alternative method of construction, using different sizes of timber and different centres in support. Mr Crandon said that that was why he asked for the alternative method to be adopted. In the light of those considerations he deleted Item 4 and recast it. Mr Crandon said that if the work did conform with the BCA he would certify the work. In mid 2002 the balconies were rebuilt with the manufacturer's specification more in mind. 292 As to Item 9 and the trusses, Mr Crandon said that Mr Cox assured him he was going to take the matter up with the truss supplier. As the supplier and manufacturer were aware of the air conditioning ducting going above the truss and of being a weight factor coming down it was part of their design and they should correct it. Mr Crandon said that as far as he understood, the necessary work was done by the truss manufacturer to improve the structural adequacy of the trusses and take the deflection out. Mr Crandon said that he had not seen if the work had been done. He had made an assumption. 293 Mr Crandon stated that he did not intend to mislead anyone or provide CHNR with the ability to mislead anyone. Mr Crandon realised the effect of what he was doing and his assertion is not easy to accept. I do not accept it. 294 Mr Crandon agreed that he had known Mr Cox for many years, that he and Mr Cox had been directors of a company involved in the plywood industry, that, to use the vernacular, he and Mr Cox were partners in a joint venture in the plywood industry. The venture did not proceed. Mr Crandon was the regular structural engineer whom Mr Cox used in the second half of the 1990s on houses to be constructed by him (including his companies). Mr Cox was a good client and Mr Crandon did not want to lose him. 295 Mr Cox was a shrewd operator. He would not have wished to give the Mosses any material substantiating that there were defects of consequence with the building works. Mr Crandon was prepared to adjust what he wrote to fit in with the wishes of Mr Cox, even when he was aware that Mr Cox was going to use the report to show the Mosses and their advisers in an effort to refute the complaints which had been made. Mr Crandon was aware that Messrs Cox and Moss were engaged in a dispute about faulty workmanship and that was the reason he was asked to carry out the inspection on 8 August 2000. 296 Mr Crandon agreed that he knew that Mr Cox would use the letter of 10 August 2000 to advance his interests in the dispute, but then denied that he knew that Mr Cox would use the information set out in that letter to advance his side of the dispute with Mr Moss (T569 & 570). Mr Crandon seemed uncomfortable as he tried to resile from what he had previously said as to his awareness of the use to which Mr Cox would put his letter. 297 While evidence was adduced that Mr Crandon had a good reputation in construction circles, he was over anxious to please Mr Cox and comply with his wishes. He was prepared to couch his reports in terms approved by Mr Cox and omit material which was potentially damaging to CHNR, Mr Cox and their interests. I do not regard Mr Crandon as discharging the role of an independent engineer. His assessments have to be approached with considerable reservation. 298 Mr Crandon could not recall if there were any other items of defective workmanship that he noted on his inspection of 8 August 2000. 299 Mr Crandon was cross-examined as to statements he allegedly made to Mr Lee Miller of Planning NSW during a telephone conversation in August 2002 in the course of Mr Miller's investigation of a second complaint by the Mosses against Mr Nowlan. Mr Crandon had no recollection of making those statements. He did not deny that he had made them. He seemed to accept that he had faxed documents to Mr Miller. The alleged statements included that the only problem evident in the slab and footings was a "… very slight crack … not structural … due to shrinkage … following two years exposure." Mr Crandon said that he was referring to a crack in the floor slab of the garage. Mr Miller has made a précis of what he believed Mr Crandon said. 300 Mr Miller has recorded Mr Crandon as claiming: "There is a widespread 'scam' operating on the far North Coast that involved land owners engaging builders to construct homes, then, when the major structural components of the home are completed, finding fault with the home and sacking the builder. The owners then lodge an insurance claim and complete the work themselves." 301 From Mr Miller's report it seems that this was one of the comments made by Mr Crandon when discussing the Moss' complaint against Mr Nowlan. Mr Crandon denied that he was trying to smear Mr Moss. Mr Crandon had been concerned for some time and had made statements to the same effect to the local Member of Parliament and to officers of the Department of Fair Trading. Mr Crandon said that he had witnessed three or four builders and concreters being taken down, not being paid and default programs being set up against them. 302 Mr Crandon rejected the suggestion that he was, in the context, implying that Mr Moss was engaging in a scam but the remarks of Mr Crandon may have had that effect. Mr Crandon thought that the mention of the scam possibly came at the end of his discussion with Mr Miller and that he (Crandon), raised the scam to bring it to Mr Miller's knowledge. Complaints should be evaluated in the light of the knowledge of scams existing. It was a matter to be taken into account. 303 There was no evidence that the Mosses were engaging in a scam. Many of their complaints were subsequently found to be substantiated. 304 Mr Crandon said that he noticed the deformation of the front patio slab consequent upon the deformation of the corrugated iron used as formwork. Mr Crandon agreed that visually it is not possible to determine whether there is steel in the slab. He thought that there was a good chance that the steel remained in situ as per design. Without either a core sample or an electronic device revealing the steel levels one could not be sure of the extent and location of the steel. Mr Crandon said that as the slab was only 2½ metres square, extensive investigation was not warranted. It was structurally adequate, has not deflected and was draining the surface adequately. It should not be regarded as an issue. Mr Harley 305 Mr B A Harley has been a licensed builder since April 1999 and is now in partnership with Mr Chaseling. As at February 2005 he was 28 years old and had had in excess of 12 years experience in construction and has completed Certificate 4 in residential construction. He had done a carpentry and joinery apprenticeship. He commenced with CHNR in January 1999 as a building supervisor. Mr Harley acted as the supervisor of the Mosses' job for about a week in around April 2000 and from about late May to 30 June 2000. When he replaced Mr Creighton in late May most of the frames were up and some of the roof trusses were being installed. The Mosses were concerned with the time the job was taking and CHNR were trying to move the job along. The Mosses raised a number of issues including the method of construction of the rear deck and placement of windows in the lower section of the house. They had to be lifted approximately 300mm. This had not been noted on the plans but had been discussed with management. The Mosses also raised the garage door. The Mosses and Mr Harley discussed how various parts of the job would be finished. 306 Mr Harley said that he asked Mr Moss to cease building a stair structure which appeared to be linking up with the rear deck. Mr Moss said that he would not do any more work, but he continued, pouring the concrete stairs. Mr Harley was present when Mr Nowlan did a frame and truss inspection and went around with him, noting the matters Mr Nowlan believed needed attention. He wanted to make another inspection before sheeting could start. 307 Mr Harley said that around June 2002, when the "court order was lifted from the Moss job" they went out to rectify some of the problems. Before the rectification work he went through the job with Messrs McDonald and Hollyoak. He was not sure of the time frame, but remembered that they were working off a Scott Schedule. An issue was raised and discussed and generally they determined upon a solution. Mr Harley believed that they wrote down what had to happen to fix the problem. CH endeavoured to do the work specified when allowed back onto the site. CH had several carpenters on the job who were rectifying issues as Messrs McDonald and Hollyoak discussed them. They were there over a couple of days. 308 Mr Harley thought that CH was on the job for "at least four to six weeks" in mid 2002. Mr Harley could not recall being present at any other meetings with Mr McDonald or Mr Hollyoak. Mr Hollyoak never contacted him and required any further work. He believed that when CH left the job in 2002 everyone had been satisfied. 309 Mr Harley instanced an occasion on which Mr Zakos was present at the site and they had to put a hose on the windows to check that all the flashing was there. CH agreed to knock out some bricks and made sure "everything was there." Mr Harley said that about three bricks were knocked out and a photograph of the flashing was taken. He was pretty sure that the five photographs were taken when CH did the rectification work in 2002. While the photographs related to flashings to the decks, it was difficult to identify the deck involved (off the main bedroom or off the family room). The flashing, which was black was hard to see on the photographs, but Mr Harley indicated what he believed was the flashing. 310 Mr Harley agreed that photographs 1 and 2 revealed clear evidence of water marks on the floor boards. Mr Harley believed that the flashing was put in during the course of 2002. Flashing should be put in when putting in a sliding door. It is basic good practice to put in the flashing as the house is being first built. Mr Harley's evidence as to the Mosses' house was confined and he appeared to have a limited recollection of what had occurred. He was not on the project for very long. Mr F R Cox 311 Mr F R Cox took particular exception to the program featuring fairly prominently the back stairs and planter boxes which CHNR did not build. The work so featured was badly done and the program gave the impression that this was the work of CHNR. These complaints are justified. At the time of the program Mr Nowlan's direction to stop work had not been rescinded and the Mosses' suspension had not been lifted. 312 Mr Cox stated that Mr Chaseling, a senior employee of CHNR was primarily responsible for managing the Mosses' job. He was at Alstonville, while Mr Cox spent most weekdays in Sydney. Mr Chaseling was familiar with the District Court proceedings involving the Mosses but I have no doubt that he discussed these fully with Mr Cox. Mr Cox said that he had been to the Mosses' site at Astonville on three/four occasions. 313 Mr Cox, in answer to Mr Moss' assertion during the program, that the floor had been put down incorrectly, that it was buckled and had pushed the wall out of alignment, said that he felt pretty bad because that allegation was a fabrication. Mr Cox said that he had visited the house, the flooring was secret nailed and that it was virtually impossible for a floor to push as high as in the area in question. Mr Cox said that there were particular marks under the boards and it appeared that somebody had had a piece of timber and knocked the floorboards up. There is no evidence that the Mosses or anyone on their behalf did this. That is improbable. It is hard to envisage anyone doing this. It was not suggested to Mr Monteith that this was a possibility. He had a different explanation. I do not accept Mr Cox's evidence on this point. He has misinterpreted what happened. Mr Cox said that there was at least a 10 to 15mm gap for expansion all the way around the floor. As earlier noted Mr Monteith did not regard such a gap as sufficient in the present case. 314 Mr Cox rejected Mr Moss' allegation that CHNR totally ignored the Mosses. He did not deal with the Mosses as to matters of detail, Mr Chaseling did. Mr Cox said that most, if not all, the matters raised, so far as he knew, had been attended to or Mr Chaseling had them in hand. 315 As to Mr Moss' assertion that at the last minute CHNR put engaged piers in which did nothing to strengthen the wall, Mr Cox accepted that there were no ties in the engaged piers. Mr Cox said that they would have been knocked down and rebuilt with ties in them prior to the end construction of the building. I am not persuaded that this would have happened. 316 As to Mr Fordham's comment that the Mosses had been waiting for two years to get into their place, and that he had had a look at it and it was a disgrace, Mr Cox thought that the point was that CHNR could not go back onto the site because of the stop work notice. Mr Cox did not regard himself or CHNR as in any way responsible for the delay and said that CHNR had made it clear that it would resume work at any date the Mosses wanted. 317 Mr Cox agreed that the corrugated iron formwork supporting the sub floor under the front landing had been deflected downwards from its original position by almost 200mm. Those sheets of corrugated iron were insufficient to support the weight of the concrete poured on them. A pier has subsequently been put under it. Mr Cox had nothing to do with putting in the pier. He did not have a look at the placement of the pier. Mr Chaseling knew about this item. Mr Cox said that there would have been a prop under the corrugated iron and the prop would have slipped. That supposition is doubtful. The defect could have been easily remedied by putting a pier under the corrugated iron or replacing the slab. 318 Mr Cox said that he did not become aware of the problem with the front landing slab until after the stop work order had issued. Mr Cox denied that the order (or notice) was a put-up job arranged between him and Mr Nowlan. Mr Cox said that he never objected to fixing anything on the Mosses' house. Mr Cox accepted that this defect had to be fixed. He would not classify it as a serious defect. He disagreed that the pier was just as defective as the original work. The pier would take all the load on the centre of the patio. 319 Mr Cox disagreed that a substantial number of the walls of the Mosses' house were out of plumb and twisted. Mr Cox said that the walls were originally well within the acceptable standards. 320 As to the brickwork for the walls, Mr Cox agreed that the relevant Australian Standard expressly stated that the corners are not to be done by toothing in the bricks for the right angle wall. Mr Cox disagreed that insufficient scaffolding had been supplied on the site and that this was why the walls had been built incorrectly. 321 Mr Cox said that he did not know and could not say whether, because of the lack of sufficient scaffolding the bricklayers built the front wall of the house to the corner and then toothed in the bricks going down the side. Mr Cox said that CHNR had to rely on the contract bricklayers who had their own ways of laying bricks. He said that they try to make the bricklayers lay bricks in the way they are supposed to be laid and that generally speaking they never had a problem with the bricklayers on the Mosses' job. Mr Cox said that he was not familiar with the details. He did not know how the bricklayers laid the bricks. 322 Mr Cox was referred to photograph 37 attached to Mr Monteith's report and the caption "irregular brickwork in external corner." Mr Cox said that the wall was slightly irregular. He agreed that, depending on the angle of the camera, the brickwork looked terrible. Mr Cox did not agree that this was necessarily an item of shoddy work. He would have to speak to the bricklayer and make an on site inspection. 323 Mr Cox agreed that originally the Mosses wanted unpainted and unbagged bricks. The brick they described was specified in the contract. Those bricks were discontinued between the time of the contract and when CHNR attempted to order them. CHNR did not order bricks until such time as they needed them. Negotiations proceeded between Mr Chaseling and the Mosses. Mr Cox said that he was there on and off occasionally while the discussions took place. 324 Mr Cox said that the Mosses ordered some PGH bricks, but when they were delivered Mrs Moss did not like them as they had a concave face. Mrs Moss, having seen a display with bricks painted in a finish called Tuffcoat, asked if it would be possible to do the house at the same cost if they could get the bricks at a commons price. PGH supplied the bricks at a commons price and they were to be painted. 325 Mr Cox could not say from his recollection whether any of the external walls had a bow in them. If there was a bow, the brick or bricks could have been toothed out and fixed. 326 Mr Cox was referred to photographs 39 and 40 attached to Mr Monteith's report and agreed that the wall appeared to bow inwards over a considerable length. Mr Cox said that it depended on the extent of the bowing whether it would be rectified. CHNR had not reached the point of going around the whole house to see what needed to be rectified. CHNR was "trying to get the internal of the house up to scratch." 327 On the joint experts' inspection during the reference to Mr Zakos, Mr McDonald, on behalf of CHNR, conceded it to be a defect. 328 Mr Cox agreed that photographs 41 and 42 attached to the Monteith report of the south side of the entry showed a twist in the wall. Mr Cox said that Mr Chaseling told him about this. Mr Cox agreed that he would not accept this building work. He added that it was to be pulled down, toothed out and re-bricked, that is, the whole corner and the return. That had not occurred. Nor had CHNR pointed the house up ready to paint. The perp ends of the house would have been filled before the house was painted. 329 Mr Cox did not agree with the suggestion that there were excessive overhangs in the face alignment of bricks, especially at corners. He said that two or three millimetres in brickwork on a concave brick like the one used was not unusual and it was not a defect. 330 In answer to the criticism in the report of Mr Hollyoak and that of Ballina Shire Council, that there were no articulation joints, Mr Cox insisted that control joints had been put in. A control joint is a vertical break in the brick which stops the brick from growing. It reduces the expansion of the brick and allowed slight movement when there is very reactive soil. An articulation joint also allows for brick expansion, subsidence and earth movement. Mr Cox said that the control joints were put in the corners out of sight and that he followed the engineering advice he had received as to what should be done on a painted house. 331 Mr Cox was aware that Mr McDonald at the experts' conclave accepted that the vertical articulation joints did not have a sufficient clearance. Mr Cox in response said that that was so if the joint was classified as an articulation joint, but if they were classified as control joints, as they should be, there was a sufficient clearance. Mr Cox regarded Mr McDonald as competent, but thought his view was incorrect. Mr Cox accepted that the referee's report proceeded on the basis that Item 16 in the Scott Schedule, namely, "None of the articulation joints have a sufficient gap nor are sealed" was defective work. Mr Cox indicated that he was not prepared to go against the engineering advice he had received. 332 I did not find Mr Cox's evidence on this point persuasive. 333 Mr Cox stated that nothing had been done since the referee's report to provide articulation joints of adequate clearance. He explained: "… we were getting the house up to the pre-sheet stage, the outside doesn't get done until we get back to that …" 334 CHNR had expected to carry the contract on and return to complete the outside work. In view of Mr Cox's evidence it is not easy to envisage CHNR installing articulation joints of adequate clearance. 335 As to the column shown in photograph 38 attached to Mr Monteith's report, Mr Cox agreed that it was a Hardie's column. It was originally a hollow shell of a fibro-like material. He did not agree that it was usual to fill such columns with cement. CHNR normally put a "space" up the centre and holding down bolts to hold them. The word "space" is probably a transcription error. It may be that the word "post" or the words "steel post" were intended. He disagreed that if you were going to fill the column with concrete necessarily the column should be vibrated as vibration causes the columns to crack after a period of time. Vibrating was said to stop white ants getting up the column. Mr Cox said that to prevent the white ants gaining access to the woodwork above the columns he was going to use a cordon collar, which was far superior to the vibration. 336 Mr Cox did not know whether the columns shown in photograph 36 attached to Mr Monteith's report were filled with concrete. If those columns were filled with concrete and sitting on wood and there were columns below, he (Cox) would have to consult the engineer about that. 337 He did not agree that if a concrete column were placed on top of a timber frame support, that would necessarily be unacceptable. It would depend on the beam underneath and its load capacity and the weight of the concrete column. Mr Cox said that if there was a laminated beam a concrete column could be supported by a timber frame support. He could not say whether there were any laminated beams below the column in question. 338 Mr Cox said that he was not aware that the columns were sitting on top of timber. He would assume the bottom columns were filled with concrete. He did not know whether the top columns were filled with concrete. 339 Mr Cox was not prepared to concede that if the top columns were filled with concrete and sitting on a timber base that would be a defect. It depended on what the engineer said and especially what his calculations revealed. 340 Mr Cox agreed that photograph 38 attached to Mr Monteith's report showed, as to the two columns (one being on the top and one on the bottom) they sloped in different directions, one sloping upwards and away from the house and the other sloping in towards the house. Mr Cox commented that they were quite easily straightened and that when CHNR built houses they put props under them and put posts in until they are all but painted. 341 Mr Cox, after being referred to photograph 35 attached to Mr Monteith's report agreed that the roof line was markedly off centre. He said that the fascia gutter was realigned to get everything square on the post in the corner. Mr Cox agreed that as the job was left in this area it looked appalling. Mr Cox said that on the assumption that the contract would be followed, CHNR were going to return and that the work in question would be rectified with the rest of the work as the building progressed. Mr Monteith thought that the error which had been made demonstrated poor workmanship. I agree. I am not persuaded that this defect could be readily rectified nor that it would have been adequately rectified. 342 Mr Cox was taken to the various letters of complaint written by the Mosses in April, May and June 2000. As to the delay Mr Cox said that a completion date cannot be guaranteed when the builder works on a sub-contract system and there is a substantial amount of wet weather. Trades get held up on other jobs. Mr Cox said that he explained all this to the Mosses in the beginning. CHNR would try and get as much done as possible before GST came into force on 1 July 2000. 343 On the photographs attached to Mr Monteith's report the brickwork could be described as a mess and poor. Mr Cox agreed, but said that the house was still under construction and had to be completed. 344 Mr Cox could not recall the south facing wall in the dining room and whether there was a bulge in it. Mr Cox said that if there was a bulge in the wall and he had seen it, he would have had it rectified. Mr Cox explained that at the date of receipt of the letter of complaint of 7 June 2000 he was off work. He had an accident at Easter followed by an operation on his eyes. He almost lost his eyesight and did not attend the site for some time. That was when Mr Chaseling took over. During April, May, June and into July Mr Cox experienced difficulty. 345 In their letter of complaint of 7 June 2000 the Mosses recounted that they had requested an estimated completion date (of Mr Chaseling) and received the reply "When it is finished." Mr Cox said that he had not appreciated that this had been said. He regarded that as not being good business and said that if he had been aware of this he would have personally apologised to the Mosses and taken disciplinary action. 346 Mr Cox said that prior to being shown the Mosses' letter of complaint of 13 June 2000 in the witness box he had not seen it. The letter dealt with shortcomings in the brickwork. Mr Cox said that he did not know of the lack of response by CHNR to that letter. 347 Mr Cox said that on 27June 2000 he drove down to the site. He still had difficulty with his eyesight. He was not aware that there was to be an inspection. 348 Mr Nowlan asked him who was constructing the set of steps, flower boxes and the like at the back of the house. Mr Cox said that he did not discuss the quality of the work, but said it was not in CHNR's contract and should not be taking place, as it was not approved. Mr Nowlan had remarked that he wanted an engineer's certificate for that work and that it should be approved by Council. Mr Cox said that he did not see Mr Nowlan's Inspection Report, or his stop work letter bearing date 6 July 2000 (Exh T) before he entered the witness box. Mr Cox said that he was told about the last mentioned letter. Mr Cox had told his counsel the day before that he had seen the letter before. Mr Cox's attempt to extricate himself from the apparently contradictory evidence was not persuasive (T233-235). 349 Mr Cox attempted to extricate himself from his difficulties by saying that Mr Nowlan's order came after that of Wayne Moss, "Mr Moss' came apparently before this [Mr Nowlan's stopwork order]. It came the afternoon of the inspection apparently." The Notice of Suspension by the Mosses (by their solicitors) was served on 30 June 2000. 350 Mr Cox said that the letter of 27 July from CHNR's solicitors to the Mosses' solicitors was sent on Mr Chaseling's instructions and that he had virtually nothing to do with the matters on that particular job. That last mentioned statement is not correct. Mr Cox said, on being pressed that the letter had probably been discussed with him by Mr Chaseling. The letter was an important one. It asserted that the Mosses had wrongfully repudiated the contract, that the works remained suspended pursuant to the notice issued by the Mosses and that no work should be undertaken on the site until the matter was resolved. The letter asserted that $64,402.25 was due and payable and that unless payment of the full amount was made within 7 days recovery proceedings would be instituted. If that became necessary interest would be claimed. The letter advised that a caveat was in the course of being lodged against the Mosses' title. I have no doubt that Mr Cox fully discussed that letter with Mr Chaseling before it was sent and carefully considered what was proposed. 351 Mr Cox said that he could not recall the terms of the conversation he had with Mr Chaseling. Mr Cox imagined somewhere along the line Mr Chaseling would have told him that he was dealing with the solicitors and they were seeking to recover some money. That evidence is difficult to accept as it understates Mr Cox's role. Mr Cox had recovered substantially from his eyesight difficulties. He was a managing director who was very much in control of what happened in CHNR. While Mr Chaseling probably dealt with CHNR's solicitors Mr Cox was fully aware of what was being done and authorised it. 352 Mr Cox maintained that Exhibit Q2, being the Progress Payment Schedule, did not form part of the contract and that it was just a guide. That was an untenable proposition. Mr Cox endeavoured to justify the demand for payment not on the basis that the works had reached Stage 3, but on the alternative basis that the amount of work carried out exceeded in value the sum sought. Mr Cox endeavoured to attribute responsibility for the latter to Mr Chaseling, and his solicitors. Mr Cox said that he was not aware that some years later CHNR attempted to enforce a claim for interest on the progress payment of $64,000. That was done through his manager (Mr Chaseling). Mr Cox said that he was not aware that CHNR attempted to recover such interest when it had been determined by the District Court that the progress payment sought was not payable. Mr Cox said that he tried not to get involved in paperwork or legal matters. I do not accept that Mr Cox was unaware that a claim for interest was being pressed. 353 Mr Cox said that at the stage of the letter of 27 July 2000 he was not aware of CHNR's intention to lodge a caveat. Mr Cox said that basically he became aware of that letter when counsel for the defendants gave him the letter. Mr Cox amended that answer by saying that he spoke to Mr Chaseling after 27 July 2000, but he could not say when, and became aware of the intention to lodge a caveat. Mr Cox further said, "The caveat would have been discussed somewhere over that period but when I can't recall." 354 Mr Cox agreed that he completed and signed the declaration which supported the caveat. Mr Cox said that he relied on CHNR's solicitors to check the contents of the statutory declaration and ensure that they were correct. Mr Chaseling had organised the matter of the caveat. He would have supplied the information to the solicitors. Mr Cox agreed that when he signed the statutory declaration he knew of the intention to lodge a caveat over the Mosses' land. He acted on the advice of Mr Chaseling and the solicitors that this step should be taken. It was not explained to him (Mr Cox) what it was hoped to achieve. I do not believe that Mr Cox did not appreciate the effect of the caveat. 355 Mr Cox agreed that it was possible that lodging the caveat was part of the attempt to get the Mosses to pay progress payment 3, but he did not recall doing it for that reason. Mr Cox said that in his opinion the works were so close to being ready that it was not funny. He denied that it was an attempt to bully and intimidate but I think it was. The works were not ready as all those at CHNR including Mr Cox knew. It was part of an application of pressure on the Mosses to pay the monies demanded. Mr Cox claimed not to be aware that the Home Building Act forbade building companies putting caveats on land on which they were building, unless there was a Court order in the building company's favour. 356 Mr Cox said that he was not involved in the commencement and conduct of District Court proceedings. He said that Mr Chaseling told him that CHNR was going to commence proceedings against the Mosses, but he could not recall exactly when. Mr Cox disagreed that for about two years CHNR persisted with a claim against the Mosses that it knew had no basis. The claim in fact had no basis and ultimately CHNR agreed to it being dismissed. That was after the referee had found that the Progress Payment Schedule formed part of the Agreement and that the works had not reached Stage 3. At the hearing before the referee there was evidence from the Mosses pointing to the Schedule forming part of the contract of 18 November 1999 and no evidence to the contrary. It had been tolerably clear since late June 2000 that Stage 3 had not been reached and the moneys payable when Stage 3 was reached were not due and payable as alleged. Mr Cox relied on the Mosses halting the job when there was relatively little work to be done to reach Stage 3. Mr Cox said that Mr Chaseling had the main running of the District Court proceedings but he (Cox) was kept fully informed as to what was proposed and what was happening. 357 Mr Cox said that in 2000 he did not know that private certifiers had no power to stop jobs and he obtained no advice on this point. He had no discussions with Mr Nowlan prior to the issue of the stopwork order that he (Cox) could recall. Mr Cox said that it was possible that when he was on the site he asked Mr Nowlan to have a look at the structure built by Mr Moss (T254). Mr Cox claimed that he could not recall what was said. He continued: "There was a heap of people on the site and the Inspector was walking around looking and I know he had a look at the back steps and I told him we didn't build them and I really didn't think a lot of the handiwork and I would probably be responsible for them and I didn't think there was any engineering for them and realistically speaking Mr Moss shouldn't have been on the site." Mr Cox said that he was worried about the structure (built by Mr Moss), that was it. 358 It was part of the first defendant's case that CHNR and Mr Cox were conducting a personal vendetta against Mr Moss. The vendetta alleged consisted in part of causing their solicitors to write to the Principal of Ballina High School, requesting that action be taken against Mr Moss by way of counselling and written undertakings from the Principal and Mr Moss. The letter of 26 February 2002 from the solicitors was a firm one, but the conduct by Mr Moss as alleged by Mr Daniel McPhie warranted a firm letter. Mr McPhie's evidence cannot be ignored. Forwarding a copy of that letter to the District Superintendent of Schools was harsh. It appeared to have been forwarded by FAX before the Principal of the High School had an opportunity to deal with the matter. The letter to the Principal was also sent by FAX. 359 By letter of 27 February 2002 the solicitors sent a further letter by FAX to the Principal, complaining that on 26 February Mr Moss had approached a student and made further comments in relation to the commercial dispute between CHNR and Mr Moss. 360 Mr Cox was aware of what Mr Moss was alleged to have done and Mr Chaseling told him about what they were thinking of doing. Mr Cox said he was in Sydney and left it to Mr Chaseling and the solicitors to take action. He was not aware of the terms of the letters. Mr Cox said that there was no connection between his knowledge of the program the first defendant was making about the Mosses, and the sending of those letters. 361 Mr Chaseling was also aware of the program being made. By that stage relations between Messrs Cox, Chaseling and CHNR on the one hand and the Mosses on the other were hostile. The tone of the letter of 26 February 2002 was abrasive. 362 The first defendant also relied on the plaintiff's issuing the Statement of Claim on 11 March 2002 in these proceedings, naming Mr Moss as the fourth defendant and his wife as the fifth defendant. Mr Cox said that he did not realise that the Mosses were being sued for defamation. He believed that in the beginning the solicitors put everybody in and then when he looked at the claim he took the Mosses out. 363 Mr Cox agreed that on p 6 of the initial Statement of Claim under the heading "Particulars of Aggravation" it was stated that Mr Moss told his students on 20 February 2002 that the plaintiff would be the subject of a program on A Current Affair. Mr Cox said that there was some delay because the student's father originally would not let him say anything. 364 Mr Cox was also cross-examined about the terms of a letter sent by his solicitors to McLachlan Chilton on 21 September 2004. That letter enclosed copies of many of the documents relating to the District Court proceedings between CHNR and the Mosses, and coloured photographs of "Mr Moss' unauthorised and unlicensed building works constructed on the subject site". The letter asserted that despite repeated requests over four years Mr Moss had refused to remove these works and that the solicitors were instructed that the house could not be completed until those works were demolished. There was no reference to the solution proposed by Mr Weir of Ballina Shire Council and Mr Moss' action in separating the steps from the house. The letter contained the sentence "We are instructed that Mr Moss may be liable for prosecution under sections 12 and 13 of that Act [Home Building Act 1989] for his unauthorised and defective works on the site." 365 Mr Cox confirmed that Mr Chaseling left CHNR shortly after the Section 7A trial in February 2003 and that after that, in the main, he was the person handling matters on behalf of CHNR with its solicitor. 366 Mr Cox said that he had Mr Chaseling return part-time and possibly the solicitor's letter was organised by Mr Chaseling, who knew a lot about this matter. Mr Cox said that he would have to ask the solicitor exactly what was meant by saying that Mr Moss was liable for prosecution for crimes. Mr Cox could not recall who gave the solicitor the instructions previously quoted. Mr Cox said that he was unaware that the letter of 21 September 2004 had been sent but if the works were still there (at the time the letter was sent) the allegation was quite reasonable. I doubted whether this evidence as to his lack of awareness was correct. 367 Mr Cox was referred to two letters written by CHNR's solicitor to the Mosses' solicitors dated 9 and 31 August 2000. Mr Cox accepted that the last paragraph of the letter dated 31 August advised that because of the Mosses' failure to pay the progress payment (demanded earlier) the work was suspended wholly until your clients' default is remedied. However, he said, "We didn't suspend the work." Mr Cox said, incorrectly, that he had no knowledge of either of the letters of 9 and 31 August 2000. He said he tended to stay out of the legal side of the Mosses' matter. 368 Mr Cox said that he was not aware of the details of the District Court proceedings. Possibly Mr Chaseling gave instructions to CHNR's solicitors. Mr Cox said that he was not aware that there was an issue in the District Court proceedings that the Mosses' house was defectively built. That is incorrect. Mr Cox insisted that the house was incomplete and "had some minor defects apparently." I interpolate that many of the defects could not be regarded as minor. 369 Mr Cox said that occasionally Mr Chaseling kept him up to date with what was happening in the District Court proceedings. He agreed that Mr Chaseling told him about the result of the referee's report. Mr Cox said that he was not aware of the referee's finding "that due to the defects that existed as at June 2000 the extent of which is identified in Exhibit D4, the work had not reached Stage 3 of Schedule B and the progress payment schedule contained in the contract." That is improbable. Mr Chaseling told him that work had to be done and that the rectification work had been agreed. Mr Cox said that Mr Chaseling was instructed to have that work done. That probably took place after the experts' conclave in June 2000. The finding just quoted was contained in the referee's report of 26 November 2002. 370 Mr Cox was aware that as a result of the experts conclave CHNR was allowed back onto the property to bring the house to pre-sheet stage (Stage 3). He stated that this did not include any of the outside work. 371 Mr Cox agreed that CHNR did no work on the Mosses' property from June 2000 until June 2002. He explained that the order was in force during this period. CHNR was waiting for an engineer's certificate (in respect of Mr Moss' work) and for the Mosses to lift their stop work (suspension) notice. CHNR returned to the site in June 2002 basically because they were ordered to do so. 372 Mr Cox agreed that once the works reached Stage 3 CHNR stopped work and has never been back to the site since. Mr Cox said that Mr Chaseling told him of the letter of 11 November 2002 from the Mosses' solicitor to CHNR's solicitors enclosing a cheque for $62,642-odd. It dealt with a number of other matters including that CHNR return to the site and recommence works immediately. 373 Mr Cox said that CHNR was staying off the site because the contract - "states that to resume work … the house must be re priced … then the work can be accepted by Mr Moss and the work would resume and be completed …" 374 The truthfulness of this answer was challenged. I doubt if CHNR ever intended to return to this site. The Mosses and the construction of their house had been a continuing thorn in its side. There was likely to be a continuing series of arguments about the terms on which CHNR would return to the site, and no resolution. 375 Mr Cox said that he was not aware of the letter of 15 November 2002 sent by CHNR to the Mosses. Apart from acknowledging the payment of $62,642 the letter asserted that an amount of $1760 was outstanding, claimed interest of $29,093 and stated that upon payment of these amounts CHNR would be in a position to proceed in accordance with the Building Agreement. The Mosses were advised to contact Mr Nowlan to resolve outstanding matters and that his cease work notice was still in effect. CHNR stated that it would not agree to the Mosses occupying the shed. 376 This letter does not mention re-pricing. Mr Cox said that he did not discuss the contents of the letter with Mr Chaseling before it was sent and that he was not fully aware of its contents. Mr Cox said that he had never charged anyone interest in his life and that he would not have charged the Mosses with interest. Mr Cox said that he could understand Mr Chaseling "looking for a certification which would be fair enough for Mr Nowlan and where he will not agree to the shed [being occupied by the Mosses]. So far as I knew they could occupy it." Mr Cox said that the non-agreement to occupying the shed was "possibly because of the wording in the contract under the site and having the insurance on it and under the Occupational Health and Workcover." I do not accept that Mr Cox and Mr Chaseling did not discuss fully the terms of the letter of 15 November 2002. The letter would not have been sent without Mr Cox's knowledge and approval. Mr Cox exercised full and detailed control over the actions and operations of his companies. 377 Mr Cox agreed that CHNR had not done any work on the site since September 2002. The Mosses were to his knowledge living in rented premises and the shed was about 100 metres from the house. Mr Cox said that if CHNR had given written permission for the Mosses to shift into the shed he would have been in breach of the law (Workcover and Occupational Safety and Welfare Act). He said that CHNR was now running fences around all building sites. Mr Cox said that it did not matter whether it was a hundred acre block. Nor did it matter if no building work was going on as he still had insurance on it. 378 Mr Cox agreed that it would appear to be correct that if the Stage 3 progress payment was not payable the interest was not payable. 379 Mr Cox was asked to explain why Mr Nowlan's order did not prevent CHNR going back on to the site and bringing the works up to Stage 3 and so collect the Progress Payment of $62,642 and yet prevented CHNR proceeding with the other work on the site. Mr Cox said that to carry out the external work which had to be done by CHNR, it needed "a certification to clear up that point (presumably as to Mr Moss' work) and also to get Mr Moss to give the OK to go back and complete the house under the building agreement." 380 Mr Cox denied that as at 15 November 2002 CHNR and he had no intention of doing any further work on the Mosses' house. Mr Cox said that if Mr Moss had produced an engineer's certification and had agreed to reprice the house he would have been more than happy to complete the house, bringing it up to the stage where it was excellent. I do not accept this evidence of Mr Cox. He and Mr Chaseling were thoroughly fed up with the Mosses, whom they regarded as too particular and unreasonable. Re-pricing would probably have seen an increased price and a demand for further moneys and would not have been agreed. 381 Mr Cox said that he was not aware that on 19 December 2002 CHNR demanded that the Mosses pay $118,172. If this be so, it seems that he was not aware that of that sum $77,070 was a claim for CHNR's costs of the District Court proceedings. CHNR had previously been ordered to pay the Mosses' costs of those proceedings. Mr Cox said that he had never previously seen the Tax Invoice. The Tax Invoice also claimed the cost of overdraft interest at the rate of 13.5 per cent per annum to 6 June 2002, that is for 706 days. Mr Cox said that he could not comment on the claims made in the document. I do not accept that Mr Cox was not aware of the claims that were being made by CHNR. Mr Chaseling, who reported to Mr Cox would have ensured that Mr Cox knew what was happening. This was a relatively small company in terms of staff numbers. 382 Mr Cox said that he was not aware of a letter dated 17 February 2003 in which CHNR's solicitors threatened to take the Mosses to the Consumer Trading and Tenancy Tribunal. This was in regard to "the defective and unauthorised works that your client has admitted to undertaking at the site in breach of the Building Agreement." I do not believe that that letter was sent without Mr Cox's knowledge and approval, especially as Mr Chaseling was leaving. 383 Mr Cox agreed that the provision of termite protection in building houses was important. There were a number of ways in which that protection could be provided. What mattered was that when the building was complete it was termite proofed. Any shortcomings or mistakes or ineffective termite proofing would be rectified. Mr Cox was not prepared merely by looking at the photographs to agree that some of the termite proofing was inadequate. He said that he would need to view the alleged deficiencies. He insisted that where there were deficiencies they would have been rectified. 384 Items 20-25 on the Draft Schedule attached to the referee's report deal with deficiencies in termite and ant protection. It has been noted that the experts had agreed that the work was defective and remedial work is specified. Item 24 was included in Item 21. Mr Cox agreed that the defects mentioned should be avoided as the house is constructed. 385 Mr Cox pointed out that it was not necessary for the foreman to be on the job every day. The work continues and the rectification work is done towards the end of the building work. Sometimes earlier work is damaged in the course of subsequent work. 386 During Mr Cox's cross-examination as to the termite protection work senior counsel for the plaintiff stated that the referee's report was not disputed. Mr Cox insisted that when the house was complete the termite protection work would have complied with the Australian Standard. 387 Mr Cox was taken to pp7-8 of the report of Mr Larry James, prepared for Home Owners Warranty and items C, D, E and F dealing with termite shielding. Mr James has noted "The builder has elected to engage the services of a licensed termite control company." Mr Cox was unable to say whether CHNR engaged the services of such a company to assess the value of the termite control barriers in the Mosses' property. Mr Cox was unaware whether the defects were ever rectified. He could not answer why the defects were not rectified while they were on site in June, July and August 2002. By that stage much, if not most, of the timber was in position. 388 Mr Cox was unable to comment on the contention that two trusses had been installed incorrectly, but he doubted that they would have been left in that state. There was no deflection in the roof. He said that it was a little hard to remember where the trusses in question were. 389 Mr Cox did not agree that in a number of places CHNR had omitted to instal flashing in the Mosses' house. He stated that as to the water staining shown on the floor in bedroom 1 near the door to the front balcony (photograph 32) the door was pushed 300mm back in on the timber floor. There was a gap between the floorboard and the brickwork and a drip line underneath the door. Mr Cox said that they did not flash (under) sliding doors, that the flashing was down the side of the door and that in the North Coast area of the State the practice was to flash the side. That was not done in Sydney. 390 Mr Cox rejected this criticism in the report of July 2000 of Mr A Weir of Ballina Shire Council's Health and Building Department. "No flashing has been provided to the first floor front verandahs, to prevent water coming into contact with the internal timber floor boards below the glass sliding door sills. These glass doors have been installed on top of the floor boards." Mr Cox was adamant that flashing should not be put under sliding doors. CHNR puts drip lines underneath doors so the water will not track across. 391 Mr Cox thought that the water got in because the door had been incorrectly tacked and could not believe that anyone would leave the door in the condition in which it was left. Mr Cox added that Mr Moss had a construction key for the whole time the house was being built. There was no evidence to support any suggestion that Mr Moss was responsible for the condition in which the door was left. 392 The Schedule attached to Mr Zakos' report reads: Item No Defect Agreement between the parties 62 Flashings have not been installed below sliding glass door over verandah to prevent water entry onto the floorboards or frame Work is incomplete Value of incomplete work is $973 Mr Cox disagreed that there was a defect because CHNR did not flash below the sliding door. Mr Cox had earlier said that he verified this with the manufacturer. 393 Mr Cox could not state the day of his inspection. He added: "It wasn't that long after the house was locked up that we had some storms and it [the door] was definitely in … I went down there once with my son and the house was just left wide open for anyone or anything to go into it. It was just incredible." 394 Even if it be accepted, contrary to the majority of expert opinion, that flashings need not or should not be put below the sliding doors, that does not explain why the sliding doors were tacked and left in the manner described by Mr Cox by those engaged in the installation of the sliding doors and the construction of the house. I reject any suggestion that Mr Moss was in any way responsible for the condition of the doors as so described. Consequent upon his inspections of 13 and 20 July 2000 Mr Weir did not comment on how the door had been left when referring to the water staining. 395 Mr Cox did not agree that it was poor building practice to have a mixture of soft wood and hard wood joists against each other. CHNR had done this regularly over the years because, as soft woods came in and hard woods have been going out, it has been necessary to use and adapt soft woods and hard woods together. It was not unusual to use treated pine on joists outside with a hard wood fascia beam. When referred to photograph 9 to Mr Monteith's report showing a soft wood adjacent to a hardwood joist on the sub floor and the differential expansion rate of the two types of timber, Mr Cox replied that on the floor under the house the expansion rate would be almost non-existent. 396 On being referred to photograph 14 (main sub floor at front wall) and photograph 15 (liquid nails bonding to ventilator opening) Mr Cox said that CHNR did not do that work. Mr Cox continued: "I actually attended this site once and the vents were actually quite loose in [the front wall] and they were actually left loose because we had to go back and point the brick up and it would be relayed just as a course of getting the house ready to paint it. We just didn't go back and do it. On 15 it looks like somebody has put glue in there." 397 Mr Cox regarded the last mentioned feature as extraordinary. He said that all brick vents had to be relayed because most of them were quite loose. Photographs 14 and 15 showed the vents from inside the house, while photographs 43 and 44 from the outside. They look poor from both sides. Mr Cox said that they needed to be pointed up and repainted (on the outside). 398 Mr Cox, after denying the suggestion that the bricks had been badly laid, said: "Mr Moss wanted the vents centred in the windows, some of them we couldn't because there was going to be quarter brick pieces cut. We took them out and laid them exactly where he wanted them and some of the bricks were loosened after that … they certainly wasn't laid like that … To paint the house that would have had to be all re-pointed and re-bedded. I don't think that really is a major issue … that is normal building." I agree that that was not a major issue. 399 Photograph 60 shows the cut out for the toilet pan fouled by the floor joist. Mr Cox said that there was a way of rectifying the problem. He described it. While involving quite an amount of work this is not a major defect. 400 Mr Cox did not agree that the concrete garage floor had suffered major cracking. He said that there was a minor crack in it. On the evidence no defect of consequence existed as to the garage floor. Indeed, Mr Monteith said that the crack was within the allowed tolerances of AS2870.1996. 401 Mr Cox agreed that the garage door which was installed appeared to be too small for the opening. Mr Cox said that the door would be replaced. Similarly the tie-down shown in photograph 25 would, if necessary, be rectified. That would not be a major matter. 402 As to the hardwood floor Mr Cox said that there was no stipulation that the floor be secret nailed. Mr Cox said that he did not tell anyone that he would "secret nail" their floor. If CHNR does not have the requisite guns the floor is top nailed. Mr Cox agreed that the practice of laying hardwood flooring is to leave it on the site for a couple of weeks prior to it being laid. Mr Cox said the flooring was outside in slings at the front of the house for quite some time and it was covered up. He checked it and made sure that when it rained, the water did not get anywhere near that flooring. 403 Mr Cox said that provision was made for the expansion of the flooring. CHNR left a 10 to 15mm gap on the long horizontal side of the board and on the end a 10mm gap because it does not tend to grow lengthwise a great deal. If, in the course of laying the floor a board is tight against the wall where it can grow, CHNR takes the board out, cuts it back and allows for expansion. Mr Monteith did not think that a sufficient allowance for expansion had been made. 404 Mr Cox was referred to photograph 27 to Mr Monteith's report which showed that a floorboard had been reduced. Mr Monteith said that this was to accommodate swelling. Mr Cox did not know where this reduction was. He thought it was possible that it was in a cupboard. Mr Cox said that if the boards expand prior to putting the wall sheets on and have pushed to the wall, the boards which have expanded would be cut down and the wall straightened. 405 Viewing photographs 28 and 29, it was possible that the expansion of the timber had displaced the framework. Mr Cox continued: "If the floor grows and over that period of time I would expect it to grow in an unclimatised area and it's a fairly large floor and with a 10 to 15mm gap there it could grow, yes." 406 I am not sure what period Mr Cox meant. Mr Cox said that when he last saw the floor it was not so seriously defective that it required to be lifted and refixed. 407 Mr Cox appeared to accept that when CHNR returned to the site in June-August 2002 the following work agreed to by the experts and specified in the Schedule to the referee's report, was not done: "Termite protection Articulation joints – Mr Cox disputed that there were any such joints and insisted that the engineer had specified control joints Flashing – Mr Cox insisted that CHNR did not flash under sliding doors Tie down straps Concrete Form Work (Item 5) – Mr Cox said that there was a brick pier put under it and declined to comment on the suggestion that it was inadequate." 408 Mr Cox repelled the suggestion that there was a litany of defects and maintained that this was incomplete work. Mr Cox denied that CHNR had refused to fix any defect and said that when the contract was "back in line" CHNR would have completed the whole house including what he described as "all those small rectifications." A number of the defects could not be classed as small rectifications. 409 Mr Cox was referred to photograph 54 and Mr Monteith's description "Load Cracking To Compressed Sheet". Mr Cox said that he did not know where that was, so really he could not comment. When it was put to him that it was on the rear verandah he replied "Possibly." 410 In response to the contention that the cracking happened because there was a concrete filled column on top of the fibro sheeting which was supported by wooden bearers, Mr Cox said "It's not the first time we have had an AC sheet crack. Looking at that it's a narrow piece, I would think it's a 100mm wide so … quite possibly it can crack. That would be expected in something like that." Mr Cox could not say whether the column was full of concrete or what structure was underneath it without having a little further knowledge of where it was. Mr Chaseling 411 Mr John Chaseling said that he had been in the building industry for approximately 35 years, qualifying first in carpentry. He had held management positions with major companies and been employed in project management roles. In May 1996 he joined Craftsman Homes Australia Pty Limited as Executive Manager. He remained with Craftsman Homes until he left on 1 March 2003 to set up a firm called Unique Building Solutions with Mr Brett Harley which commenced on 1 April 2003. Some time prior to 1 March 2003 he had resolved to leave Craftsman Homes to set up his own business. 412 Mr Chaseling said that he telephoned and had a conversation with Mr Ben Fordham around 20 or 21 February 2002 in which he confirmed that Channel Nine was doing a program on CH. Mr Chaseling said that he told Mr Fordham that CH was prepared to talk to Channel Nine provided they told CH what the issues were prior to any interview. Particular matters were not mentioned. 413 Mr Chaseling believed he had a second conversation with Mr Fordham during which Mr Fordham said, "I have been to the Moss house, it's a disgrace." Mr Chaseling said that he replied that he was not prepared to discuss the Moss matter because it was in court. 414 Mr Chaseling said that he told Mr Fordham that Mr Moss had issued a stopwork order on 27 or 28 June 2000 and that stopwork order was still in force. Mr Chaseling, by letter of 21 February 2002 to Mr Fordham, confirmed that the Moss matter was listed for hearing in the District Court on 11 March 2002, that Mr Moss had exercised a Cease Work clause in the Building Agreement on 29 June 2000, that the Moss home had a stopwork order issued by the Certifying Authority, that the District Court proceedings involved a claim by CH for work completed and not paid for by the Mosses, and a cross-claim by the Mosses for defective work and that CH was willing to be interviewed about the Mosses after the Court had heard the matter. 415 Mr Chaseling confirmed that as to other dissatisfied clients any approach made to CH would be addressed and if rectification was required CH would, as in the past, complete those works and that CH had completed over 900 homes on the North Coast over the last twenty years. Mr Chaseling invited Mr Fordham to contact some of those clients as well as the five Channel Nine claimed were not happy and stated that CH had been awarded 42 Excellence in Housing Awards by the HIA and MBA. 416 Mr Chaseling said that Mr Cox telephoned him from his office in Sydney about 23 or 24 February 2002 and said that he had just had Ben somebody and a woman from A Current Affair come on his property. Mr Chaseling said that he advised Mr Cox to make no comment and ask them to leave. Mr Cox sounded very agitated and very nervous. 417 Mr Chaseling said that he telephoned Mr Fordham and told him that they (Cox and Chaseling) would be prepared to come to Channel Nine to be interviewed, but the interview needed to be conducted in a proper manner and that CH needed to know the clients whom Channel Nine was going to rely on so CH could prepare the files and make sure that CH had the proper information available. 418 By FAX of 25 February 2002 to Mr Fordham, Mr Chaseling confirmed that he and Mr Cox would be available for an interview, subject to: 1. The Moss matter was not to be discussed or used in any program until after the District Court had ruled on the claim and cross-claim. There was a warning that if Channel Nine had been to the site, they may be subject to prosecution for trespass as CH had exclusive possession of the site under the building agreement. Channel Nine was expressly refused permission to enter the site. 2. Other specific matters could be discussed provided the questions to be put are supplied in writing by 4.30pm today. This was to enable files to be retrieved. They undertook not to contact any past clients whose names were provided by Channel Nine. 3. Written agreement to the above conditions was to be faxed by 4.30pm on 25 February 2002 for an interview to be had in Sydney on 26 February 2002. 4. Any approach made to CH by past clients will be addressed and if rectification is required CH will complete those works. 5. Letters marked "return to sender" (presumably addressed to CH) and held by Channel Nine to be available on 26 February 2002. 419 There was a telephone call from Mr Fordham to Mr Chaseling about 3.50pm in which delaying the interview until Wednesday or Thursday was raised and to which CH was agreeable. In his confirmatory note of 25 February 2002 Mr Chaseling wrote that if any of the terms in previous correspondence were not met CH would consider the matter at an end. 420 In his FAX of 26 February 2002 Mr Fordham wrote confirming the following points for "tomorrow's interview with Messrs Cox and Chaseling at ACA in Sydney: "1. The Moss matter listed for hearing in the District Court Sessions commencing 11 March 2002 in Lismore would not be mentioned in the interview. Mr Cox and Chaseling will not be asked to comment on the matter before the Court. 2. Topics to be discussed in interview (a) The Vimpany house at Alstonville, in particular, bricks the wrong way around and others still coated with cement. (b) The Allen house at East Ballina, in particular, problems with three piers and concrete problems. (c) General questions on workmanship issues, such as piers, meter boxes, floors, variations, general construction (d) How CH deals with complaints from clients. (e) History of CH – satisfied customers and awards." 421 Mr Chaseling did not accept the terms of Mr Fordham's FAX and adhered to the conditions set out in his FAX of 25 February 2002. Mr Chaseling objected to Mr Cox and him being asked "cold questions". Channel Nine did not accept CH's conditions for the interview. 422 By FAX of 27 February 2002 the solicitor for CH wrote to Nine Network Australia Pty Limited rejecting the assertion in the FAX of Mr Stewart, its legal officer, that CH had been given an opportunity to respond to the allegations made. That FAX also set out CH's response to the various allegations and comments as to the Moss, Allen and Vimpany contracts and allegations. The FAX requested that the broadcasting of the program be delayed and that written details of the allegations to be made be supplied. 423 Mr Chaseling said that he was not involved in the day to day operations of CHNR until about March or April 2000. In 1999/2000 Mr Cox operated from 34 Kays Lane, Alstonville and on average spent five days per week there. After the Sydney operation commenced Mr Cox usually spent every second Friday in Alstonville. 424 Mr Chaseling said that he heard of the Moss contract about 18 November 1999. He became aware of the main contract (Exh Q1). The first time he saw the Progress Payment Schedule was at a referee's conclave in about September 2002. Until then he had dealt with the Mosses on the basis that Exh Q1 only existed. Mr Chaseling said that he first met the Mosses in late March/early April 2000. He and Peter Smith, a sales consultant, met with the Mosses. There was a discussion about the colour of bricks, some excavation discrepancies and the progress of the works (including the building). 425 Mr Chaseling recalled seeing the letter of 30 April 2000 from the Mosses. That letter referred to discussions with Mrs H Cox and Mr Chaseling on 28 April 2000. They were about the bricks, the Tuffcoat finish to be applied and some foundations alleged to be in the wrong place. Mr Chaseling said that as at 30 April he knew very little about the Mosses' contract, the plans and the job. 426 Mr Chaseling knew that the bricks desired by the Mosses were not available. An agreement had been reached whereby the Austral Regal Port brick, a face brick, was to be used and a Tuffcoat finish applied. It is a painted finish which can be applied to any brickwork as long it has a flush cut joint. The letter referred to the foreman and the bricklayers flush finishing the bricks and pointing up any holes. Mr Chaseling said that he did nothing as to this item. 427 As to Point 2, namely that the foundations were laid incorrectly under the barbecue area, Mr Chaseling said that he had to visit the site and did so. One footing was 200mm out of alignment and that was corrected almost straightaway. 428 As to the complaint that the downstairs toilet window had been placed in a position different from the plan, it was placed in a slightly different position to that shown on the plan. The difference was 150mm, but the as built position was correct – otherwise an external wall would have butted into where the window was going to be located. 429 As to the complaint (Point 3) that the walls were located in the wrong place, Mr Chaseling found on his inspection that the walls were in the correct place. 430 As to point 4, namely, "Excavation was greater than necessary resulting in considerably more disturbed earth than required" Mr Chaseling said that on a site visit in May 2000 he and the foreman, Mr Creighton, looked at the natural fall of the land and took some levels to confirm that the excavations were at their best possible level. The garage area and bottom floor of the house was approximately 200mm lower than the level shown on the plans. Mr Chaseling stated that this was insignificant in relation to the overall construction. This is arguable. 431 As to Point 5, para 1, namely "Levels between the floors were approximately 200mm greater than the plan and spec resulting in large fill-ins over doors and greater expense," Mr Chaseling said that this complaint related back to the previous item. Mr Chaseling found that the finished floor level of the lower floor was approximately one step lower than the level shown on the plans and stated that he said to Mr Moss that CHNR could raise the floor level under the house by pouring an additional 200mm of concrete over the existing floor. Mr Chaseling stated that Mr Moss said he would come back to him on it, but to the best of his knowledge he did not. Mr Moss did not regard this as solving the problem – see earlier. 432 As to Point 5, paras 2 and 3, namely "The excessive excavation has resulted in larger retaining walls and earthworks relating to landscaping than was necessary" and "Due to excessive excavation … there was at least six courses of bricks around the lower section which was unnecessary," Mr Chaseling said that there may have been three extra courses of bricks in the sub-floor, not six, and that this directly related back to the issue of pouring an extra 200mm of concrete. 433 As to Item 6, para 1, namely, "The window in the rear of the garage is incorrect", Mr Chaseling said that the window installed was incorrect and he instructed Mr Creighton to replace it with a double hung window. He thought that this was done. 434 As to Item 7, namely, "… in the great room (lounge), the low wall is incorrect", Mr Chaseling said that as a result of his inquiries he ascertained that there had been a variation to the drawings after the contract had been signed, to change this particular wall. He did not have any conversations or other communications with the Mosses over this. Mr Chaseling's explanation is partly correct. The amendments to the specification were not incorporated in the plan attached to the contract. 435 As to Item 8, the red ironbark floor and delay in supply, Mr Chaseling had no understanding of that matter. That was covered in Mr Moss' evidence. 436 As to Item 9, namely, "There is no structure made to support joists of the steps to the sunken foyer, the bearers around this will need to be redesigned and altered", Mr Chaseling said that as at 30 April 2000 he had no understanding of these matters so he spoke to Mr Creighton. Mr Chaseling did not do anything as to that joist or redesign or alteration, but he recalled that Messrs Moss, Hollyoak and Crandon had discussions on site later about these joists. 437 Mr Chaseling had no understanding of Item 10, relating to the barbecue area and back deck as at 30 April 2000, so he made enquiries of Mr Creighton and considered the contract including the specifications, and felt that there was no cause for concern. 438 As to Item 11, Mr Chaseling accepted Mr Creighton's view that it was premature to be looking at the kitchen cupboards when the first floor level of the house had not been reached. 439 As to Item 12, that all TV points, et cetera, had been left off the final drawings, Mr Chaseling said that it was not the practice to show TV points on contract drawings. It was usually done on site together with the electrician. 440 Mr Chaseling said that the corrections required to the wiring layout would have been resolved on site with the electrician and the Mosses, when they met to fix the positions of all their lighting and power points. 441 Mr Chaseling did not understand what Item 13 meant, that is, that the plan did not show sections of some doors and windows to be panelled. He did not communicate with the Mosses about it. 442 Mr Chaseling did not make any enquiries about, or communicate with the Mosses about Item 14 (charges for collars to the columns). 443 As to item 15, Mr Chaseling said that at the meeting of 28 April 2000, the Mosses wanted benchtops in the kitchen 30 to 40mm higher than normal. The Mosses were tall. Mr Moss stated that because of the bench heights they wanted and the drop-off on the eaves of the house there was not going to be enough room between the top of the eave and the top of the benches to sustain the height that they wanted in the windows. Mr Chaseling suggested that smaller windows be made to fit the openings because of the higher benches. Mr Chaseling denied that he spoke in a loud tone or threatened anyone in relation to the benchtops. 444 Item 16 complained that incorrect stud spacing for the internal walls had occurred and that this led to considerable delay while the error was fixed. The internal studs should have had 450mm centres and not 600mm centres. Subsequently extra studs were placed in every opening to bring them back to 300mm centres. 445 As to Item 17, the Mosses complained of delay in excess of two months in resolving the power dispute. This matter was handled by Mr Cox. 446 As to Item 18, namely, the delay in putting the roof on and the wet weather being experienced has seen mould and fungus starting to grow on the framing timber, particularly in the downstairs section, Mr Chaseling said that there was some mould growing, but there had been a particularly wet autumn. When the roof went on the mould dried up. 447 At the meeting there was discussion about the conflict between Messrs Moss and Creighton and Mr Chaseling decided that it would be in everybody's interest to remove Mr Creighton as supervisor and replace him with Mr Harley. 448 By letter of 10 May 2000 Mr Chaseling wrote to the Mosses that the brickwork at the rear of their home (stairs etc) seems not to be placed on footings and could be subject to structural problems and that he was worried that there could be a problem at the frame inspection. Mr Chaseling said there was brickwork sitting directly on red dirt and had no concrete underneath it. This was clearly visible. This was in the staircase and in the lower section of what appeared to be a storage area. 449 In their letter of 21 May 2000 the Mosses explained that they were greatly distressed about completion going beyond 30 June 2000 for GST and other reasons. They complained about the failure to put two gangs on the job as promised. 450 Mr Chaseling said that in May 2000, because of the large volume of work, not only in the Lismore area, but in the run-up to the Olympic Games, it was difficult to obtain supplies of all kinds of materials and to obtain qualified tradesmen. 451 Mr Chaseling said he might have undertaken to put two gangs on the job from 1 May 2000. As he left on holidays he said that he did not know whether two gangs were put on and could not recall whether he gave any directions about putting two gangs on the job. It is probable that in view of the delays on the job and the sustained complaints of the Mosses about that delay, that Mr Chaseling promised to put two gangs on the job. He never did so and, I doubt if he intended to do so. Mr Chaseling was fed up with the Mosses. 452 The Mosses complained that there had been many rain free days when there were no workers on site. A study of the rainfall figures supplied by the Tropical Research Station at Alstonville, which is some 300 metres away from the Mosses property reveals that from December 1999 to 31 May 2000 there were many days when appreciable quantities of rain fell. Of course, there were many days on which no rainfall is recorded and also many other days where less than 1mm of rain fell. During March to June 2000 the records reveal: Month Total Rainfall (mm) Average Rainfall (mm) March 105.81 3.4 April 184.4 6.1 May 131.0 4.2 June 210.4 7.00 Mr Chaseling said there were some 75 wet days during the period 1 January – 30 June 2000 and that it was important to point out to the Mosses that CH was entitled to extensions of time. 453 The Mosses met with Mr Chaseling on 6 June 2000. In their letter of 7 June 2000 the Mosses formalised the issues raised. Item 1 – Quality of brick work – The Mosses complained: (a) of poor alignment of bricks, holes in mortar, missing mortar, joints of different thickness, bulging mortar, corner bricks not lining up with walls and the poor standard of craftsmanship; (b) the flush finish as stated in the contract had not been achieved; (c) the south facing wall in the dining room has a bulge in the middle about 2/3rds of the way up, and (d) the vents at the front of the house below bedrooms 2 and 3 are not centred in the brick wall and the vents under the Entry are too high and there is timber showing behind it. 454 Mr Chaseling detailed his lengthy experience in observing and supervising the laying of bricks. He said that the bricks on the Moss house were laid with a flush joint; some pointing up was required. On one occasion when he visited the site the bricklayers were bagging the external brick work. Mr Chaseling said that the arrangements were that they were to be left with a natural appearance with a Tuffcoat finish. He did not observe joints of different thickness, bulging mortar, corner bricks not lining up with walls nor a bulge in the south facing wall of the dining room. I am unable to accept Mr Chaseling's assessment of the quality of the brickwork and the brick laying. Mr Chaseling agreed that the vents were not centred in the brick walls. The bricklayers told him that the vents had been laid in the most appropriate position. The vents were subsequently re-positioned in accordance with the Mosses' request. 455 Item 2 – The Mosses contended that the back deck had been incorrectly finished and that the method of construction used did not comply with the manufacturer's recommendations. Mr Cox instructed the supervisor as to how to instal the decking material. In about August 2002 the deck was rebuilt. The Mosses complained that there was no backing rod between the sheets as per the manufacturer's recommendations. Mr Chaseling said that Mr Cox dealt with this, determining what should be done. He passed the information on to Mr Harley. The Mosses were concerned about some screws being close to the edge of the sheets and some screws missing the joist. After an inspection Mr Chaseling noted that there were some screws which had missed the joists and instructed Mr Harley to ensure that that was corrected. The edge finish on the deck was resolved in August 2002. 456 Item 3 – The Mosses complained that these issues needed addressing, namely, method of attaching tiles, bedding of tiles, finishing of edge, finishing of underdeck. Mr Chaseling said that they were subsequently dealt with on return to the site in August 2002. 457 Item 4 – First column and post on back deck. The Mosses stated that the column and post had been moved at least three times and some damage had been done to the top of the wooden post supporting the roof. Mr Chaseling said that Mr Moss was wondering how he was going to attach his aluminium handrails to the compressed concrete columns on the back deck because they had not been core filled. Mr Chaseling said that this problem was solved in August/September 2002 when the columns were core filled. 458 Item 5 – Middle Column underneath BBQ area out of line. Mr Chaseling said that this was rectified in August 2002. 459 Item 6 – Blue Gum timber for the stairs – This was ordered from Sarwood Timbers and Mr Chaseling thought it was still there waiting to be delivered. 460 Item 7 – Post at top of internal stairs – The Mosses stated that they did not want this and it was not in the plan. The Mosses wanted a wall without a post and for the wall to be structurally sound and stable. Mr Chaseling said that from his discussions with the Mosses they wanted a newel post at the top of the stairs and not a timber post. I am not sure what Mr Chaseling meant by a newel post. Mr Chaseling said the post was used as a safety barrier and was still there. 461 Item 8 – Cut away wall in the lounge room – The contract amendment read "extend wall in lounge with cut out and rounded edges". Mr Chaseling said that this item was passed on to Mr Harley for action. He did not recall whether it was done prior to the stopwork notice being issued. 462 Item 9 – Delays with gutter and roofing because no scaffolding was supplied resulting in a lost week, both subcontractors being on site several times wishing to complete, but being unable to do so because scaffolding had not been supplied. Mr Chaseling did not deal with the issue of lack of scaffolding. He said that there were two separate contracts, one to supply and instal the fascia and the gutter and the other to supply and instal the roof. Mr Chaseling said that, as he recalled, both subcontractors were having problems obtaining material because it was going to finishing off the Villages for the Olympic Games. Even assuming there may have been difficulty and delay in obtaining material that is no answer to the complaint when the subcontractors were on site ready and willing to complete their work, but could not do so due to lack of scaffolding. The builder's response does not appear to be a valid one. 463 Item 11 – Incorrect window in garage not yet replaced. Mr Chaseling did not recall this being discussed at the meeting of 6 June 2000 but accepted it must have been. He had already organised for the window to be replaced. He believed it was eventually replaced, after 6 June 2000 and before 30 June 2000. 464 Item 13 – Completion Date – On 6 June 2000 the Mosses requested an estimated completion date and Mr Chaseling replied, "When it is finished". Mrs Moss expressed disappointment that the house was taking so long. Mr Chaseling replied to the following effect: "Well, we just can't finish it because of the wet weather and the issues of materials and the amount of work that's out there taking the trades up because of the GST introduction." 465 Mr Chaseling did not take any action on receiving the Mosses' letter of 13 June 2000, as it seemed to him to go over the same issues they had discussed on two previous occasions. He caused a site meeting to be held on 24 June 2000 at which he had Mr Moss sign a number of variations. 466 Mr Chaseling said that when the claim for Progress Payment 3 was sent out the Mosses' house was not entirely at that stage. He told Mr Moss this and that CHNR did not expect to be paid until the house reached that stage, which would be about 10 to 14 days after the issue of the invoice. 467 Mr Chaseling said that in June 2000 he contacted Mr Nowlan and booked a frame inspection for the Mosses' house. He received a building inspection report from Mr Nowlan around 4 or 5 July 2000. On 30 June 2000 he received a letter from the Mosses' solicitor suspending the progress of the works. He had no idea this was coming. After receiving that letter, CHNR removed the scaffolding and made the building secure. He said he then received a letter by FAX from Mr Nowlan containing a stopwork order on the Mosses' job and forwarded a copy to the Mosses' solicitors. 468 Mr Chaseling said that at his request a meeting was held about 7 or 8 July at the offices of the Mosses' solicitors. Mr and Mrs Moss, their solicitor, another gentleman, Mrs Cox and he (Chaseling) attended. Mrs Moss said that she was concerned about the time it had taken to build the house so far and the defects in the house. Mr Moss commented that several defects had not been rectified. Mr Chaseling said that at the end of the two hour discussion he said to the Mosses: "Well, if this finishes up in litigation instead of getting in to your house soon it will be at least two years before you are able to occupy your home." Mr Chaseling said he knew the time it was going to take to run a court case to solve the issues. Mr Chaseling said that at the meeting, they basically went over the items in the Mosses' letters. After the meeting, and probably on 8 or 9 July 2000, he became aware of the letter of 7 July 2000 from the Mosses' solicitors purporting to terminate the contract. 469 Mr Chaseling attended an on site meeting about 18 October 2000. Also present were Messrs Moss and Hollyoak, Mr James for HOW Insurance, and possibly Mr Harley. I have earlier summarised what occurred. 470 Mr Chaseling said that on behalf of CHNR he gave instructions to its solicitors in relation to the District Court proceedings. CHNR retained Mr Max McDonald. Mr Chaseling said that he attended the experts' conclave. There were at least two of these. He said that a joint report prepared by Messrs McDonald and Hollyoak was produced at the final conclave in September 2002. 471 Mr Chaseling said that Messrs McDonald and Hollyoak did an on site inspection of the Mosses' house in September 2002. He was not present. 472 There was a body of evidence as to the production and delivery of the Joint Expert Witness Report dated 12 September 2002. That contains two columns, one headed "Description of Alleged Defect" with some 82 items being listed and the other column headed "Comment". In this column against most of the items the words "No longer an issue" appear. As I understand it, where that entry appears the claims were discontinued, but not resolved. The items were premature if the contract was still on foot or had been revived and the work was incomplete. As to some items there was a notation of "Incomplete" and as to others a brief notation of the work to be done. 473 Mr Chaseling said that after the experts' conclave and the preparation of the Joint Expert Witness Report dated 12 September 2002 (Exh BU – pink cover) he requested the Mosses to complete fresh material schedules so CHNR could continue with the works, but the Mosses did not do so. The requests were contained in correspondence. 474 Mr Chaseling said that between 6 June 2002 and approximately the end of September 2002 CHNR completed a substantial amount of work and rectified some of the alleged defects in the house. His involvement was limited to "a cursory overview situation. Mr Harley was handling the on site supervision of those works." 475 Mr Chaseling, in preparing the tax invoice of 19 December 2002, relied on the suspension of works clause in the building agreement allowing CH to recover all expenses related to suspension of works and the provision in the agreement allowing for interest at 20 per cent per annum (cl 8.04). While he relied on that provision as a source of power, it was not actually charged. Mr Chaseling said that under the building agreement CH was entitled to claim the full cost of the value of works completed at the notice of suspension, being $69,784. The value of that work exceeded the value of the progress payment claimed. 476 Mr Chaseling thought that CH was entitled to claim the cost of overdraft interest at 13.5 per cent. This was a cost associated with the Mosses not paying the amount due ($69,784) under the suspension notice. 477 The charge of $4500 for extra scaffolding represented the extra cost of dismantling the scaffolding due to the suspension and the cost of erecting replacement scaffolding to enable the job to be completed. 478 Mr Chaseling said that CH was entitled to recover its costs ($77,070) of the District Court proceedings because under the building agreement it was entitled to recover all costs in relation to the suspension of the works. Mr Chaseling said that these were the costs CHNR had incurred in defending the cross-claim and did not include any sum in respect of costs that CHNR had been ordered to pay to the Mosses. 479 Mr Chaseling said that CH applied for leave to appeal against the costs of order of the District Court (Twigg DCJ) because he felt that the judge: "had completely missed the whole basis of the case where Mr and Mrs Moss had withdrawn a cross claim that had been the subject of substantial costs on both sides and in our defence of that we had suffered huge expenses and that case was never heard." 480 Mr Chaseling said that CH sought a review of the costs assessment and on that review it was reduced from about $90,000 to about $67,000. Mr Chaseling may be confused. The Certificate of the Review Panel of 16 December 2003 states that the costs assessment of the Costs Assessor of $67,644.29 is affirmed. Perhaps, there was an initial claim in the sum of $90,000 and that was reduced by the Costs Assessor to the figure mentioned. 481 Mr Chaseling said that he instructed CH's solicitors to place a caveat on the Mosses' property as he believed CH had a caveatable interest. 482 On Tuesday, 16 July 2002 at a meeting attended by Mr Rod Willis of Ballina Shire Council, Mr Moss and Mr Chaseling at the Council Chambers, Mr Moss reiterated that the Mosses would like the Council to take over the job of being the Principal Certifier rather than Mr Nowlan. Mr Chaseling said that it would be appropriate for the Council, should it so desire, to take over the position of principal certifier. Mr Chaseling was advised by Mr Willis in August or September 2002 that the Council had declined to take on the role of principal certifier and that Mr Moss had been so advised. 483 Mr Chaseling said that by 19 July 2002 the house was ready for the linings and he instructed his solicitors to write and ask for the outstanding progress payment. 484 I have earlier referred to the site meeting on 31 July 2002 attended by Messrs Moss, Chaseling and Weir as to Mr Moss' site works at the rear of the house and the result. 485 Mr Chaseling was taken through the correspondence that passed between CHNR and the Mosses and their solicitors during 2002. Mr Chaseling confirmed that he gave the instructions in respect of the letters written by CHNR's solicitors. 486 Mr Chaseling said (T423) that there were two reasons why he would not give the Mosses permission to live in the shed on the property: "First was in breach of the covenant on the company (sic) and we had exclusive possession of the property under the terms of our building agreement." The word "company" should read "property". At T452 Mr Chaseling said that he understood there was "a covenant on the property that prevents anybody from living in a shed." 487 Mr Chaseling said that after a meeting attended by Mr Larry James for HOW in about October 2000 CHNR did not proceed to do any work in rectification of the defects because of the stopwork notice of Mr Nowlan and the suspension notice of the Mosses. 488 In cross-examination Mr Chaseling agreed that he was in Court on 18 December 2002 and heard the judge make an order that Ilvarity pay the costs of the Mosses' cross-claim against Ilvarity. He knew that the judge had declined to make an order that the Mosses pay Ilvarity's costs of the cross-claim. Mr Chaseling responded that Ilvarity was still entitled to recover under the building agreement any costs related to the suspension of the works. Mr Chaseling asserted that that claim had not been tested and that he did not know that Ilvarity had no entitlement to the money representing its costs of the District Court proceedings. Mr Chaseling insisted that Ilvarity was entitled to the sum of $77,000 under the building agreement. The basis of that claim has been stated earlier. Mr Chaseling relied on cl 5.05 of the building agreement and contended that the costs of the cross-claim were costs and losses associated with the suspension. That contention is incorrect. Under cl 5 of the contract the contractor may suspend the progress of the works wholly or in part subsequent to the default by the proprietor for any of the specified causes (cl 5.02). However, under cl 5.01 the proprietor may suspend the progress of the works wholly or in part by the issue of a written direction to the contractor. There is no requirement for a specified cause to exist. There is no link between a proprietor suspending a contract and instituting a cross-claim for defective work. It was open to Ilvarity to raise the terms of cl 5 of the building agreement before the judge when arguing the question of costs. 489 An examination of the account of 16 December 2002 prepared by Ilvarity's solicitors suggests that portion of that account of $77,070 should be attributed to the Statement of Claim. The referee relied on the defects found, and identified in his report, to hold that the job had not reached Stage 3 as at 27 June 2000 (or, I add, at the date Ilvarity commenced proceedings). This led to the dismissal of the claim. This means that there would have to be some apportionment of the referee's fees, the costs of the Experts Reports and the costs of appearing at the hearing. Further, it is hard to see how the costs of the District Court costs hearing, in which Ilvarity was unsuccessful could be debited, on any view, to the Mosses. A more detailed examination of the charges and items on the account, and perhaps some evidence, would be needed before any figures could be fixed with any degree of precision. On the materials before this Court only rough estimates could be made. 490 Mr Chaseling said that there was no dispute that the building did not reach Stage 3 until September 2002. He also agreed that Mr Moss' works were not an impediment to CHNR installing the linings. Mr Chaseling said that there was no asking Mr Nowlan anything in regard to the backworks (the works carried out by Mr Moss). 491 Before causing Ilvarity to lodge a caveat on the Mosses' land, Mr Chaseling was advised by CHNR's solicitors that it had a caveatable interest. While he was aware of the Home Building Contracts Act he assumed that Ilvarity's solicitors were also aware of that Act. Mr Chaseling believed that Ilvarity had a $64,000 interest in the property. 492 On the assumption that the Progress Payment Schedule did not form part of the contract, Mr Chaseling said that it was "a common industry accepted standard that when the house gets ready for linings" Stage 3 is reached. Mr Chaseling amended his answer and said that according to industry practice Stage 3 is reached generally when the house is at lock-up stage. The banks use "lock up" rather than ready for linings. Mr Chaseling sought to reconcile his answers by saying, "You can be ready for linings with or without doors and with or without garage doors." 493 Mr Chaseling said that when he was on site with Mr Nowlan prior to the latter's letter, he may have pointed to the works carried out by Mr Moss and said, "That's not our work, we are not responsible for that", but there was no other discussion. Mr Chaseling said that he had never discussed the stopwork order with Mr Nowlan. Mr Chaseling never asked himself or Mr Nowlan what power he had to issue a stopwork order. 494 Mr Chaseling said that Ilvarity had no record that Mr Moss was asserting that the work on the house was defective until the on site inspection with Messrs Hollyoak and Larry James. Ilvarity had received no letters alleging defective work and no oral complaints from Mr Moss. As to the letters received from the Mosses, they were resolved as work in progress issues. That was an unrealistic and incorrect interpretation. The letters of the Mosses contained a series of complaints of defective work and of work which had not been done. 495 Mr Chaseling immediately amended his answer. He said that Ilvarity did have some letters of complaint "but when the suspension notice was issued on 30 June there were no reasons for why the suspension notice was issued in relationship to defective work; it came as just a stop work notice." (T444) 496 Mr Chaseling took exception to the suggestion that as at 27 June 2000 the relationship between Mr Moss and him had deteriorated quite considerably. Mr Chaseling said (T445) that all he "had tried to do was sort out the problems that Mr Moss believed he had and get on with finishing the house." Mr Chaseling said that Mr Moss would not complete his colour selection schedule so Ilvarity could get on with the job. By the end of June 2000 relations between Messrs Moss and Chaseling were hostile and Mr Chaseling was deluding himself if he thought otherwise which I doubt. 497 Mr Chaseling agreed that following the determination of Mr Zakos that at the time of the commencement of the District Court proceedings the works were not at Stage 3 and the moneys claimed by Ilvarity under the Stage 3 progress payment were not due and payable by the Mosses to Ilvarity. (T446) 498 Mr Chaseling denied that Ilvarity commenced a claim which he knew had no basis. He said he believed that there was a basis for the claim because the Mosses had terminated the contract. He further said that Ilvarity made a progress claim to save the Mosses $6400 in GST. Mr Chaseling said that he acted on the advice of CHNR's solicitors to issue a statement of claim and pursue it. 499 Mr Chaseling agreed that Mr Zakos' report was adopted by a judge of the District Court. This was presumably before the costs determination of 18 December 2002. Mr Chaseling agreed that at the time the District Court adopted the referee's report, he knew that there was a binding decision as between the Mosses and Ilvarity that the moneys claimed had not been payable when the proceedings were issued. 500 Mr Chaseling gave this evidence (T448): "Q. And it had taken something like two months of work on the Mosses property to bring it up to Stage 3 once work had recommenced in June 2002, hadn't it? A. Well, when we returned to the site we did much more than we required to get it ready for lining stage, yes. Q. It follows, doesn't it, if the money was not payable by the Mosses to Ilvarity that interest on that money was not payable? A. Interest – overdraft interest I saw as still being a cost of the suspension of works. … Q. You knew that if moneys are not payable interest was not due on them? A. The account that was sent in November … did not relate to the progress payment, it related to the works completed as at the time of the suspension of works which was more than the amount of the progress claim, some 69 odd thousand dollars of work, not 62." 501 Mr Chaseling said that Ilvarity did not regard the stopwork letter of Mr Nowlan as binding Ilvarity not to do any work other than in the area at the back of the Mosses' house. As far as Ilvarity was concerned there was nothing stopping it doing work on any other part of the house (T450). 502 Mr Chaseling said that after the District Court reference there was an impediment to Ilvarity continuing work. Mr Nowlan required a re-inspection and when Ilvarity booked him to do a re-inspection in September 2002 he refused to do so until Mr Moss resolved the outstanding issues he had with him. 503 Mr Chaseling agreed that Ilvarity brought the works up to Stage 3 so the $62,000 became payable (T451), but claimed it could not continue with the works until a pre-linings inspection was carried out and, presumably, the requisite certificate issued. Mr Chaseling said that the only reason the house was not completed was that Mr Nowlan would not issue a certificate for the pre-linings inspection. That reason is incorrect. 504 Mr Chaseling agreed that Ilvarity left the property in September 2002 never to return. He believed there was a further repudiation (by the Mosses) of the contract or cancellation or suspension of the contract, further down the track. He fixed this as taking place in January/February 2003. He did not know what subsequently happened as he left Ilvarity's employ. 505 As to wet weather delays, Mr Chaseling said that the site was a red soil one and that it took two or three days for the water to escape after rain. 506 Mr Chaseling was not aware that the workmen were not attending at the site on Mondays and Fridays. He pointed out that Ilvarity had 26 weeks to build the house and that did not mean that it had to be on site every day. 507 In a letter dated 30 July 2002 to the Mosses, Mr Chaseling wrote: "To put it in plain language what part of not available do you not understand?" Mr Chaseling was frustrated. He had advised Mr Moss on three different occasions that Molasses, the colour he wished to use, was not available in Tuffcoat and they had replied that they wanted Molasses. Mr Chaseling disagreed that he had lost his temper. He was obviously angry with the Mosses. 508 I have earlier referred to the false statements of Mr Chaseling in Ilvarity's undated letter (sent after 14/9/00) to HOW and the diversionary tactics he adopted. I have also referred to the report of Mr James (for HOW) and the statements made by Mr Chaseling to Mr James as to rectification and engaging a practising structural engineer and a licensed termite control company. 509 Mr James took the defects upon which he commented from Mr Hollyoak's report. Mr Chaseling was cross-examined at length on Mr James' report. 510 As to the claims of defective brickwork, Mr James noted that some of the defects had been rectified and that other defects would be resolved or rectified and completed by the builder. As to further alleged defects a practising structural engineer was to be engaged to assess the item and the builder was to carry out any recommended rectification works. Mr James' report covered other areas, namely, termite shielding sub-floor framing (including flooring), verandahs, columns, external, flashings, drainage. The items are too numerous to list. 511 Mr James in the latter part of his report dealt with the report of Ballina Shire Council, extracted parts of that report and summarised the responses of the builder. This part of Mr James' report dealt with alleged defects in the footings, front entry patio slab, masonry walls, stormwater control and ground floor frame. 512 Again, as relevant, the builder agreed to engage a practising structural engineer or a licensed termite control company to assess the item and carry out recommended rectification works subject to compliance with any contractual obligations. A copy of the report was to be sent to HOW. Other responses by the builder included builder to resolve or rectify this item. That appeared many times. In a small number of instances the recommendation was "No Action". The general effect of the report of Mr James was that there were a lot of defects and that a lot of remedial work was required. 513 Mr Chaseling became irritated when being cross-examined about his steps to stop the inspection by Mr James for HOW and the defects listed in the report. At one stage (T470) he broke away from the questions of the cross-examiner and became an advocate. He broke into a series of assertions and would not stop. They included: (a) at the end of the meeting (with Mr James on 18 October 2000) Mr Moss said "Now that this is over I can get a builder of my choice to finish this job and Craftsman Homes can pay the difference," that he (Chaseling) replied "That's not the way it works, Mr Moss, that Mr James confirmed that it was up to the builder to rectify the situation and that if the builder did not rectify the situation he could continue his claim through HOW. (b) Mr Moss later threatened anybody who entered the property with trespass and that was why Ilvarity did not go back until the suspension of works order was lifted on 5 June 2002. I am sceptical about the alleged threat. It was not the reason why Ilvarity did not return to the site. 514 Mr Chaseling agreed that Mr James' report recorded an agreement between Ilvarity and Mr Moss, but Mr Chaseling stated that it would not allow Ilvarity to complete the work until Mr Moss withdrew the suspension of works notice on 5 June 2002. 515 Mr Chaseling agreed that none of the matters referred to in Mr James' report were done prior to the middle of 2002 and stated that this was because they were under threats of trespass from Mr Moss if Ilvarity entered the property. In my opinion Ilvarity had no intention of returning to the Moss' property until it was paid the amount of Progress Payment No 3 ($62,642). It was the prospect of obtaining that which led to Ilvarity returning to the site and executing further work. Some defects were also remedied. 516 Mr Chaseling recalled that Mr Moss stated the engaged piers were missing from the exterior walls of the back deck. Mr Chaseling agreed that he replied that if that was the case the brickies would have to go and put them in. Mr Chaseling said that they did. Mr Chaseling said that the engaged pier that Mr Moss was referring to was irrelevant. It did not need to be there. 517 Mr Chaseling recalled having a discussion with Mr Moss about the gyprock already in the house and asking him if he would like to purchase that gyprock so he could save the GST on the gyprock being supplied. Mr Chaseling told Mr Moss that Ilvarity would be entitled to charge him for removing it as it was a cost of the suspension of the work. 518 In response to the question whether Mr Moss asked for a key to the house, Mr Chaseling said that Mr Moss did not need a key to the house, it was not locked up. Mr Chaseling denied that he ever said words to the effect "Fred has agreed to end the contract and let you take the job over." I accept Mr Chaseling's denial. 519 In re-examination Mr Chaseling said that in addition to Mr Moss' threat about prosecution for trespass after the meeting on 18 October 2000 Mr Moss, in either June or July 2000 at the Mosses' site said "You are trespassing, get off." 520 Mr Chaseling behaved poorly towards HOW and Mr Moss felt he could no longer trust and rely on Ilvarity to complete the house to an acceptable standard. He would not have been sorry to see another builder complete their house. In Court the hostility evinced by Mr Cox towards the Mosses, the even greater hostility evinced by Mr Chaseling to the Mosses and the hostility evinced by Mr Moss towards them was palpable and illuminating. Mr Moss felt powerless to resolve the serious problems which had arisen and have the house completed. The Mosses needed the compensation moneys from HOW. They were not prepared to accept sub-standard work. I do not accept that the defects would have been satisfactorily rectified. The Plaintiffs' Contentions 521 The plaintiffs contended that the Mosses were primarily concerned that the construction of the house was not proceeding as quickly as they had hoped. I accept that the Mosses were much troubled about the financial effects of the impending GST and the rent they were paying to occupy other premises and that they wanted to get into their house at an early date. CHNR relied on what it classed as considerable rain which entitled it to extensions of time, the shortage of materials and the shortage of available competent tradesmen. Mr Chaseling explained that this was due to the volume of building work being undertaken by many trying to avoid the GST becoming due and the push to complete the villages for the Olympic Games. 522 The plaintiffs contended that the delays resulted in the Mosses becoming disgruntled and making an excessive number of complaints about minor matters. 523 The delay which occurred in the construction of the Mosses' house was excessive, making due allowance for the wet weather and the shortage of materials and available competent tradesmen. Time was also lost in the slow resolution of the power dispute and the dispute about the bricks due to them not being ordered in a timely fashion. 524 Some of the complaints were not minor as Messrs Monteith and Neil demonstrated and I have found. A lot of minor defects can, in combination, result in an unsatisfactory building. It was the defects that led the referee to conclude that as at 27 June 2000 the building had not reached Stage 3, that is, it was not ready for the internal linings. Mr Chaseling accepted that the house did not reach that stage until about September 2002. 525 I do not accept that the third progress claim was delivered prematurely primarily to assist the Mosses avoid paying GST. Ilvarity wanted money. It commenced proceedings to recover the amount of that claim, but it was not entitled to the sum claimed. 526 CHNR placed reliance upon Mr Moss starting to build steps adjacent to the house and to create garden beds and persisting with their construction when asked to desist. CHNR placed considerable reliance upon the Mosses serving a Notice of Suspension on 30 June 2000 and a Notice purporting to terminate the contract on 7 July 2000. The Mosses did not intend to let CHNR back on the job. However, the Mosses ultimately lifted the suspension in June 2002 and acknowledged that the contract was on foot. It was not clear how far the plaintiffs relied on the stopwork notice issued by Mr Nowlan other than as a matter of history which generally made it more difficult for CHNR to perform its contractual obligations. At times, and particularly from November 2002 Ilvarity relied at least in part on the stop work notice as a reason for not returning to the site. 527 The plaintiffs submitted that the supposed defects complained of by the Mosses and particularised in the cross-claim and in the defence in these proceedings as particulars of justification were matters which in the main were not defects at all, did not require rectification and in any event were matters which CHNR was prevented from completing and/or rectifying by the actions of the Mosses in excluding CHNR from the site. 528 I have already expressed the view that there were both substantial defects and a considerable number of defects and that rectification was required and my view as to the extent to which CHNR was prepared to undertake rectification. 529 The plaintiffs complained that after Mr Zakos' determination of 18 September 2002, the Mosses continued to insist on an unavailable colour for the painting of the brickwork and took until 11 November 2002 to pay the Stage 3 progress claim. The comment could fairly be made that this did not encourage a prompt resumption of the works. CHNR and the Mosses were still fighting over what moneys were payable, for example, the costs dispute in the District Court on 18 December 2002. This was followed by the further demands of the builder. 530 The plaintiffs further complained that the Mosses were not entitled to require a resumption of work so shortly after the January industry holiday period. While I accept that most of the building industry shuts down from a few days before Christmas until mid-January, CHNR had received the amount of its third progress payment on 11 November 2002. As previously mentioned it was not entitled to delay for so long in recommencing the works. It had not recommenced at the site by 3 February 2003, despite having been asked to do so. Neither CHNR nor Mr Cox intended there to be a resumption of works until more moneys were paid and the contract had been repriced (see earlier). That would probably have involved a new and increased price to complete. They were fed up with the Mosses and, apart from any contractual obligations, would have preferred not to return to the site. Mr Cox's view as to what the contract entitled him to probably precluded him and CHNR returning to the site as the Mosses were unlikely to agree. 531 Contrary to the plaintiffs' submissions, and generally, I do not regard the Mosses' demands, actions and time frame as unreasonable in the events which had occurred. However, the Mosses were not without fault. 532 In my review of the evidence I have referred to some of the defendants' submissions. I will not repeat this material. Their general thrust was clear. There was an abundance of defective work, some incomplete work and little real prospect of the majority of the defective work being satisfactorily rectified. The defendants submitted that a comparison of the report of July 2000 of Ballina Shire Council with its report of May 2003 and Mr Monteith's report of October 2004 reveals that little work was done to fix the serious defects when CHNR returned to the site in 2002, despite CHNR's extensive works in 2002. The defendants pointed out that in the third paragraph of its May 2003 report the Council records: "The following matters that were listed in Council's report dated 25 July 2000 have not been carried out as follows …". Referee's Report 533 I have earlier noted the terms of the referee's report as to the 82 items in the Scott Schedule based on the agreement of the Joint Experts. Even allowing for some "give and take" in reaching that agreement, the expert for CHNR has conceded that there was a lot of defective work (47 items) and appreciable incomplete work (16 items). I do not accept that by September 2002 when the further Joint Expert Witness Report of 12 September 2002 was compiled the Mosses and/or their expert (Mr Hollyoak) had conceded that most of the defects had been rectified. The report of Mr Monteith and the May 2003 report of Ballina Shire Council established that a substantial number of defects which had previously existed had not been rectified. 534 The referee attached to his report of 26 November 2002 a Schedule of Agreements summarising the experts' agreements and position for all items in the Scott Schedule. The defendants submitted that the agreed cost of rectifying the defective items as shown in the third column of the Schedule, amounted to $48,210. There were some cases where the extent of the rectification required was in issue and the cost has not been stated. The defendants pointed out that the figure of $48,210 did not include the estimates for the incomplete work which appear at various intervals which, (taking the average of the difference between Messrs McDonald and Hollyoak where they occasionally differ), totalled about $22,000. Thus the plaintiffs were seeking to recover about $64,000, yet the rectification costs and the value of the incomplete work was about $70,000. The defendants submitted that this amounted to an effective admission of shoddy building practice. That is putting the matter too high. The material in the Schedule of Agreements points to much defective work and an appreciable amount of incomplete work and substantial costs. Some Findings As To Crandon Report & Evidence 535 The defendants mounted a major attack on the report and evidence of Mr Crandon. I have earlier set out the alterations made by Mr Crandon to his report of 10 August 2000 to accommodate the wishes of Mr Cox, knowing that it was to be used in the dispute between CHNR and the Mosses. The items omitted were critical of the work of CHNR. Mr Crandon explained (T568): "it was strictly engagement by my client for me to go out and have a look at certain items, and whilst I was there I nominated a lot of other items that didn't get into this report." 536 The defendants submitted that the report was nothing more than a list of items Mr Cox wanted Mr Crandon to mention. Mr Crandon took the view that there was a confidential relationship between him and CHNR and Mr Cox, that he told Mr Cox the position as to a number of items and that, within limits CHNR and Mr Cox were entitled to have a report covering the matters he nominated and in the terms which he sought. Hence emphasis was placed on the works being carried out by Mr Moss. 537 Despite its stated purpose the report was not comprehensive. Mr Crandon did not mention many of the matters covered in the reports of Messrs Monteith, Neil and Weir. The defendants attacked finding No 5 in Mr Crandon's report under the heading Flooring Substructure, namely "All components have been installed in accordance with Manufacturer's Hurford's specifications. Certification with conditions by Contech." That is not useful. It does not address the problems which arose. Finding No 10 was also attacked. Under the heading Bricklaying it was stated "Jointing finish is adequate to take Tuff Coat application". Given the evidence as to the state of the brickwork this comment does not adequately address the real problems with the brickwork. 538 Under the heading Degree of Excavation, Mr Crandon has written "The siting and founding of the building is in accordance with the plans and specifications Dwg No 7.11.99". This does not adequately deal with the major problem of excessive excavation and its consequences. 539 The plaintiffs submitted that the attack of the defendants ignored Mr Crandon's evidence in re-examination at T598, 599, 600 and his explanation for changing his initial report of 10 August 2000. 540 Mr Crandon was very close to Mr Cox and over willing to comply with his wishes and to further the interests of CHNR and Mr Cox. He was not a truly independent engineer. Relatively little reliance should be placed on his assessments and opinions. I have elsewhere commented on the way in which he gave evidence. McDonald Report Superseded 541 I have earlier referred to Mr McDonald's report. It does seem to have been superseded by the experts conclave in June 2002. The referee has noted Mr McDonald's agreement with Mr Hollyoak as to many of the defects. These were also accepted by the referee. As earlier intimated I proceed on the basis of the referee's report and the agreements he has noted and summarised. Some Findings as to Crandon Report & Evidence 542 I set out in summary form some of the evidence of Mr Cox on some of the issues and my opinions: (i) He claimed that the patio set down on green timber was an item of incomplete work which would have been replaced. However, when CHNR rebuilt the entire decking in 2002 substantially the same fault remained (T128, T843-844, T707, T744); (ii) He claimed that Mr Moss had fabricated the buckling of the floor shown in the program and that an adequate 10-15mm expansion gap had been left by CHNR all around (T134-135). Mr Moss denied the fabrication allegation (T804). I have earlier rejected that allegation; (iii) He claimed that the probable cause of the collapsed formwork was a prop which had slipped and that he saw evidence of this himself on an inspection. (T200, 201, 206, 207). Mr Moss said that this did not occur (T709). A 2002 photograph (Exh 67(2)) shows the prop still in place. Mr Moss was on the site daily or virtually daily, whereas Mr Cox was on the site on a limited number of occasions. Mr Moss is probably correct; (iv) As to the irregularity of the brickwork (photograph 37 of the Monteith report) Mr Cox said that this was "not necessarily" an item of shoddy building work. He would have to inspect the job. This was shoddy work. He agreed that photographs 41 and 42 show a substantial twist in the wall to the south side of the entry. Mr Chaseling told him about this. The work was to be demolished and redone. That had not happened; (v) I will not further refer to the articulation/control joint controversy; (vi) He agreed that if the columns were filled with concrete and sitting on timber this "would certainly be engineered before it went any further" (T221). It needed to be; (vii) He stated, "We don't flash sliding doors" [below them]. The defendants submitted, correctly, that this was poor building practice and contrasted the evidence of Mr Harley (T608-610, 612-614). Mr Monteith was not cross-examined about this being reasonable practice; (viii) He claimed (T297) that the mixture of hardwood and softwood joists was a regular practice of CHNR. Mr Monteith had never previously observed such a practice and was critical of it. Mr McDonald agreed, correctly, it was defective – see the referee's report and the Schedule based on the Scott Schedule, Items 29 and 31; (ix) He claimed that the floor timbers were allowed to season outside the house for quite some time prior to it being installed (T303), whereas Mr Moss stated that it was installed the day after its arrival. Mr Cox spoke of the timber being in slings outside the house and his taking steps to ensure that it was covered and not damaged by any rain. Mr Moss spoke of not being able to sort the boards so that those with faults were placed where the faults would not be visible, for example, under cupboards. Both Mr Cox and Mr Moss had good reason to recall the true position. I am not able to determine the true position on this point. It is possible that the floor timbers were in the slings for a few days and then laid promptly. Both Messrs Cox and Moss may have faulty recollections on this point. I am not prepared to hold that either was giving evidence which was deliberately untrue on this point. This is a discrete issue on which I am not helped by general impressions of credit; Defendants' Comments Upon Plaintiffs' Responses to Alleged Justification of Imputations - Mosses 543 The defendants contended that it was apparent from the evidence of Messrs Cox and Chaseling, the remarks of the plaintiffs' counsel and the cross-examination of Messrs Monteith and Moss, that the plaintiffs were relying on the following responses with respect to the defective works and the imputations of - shoddy building practices; - incompetence as a building contractor; - homes riddled with faults; and - not competent in business of building homes. 544 Response (a) House incomplete and Ilvarity willing to return, complete and rectify The defendants pointed out that at T115 Mr Cox put the position thus: "The house was under construction and incomplete so you know anything that was wrong with it, all he needed to do was point it out and if he wasn't happy with it we would have rectified it, regardless of what it was. We never objected to doing anything on the house at all, nothing." 545 That statement does not reflect the true position. Ilvarity and Mr Cox were reluctant to rectify defects which were major or costly. They sought economic compromise solutions which they hoped, if not expected, the Mosses would accept. Such solutions were not an adequate substitute for the work being done in accordance with the plans and specifications, the applicable standards and in a good and workmanlike manner. One example is the poor quality brickwork. Some defects would probably have been ignored. 546 The defendants submitted that the mere fact that items were amenable to rectification could not affect the truth of the imputations. This submission goes too far. While it is the duty of the builder to erect the house in a good and workmanlike manner in accordance with the plans and specifications, if a builder rectified a defect within a reasonable time, that is, fairly promptly of its own accord, or on the proprietor or his agent pointing it out, it would be incorrect to describe the builder as being guilty of shoddy building practices or as incompetent as a building contractor or as building homes riddled with faults. A matter of degree is involved. If there were an appreciable number of defects or aesthetic defects, one or more of the descriptions just mentioned may not be incorrect. Rectification of defects can delay the completion of the works. 547 In the present case there were major defects and an appreciable number of defects. Rectification would have taken some time and been costly. 548 The defendants submitted that the sheer gravity of the defects meant that the work should properly be regarded as shoddy and incompetent. I agree, that that is so in the present case. 549 Relying on the expert evidence and the expert reports led in the defendants' case (and earlier summarised) they submitted that the Mosses' house was riddled with serious faults. While it is true that the experts conclave was of the opinion that the house did not need to be demolished, it became apparent during Mr Monteith's evidence and especially during his cross-examination, that the roof would have to be removed, the trusses fitted correctly and the roof re-laid. While the mistake made did not affect structural stability, it was quite gross. Much of the flooring would have to be taken up and re-laid. Rectifying the faults in the brickwork would have involved demolishing sections of it and rebuilding. 550 The limited amount of rectification work performed when CHNR returned to the site in mid 2002 and its refusal or failure to return to the site in late 2002 – early 2003 after payment of the Third Progress Payment about 12 November 2002, robs the assertion of a willingness to return to the site to remedy defects of value. 551 Many of the defects listed in the reports of Mr Weir of Ballina Shire Council and that of Mr Monteith would best be attended to prior to the installation of internal linings (ie, before Stage 4). In other words, they required attention before Stage 3 was truly complete, ie, ready for internal linings. 552 Some of the rectification work performed was deficient, for example, the reconstruction of the back decks, the second attempt at a termite control system and the flashing on the balconies. Mr Cox acknowledged in cross-examination the failure of CHNR to attend to termite protection and tie down straps. 553 Response (b) Mr Moss was responsible for the suspension of works which prevented CHNR from finishing the job. The Mosses caused the letter of 30 June 2000 of their solicitors suspending the progress of the works to issue. The defendants submitted that the Mosses did so in circumstances where they had no choice. Mr Moss knew that there were serious unrectified defects. Repeated requests by the Mosses to remedy the defects had not been acceded to. Mr Moss had been told by Mr Chaseling that the following Monday CHNR would paint the brickwork and that if CHNR did not do so there would be extra costs for scaffolding and that CHNR wanted to commence sheeting or installing the internal linings. Mr Moss knew that once the sheeting went on many defects would be covered up and that they would have a difficult task to prove that the defect was there. 554 On Saturday 1 July 2000 Mr Chaseling had a discussion with Mr Moss enquiring whether he would like to purchase the gyprock already in the house so he could avoid paying the GST. That suggests the gyprock lining was in the house about to be installed. 555 CHNR also purported to suspend the works. By letter of 30 August 2000 to the Mosses' solicitors, its solicitors wrote: "We are also instructed to advise that by reason of your client's failure to pay within 14 days the progress payment requested 27 June 2000 our client hereby suspends the works wholly until your client's default is remedied." 556 The reason given for the purported suspension was unjustified and so was the purported suspension. It is unnecessary for the Court to consider whether the service of that notice was repudiatory conduct entitling the Mosses to rescind the contract. 557 The defendants submitted that it was the conduct of CHNR in 2000 and in particular its delays, unjustified demands for payment, shoddy building practices, failure to attend to complaints and defects and the risk of it covering up the problems which led to the Mosses serving a notice of suspension. The defendants submitted that that suspension was overtaken by the purported suspension of CHNR and its decision to sue the Mosses for the third progress payment. 558 The defendants contended that the Mosses' suspension was in itself no answer to the failure by CHNR to return to work after the payment of the Third Progress Payment about 12 November 2002. That is correct. 559 When in early June 2002 the Mosses withdrew their previous suspension and CHNR returned to the site and executed further works, that earlier suspension ceased to provide a justification for not returning to the site. The real reason for CHNR not returning to the site was the non-payment by the Mosses (and their refusal to pay) the extra moneys which CHNR demanded. CHNR was not entitled to those moneys. The parties agreed to accept Mr Zakos' determination whether the works had reached Stage 3 as at 27 June 2000. 560 Response (c) Ilvarity could not return to work because of the stopwork order by Mr Nowlan. This response was allied to the further response which was expressed in evidence by Mr Chaseling (T454). "the only reason the house is not completed is Mr Nowlan will not issue a certificate for prelinings inspection." 561 Leaving aside the point of the former Building Surveyors and Allied Professions Accreditation Board which was not pursued before me, that Mr Nowlan had not been validly appointed as the Principal Certifying Authority (PCA), it was not seriously contended that the PCA had the power to issue a stopwork order. 562 Section 109L of the Environmental Planning and Assessment Act empowered the PCA to issue a notice requiring work to be carried out. Mr Nowlan agreed, and correctly so, that the letter (Exh T) he sent was not a notice under s 109L. It did not purport to be. Section 121H provides for notice to be given of a proposed order, but the letter sent purports to direct that work cease forthwith. From Mr Nowlan's evidence I gathered that he hoped that his letter would bring matters to a head and result in a practical resolution of the dispute between the Mosses and CHNR. Mr Moss gave evidence that he told Mr Chaseling on two occasions during 2000 (T766) that Mr Nowlan did not have power to issue a cease work order. I think that Mr Moss probably did so and Mr Chaseling took no notice. 563 As the defendants pointed out Mr Chaseling agreed that the cease work order was not an impediment to CHNR installing the linings. He saw CHNR not doing any work on the back area (where Mr Moss' works were located). Mr Chaseling said that Mr Nowlan's order would not have stopped CHNR doing any other work on any other part of the house (T444-445) Mr Nowlan's cease work order did not stop CHNR returning to the site in June 2002 and carrying out work on the site. 564 As earlier mentioned, the issue of the rear stairs and planter boxes had been resolved at a site meeting about 31 July 2002 involving Messrs Weir, Chaseling and Moss, and by Mr Moss promptly separating the rear stairs and planter boxes from the house. They were to be treated as landscaping. There is no evidence of Mr Nowlan being told of this. Mr Moss did not obtain a confirmatory letter from the Council, but there did not seem to be any dispute as to the solution devised by Mr Weir and implemented by Mr Moss. 565 The Mosses declined the request of CHNR to contact Mr Nowlan concerning a pre-linings inspection to resolve issues between the Mosses and Mr Nowlan. The Mosses no longer regarded Mr Nowlan as the PCA. 566 The point was also made that while the Mosses no longer regarded Mr Nowlan as the PCA, it had not arranged for the Council to take over as the PCA and obtain a certificate that the house was ready for linings. Nor had steps been taken to clear up the position as to the footings. It is normally the builder who procures the compliance certificate. It appoints the PCA. 567 It seems that the Mosses did not have the money to pay both the costs of rectification of the house to date, and the cost of completing the house. The Mosses depended upon obtaining insurance compensation moneys from HOW to cover the former. The Mosses faced formidable hurdles to obtain such moneys. It was in the financial interests of CHNR to assist HOW to repel the Mosses' claims. The Mosses thought that there was no point in dealing further with the appointment of the PCA until its claim against HOW was resolved. 568 I do not accept that Ilvarity could not return to work because of the stopwork order of Mr Nowlan or his declining to issue a certificate of satisfactory completion of the works, so that they were ready for the installation of the internal linings. 569 Response (d) CHNR could not return to the site because of the failure of the Mosses to make appropriate colour and material selections. This alleged failure appears in the letters of 3 and 17 February 2003 from CHNR's solicitors to the Mosses' solicitors. The defendants submitted that the Mosses had made all appropriate selections – see the evidence of Mr Moss at T749-751 and the correspondence in July 2002 between CHNR and the Mosses. 570 When in 2000 a Tuffcoat finish was agreed as part of the compromise, as the originally selected bricks were no longer available, the colour selected was Molasses, being the closest colour to that of the originally selected bricks. When the colour Molasses was not available, the Mosses' plans were given a major jolt as they did not regard the other available colours in the Tuffcoat range as suitable. The dilemma had to be resolved. The Mosses either had to select another colour from the Tuffcoat range or propose another finish where there was, in their opinion, a more desirable colour. The matter could not be allowed to drag on. As at February 2003 the brickwork needed much rectification and the walls were not ready for the application of the Tuffcoat finish, but the matter would have needed resolution within two to three weeks of work resuming on the site, assuming the rectification works proceeded with reasonable diligence. 571 Response (e) Joint Expert Witness Report of 12 September 2002. The plaintiffs attached considerable importance to this report and the entry against many of the items taken from the Scott Schedule of "No longer in issue". The plaintiffs treated that as meaning that the defects complained of had either been rectified or were not being pursued by the Mosses. 572 I have earlier referred to the circumstances in which this report was prepared and the significance which should be attached to it. In the light of their lifting the suspension of the works, CHNR returning to the site and carrying the house to Stage 3, the Mosses, on the advice of their legal representatives, discontinued their cross-claim. It was premature if CHNR continued with the contract. The evidence, especially that of Mr Monteith and the Council's report of May 2003 revealed that there were still many defects, some of which were substantial and not capable of easy rectification. Some of the rectification would have been costly to execute. 573 I do not regard the Joint Expert Witness Report with the frequent entry of "No longer in issue" as a bar precluding the Mosses from relying on the defects set out in the expert evidence and reports adduced by the defendants. Mrs Moss Not Called 574 The plaintiffs relied on the failure of the defendants to call Mrs Moss to give evidence. The materials reveal that she took a keen interest in the construction of the house and was present at some of the meetings. Mr Moss appears to have been the principal actor and he had some technical knowledge flowing from his interest in and study of woodwork. He was cross examined vigorously and at length but not in a manner which was open to criticism. Nevertheless, most husbands would be reluctant to expose their wives to such an experience. Too much should not be made of her not giving evidence. The documentary material was of importance and many of the disputed issues as to the condition of the house was determined mainly on expert evidence. Conclusions as to Mosses' Home 575 I agree with the referee in his determination in his report of 26 November 2002 as to the items which constituted defective work carried out by Ilvarity. As well as acting on his own assessment he was acting on the assessments of Messrs Hollyoak and McDonald. I also agree that the works had not reached Stage 3 as at 27 June 2000 and that Ilvarity was not entitled to the Third Progress Payment. The latter two matters were not in dispute in these proceedings. 576 Some of the defects were major and particularly serious, as highlighted by Mr Monteith. These are referred to earlier, generally in summary form. Troubling defects included the defects in the flooring, rectification of the "incorrect handing" of the roof trusses and misalignment of the hip rafters and the prominent resulting eyesore, the poor quality brickwork, the lack of adequate termite protection, inadequate flashing and defects in the columns and balconies. The excessive excavation, the incorrectly placed wall under the stairwell and the inadequacy of the construction of the rear deck were not minor matters. 577 As earlier mentioned, Ilvarity seized on the works carried out by Mr Moss to deflect attention from the poor qualify of its own work and to justify its own withdrawal from and non-return to the site. Ilvarity was focussed on obtaining payment of its third progress claim, even though it did not become entitled to that money until September 2002. 578 As to the Mosses' house, the defendants have established that Ilvarity and Mr Cox were guilty of shoddy building practices, constructed a house that was riddled with faults and displayed incompetence in the building of that house. The Mosses were difficult and demanding clients, but much of the work performed was below an acceptable standard. Matters were not helped by the poor relationship between the Mosses and Mr Cox and the even poorer relationship between Mr Chaseling and the Mosses. Both Messrs Cox and Chaseling were dominating and endeavoured to enforce their will. Mr Moss was inclined to be stubborn and very particular, demanding a high standard of work. CHNR, through Messrs Cox and Chaseling wanted the Mosses to accept an inferior standard of work. 579 The obsession and lack of objectivity on the part of Messrs Cox and Chaseling and Moss, as they gave their evidence, was marked. Each saw events through partial eyes. I have approached their evidence with caution. Mr Crandon saw matters through the interests of CHNR and Mr Cox. Unfitness to Remain in Building Industry - Mosses 580 The defendants submitted that the evidence of shoddy building practices as to the Mosses' house was alone sufficient to demonstrate the unfitness of CHNR and Mr Cox to remain in the building industry. In addition, the defendants relied on the following behaviour of CHNR and Mr Cox to which I have added my comments, namely: (a) The issue by CHNR of the demand for payment of Stage 3 progress claim when it knew the money was not owing and the house was not near Stage 3. Comment : CHNR knew the money claimed was not owing. Subject to the elimination of the graver defects the house was approaching, but had not reached Stage 3. I did not find the pretext of trying to help the Mosses avoid GST as persuasive. (b) The illegal placement of a caveat founded on a demand for money which CHNR knew was not owing. Comment: I would have expected CHNR's solicitors to have advised it that the Home Building Act precluded lodging a caveat; The core of this complaint is, however, that it was known that the money claimed was not owing at that point. (c) The commencement of the District Court proceedings seeking payment of the Stage 3 progress claim moneys which CHNR knew were not owing. Comment: CHNR knew this action was insupportable as the moneys claimed were known not to be due, but Mr Chaseling claimed it was done on legal advice. That advice probably depended on the version of the facts given to the solicitors. (d) Threats, intimidation and delays by CHNR and its officers during 2000 including threats to cease work unless Mr Moss agreed to variations and threats to tie the Mosses up in litigation for 2 years. Comment: Litigation over building disputes is frequently protracted. The delay by the Mosses in supplying particulars of their cross-claim in the District Court held up those proceedings for 12 to 18 months. When building disputes occur there are usually robust exchanges and not a lot of weight should be attached to these. Mr Moss was not likely to be cowed into submission. (e) CHNR's obstruction of the Mosses' insurance claim, particularly the dishonest letter by Mr Chaseling. Comment: Mr Chaseling's undated letter (sent after 14 September 2000) was misleading and untruthful as previously explained. CHNR had an interest in the course being taken by HOW which would probably look to CHNR to reimburse it for any moneys expended in meeting the Mosses' claim. (f) The pressure applied by CHNR to Mr Craig Nowlan to issue the stopwork order and the dishonest reliance by CHNR on the stopwork order. Comment: "Pressure" is too strong; it was "influence". CHNR was not entitled to rely on the stopwork order. (g) The unjustifiable oppressive and dishonest demands for interest and costs in late 2003 following the District Court proceedings. Comment: A large sum was sought to which CHNR was not entitled. This was oppressive. (h) The threat of criminal prosecution by CHNR against the Mosses. Comment: That puts the matter too high. The suggestion was that the Mosses may be liable for prosecution under the Home Building Act 1989 . (i) The savage and relentless legal pursuit of the Mosses by CHNR from the District Court proceedings to appeal against costs orders, appeal against costs assessment and the commencement of proceedings in the Consumer Trading and Tenancy Tribunal. Comment: "Savage" and "relentless" puts the matter too strongly. CHNR could not succeed in its claim in the District Court proceedings. Stage 3 had not been reached. The application for leave to appeal against the costs order of the District Court was optimistic as was the appeal against the costs assessment. Apparently, the proceedings in the Tribunal have not been pursued. There has been a number of proceedings instituted by CHNR. The costs of having to resist the proceedings instituted by CHNR would be a burden which would trouble the Mosses. (j) The pressure placed by Mr Cox on Mr Crandon to delete material favourable to the Mosses and adverse to CHNR from his report. Comment: Mr Cox told Mr Crandon what material he (Cox) wanted deleted from the report. It was material which highlighted work which could be regarded as unsatisfactory and which could be used by the Mosses against CHNR. The report purported to be of an inspection "for the purpose of examining and assessing any structural defects evident in the building … still under construction." Instead the report covered matters which Mr Cox wanted mentioned, eg, the rear stairway and planter boxes and the rear retaining wall and matters of lesser consequence. I would prefer to use the word "influence" rather than "pressure". (k) The refusal of CHNR to return to the site and complete the contract in the November 2002 - February 2003 period after the Mosses had made the Stage 3 payment. Comment: CHNR did not return to the site and sought the payment of further moneys. It also preferred to focus upon seeking the demolition of the works built by Mr Moss at the rear of the house. (l) The refusal of permission for the Mosses to reside in the shed on the Mosses' property. Comment: The shed was approximately 100 metres from the house and the property was about 6 acres in area. Mr Cox and CHNR relied on the terms of the contract which they believed gave them exclusive possession of the whole site. There was no discussion about fencing off the construction site. No builder or insurer would want the owners having unrestricted access to the construction site until after the house was completed. 581 There was detailed evidence on many of the matters mentioned in the foregoing subparagraphs and I will not attempt to summarise it. Mr Cox and CHNR strongly contested the allegations that they had acted dishonestly or improperly and applied pressure on Messrs Nowlan and Crandon to issue documents which appeared to favour the interests of Mr Cox and CHNR. Pressure is probably too strong a word but CHNR and Mr Cox did use influence. Mr Cox effectively communicated what he wanted. 582 There is no doubt that this job went sour and adversely affected all parties involved. One act of misconduct by a builder or its managing director in the course of erecting a building would not generally be sufficient to hold that a person was unfit to remain in the building industry. I am not considering serious frauds or serious crimes in this context. Nor would I consider that shoddy building practices on one job would normally be sufficient to so hold unless such practices were extensive on that particular job. 583 Where a builder and its managing director have built a large number of homes satisfactorily (or with only minor complaints) I would generally be slow to hold that one bad job should see them classed as unfit to remain in the building industry. This applies even more strongly where the builder with its managing director has won industry awards for building good quality homes. 584 The defendants stressed that in the present case they relied on the protracted delay by CHNR in carrying out the works, the shoddy building practice and the matters listed in subparagraphs (a) to (l) of the paragraph under the heading "Unfitness …". 585 While the delay in proceeding with the works until 30 June 2000, allowing for the wet weather was substantial it was not sufficient of itself to hold that Mr Cox and CHNR were unfit to remain in the building industry nor was the delay from 12 November 2002 to 3 February 2003. The latter is a different issue from whether the conduct of CHNR was repudiatory of the contract. 586 The shoddy building practices in the Mosses' case were extensive and provided a basis when coupled with other factors to hold that CHNR and Mr Cox were unfit to remain in the building industry. 587 As to matters listed in subparagraphs (a) to (l) of the paragraph under the heading "Imputation – Unfitness …", I would not, in determining unfitness, rely on the matters in subparagraphs (d), (h) and (l). Where in my comments I have qualified the allegations in the subparagraphs, I adhere to those comments. 588 Based on the Mosses' job alone, the combination of the protracted delay, the shoddy building practices and the allegations as modified by my comments in subparagraphs (a), (b), (c), (e), (f), (g), (i), (j) and (k) I would hold that CHNR and Mr Cox were unfit to remain in the building industry. In so concluding I have kept in mind the submission of CHNR and Mr Cox that I should not attribute to them any fraudulent conduct on the part of Mr Chaseling. Mr Cox was very much a "hands on" managing director who retained overall control of the Mosses' job and participated in all the critical decisions. He had the final say. Mr Chaseling was Mr Cox's executive officer and kept Mr Cox fully informed at all stages of the Mosses' job. Mr Chaseling's aggression reflected that of Mr Cox and each took action on behalf of CHNR. 589 The defendants put their case more widely, submitting that even without considering the Allans, Vimpanys and Willoughbys, the evidence with respect to the Mosses alone justified all of the imputations. That is probably so but I will subsequently analyse and assess the width of the imputations. 590 As there were houses for other people built by CHNR on which the defendants relied, I turn to these. Mr and Mrs Allan 591 On 11 March 1999 Noel Antoni and Isabella Anne Allan entered into a contract with Ilvarity, trading as CHNR, for it to build a four bedroom brick veneer house with family and living areas at Lot 212, The Terrace, Angels Beach (also known as 26 The Terrace East Ballina) for $138,198. It was to be their retirement home and also the home where their children and grandchildren could come and stay. Mr Allan was a fitter and turner by occupation. Prior to the contract they had discussions with a Mrs Leanne Wilton, a sales consultant with CH. The late Mr Allan's statements 592 Mr Allan died in July 2002. On 19 February 2002 he was interviewed by Mr Fordham and the defendants sought to rely on the previous representations he had made. I allowed those representations to be admitted in evidence. Mr Allan, referring to underneath the house, said that the foundations were completely off centre to the footings and the bearers on top of the footings were completely off centre to the foundation blocks. Three out of six of them were off line. Mr Allan said as to one of them that a brick pier was offset by 400mm and that the bearer on top of that was offset another 200mm. The pier should be in the centre of the concrete slab. Mr Allan pointed out that the concrete put in was only 50mm thick. He had removed the sand and inserted a piece of timber under the concrete. There was no adequate concrete footing. The pier was just lying on top of the sand. There should be a solid concrete footing. The builder had done a "cover up" job. There was an allied problem in that under-strength bolts were used in connection with the bearers and the footings. 593 Mr Allan said that the mortar was of very light construction and crumbled readily. The brick piers were 400 to 600mm out of line. The linen cupboard doors crept as they were rolled. That meant the floor was not completely straight. This was probably caused by the piers being out of line. The exhaust fan was kinked and did not work properly, that was also over where the piers were. Mr Allan complained continually about the foundations and said that nothing was done, and Ilvarity ignored him and when it came close to the occupancy date they put it back to keep him quiet. The representative of Ilvarity inferred that the occupancy date was put back because he was complaining. He had had the Council and their own engineer examine the piers. 594 Mr Allan summarised the position thus: "That is what they've put down supposedly to fix the problem which has not done a thing because the concrete they had there at the maximum would be 50mm which is 2 inches and it should be 600mm deep. … … They're all different piers." 595 Mr Allan detailed these defects: (a) Ilvarity put the water meter on the wrong side of the block. (b) The power points (in the kitchen) were covered by the cupboard that Ilvarity forgot to put in and new power points were installed dangerously close to running water. (c) Ilvarity replaced the gutters and downpipes three times and still did not get them right. The Allans had to sign a waiver. (d) Ilvarity drilled a hole in one of the roof panels. Ilvarity took 18 months to finish that and water was pouring on the plaster and the floorboards. (e) The fourth sink had been installed – it is not entirely satisfactory, but it has to do. 596 Mr Allan stated that items that Ilvarity should have finished within 35 days took almost two years and only under threat of a Fair Trading hearing. This placed considerable strain on both Mr and Mrs Allan. 597 Mr Allan said that when the foundations went down he asked the foreman about them and was told not to worry, they would be taken care of. The house was built over them and nothing was done until 12 months after they moved in and they are still in an unsatisfactory state. 598 Mr Allan said that in all they had over 100 complaints. He said that Ilvarity put their occupancy date back once for two weeks and when they complained further Ilvarity put it back a further four weeks. 599 It is a strong inference from Mr Allan's statements that relations between the Allans, on the one hand and Messrs Cox and Chaseling on the other, were poor. Mr Allan made this statement: "The only reason they finished most of the major things off is we took them to Fair Trading and they had to fix them up before they went to Fair Trading because all the items were listed. We've had basins replaced, both low-down suites replaced, bathroom mirrors replaced. Almost everything in the house had to be fixed." 600 Mr Allan said that he kept a very close eye on the works and that upset Ilvarity and made them very annoyed. Ilvarity told them the house was off limits and when the house finally got to lock-up stage Ilvarity locked it up and they could not get in to see what was going on. 601 Mr Allan stated: "Another thing we're invited by the painter to come up here to have a look at the paint. We were banned from the house at this stage. We come up and I noticed all the tiles in the wet areas being laid the wrong way around. It stated on the plans: 'lay tiles on diagonal'. All the tiles were being laid square and we told the tiler and he just ripped them all up and he took off somewhere. And that would have been a major catastrophe if all the cement, all grouting had set around those tiles and that was another disaster we averted." and "The house has turned out nice but only because we've been hammering them for 2½ years to get it that way." 602 Mr Allan was still very worried about the foundations and concerned that difficulties may arise if anyone wanted to add an extra storey, or on resale, because of the report an engineer would make on the foundations. 603 It was apparent that Mr Allan had had building and engineering experience and was able to detect faulty work. I have kept in mind that Mr Allan's evidence could not be tested by cross-examination. His statements were supported by other evidence. Mrs Allan 604 Mrs Allan detailed the following defects: (a) there were no steps to the front, rear and side entries to the house. The house was a metre off the ground. She heard her husband speak to Mr Cox about this after completion of the house. Eventually, Ilvarity provided steps at each of the three locations at no extra cost to the Allans. (b) the brickwork was of poor quality and at the insistence of Mr and Mrs Allan it was bagged. There were several arguments with Mr Cox about this. (c) black marks came through in the grout between the tiles, they were worse in the wet areas (d) the water meter was put on the wrong side of the block (e) initially Ilvarity did not put in the appliance cupboard shown on the plan and then altered the kitchen to instal the cupboard. On installing that cupboard the power points were covered up. Ilvarity located the power points in the side of the cupboard barely six inches from the kitchen sink. This was too close (f) Ilvarity put in the wrong size kitchen sink – it differed from the one the Allans ordered. The second sink buckled – it did not fit the hole properly. The Allans had to shop around for another sink and find one to fit the hole already in the bench (g) a hole was drilled in error in one of the roof panels. Despite frequent requests it took a long time to fix. Eventually, about 12 months after the Allans moved in the whole panel was replaced. If it rained heavily, the occasional drip was heard (h) the Allans selected ebony downpipes but slate green downpipes were installed. 605 About 23 September 1999 Ilvarity issued a Final Account for $13,305 and required payment to enable the keys to be handed over so the Allans could occupy the home. By letter of 24 September 1999 the Allans enclosed a cheque in that amount. They stated that the payment was made without prejudice to any rights that they may have under the contract, and on the basis that the payment was not to be deemed acceptance by them of the completion by the contractor of its obligations pursuant to the contract. 606 By letter of 4 November 1999 the Allans enclosed "a list of defects and faults (pages 2 and 3) requiring attention, most of which were made known to the foreman at a previous time." There were 34 items on the list, most of which were comparatively minor. By letter of 10 December 1999 the Allans forwarded an additional list of 11 faults and defects and by letter of 20 December 1999 a further list of 6 defects. Apart from the item as to the piers and foundations most of the other items on these additional lists were comparatively minor. In its reply of 21 December 1999 CHNR stated that some items had been attended to and that the remaining items would be the subject of appropriate action to complete the outstanding maintenance when its tradespeople returned from annual leave at the end of January 2000. 607 Some of the complaints were attended to by Ilvarity, but Mrs Allan could not recall whether this was before or after Christmas. Ultimately, the Allans made a complaint to the Fair Trading Tribunal. 608 Mrs Allan said that on 25 January 2001 Mr Chaseling arrived at the Allan's home, without notice and uninvited and banged on the door. Mrs Allan was minding her grandchildren. She said that Mr Chaseling was rather loud. Her husband attended to him. She heard "thump" and walked outside. Mr Chaseling was banging on the front of the garage door, which was a bone of contention. She said that her husband asked him to leave because he was upsetting them and that Mr Chaseling did, eventually. He was still not in a good mood and banged his car door and drove away at speed with his tyres screeching. On 28 January 2001 Mrs Allan wrote a detailed letter of complaint about Mr Chaseling's abrasive conduct to Mr Cox. She confirmed that the contents of this letter were true. 609 Mrs Allan could not recall exactly when Mr Crandon came to their house, but it was after they had moved in. She got her husband and he went with Mr Crandon to the door to under the house so he could have a look at the foundations, but they were only gone a few minutes. She did not observe Mr Crandon make an inspection of the underneath of the house. There is a small door on the eastern side of the house which gives access to the foundations. 610 In cross-examination Mrs Allan agreed that the house looked 'terrific' at the moment. She intended to continue to live there. Her husband told Mr Fordham that the house had turned out "nice". Mrs Allan agreed that her husband was a perfectionist. She agreed that a lot of their complaints were remedied eventually. She believed that the piers were there to help support the load bearing walls. She did not know exactly where the out of alignment piers were, as she did not go under the house. Mrs Allan agreed that the first application the Allans made to the Fair Trading Tribunal included a complaint about the piers and a complaint about two panels of the garage door. Mrs Allan agreed that at the hearing of the Allans' first application their complaint about the piers was dismissed because of the certification (by Mr Crandon) that the rectification was satisfactory. There was an order for IIvarity to rectify the garage door. 611 Mrs Allan agreed that most of the floors inside the house in the living area are hardwood timber. She said that there are, and always have been, creaks in the floorboards. She said the floorboards were creaking on 28 January 2005. That was the day on which Mr Daniel Lee, a consulting structural engineer, inspected the house. 612 Mrs Allan said that while the applications to the Fair Trading Tribunal were pending over a period of months, Ilvarity was doing work on their property. Mrs Allan was impressive, reliable and restrained in manner. Mr Crandon 613 Mr Crandon said that Ilvarity asked his office to undertake engineering designs, site investigation and preparation of engineering documents for Ballina Shire Council. His office prepared the engineering or foundation design off the plans prepared by Ilvarity. This was probably in 1999. Mr Crandon said that in 2000 he was contacted by Mr Cox consequent upon Mr Allan's call to him of concern about the foundations. Mr Crandon made an appointment to inspect the foundations and thought he was accompanied by Mr Harley or Mr Creighton on his inspection. Mr Allan pointed out that the piers supporting the floor under the rumpus room and lounge room area were out of alignment and "wanted some degree of satisfaction that there was not going to be a future failure of the foundation or alignment of the floor in the house". Mr Crandon found it very difficult to get under the house because it was very low to the ground. He was able to get his head through the doorway and shine a torch, but he went no further. Mr Crandon was not a small man. He gave this description: "I was able to observe from some distance the problem of piers being offset from their footings and some degree of offset with (? where) the bearers were coming down onto the piers. I could only locate that on three piers. I then advised Mr Cox with a letter and photographs that were taken later by Mr Harley, who was a lot smaller stature at the time than I was. He was able to get in there and photograph the site so that I could comment on it." 614 Subsequently, by letter of 21 September 2000 to Mr Allan, with a copy to Ilvarity, Mr Crandon wrote: "A misalignment of specific footings to the internal support piers under the residence had seen the placement of the brickwork offset the pad footing of which you have photographs. My verbal instruction to Brett Harley … was to enlarge the footings to give adequate support to the existing brickwork. This work was completed by Brett of which he has photographed his rectification. The photographs are explicit and detail accurately the extent of the remedial works. It is my opinion these works comply with my instructions and the rectified piers adequate to support all normal loads implied." 615 Mr Crandon said he had made the normal recommendation to strengthen the side of the pad that was limited "by digging down and adhering the extra concrete to the side of the footing and maintaining the structural identity or integrity of the pier to support the bearer." When asked whether he referred to any depth Mr Crandon replied: "Yes, it's normal practice to area it over 150, 8 inches in which you dig down beside the sand, keeping in mind you are in a very restricted area 18 inches or 450 millimetres high, to dig down and pack concrete and adhere it to the footing." 616 Mr Crandon explained that the house was on sand and the site was regarded as stable and that in "the order of 150 to 200 (mm) would have been quite adequate to get enough area just to stop any form of eccentricity movements of the pier". Mr Crandon said that as he could not get in physically to have a look at the site of the piers, he asked for photographs to be taken of the completed works. Mr Crandon regarded Mr Harley as a very competent builder. 617 Mr Crandon envisaged Mr Harley getting right under the house and being on his stomach as he added extra concrete to the footings. Mr Harley was working in a restricted space of about 18 inches or 600mm. Mr Crandon said that he did not make a further visual inspection after Mr Harley reported that he had done the work which had been specified. Mr Crandon disagreed that this was inadequate. He had carefully instructed Mr Harley what had to be done and they had discussed it. He relied on Mr Harley's known competence, his previous compliance with instructions, Mr Harley's report that he had done the work specified and the supporting photographs. Mr Crandon disagreed with the suggestion that the photographs revealed that the so-called repairs carried out by Mr Harley consisted of a layer of concrete being put adjacent to the original piers. Mr Crandon said that Mr Harley assured him that he (Harley) "dug down beside the footings and placed the concrete in there and adhering the concrete to the footings." 618 Mr Crandon said that Mr Cox, under the name of Craftsman Homes, had a very good reputation for building good quality homes. 619 Mr Crandon became very agitated and annoyed with the cross-examiner for suggesting that he (Crandon) had adopted a hopelessly inadequate approach to determining whether Mr Harley had done the repairs correctly. Mr Crandon remonstrated: "If the man – and I'm giving instructions to builders all the time every day, and they do the work. I don't go and crawl down bloody holes just to satisfy myself. If a man tells me he has done the job and he is a reliable man, you take that into your determination, yes, the job's been done correctly." 620 Mr Crandon's approach allows plenty of room for error. This was a difficult repair task and there was a chance, even with a reliable tradesman, of him not achieving the desired result. The work needed to be checked even if that meant Mr Crandon advising the contractor to retain another engineer who could adequately check the work. The foundations were an important part of the house. Mr Lee 621 Mr D Lee, a well qualified and experienced engineer inspected the Allans' property on 28 January 2005 and was provided with copies of the building agreement, the specification, the certificates of 17 March 1999 of Richard Crandon and Associates Pty Limited of Sufficiency of Design and Soil Profile Classification, Mr Crandon's letter of 21 September 2000 and the report of 19 September 2004 of T J Hollyoak Building Consulting Pty Limited. 622 Mr Lee was asked to advise as to the sufficiency of the piers and the misalignment or non-alignment of the bearers over the piers. During his inspection Mr Lee took photographs, some of which were attached to his report. Mr Lee reported: "The photos will demonstrate that essentially most of the piers have an eccentric load on them from the point of view that double member joists have been used and where they overlap they have to actually swap from one side of the pier to another and in most cases the offset is satisfactory. However there are half a dozen or so piers where the bearer is right over the edge of the pier. There are also a number of piers that have virtually no support to their base where the pier is completely off centre and in fact almost right on the edge or beyond the original pier hole that was bored. Some repairs have been attempted to the piers to provide support to the actual brick columns and these repairs to the pier bases appear to be a thin layer of concrete placed adjacent to the original piers that were bored. This appears to be inadequate in terms of providing adequate base support to the pier itself which makes it even worse from the point of view of the eccentric loading having double eccentricity. The other concern which hasn't been picked up in previous reports is the fact that hollow cored bricks have been used on edge or otherwise in a number of piers. This basically means that the pier is not a solid mass which is a normal requirement for piers and this should be rectified. Essentially you've got very little bearing space for what is left of the piers because of the hollow cores. Other than that there is obviously misalignment between some of the piers when you look straight down the edge of the piers because of the fact that the differences between the bearer positions on the piers varies as you sight along the line of the bearer. The ground conditions are sandy and there is no evidence of any subsidence from inspection under the house. There does not appear to be any major cracking observed in the walls so the strip footings seem to be intact. The floor internally seemed level and did not creak under foot. The bearers that run along the strip footings are sitting on the engaged piers sufficiently and no other problems were observed. Plumbing seems to be intact and no leaks were observed in the pipe work." 623 Mr Lee went under the house from the entry door across to the other diagonal corner and came back around the piers. As to his observation that the floor internally seemed level and did not creak under foot, Mr Lee said that he walked on the floor in the lounge area as he walked into the right of the hall, that is above the two piers. 624 Mr Lee said that the piers under the Allans' house were load bearing. Different piers bear different areas of floor. The piers themselves supported about 9 square metres of the floor and some of the piers possibly support some walls which would run across them, but he (Lee) had not checked the plans to cross-reference that further. 625 Mr Lee said rectification works had been done to four piers. They were under the middle of the lounge room floor approximately. Mr Lee was unable to check that the piers which had been "rectified" were not bearing the load of any wall because he did not have a set of plans to cross reference the particular pier positions. Mr Lee gave this evidence: "Q: But they positioned under … the lounge room floor? Some were A: I am just trying to think because the lounge is offset relative to a bedroom at the front of the house but generally speaking I would say yes." 626 Mr Lee made these comments, amongst others: "1. There are a number (greater than 6) of brick piers that have been constructed to one side of the concrete footing. This off-centre alignment of the piers on the footings is not consistently in the same direction. 2. There are a number (greater than 6) bearers located to one side of the brick piers. 3. There were four locations where some additional concrete had been placed adjacent to the original footing. These locations were the three piers closest to the under floor access, and one on the far side of the house away from the access door. My probing under the additional concrete revealed that the concrete was approximately 150mm thick. I could not determine whether the additional concrete was tied to the original footings by dowels or other means. 4. The specifications for the concrete piers by Richard Crandon and Associates were that they be 450 diameter mass concrete piers 400 deep." Mr Lee expressed these opinions: "1. The construction of the brick piers off-centre on the concrete footings are not in accordance with "proper and workmanlike manner" (as required by the contract) or in accordance with normal practices. The reason for this opinion is that the construction results in eccentric loads which are not structurally sound. 2. The construction of the bearers off-centre on the brick piers is not in accordance with "proper and workmanlike manner" (as required by the contract) or in accordance with normal practice. The reason for this opinion is that the construction results in eccentric loads which are not structurally sound. 3. Further, the extent of the eccentricity exceeds the parameters allowed by the masonry code specified and the parameter used for the design certification by Richard Crandon. (In the following, the brick piers sit on the concrete footings). Our calculations depict the following pier design capacities: Applied Load Pier Capacity Without Pier Capacity With 92mm Loading Code Eccentricity Eccentricity (max allowed by AS1170 Masonry code AS3700 Masonry code AS 3700 24kN 47kN 34kN Footing capacity calculations without eccentricity. 450 mm diameter by 400 mm deep concrete pad footing ultimate capacity is 33 kN (based upon friction angle of 30 degrees for medium dense sand and a density of 1.73 t/c m). The footing capacity is exceeded when the eccentricity exceeds 64 mm of the width of the footing. 4. The analysis above is based upon solid brick piers. The cored piers bricks used in the piers are not suitable (i.e. not in accordance with 'proper and workmanlike manner') and these should be replaced or grout filled. 5. The repairs undertaken to rectify the off-centre footings was not effective because there is insufficient depth to the additional concrete and they may not have been tied to the original concrete. 6. There were other piers through out the dwelling which were misaligned and should have been repaired but were not. 7. The reasons for the misalignment of these piers would have been associated with set out and construction rather than being misaligned due to ground conditions." 627 As to Mr Lee's opinions, Mr Crandon said: "I disagree with his opinion on 1 … I somewhat agree with him. It is not workmanship to have that offset … I do disagree with the fact that his statement [of a construction] which is not structurally sound. That is a point of objection I take up with Mr Lee." 628 Mr Crandon disagreed with Mr Lee's opinions numbered 4, 5, and 6, but agreed with opinion numbered 7. 629 Mr Crandon agreed that it was not possible to tell from the photographs whether the additional concrete was tied to the original concrete and that Mr Harley did not tell him (Crandon) the depth of the additional concrete. Mr Crandon agreed that the information he had about the repairs was what Mr Harley had told him had been done and the photographs which Mr Harley had taken. Mr Harley 630 Mr Harley said that he came to the Allans' site after the foundations had been poured, the base had been bricked up and the carpenters had started on the floor framing. Mr Harley said that Mr Allan's first concern was that a dog could get underneath the house and dig around the piers and cause them to topple over. He thought that this was a fairly exaggerated opinion. Mr Harley said that he discussed the matter with Mr Allan and told him that they would dig down beside the piers, put some concrete there and fix it up for him. Mr Harley believed that this discussion took place about the time the house was ready for linings. Mr Harley said that they (Ilvarity) dug around the piers and put a small amount of concrete on the top of the footings. 631 Mr Harley said that about six to twelve months after the Allans had moved into the house he received a further instruction. He was not sure whether it was at a construction meeting at the office, or during a telephone call. He believed the instruction came from Mr Crandon and that "the instruction was to dig down beside the pier, pull out from the pier and mass fill it with concrete." Mr Harley could not recall seeing Mr Crandon attempt to inspect under the house. He was not sure of the full depth of the pier but possibly it was 450mm. Mr Harley said that he did the work with Gary Creighton and Marshall Ryan. He was physically under the house doing the work which was difficult to carry out. They made up and used a metal sleigh which they pulled with a rope to take the material and pour in the concrete. 632 Mr Harley spoke of having rectified minor defects of which Mr Allan complained. 633 In cross-examination Mr Harley was not challenged as to the work he said he performed at the Allans' house. Mr Harley said that the foundation piers on which he worked were not close to the entry door under the house, but he would only be guessing as to how far they were from the entry door. 634 The rectification work required was difficult to execute. The available space in which to work was very confined. I do not doubt that Mr Harley and his co-workers worked under the Allans' house, removed materials, poured concrete and believed that they had carried out the instruction which they had received. Their work was never inspected by Mr Crandon. The photographs taken by Mr Lee illustrate the poor initial workmanship and some of the problems. The evidence of Mr Lee establishes that the necessary rectification works were not satisfactorily executed. There is no good reason to reject Mr Lee's evidence. He made a careful and detailed inspection, physically going under the house and then a final assessment. He adopted most of the recommendations of another engineer who was formerly with the same engineering firm, Mr Raymond Sergeant, in his report of 22 October 2004. 635 I have noted the difference between the evidence of Mr Lee and Mrs Allan as to the creaking of the floor. Mrs Allan seemed to be directing her attention to a different part of the lounge area floor from that on which Mr Lee walked. 636 I have not overlooked that the Fair Trading Tribunal dismissed the Allans' complaint as to the piers. It probably acted on the view of Mr Crandon. The Tribunal did not have the benefit of Mr Lee's report. 637 Counsel for the plaintiffs, in cross-examining Mr Lee, elicited that Mr Crandon was an engineer with lengthy experience in the Northern Rivers area and highly respected as a competent professional engineer. Mr Lee said that if Mr Crandon had certified that the bearers (in the Allans' house) were structurally sound, he (Lee) would accept that opinion. While these general observations set the background, I must concentrate primarily on the evidence relating to the particular issues which have been raised. 638 It is a great pity that the defects in the piers and their positioning in relation to the footings and the defects in the positioning of the bearers were not rectified at an early stage of the works, when the floor framing was being undertaken. Once the house reached lock up stage rectification became difficult. 639 It remains an issue for the future whether the problems with the foundations will adversely affect the resale value of the house, or the raising of money by way of mortgage using the house as security, or the addition of another storey. The house has stood since late 1999. Mr Chaseling 640 Mr Chaseling said that he came into contact with the Allans after the house had been handed over. In December 1999 they requested some maintenance items be completed. He instructed Ilvarity's maintenance contractor to do a site inspection with the Allans and go through the items one by one. 641 Mr Chaseling said that in about July 2000 he was involved in a Fair Trading Conference with the Allans. Mr Chaseling said that after the order of the Fair Trading Tribunal he instructed the garage door installer to carry out the required corrections. 642 As to the pier issue, Mr Chaseling said that he asked Mr Crandon to have a look at the piers and advise as to what rectification, if any, was required. Mr Chaseling thought that Mr Crandon telephoned and advised that he had instructed Mr Harley to rectify two or three piers under the house. 643 Subsequently, Mr Allan wrote again about the piers being out of alignment. On 8 September 2000 Mr Chaseling replied to that complaint. The Allans commenced another action in the Tribunal in 2001. That raised the piers issue and a number of other relatively minor complaints. The Tribunal rejected the Allans' case on the piers issue, apparently relying on Mr Crandon's letter. It ordered that Ilvarity pay the Allans $200 compensation but not in relation to the piers issue. 644 Apart from questioning on the incident which occurred at the Allans' home on 25 January 2001, Mr Chaseling was not cross-examined further as to the Allans. Mr Allan, who handled the matter for the Allans, is dead. I am unable to make any findings as to that incident. I do not regard it as important in the current context. Mr Cox 645 Mr Cox was referred to the segment of the ACA program in which Mr Allan is shown as saying, "Let me show you an example of one of the problems we have had in our house. The foundations are completely off centre to the footings. The bearers on top of the footings are completely off centre to the foundation blocks." Mr Cox was also reminded of Mr Fordham's comment, "They took Mr Cox to the Fair Trading Tribunal and rectification work was carried out on a number of areas including the foundations. The Tribunal accepted a report by an engineer hired by Craftsman who declared that the rectified piers were adequate." Mr Allan's voice was heard over a picture of a pier with a piece of wood. He was heard saying, "They say that's a proper concrete footing but it cannot be because I dug out under there and put a bit of timber there. There's nothing there. It only just laying on top of the sand." 646 Mr Cox said that what was said was incorrect because the pier was a concrete pad with a brick pier on it and there was a direct load from the bearer onto the brickwork down onto the pier. Even if it was off centre it was in stable ground which is sand, with virtually no movement or nil movement or settlement of any description either downways or sideways. (T141) 647 Mr Cox said (T141-142) that when he was told of the Allans' complaint of the piers being off centre on the foundation he went to the site and looked at the piers. He said "There was a solid concrete pad with a brick pier on it. The bearer carries across the brick. It's bolted with an endless thread rod into the concrete and into the bearer and there is no way you are going to get any movement on it, so it's a direct load. The only thing above it, loading onto it, is the floor and people walking on it, so it's more than ample to carry the weight, so I classified it as being quite acceptable." Although Mr Cox spoke in the singular, I took him to be referring to the brick piers under the floor of the lounge area. After Mr Cox's inspection he sought an opinion from Mr Crandon. Mr Cox saw Mr Crandon's letter of 21 September 2000 shortly after that date. 648 Mr Cox was upset by Mr Allan's earlier quoted comment, because he thought that it was incorrect. Mr Cox added, "It's only a bit of over spillage from the top of the pier. He raked the sand underneath it and put a timber in there …". 649 When Mr Cox gave this evidence I took him to be referring to an inspection he made shortly before he sought an opinion from Mr Crandon. However, Mr Cox may have been referring to an inspection he made at an early stage of the job. He explained: "I inspected the piers when the bearers and joists were just laid – I inspected the foundations and the brickwork when the bearers and joists were down and I had noticed they were on the edge of the pier pad and it had a full load bearing down onto the pier and into the ground, so there was, in my opinion, no detriment." Mr Cox said that there were footings under the pier pad. The footings were normally 450 to 500 to 600 mm deep. Mr Cox explained that as the concrete is poured on the top it spills over a little. The pad does not go down beneath the spillage, that is on the edge. In the centre the pad would go down at least a minimum of 400 mm, with an average of 500 to 600mm depending on the engineer's detail. In the previous sentence Mr Cox was dealing with the usual situation as to the depth of the pad. He said that from his observations the brick piers were on the pad so far as it extended down to the full depth. At T326 Mr Cox said that he did not inspect the piers after the floor went down. 650 Mr Cox thought when Mrs Allan referred to buying a new car and the expectation that it would be free from scratches and dents, this was "a little bit one sided". Mr Cox insisted that the Allans had got an excellent house. 651 In cross-examination Mr Cox agreed that the letter of 21 September 2000 of Mr Crandon indicated that he had not actually examined the foundations himself. Mr Cox said the work initially done was accepted, that he did not know what Mr Crandon had done, but Mr Crandon would have known what he was doing. Mr Cox was taken to the photographs attached to Mr Hollyoak's report on the Allans' home and coloured versions of them. 652 Mr Cox agreed that the piers were off centre on the concrete footings. He said that as a consequence there were very light eccentric loads on the footing because the only load was a bearer and joist in the floor. There was no roof load. He added, "Being tied down with a rod into the footing would transfer it to the bottom of the pier. I don't think that was bad building practice." 653 Mr Cox agreed that the aim was to put the pier in the centre of the footing. He regarded this as the ideal, but said that it did not happen in every case and that was "why you put 400 by 600 and a nine by nine or 225 pier on it." Mr Cox said, "There is no such thing as a pier being in the actual centre [of the concrete footing] every time." Mr Cox said "If the pier was half way … off the footing or overhanging it, it would need to have something down the side. Richard asked for concrete down the side [of] it and that was what I was understanding was done." Mr Cox thought that it was for the engineer to decide what should be done so that there was no movement. 654 Mr Cox agreed that the bearers were sitting on the edge of the piers and that the aim was to get the bearers close to the centre of the piers. Again, this was the ideal. Mr Cox contended that it was sufficient if the bearers "have a direct load down to the ground on a direct line it will carry." 655 In determining whether the bearers had been installed in a competent manner, Mr Cox was not prepared to form an opinion based on the photographs he was shown because photographs can be very deceiving and he would have to go into (under) the house. 656 Mr Cox said that he was not aware that some repairs had been attempted by Ilvarity on the Allans' piers (T325). While this reflects what Mr Cox said I am not sure that this is what he meant. He may have meant that he was not aware of the full details of the repairs. He was not in a position to comment on the repairs as he had not inspected them after they were done. He was told that they were "okay" and Mr Crandon was happy to certify them as adequate for the load they were carrying. 657 Mr Cox did not think there was a problem in the first place as he thought that the piers would carry the load down to the ground. 658 It seems from Mr Cox's evidence that he first inspected the piers when the bearers and joists were just laid. That inspection included the foundations and the brickwork and probably took place in the early part of the construction of the Allans' house. The contract was signed on 11 March 1999 and the final payment was made on 24 September 1999. Mr Allan had raised the adequacy of the foundations with the foreman. 659 Mr Cox may have made a further inspection or site visit after Ilvarity received the letter of 10 December 1999 and he was told of the complaint about the foundations. Mr Cox (T141) said that when he was told about the complaint of the piers being off centre he attended the site. At T325 when he was asked if he had ever looked at these piers Mr Cox replied: "I did once but I didn't get under the house because I was told … that it had been concreted down the side of the pad and … they are quite happy. The engineer was happy to certify that so I didn't go any further with it." Mr Cox said that at the time he did not know that Mr Crandon had certified on the basis of photographs. 660 Mr Cox said that then "we called an opinion from the engineer" (Mr Crandon). Mr Cox was then referred to Mr Crandon's letter of 21 September 2000 and said he had seen it shortly after the date. 661 The effect of Mr Cox's evidence is that he made a detailed inspection of the footings, piers and bearers fairly early in the construction of the house, that there were defects but there were direct loads and that overall the work was structurally acceptable. He probably made a more limited site inspection after the later complaint was received but this is not clear. He called for the opinion of an engineer. Mr Cox was not so concerned with the detail of what had been done by and at the behest of the engineer, but relied on the fact that Mr Crandon had certified the work as acceptable and adequate. 662 Mr Cox denied that the Allans had to fight tooth and nail to get Ilvarity to rectify the problems which they had identified. Mr Cox did not know the details of the three complaints the Allans made to the Tribunal and denied that if they had not made those complaints nothing would have been done. Footings Piers and Bearers 663 I accept Mr Cox's evidence that the ideal of the pier being exactly in the centre of the footings is often not achieved and similarly that the ideal of the bearers being exactly in the centre of the piers is often not achieved. However, when Mr Lee spoke of the piers being off centre on the concrete footings he was talking of a number of piers that have virtually no support to their base, where the pier is completely off centre and almost right on the edge or beyond the original pier hole that was bored. In other words, the work done was beyond any reasonable tolerances that should be allowed. Mr Lee also referred to there being half a dozen or so piers where the bearer is right on the edge of the pier. I agree that a pedantic approach should not be taken to the requirement that the piers be in the centre of the footings and that the bearers should rest on the centre of the piers. Mr Lee did not take a pedantic approach. His report and his evidence was to the effect that there were significant departures from good building practice. 664 I found the report and the evidence of Mr Lee and his careful and detailed inspection and examination of the works executed and the problems persuasive. I have preferred his assessment and opinions to those of Mr Cox. I do not accept Mr Cox's evidence that there was no problem with the initial works and that they were acceptable. Mr Cox accepted that Mr Crandon recommended extra work and that the matter had to be appraised by a professional engineer. I do not discount the many years of experience, building knowledge and skill of Mr Cox. The lack of an inspection by Mr Crandon (or another engineer of smaller physical stature) after the rectification works had allegedly been executed deprived Mr Crandon's opinion of some weight. I prefer the opinions of Mr Lee. I add that I have no doubt that Mr Lee was able to distinguish between concrete spillage and additional concrete added to some of the existing footings. 665 The work of Ilvarity as to the footings, piers and bearers has been proved to be unsatisfactory, that is, it was not done in a good and workmanlike manner. 666 As to the sundry complaints of comparatively minor defects of the Allans, it seems that most of these were ultimately rectified, but that it took a long time for this to occur. That rectification probably occurred because of the persistence of the Allans. I take into account that the Allans were fastidious and demanding. Relations between the Allans and Messrs Cox and Chaseling became very strained. Shoddy Building 667 The defendants relied on the following in relation to the construction of the Allans' house as supporting the substantial truth of the shoddy building imputations. I also add my comments. (a) The construction of engaged brick piers off centre on concrete footings in the sub-floor and the construction of bearers off centre to the piers. Comment: I have briefly reviewed the evidence as to these matters and concluded that this was faulty work. It was evidence of shoddy building practice. The defendants submitted that Mr Cox's opinion when he inspected, that there was no problem reflected adversely on Mr Cox's competence as a builder. That is putting the matter too highly. He thought that there was an adequate downward transfer of the loads and that the soil was stable. Mr Cox could not be expected to have the expertise of Mr Lee. Mr Lee was concerned at the extent to which the piers and bearers were off centre and that the piers were constructed of hollow bricks which, in his opinion provided insufficient support for the bearers. Mr Cox made an error of judgment in the first instance in accepting a lesser standard of work. When the later complaint was made he sought engineering assistance. That provided was less than adequate, but Mr Cox was not aware of that at the time. (b) The construction of the house initially without steps. Comment: There was evidence explaining how this occurred. There were no steps on the display home on which the Allans' house was based. Mrs Allan said that one just walked straight into it. She did not notice any "ramping up" of the sand. Mr Cox had envisaged that there may be some ramping up. The Allans' house was about a metre off the ground. This made it obvious that steps or some other means of gaining access to the house was required. After the Allans complained to Mr Cox steps were installed. The defendants submitted that the original state of the house (without a reasonable means of access) reflected shoddy and/or incompetent building. No steps were shown in the plan but Mrs Allan relied on the provision in the contract documents that anything necessary for the house was deemed included within the plan or specified (see Exhibit 39, the sixth paragraph under the page headed "Generally" in the specification.) Mrs Allan could not recall exactly when the question of the house having no steps arose. She thought it was fairly close to the date of completion, probably after completion. Mrs Allan agreed that CHNR built steps at the three points of entry to the house at no cost to the Allans. It was not suggested that there was significant delay in building the steps, although Mr Cox initially maintained the stance that CHNR was not obliged to provide them. There was obviously an initial decision not to provide the steps, as they were not shown on the plan, but the specification required all things necessary to be provided and steps or some other means of access was necessary. This was not an example of shoddy building practice or incompetence, but a misinterpretation of CHNR'S contractual obligations. (c) Various other faults including poor external brickwork and the problems referred to in the statements (previous representations) of Mr Allan, the evidence of Mrs Allan and in the letters they sent. Comment: The poor brickwork had cement hanging off the bricks. The brickwork, after much argument, was eventually bagged. I have earlier summarised some of the other defects. I note from Mr T Hollyoak's report of 19 September 2003 that Mrs Allan handed to him a list of defects allegedly notified to the builder as requiring attention and numbering 74 items. 668 Some of the defects earlier mentioned were of consequence, for example, black marks on the tiles on the floor of the wet areas, the appliance cupboard in the kitchen, the closeness to water of the electrical power points and a damaged roof panel. There were a lot of minor complaints. Some were not rectified. It took about 2½ years and much persistence by the Allans before most of the defects were rectified. The delay in attending to the defects, although some were very minor, was excessive. It was the combination of a lot of minor defects and their tardy rectification which the Allans, understandably, found intolerable. There were examples of shoddy building practices amongst these other faults. 669 Without wishing to engage in semantics the defendants have as to the Allans' home established an appreciable number of examples of poor workmanship and poor building practices. Using the word "shoddy" in the 5th sense set out in the Macquarie Dictionary, 1982 Reprint, namely "of poor quality or badly made" CHNR and Mr Cox have engaged in shoddy building practices. Some of the defects exhibited incompetence in building matters. 670 The defendants relied on all the materials proved as to the Allans' house in relation to shoddy building practices as materials supporting the substantial truth of the imputation of unfitness to remain in the building industry. In particular, they relied upon the installation of the piers, and the refusal to make adequate repairs. I have earlier expressed the view that there was an error of judgment on the part of Mr Cox. He did seek engineering assistance, but it turned out to be of dubious quality. Mr Cox understood, as was the fact, that Mr Crandon had certified that the rectified piers were adequate to support all normal loads implied. The facts relating to the installation of the piers and the steps taken to rectify the piers upon the advice of the engineer are not sufficient to support an imputation of unfitness to remain in the building industry. The various other faults are not of themselves, even in combination, sufficient to support an imputation of unfitness to remain in the building industry. The aspect which has troubled me most was the protracted delay in rectifying the minor complaints and probably only doing so because of the persistence of the Allans. The Vimpanys 671 On 7 February 2000 Gloria and Ian Vimpany entered into a contract with Ilvarity for the latter to build a brick veneer house at 72 Panorama Drive, Alstonville (Lot 205) for $117,421. The house was to have three bedrooms, a study and living areas of reasonable size. 672 Mr Vimpany was employed by the State Department of Agriculture for 35 years as a soil scientist. He was retired when he gave evidence. In the Vimpanys' negotiations with Ilvarity the question of the bricks to be used in the house was discussed. Mrs Vimpany did not like the colour of any of the bricks within the standard range used by Ilvarity. It was suggested that they look elsewhere and if they preferred other bricks they pay the extra money to obtain such bricks. They visited various brick suppliers and chose the brick which is Exhibit 3, being the Majorca brick manufactured by PGH. The Vimpanys also went and looked at a house, suggested by the brick supplier, which was built of the selected bricks. The Brickwork 673 Mrs Vimpany has a distinct dislike of terracotta orange colours. The brick selected has pink in some places and a whitewashed finish to the outside. They knew from the displays that there were some bricks that were a little dark. They wanted and expected that the side of the brick with the sandy wash (and sandy texture) would face outwards from the house and be visible externally. The other side of the brick did not have the sandy texture. Mr Vimpany said that the majority of the bricks on the other (or wrong) side have a terracotta colour and they did not want this to be visible. 674 The After Contract Variation of 30 March 2000 contains as one of the variations: "PGH Majorca bricks $1150" This amount was paid by the Vimpanys. 675 The site was cleared and levelled and the footings were constructed. When the bricklayers first commenced on the job the Vimpanys went and spoke with them and ensured that they understood that the bricks were to be laid with the side with the sand wash and texture facing outwards from the house. This bore fruit. Mr Vimpany stated that the footings were almost perfect. 676 Mr Vimpany said after the footings were laid, the slab was poured, the frame went up, the roof was put on and the bricklayers returned and started to put up the walls. When the Vimpanys next visited the site the bricklayers had commenced construction on the first portions of the brick walls and there were a lot of bricks laid with the terracotta (or wrong) side facing out. The Vimpanys asked the bricklayers to lay the bricks with the correct (or sand wash and texture) side facing out. The bricklayers continued to lay the bricks with many of them having the wrong side out. The Vimpanys approached Ms Jenny Santin, the sales lady at Ilvarity with whom they had dealt. Ms Santin was horrified and thought that the walls may have to be pulled down. She said that she would speak to the bricklayers and see if they could get the wall better. Mr Vimpany said that if anything it got worse, with the Vimpanys asking the bricklayers to stop. Mr Chaseling came to the site and met the Vimpanys there. Ms Santin and the bricklayers were also present at the meeting. The Vimpanys protested to Mr Chaseling that so many bricks were placed the wrong way and expressed their disappointment that that had happened and their hope that things would improve. Mrs Vimpany had marked some bricks in an area of the wall close to their large living area which were very bad. The Vimpanys asked whether they would change several bricks on that wall. Mr Chaseling agreed to change bricks, and nine bricks on that wall were changed and not the 20 bricks which Mrs Vimpany had marked 677 The Vimpanys were concerned about asking for further changes in case they affected the strength of the wall. Mr Vimpany said that they were never told by anyone on behalf of Ilvarity that it was the bricklayer's choice "best side out " as to how those bricks were to be laid. Exhibit 72, which consisted of two photographs taken by Mr Vimpany, indicated the difference between a wall where the bricks were laid satisfactorily and one where they were laid unsatisfactorily. 678 Mr Vimpany said that the last portion of wall which was constructed was much better and much of it was constructed correctly. Mr Vimpany said that they understood that about 70 per cent of the bricks, a large proportion, would be the paler colour, but that there would be a percentage of darker coloured bricks, that they would be spread on the wall as evenly as possible, but they would not be anywhere near the majority of bricks. Mr Vimpany estimated that 20 to 30 per cent of the bricks were incorrectly laid. He thought 20 per cent would be a conservative assessment. 679 Mr Vimpany denied that the complaint was that there were too many light coloured bricks in the back wall and that the Vimpanys wanted to sprinkle a few darker ones in. Mr Vimpany pointed out that every one of the bricks replaced in the wall had the pale colour put outside. 680 Mrs Gloria Vimpany said that she never saw Mr Cox at the site. She was referred to the evidence of Mr Cox: "Mrs Vimpany pointed out the bricks. There were too many light bricks in the back wall, I think it was the living room and they asked if we could organise the bricklayers to just sprinkle a few darker ones, take some out and replace with the bricks with black patches." 681 Mrs Vimpany denied that she ever had a conversation with Mr Cox where she said that, or anything like that. While it is possible that Mr Cox was present at the site meeting, as it involved a major matter, I accept that she did not say anything to the effect of that suggested. That would have been contrary to her whole approach to the brickwork. Mr Cox is mistaken in his recollection. There is force in Mr Vimpany's point that all the bricks replaced in the wall had the pale colour put outside. I accept Mr Vimpany's evidence to that effect. 682 Mrs Vimpany said that they went and saw Ms Jenny Santin who was in charge of their contract and complained to her about the brickwork. Mrs Vimpany believed that Ms Santin (whose name was spelt in various ways in the transcript, and I do not know which is correct) had arranged for the bricklayers to change the bricks. While I thought Mrs Vimpany did her best to tell the truth, her husband's recollection of the details was more reliable. 683 When asked whether she was satisfied with the changes of bricks, Mrs Vimpany replied: "Not really, because there were still a whole stack of bricks that were not properly fixed up. It did help a little bit to have some of them fixed up." 684 Mrs Vimpany did not ask for the other bricks to be replaced. She was fearful that they might have to pull the wall down if they had to replace all the other bricks. Cleaning of Bricks 685 Mr Vimpany said that when the house was finished the bricks were extremely messy, with quite a large amount of cement smeared over the bricks externally. The bricks have never been adequately cleaned except one small portion of a wall, which he had cleaned. He estimated that the portion he had cleaned was perhaps less than 5 per cent of the total wall area of the house. By letter of 19 November 2000, addressed to CH and faxed on 20 November 2000 the Vimpanys stated, amongst other things that the bricks outside were still covered in cement in many areas. They requested early attention to this and other defects. They pointed out that they had moved into the house 12 weeks previously. 686 Mr Vimpany said that after their complaint Ilvarity arranged for a handyman to attend. He had a bottle of acid. He was not prepared to do the cleaning, because it could damage the bricks. The handyman referred the matter back to Mr Cox, who was going to have the bricklayers come back and do the cleaning. 687 Mr Vimpany said that cleaning the bricks was quite complicated. Hydrochloric acid is used to remove the surplus cement. The acid then has to be neutralised with a substance such as sodium carbonate or bicarbonate. The bricks then need to be treated with phosphoric acid (or other suitable substance) in case there is any iron staining to remove. 688 Mr Vimpany said that after the handyman declined to do the cleaning, he spoke to Ms Jenny Santin. He also visited the office of Ilvarity and asked that the bricks be cleaned. Mr Vimpany believed he spoke to Mr Cox, who said that he would get the bricklayers back to do the cleaning. They never returned and the cleaning was not done. There was a suggestion in the cross-examination that the Vimpanys had not sufficiently pursued Ilvarity to have the work done. Mr Vimpany replied that, having written a letter and subsequently seen Mr Cox, there was no point in continuing to press Ilvarity as it was patently obvious nothing was going to happen. Mr Vimpany said that when they made requests for rectification, nothing happened. Mr Vimpany described cleaning the walls as a fairly difficult and tedious exercise. It was not a task that he should have to do. He said that they had not considered paying somebody separately to do that task. Mr Vimpany said that at the moment they have to accept the house as it is until they pay somebody to do the cleaning, or do it themselves. Mr Vimpany stated that if the house were to be sold, the messy brickwork would affect the value substantially, and they might have to do something. If the house is left in its present condition this would affect its sale value. 689 On 23 August 2000 Mr Craig Nowlan undertook a final inspection of the dwelling and issued an Interim Occupation Certificate. The Schedule of Outstanding Work contains this item: "Complete external brick cleaning." It is apparent that cleaning the bricks on the Vimpany's house is going to be a lengthy, tedious and costly process. Meter Box 690 Mr Vimpany said that on the original house plans the meter box was shown as being on the side of the garage, where it is now (see right elevation, section a-a, the working drawings and the letters mb). When the meter box was first installed it appeared in the middle of one of the lounge room windows and remained there while all the other windows, with one exception, were put in. 691 Mr Vimpany spoke to Mr Chaseling and asked that the meter box be located where it was supposed to be, on the side of the garage. Mr Chaseling replied that this could not happen unless the Vimpanys paid the extra to have it moved. Mr Vimpany said that they were then presented with an After Contract Variation dated 13 June 2005 (Exh 5). That included this item: "Change meter box to beside garage at front of house $420" Mr Vimpany signed that variation. 692 Mr Vimpany said that the Vimpanys paid that sum because otherwise no further construction would have happened. Mr Vimpany said that Mr Chaseling indicated that construction could not proceed because the lounge room window could not be put in and therefore the house could not be completed. 693 Mr Vimpany said that they could not afford any real delays as they were living in rented accommodation and had to be out of the rental house by a specified date. Mr Chaseling took advantage of the need of the Vimpanys to move into their house. Error By Vimpanys - Lifting Tiles 694 There was one matter where the Vimpanys made serious errors. In the promo there is a place in the film where some poor tiling on the outside porch at the Vimpanys' home is shown and Mr Vimpany remarks "Within two months of moving in here these tiles have all fallen off". In the context the inference is that this was the responsibility of CH. As Mr Cox pointed out, CH did not supply the tiles and did not lay them. The tiles inside the house were laid by Mr L Beeves, who was a subcontractor of CH. The Vimpanys engaged Mr Beeves to lay the tiles in areas for which CH was not responsible. CH was not responsible for laying the tiles on the front outside porch. Mr Vimpany gave these explanations. (a) because some of the tiles were the same (that is, on the areas for which CH was responsible and on the areas for which it was not responsible), the same tiler had to lay them all, and (b) because the house had been paid for and completed before the Vimpanys took over, there was some responsibility on CH's part to see that the tiles were properly laid and CH were not able to get the tiler back to fix the problem. These explanations do not adequately explain the error. 695 Mr Vimpany telephoned Mr Beeves three or four times and asked him to come back and fix the problem. Mr Vimpany acknowledged that the issue of fixing the problem with the tiles on the front porch was a matter between him and Mr Beeves. 696 Because of the error by Mr Vimpany defective work was wrongly attributed to be CH's responsibility in the promo. This error was not repeated in the program. Mr Chaseling 697 Mr Chaseling said that the Vimpanys had been in occupation of their house for some two or three months before he became aware that there were any problems. He said that he did not do anything in relation to them as Mr Cox was at the site inspection. He remembered various bricks being marked by Mrs Vimpany as being the wrong way round. Mr Chaseling did not recall saying anything to Mrs Vimpany about the bricks or about her complaints. 698 Mr Chaseling said that he was not involved in the meter box and that any conversation about shifting it and payment therefor was probably with Mr Cox. Mr Chaseling is mistaken. Mr Cox 699 Mr F R Cox was taken in his evidence in chief to the promo. He saw Mr Vimpany saying, "We have given up" and the "Craftsman Homes" signage. Mr Cox was then shown on the video refusing to answer any more questions and telling Mr Fordham and the TCN9 crew to get out or he would call the police. Mr Mike Munro, the presenter, concluded by saying "Ben Fordham with that investigation tomorrow." Mr Cox said that he felt pretty devastated, because the thing was so incorrect. 700 The promo records Mrs Vimpany saying, "I nearly had a nervous breakdown when they did it" and shows her near the bricks. Mr Cox said that he regarded this as a pretty low sort of act as Ilvarity never had any complaint from her when it handed over the house. The program records a similar remark by Mrs Vimpany about the bricks. She said that what happened was a great disappointment. 701 Mr Fordham then commented that, according to the Vimpanys CHNR made obvious mistakes, the brickwork was to be a specified colour (the intended lighter colour) but many of the bricks were laid the wrong way round. 702 Mr Cox said that he was at the site when Mrs Vimpany asked to have bricks changed, that the meeting occurred as Ilvarity was finishing the house off and there were a lot of people there. He could not remember whether the bricklayers were present (T125). Mr Cox said that there was no sign of any nervous breakdown on the part of Mrs Vimpany. She put a black cross in texta on the bricks she wanted changed. I have earlier declined to accept Mr Cox's evidence that Mrs Vimpany wanted some dark bricks sprinkled through the wall or walls and that the bricklayers did this. Mr Cox said he gave a direction to this effect. Mr Cox has confused the bricks which had to be reversed. Only some of the bricks marked by Mrs Vimpany were changed. The meeting over the bricks took place after the Vimpanys had spoken to Ms Jenny Santin and after most of the walls had been built. I accept the evidence of Mr Vimpany, that there was a considerable improvement in the building of the last portion of the bricks. Mr Cox said that if the Vimpanys had wanted anything changed, this would have been done. I do not accept that statement as correct. 703 Mr Cox said that the bricks used in the Vimpanys' house were ones where the bricklayer chooses the best side out and that is the way such bricks are laid. That is an erroneous assertion. I do not believe that such information was given to Mr Cox in a telephone call to the manufacturer or otherwise. Mr Brunnot from the manufacturer, P.G.H Bricks gave evidence that all P.G.H. bricks were sold with one face and one header (T649) and the standard Terms of Sale state "Face bricks are sold with one face and one header unless otherwise specified." The Price List of PGH does not otherwise specify in respect of Majorca bricks. Cross-examination did not weaken this evidence of Mr Brunnot. 704 Mr Cox thought that the wall shown in the promo and in the program was the one where the bricklayers had changed the bricks, and on the program the darker bricks were marked with white tape and were changed within a few days of handing the house over to the Vimpanys. 705 The Vimpanys signed the certificate of practical completion on 23 August 2000. The certificate recorded that the Vimpanys had inspected the works and acknowledged that "the works have been constructed to our satisfaction." The Defects Liability period commenced on 23 August 2000 and expired on 22 November 2000. It was contended that the Vimpanys would not have signed that certificate if they had any outstanding complaints. That does not follow. The Vimpanys felt that they could not make any more changes to the bricks in the walls. There was a defects liability period of some three months in which notified defects could be rectified. Further, they needed to move into the house because they had to vacate the rented premises in which they were living. 706 Mr Cox said that he felt terrible when he heard (and saw) Mrs Vimpany state that it was a great disappointment to have the bricks laid so poorly. Mr Cox did not think the bricks were poorly laid, but they were. 707 On being referred to Mr Vimpany's statement on the program - "The whole wall was left very messy covered in cement um … I've taken it on myself to clean the top part of the wall. But the bottom half of the wall I've left so we can show what a mess they did leave the bricks and that appears right around the house in places." Mr Cox said that the bricks were cleaned and that the amount, if any, of cement left on the bricks would have been very minute. He added, "Generally, you know, it was just a fabrication." There was no fabrication on the part of the Vimpanys as to the brickwork and its condition. Mr Cox defended his allegation of fabrication (T179) because his maintenance man attended the Vimpanys' house and did the maintenance on it. Mr Cox said he would have to talk to his maintenance man. Mr Cox said that his maintenance man "came back to me and told me that the job was complete and Mr and Mrs Vimpany was quite happy …". Mr Cox did not seem to know the real facts. If he did receive such a report it was untrue. I am sceptical whether such a report was made to Mr Cox. 708 As mentioned earlier, Mr Nowlan on his inspection on 23 August 2000 had recorded "Complete external brick cleaning." 709 In his report (p5) of 22 August 2003, Mr Hollyoak listed the following items as defects, amongst others: "Bricks laid inside out, rear face on the outside. Bricks not cleaned adequately or sufficiently." 710 Mr Hollyoak has written: "The bricks as supplied to the Vimpany residence are a PGH Majorca type which are a brick that only has one finished face, ie cannot be used inside out. There are bricks made that have two acceptable face surfaces, but the PGH Majorca is not one of them. Cleaning of brickwork that has allegedly been carried out is not acceptable. Many smudge/smear marks are evident and a complete section of bedroom 1 ensuite wall has not been cleaned at all. The owner commented that he has cleaned the majority of brickwork, and this could be true." Mr Hollyoak's observations on inspection of the laying and cleaning of the brickwork (p3) are to the same effect. 711 In cross-examination Mr Cox said that he was unaware that the Vimpanys had been pleading for the bricks to be laid the right way around. This is incorrect. It is probable, given the severity of the problem and Ms Santin's fear that some of the brickwork may have to be demolished that the matter was brought to Mr Cox's attention. He said he attended the site meeting. Ms Santin was also there. She was not called. 712 Mr Cox was taken to the program and shown the section where Mr Vimpany was indicating the wall with concrete marks at the bottom of the wall below the area which he claimed to have cleaned. Mr Cox agreed that if the whole wall was in the same condition as the bottom part of the wall it would spoil the appearance of the house and it would be shoddy building practice to leave the exterior walls of the house in that condition. Mr Cox said that Ilvarity did not leave the brickwork in that condition, that when the brickwork was completed professional cleaners came in and pressure cleaned the bricks. Mr Cox said that what was on the bottom was "run down from scrubbing the bricks from the top with water and acid." I do not accept the evidence of Mr Cox that Ilvarity had the bricks adequately cleaned. Mr Cox said that the Vimpanys did not complain about the cement marks on the exterior walls to his knowledge. They did seek to have the brickwork cleaned and he (Cox) was aware of this. 713 Mr Cox said that Mr Vimpany's letter of 19 November 2000 (faxed 20 November 2000) would have come into Ilvarity's office and gone straight out to the foreman who "would have then taken care of the work and our maintenance man would have gone to the site and done the maintenance" (T189). Mr Cox also said: "Our company pressure cleaned the Vimpany's house and sent a maintenance man back and recleaned any areas that needed to be done." 714 This was what Mr Cox hoped had been done. He did not know whether it had been done. Mr Cox was acting on assumptions, not knowledge. He said that he had no knowledge of what was done in response to Mr Vimpany's letter dated 19 November 2000. The acceptable evidence establishes that the brickwork was not adequately cleaned by CHNR. 715 Mr Cox departed from some earlier evidence he had given and said that he did not agree that it would be shoddy building practice not to clean the brick walls. This was after he realised that the brickwork may not have been adequately cleaned and that his earlier assertions may have been wrong. 716 Mr Cox agreed that if a builder put a meter box in the middle of a window, the builder would be engaging in shoddy building practice. He was not privy to the information about shifting the meter box over and whether it was as a result of an agreement with the owner. Mr Cox said that Mr Chaseling mainly dealt with Mr Vimpany as Mr Chaseling was at the office when Mr Vimpany came in. Mr Cox added "Either John or my wife." Mr Cox doubted whether either his wife or Mr Chaseling would have threatened to stop construction if the Vimpanys did not pay the variation. If this was true it would be, Mr Cox agreed, an unreasonable way to behave towards the Vimpanys. What Mr Vimpany said on this point was true. 717 Mr Cox agreed that the variation would have been and was signed by him. He explained that the variation would have been done and sent to him "and I would have changed (sic) and there would have been a reason for the meter box change taking place. Why at this stage I can't tell you but there would have been a reason for it." 718 Both Mr Cox and Mr Chaseling stated they had no knowledge of the meter box variation. The variation, on its face, is explicit and provides for the meter box to be changed to beside the garage where the plans state it to be. On the evidence as it stands Mr Vimpany was charged $420 for shifting the meter box from a window area to the side of the garage where the plans show it should be. This appears to be an incorrectly charged variation. It is probable that Mr Vimpany had to sign it to avoid holding up the completion of the house. 719 It has been established that the bricks were laid incorrectly in that many were laid with the wrong side out and that some bricks were changed so the correct side faced out. Further the Vimpanys, although disappointed with the laying of the bricks which they regarded as poor, did not insist on the brick walls being demolished and rebuilt. They had strong personal reasons for wanting the house finished. 720 It has also been established that the external brick walls of the house were not adequately cleaned and left a lot to be desired, particularly from a visual aspect. Shoddy Building 721 The defendants relied on the following in respect of the shoddy building imputations: (i) the construction of the house with a large percentage of the bricks facing the wrong way around; (ii) the dirty and unclean condition the bricks were left in at the time of completion; (iii) other errors including the misplacement of the meter box, careless painting, the inadequate installation of the roof insulation and other matters referred to in the letter of complaint of 19 November 2000 from the Vimpanys and the report of Mr Hollyoak. 722 I have previously concluded that some of the walls of the Vimpanys' house were constructed with a large percentage of the bricks facing the wrong way out. It is remarkable that when the Vimpanys drew attention to the mistake, and they did so on several occasions, that CHNR did not stop the bricklayers proceeding erroneously and have them lay the bricks with the face side out. The lack of action by CHNR after being alerted to the error being made in laying the bricks was never satisfactorily explained. The suggestion that bricklayers like to lay bricks in their own way is no justification for what happened. Time and the pressing needs of the Vimpanys to be able to move into the house did not permit the defects to be properly rectified at a late stage in the job. I have also concluded that CHNR did not clean adequately the bricks in the wall of the Vimpany's house and left them in a dirty and unclean condition. This was a shoddy way to leave the house. 723 The defendants relied on other matters, which they conceded were of various seriousness, as indicative of shoddy building practice, including: (a) The incompetent painting of the kitchen and bathrooms where a spray paint used on the ceilings splattered on the benches, sinks vanities and bath (T868); (b) the failure to lay properly or at all the roof insulation which was left in its original plastic bales in the roof (T868). The story as to this and the attempted rectification is a sorry saga. The Vimpanys ended up getting an outside contractor to come in to do the job properly and paid him; (c) the construction of at least three windows in the wrong place during construction; these had to be moved. These errors were noticed by the Vimpanys on their almost daily site visits; (d) the absence of the kitchen skylight; (e) poor paint finishes in several areas and bulging plasterboard; (f) left hand overhead cupboards in kitchen were out of square and sagged; (g) truncated truss and rafter crossings in roof not clipped back or back-blocked; (h) front entry posts not installed in accordance with the specification; and (i) Temperature pressure relief drain from hot water unit was not discharging at least one metre away from the base of the unit. Mr Hollyoak recommended that heat traps be installed on the delivery pipe from the unit. The items listed in sub-paras (d) to (i) were substantiated in the report of Mr Hollyoak. 724 In combination, the defective bricklaying, the failure to clean the brickwork adequately and the other errors, briefly outlined in the previous paragraph, constitute shoddy building practices. CHNR did not adequately supervise the work which was done on the Vimpanys' house. As to the Vimpanys' house the defendants have proved the truth of the imputation. Unfitness 725 As to the unfitness imputation, the defendants submitted that the allegation of CHNR and Mr Cox that the Vimpanys' assertion as to the failure to clean the bricks was a fabrication was evidence of their unfitness to remain in the building industry. The defendants further submitted that Mr Cox had told lies when he asserted that Mrs Vimpany complained about an excess of light coloured bricks through the walls. It was also false for Mr Cox to say that the Vimpanys' last complaint about the brickwork was the only complaint ever made. Perhaps, that was the only complaint Mr Cox remembered. The defendants also submitted that Mr Chaseling's evidence that he was not involved with the Vimpanys until some months after they took possession of the home and that he did not recall speaking to Mrs Vimpany about the bricks was deliberately false. 726 I am satisfied that Mrs Vimpany did not make the statements attributed to her by Mr Cox and that Mr Cox erred when he said that the only complaint made by the Vimpanys was what he described as the last complaint. I am also satisfied that Mr Chaseling did speak to Mrs Vimpany about the bricks. However, whatever suspicions I may have as to whether Mr Cox or Mr Chaseling was giving deliberately untruthful evidence on these points, the evidence is not sufficient to enable me to make findings to that effect. 727 The defendants also relied on the whole of the conduct of CHNR and Mr Cox previously detailed as to the Vimpanys' house as establishing the substantial truth of the unfitness imputation. The defendants highlighted the gravity of the error as to the laying of the bricks and what they described as the substantial failure to address the complaint, the dirty condition of the bricks and the total failure by CHNR to address a number of complaints about this and the unexplained insistence that the Vimpanys pay extra for the meter box to be moved. 728 The critical failure by CHNR was not to address the problem of the bricks being laid the wrong way around when the Vimpanys made their early complaints about the laying of the bricks. Ms Santin was not called to deny that such early complaints were made. By the time of the site meeting the constraints affecting the Vimpanys meant that it was too late to demolish the walls and rebuild them with the correct or face side facing out. The failure by CHNR to heed the dirty condition of the bricks and have them cleaned adversely affected the appearance of the house. The house should not have been left in that condition. The dirty condition affected the enjoyment of the house by the Vimpanys and probably its value. 729 As to the meter box, Mr Hollyoak in his report, identified one possible basis for the extra charge for moving it, but did not regard that basis as valid. CHNR did not specify that basis. 730 Serious as the defects in the Vimpanys' house were I would not regard them, taken individually, as being sufficient to justify the imputation that CHNR and Mr Cox were unfit to remain in the building industry. Taken together, my mind has vacillated as to whether they are sufficient to justify the unfitness imputed. On the balance of probabilities I think they fall marginally short of justifying that imputation. However, these defects in the Vimpanys' house need to be considered in conjunction with the defects in the Mosses' house, the Allans' house and the Willoughbys' house. The Willoughbys 731 On 25 March 1997 Mr and Mrs Willoughby, an elderly couple, entered into a contract with Ilvarity for the latter to erect a three bedroom dwelling on Lot 10 Gardenia Court, Mullumbimby for $130,355. 732 On 30 June 2000, following prior telephone contact, the Willoughbys wrote to CH that their kitchen cupboard and benchtop had pulled away from the wall and asked CH to look into the matter. They also advised that there appeared to be machine marks on the top of all the four drawers in the kitchen bench. 733 The Willoughbys had graver problems with their recently erected house and they obtained a Special Purpose Report, dated 3 January 2001, from Paul McLisky, Building Consultant. This followed an inspection on 12 December 2000. The house was of brick veneer construction, with timber floor, wall and roof framing set on brick piers and a brick perimeter wall with corrugated steel roof cladding. Construction commenced on the house in mid 1997 and the northern side of the house appeared to be constructed on fill cut from the southern side. There is a large fig tree to the south eastern corner of the house. McLisky Report 734 Mr McLisky dealt with the following issues: 1. Subsidence in the floor (a) noticeable drop of floor level of kitchen/dining room; (b) the subsidence has caused cracks between the wall and the cornice in the master bedroom and bedroom 1, gaps between the skirting board and the flooring in the dining room and other cracking; (c) considerable cracking of the foundation soil in the sub-floor; and (d) the foundations and footings needed to be assessed for adequacy and stabilised. 2. Movement in the external walls (a) subsidence and cracking and significant movement in the eastern wall and part of the eastern section of the northern wall of about 10-12mm; (b) significant structural movement in the building caused by subsidence of the foundations and footings of the northern wall and the northern end of the eastern wall. This was considered a major structural defect; (c) it was unlikely that the cracking had been caused or influenced by the fig tree to the south west [earlier stated to be the south eastern] corner of the house; (d) the most obvious cause of the movement would be instability in the foundations due to subsidence on the fill with the footings not being adequately bedded into stable ground; and (e) it is likely that the north eastern corner of the house will have to be reconstructed so that it is plumb and tight against the aluminium door. 735 Mr McLisky stressed the need for a thorough assessment by an independent consulting engineer of the foundations, footings and construction with specification by such engineer of the rectification required. 736 Mr McLisky's report was forwarded to CH by the Willoughbys under cover of their letter of 13 March 2001 which states, amongst other things: "The building was inspected by your engineer on 8 February 2001, however, he did not assess the foundations and footings for adequacy as recommended in Section 1.4 of the enclosed report [of McLisky]. We have not heard from your company since the visit of your engineer and as it is now nine months since we first contacted you we feel that the matter is now of some urgency." The Willoughbys' letter also refers to other previously mentioned matters: (a) front and second bedroom doors not closing properly (b) cupboard door scraping on bulkhead when opened (c) the need for a manhole so that they can access the main part of the roof. 737 The letter also raised: (a) there were no air holes across the back of the house; and (b) the air holes in the front have been covered over with beams supporting the verandah. 738 The Willoughbys expressed their disappointment at CH's failure to contact them and stated that if they were not contacted within five days with a firm date for commencing repairs and rectifying the structural faults, they would have to make an insurance claim against CH through the Department of Fair Trading. 739 The Willoughbys' letter elicited this undated reply signed by Mr Chaseling of CH (Ilvarity). "Please find enclosed the Engineers report in respect of your home. We are prepared to undertake the remedial works recommended provided however that you are prepared to compensate us for the cost incurred." Crandon Report 740 Mr Crandon was the engineer. He expressed the opinion that the cause for the differential settlement in the NE corner of the building was "a large mature Moreton Bay fig tree approximately 8 metres from the SE corner of the building" and that this was evident from the pattern of the cracking of brickwork and internal linings. 741 Mr Crandon wrote: "I believe at the time of construction the Builder had raised the future problems of such a large tree in close proximity and its effects on the long term serviceability of the building foundations. Piering to solid ground was constructed into all perimeter foundations in fill areas to encounter this tree problem. It is now evident that the tree influence, although greater in the fill areas, is now showing influence in the natural soils say 2 – 3 metres below. To correct the problem I can only suggest the deeper underpinning to say 3 – 4 metres to found the building below the area of influence of the tree. Placement of a 900 wide pathway against the building would help maintain the permanent moisture level under the footings that are being effected by the tree roots. This work should be completed under the direct supervision of a Geotechnical Engineer. The other area of concern is the minor cracking of the brickwork in the western wall in the garage area. Again this area of the building is in fill area and subject to tree influence similar to above. In this situation I am of the opinion, because of the very minor/slight cracking in the brickwork, the defects should be monitored for possible deterioration over the next twelve (12) months and the matter reviewed." Aungle Report 742 On 18 March 2001 Mr Rob Aungle, a consulting engineer inspected the Willoughby's house and site. He had the Geotechnical report of December 1996, the foundation drawing of 4-55-96 Sheet E1 with engineering certification by Col Jenkins of 5-12-96, Mr McLisky's report and Mr Crandon's report. 743 Mr Aungle wrote: "General comments: The problems which the owners are experiencing with the movement and cracking of the house are being caused by a major design fault and the effects of this will get worse as time goes on. Even if parts of the house were to be underpinned as suggested by Richard Crandon, there could still be no guarantee that this would solve the problem, as the fault is with the adequacy of all of the concrete footings. In our opinion the perimeter strip footing is half the thickness required by the relevant Australian Standard, and is not founded to an adequate depth. The piers as designed which support the strip footings in the filled zone are completely inadequate. Similarly the pad footings in this zone are not founded to an adequate depth and are exhibiting lateral and vertical movement. The geotechnical report (prior to clearing and earthmoving operations) classed the site as 'SR' – slightly reactive. However, upon completion of clearing, root grubbing and filling, as shown in the design drawings, the site should have been re-classified as Class 'M' or 'H' and the foundations designed accordingly. As the Fig Tree to the east of the house was to be retained as a feature, the design should have made allowance for this. Pruning of subsurface roots as well as the limbs within the building envelope, subsoil drainage and re-siting the house are issues which should have been considered before construction commenced. Geotechnical Report Our overall classification for this site is 'M' – moderately reactive, although the foundation conditions in the NE corner could be classified as 'H' – highly reactive. This is indicated by differential movements of up to 30mm between the highest and lowest points on the perimeter of the building and the clay content of the fill material. The report by Col Jenkins states that the soil here is krasnozem and behaves like confined wet sand – ie little differential movement as soil moisture conditions change The soil as observed beneath the house has a high clay content and behaves like a clay, ie the volume changes significantly with soil moisture – shrinking and cracking when dry, swelling when wet. Earthworks The Moreton Bay Fig tree eastern side of the house, estimated age: 50+ years, was existing when Craftsman Homes began construction in 1997. The building pad was created by clearing a stand of Camphor Laurel trees, cutting the high side of the site (southern) by one metre and filling the low side (northern) It is our opinion that the control of compaction of the fill, the choice of filling material and the subsoil drainage works are unsatisfactory." and "Conclusions: 1. Unless the part of the house sitting on the clay fill material is rebuilt, with correctly sized footings and piers correctly placed beneath the footings, the problems experienced by the owners will continue into the future and the condition of the house will continue to deteriorate. 2. The fill upon which the house is built must be provided with adequate subsoil drainage and the subfloor ventilation must be improved or the floor sheeting and subfloor framing will be adversely affected. 3. The structural repairs should be designed by a suitably qualified and experienced Structural/Geotechnical Engineer." Dept of Fair Trading 744 About 11 May 2001 the Willoughbys lodged a complaint with the Department of Fair Trading and provided copies of the relevant correspondence, reports, a statutory declaration from Mr Willoughby and quotes from builders. 745 A note of 4 March 2003 of J Palombo, Senior Technical Consultant of the Building Assessment Unit of the Department of Fair Trading records that a site meeting was held by Mr Palombo with Mr J Chaseling of Ilvarity, its engineer, Mr Crandon and the Willoughbys. Mr Palombo wrote: "This meeting was successful in that the builder represented by John Chaseling and their engineer Richard Crandon accepted that the problems were as a result of the company's negligence and that they were responsible for an appropriate method of rectification. The builder agreed and the engineer will design an appropriate remedy. As the work is to be rectified by the original builder I advised the claimants that their insurance claim would be closed pending a satisfactory outcome. This they accepted." 746 The proposed settlement did not eventuate. In their letter of 30 April 2003 the Willoughbys set out their understanding of the proposed settlement. However, in an attachment to their letter they stated that they were unhappy with Mr Crandon's substitute plans as they differed from what had been discussed. The Willoughbys summarised the problems as wrong soil classification and inferior piers and footings. 747 The further report of 1 May 2003 of Mr Rob Aungle sets out "Deficiencies with Structural Rectification Works & Specifications." Mr Aungle makes some ten points and his criticisms of what Mr Crandon proposes have considerable bite. 748 The Department of Fair Trading obtained a report from Bonacci Rickard (NSW) Pty Limited, consulting engineers. The report states: "Based on the documentation at hand, it is our opinion that the method of rectification put forward by Mr Crandon does not provide a reliable long-term solution. This is reverberated in the disclaimer provided by Mr Crandon which states that his design is 'a compromise between an effective repair & reasonable costs. These measures will not necessarily eliminate future cracking". A more reliable approach in our opinion would be to underpin the entire length of the strip footing located within the fill zone which would require approximately ten new underpinning piers. The underpinning detail put forward by Mr Crandon is a typical underpinning method used by contractors in NSW and is acceptable. We believe that some cost savings can be made with this detail as the capping beam to the pier can be introduced at pier locations only instead of along the entire length of the strip footing. Consideration should also be given to either underpinning each isolated brick pier in the fill zone or installing supporting steel beams which would need to incorporate the installation (of) four new piers. These measures would in our opinion alleviate any issue with settlement of the fill due to inadequate compaction." 749 By letter of 18 September 2003 to the Willoughbys the Office of Fair Trading advised that approval had been granted to settle their claim for $73,789 and that such approval had been based on the quotation from the contractor RA & KM Boyle and the tax invoice of Rob Aungle & Associates. The letter stated that the Deed of Release enclosed and to be signed by the Willoughbys did not preclude them from making a further claim against the comprehensive insurance scheme should further defects become apparent. The Willoughbys were advised that upon returning the Deed of Release duly executed a cheque would be issued to them in the amount of $73,789. 750 Ms Rosa Cheung, Claims Officer made this file note on 22 September 2003: "Fred Cox of Ilvarity Pty Limited (the contractor) rang in response to FTAC's approval letter dated 18 September 2003 at folio 221. Mr Cox said that he intended to attend to the problem and his engineer was preparing the plans for rectification work. I advised Mr Cox that FTAC had written him a letter in May 2003 with its engineer's report, to date we have not received a response for the letter. Mr Cox said that he had not received the said letter I confirmed the address of the letter to which it was sent. I advised Mr Cox that this matter has been going on for more than a year and he has not contacted FTAC since May 2003, the claim has been approved based on all available information in file. I also advised Mr Cox that FTAC could not rescind its decision once it has been made. I advised Mr Cox to send us his representation if he disputes against the decision to the Director of Home Building Insurance or to seek advice from his legal adviser. I ensured that all information submitted would be taken into consideration when debt recovery action takes place." On any view the response of CH to rectifying the problems encountered by the Willoughbys had been tardy. 751 On 19 May 2004 Ilvarity agreed to pay The Fair Trading Administration Corporation, without admission of liability, $50,000 in full and final settlement of the Corporation's claim of $77,715 against it arising out of the building works carried out for the Willoughbys at 15 Gardenia Court, Mullumbimby (No 15 was Lot 10). The amount of $50,000 was to be paid by way of 24 monthly instalments of $2083.34. Mr Cox 752 In cross-examination, Mr Cox denied, erroneously, that there were a number of serious problems with the house. Mr Cox stated that in 2000 there was some mention that there was some movement in the house. Mr Cox said that he did not remember seeing the letter of 30 June 2000 from the Willoughbys, but did remember having people go up and have a look at rectifying the house. 753 Mr Cox said that the letter of 13 March 2001 from the Willoughbys, and the attached report of Mr McLisky, did not come to him. They would have gone to Mr Chaseling. Mr Cox said that Mr Chaseling also dealt with the site inspection and the retention of an engineer. Mr Cox said that he did not know whom Mr Chaseling arranged to attend at the site. 754 Mr Cox accepted that the front part of the house was built on fill and that it was notorious that fill, depending on the compaction of it, was highly likely to be less stable than ordinary soil. 755 Mr Cox said: "When the house was first talked about and I inspected the block of ground I made reference to the fig tree and it should be removed as a matter of urgency. The only thing I neglected to do was put that in writing. Any fig tree that's within 200 metres of a house has to be moved. …" 756 Mr Cox said that the tree was 45 to 50 feet in height with a spread of probably more than that; it was massive. Mr Cox said that CH employed an engineer (Mr Col Jenkins) to do the design for the foundation, and the footings for that building and that block, and followed his design to the letter. It was inspected and passed by the Council. Mr Cox said that he was not particularly saying that he was aware before building the house that the fig tree posed a potential threat to the stability of the house. He said, "the reason I worried about it is it had a limb that came out right over the top of the house. … eventually Mr Willoughby had it trimmed back. …" 757 Mr Cox seemed to accept that the fill was or might be inadequately compacted as he said, "That was one of the reasons there was piers put down." Mr Cox said that the house should not have been inadequately drained as CH put a dish drain around the back of the cut." 758 Mr Cox said that he had not seen Mr Chaseling's undated letter of response to the Willoughbys' letter of 13 March 2001 and had no input into that letter. 759 The letter or certificate of 28 April 2003 from Richard Crandon & Associates Pty Limited was headed "Attention Mr Fred Cox" and proposed certain rectification works. By April 2003 Mr Chaseling had left. Mr Cox said that Mr Chaseling was still handling this matter. Both in the letter and on Drawing 2 the engineer disclaimed liability. When asked as to the propriety of suggesting a compromise between an effective repair and reasonable costs, Mr Cox said that he thought that the repair would have worked. 760 Mr Cox maintained the position that the problem which had arisen was essentially an engineering one. When it was put that it was not merely an engineering problem and that Ilvarity's workmen knowingly did not put the piers down to solid ground, Mr Cox responded that the Council had inspected the piers and passed them. He assumed that the piers went down to solid ground. 761 The evidence indicates that the piers were too shallow to be effective. Mr Cox said that he did not know why the problem with the piers was not fixed. He referred that issue to Mr Chaseling. 762 Mr Cox did not recall, and said he was not aware of, the Department of Fair Trading writing to Ilvarity in May 2003 with an engineer's report. Mr Cox said that there was one letter that went missing, or was misplaced. It may have been put in with something else. Mr Cox said: "When it came out, I was going to appeal against it but apparently somewhere along the line there was a copy of it, I don't know the full story of that. It would have to go to John because he would have dealt with it again." (It is not clear to what letter Mr Cox was referring). 763 Mr Cox denied that initially he received a copy of the letter of 18 September 2003 from the Department to the Willoughbys, or a letter containing identical information. Mr Cox said he was told that the Department of Fair Trading had resolved to pay the Willoughbys' claim in the sum of $73,789. 764 Mr Cox said that he could not recall whether he, or Mr Chaseling, telephoned the Department on 22 September 2003. Ms Cheung's note was that Mr Cox telephoned. 765 Mr Cox then said: "When I found out that they had settled it I rang them to find out why it had been settled and they told me they had sent a letter which at that stage I had not received. I don't know where it went." 766 Mr Cox added that this letter did come. He was taken to the diary note of Ms R Cheung. He did not dispute the contents of her note. At one stage Mr Cox seemed to be confusing the letters sent and received. 767 Mr Cox said he did not receive the letter, which the FTAC had written to him in May 2003 with a copy of its engineer's report, at that time. He said he found that letter some time later. It was in a separate folder with all of the legal documents. He found it when he was going through a heap of legal papers. Mr Cox said that on his instructions and those of Mr Chaseling, Mr Crandon was, in the month prior to 18 September 2003, preparing revised plans, that is, a new detail for the house. 768 When asked about the delay of three years in resolving the issues relating to the Willoughbys, Mr Cox replied: "Again you would have to speak to John because the dealings with the Department of Fair Trading and the rest John handled. That was the process I had to follow … " 769 It is apparent from the answer of Ilvarity in the Fair Trading proceedings that Ilvarity wanted to be excused from the proceedings and, instead, action taken against Mr Col Jenkins and Byron Shire Council for approving the works. Mr Aungle's point that the design had to accommodate the fig tree has considerable force. Mr Chaseling 770 Mr Chaseling disputed that Ilvarity had been negligent. He said that under the Home Building Act the head contractor is responsible to the client for the building irrespective of the sub-contractors or engineers used by them. Mr Chaseling said that Ilvarity had no alternative but to agree to rectify the works and then take action against Mr Jenkins to recover the moneys (T479-480). Mr Chaseling was not further cross-examined. Mr Crandon 771 Mr Chaseling's evidence in chief (T420-421) was to the same effect. He also set out how Mr Crandon suggested to him that the foundations problem might be solved. Mr Crandon later submitted a detailed plan. 772 Mr Crandon said that he was engaged by the surveyors handling the subdivision in Gardenia Court, Mullumbimby to undertake the site investigations and report on the individual lots and determine the soil classification of each lot. He did so. This would have been some years previously. He inspected the Willoughbys' residence in early 2001 at the request of CH and prepared a report. 773 Mr Crandon said that it was a simple case of differential settlement in the order of a maximum of 10mm and a matter of jacking up the corner of the house and realignment and making good any damaged brickwork, tiles or internal linings. 774 By FAX sent on 5 March 2003 (Exh BR) Mr Crandon advised Ilvarity to notify Mr Colin Jenkins of the potential claim of and the procedure to be followed thereafter to recover the cost of rectification from him. 775 Mr Crandon said that he was given a copy of the report of Bonacci Rickard (NSW) Pty Ltd. Mr Crandon said that after he saw this report he was contacted by Mr Cox to review the rectification work and come forth with a solution to satisfy the Willoughbys and the Department of Fair Trading. On 3 September 2003 he wrote to CH and annexed three plans which he had prepared. Unfortunately, neither the letter nor the plans were discovered by Ilvarity. He had no further involvement with the Willoughby residence. 776 Mr Crandon was shown a copy of a letter of 28 May 2003 from the Office of Fair Trading to Ilvarity, Attention Mr Chaseling. He said that he did not see a copy of that letter. That is probably the letter enclosing the copy report of 19 May 2003 of Bonacci Rickard. 777 Mr Crandon adhered to his earlier view that while the large Moreton Bay fig tree was over the house and had its effect on the house foundations, there was no guarantee of maintaining the stability of the house. He regarded this as the major problem of the job. 778 In cross-examination Mr Crandon said that at the meeting on 4 March 2003 with Mr Palombo he did not use the word negligence, but there was a problem that was the responsibility of the builder. 779 Mr Crandon said that he had not seen Mr Aungle's report previously. Mr Crandon said that Mr Aungle was at the site meeting. Mr Crandon gave this evidence (T581): "Q: Mr Aungle expressed the view that the problem caused with the Willoughby's house was not caused by a fig tree? A: I don't recall that, but the fig tree did come into discussion along with the inadequacy of the foundations or the possible inadequacy of the foundations and also the (sic) there was no evidence of compaction of the platform, building platform. Keep in mind I was not the engineer for this job. I only got invited in after the event." and "Q: Mr Aungle expressed the view didn't he, that the piers which supported the strip footing in the fill zone was completely inadequate? A: That was his comment, Mr Aungle. That came from the Department of Fair Trading meeting we had in their offices in Molesworth Street, Lismore." 780 Mr Crandon agreed that from the FAX he sent to Mr Cox on 5 March 2003, being the day after the site meeting with Mr Palombo, it was absolutely clear that CH, with Mr Chaseling as its representative, had accepted responsibility for rectifying the problem with the Willoughby's house. 781 At T583 there was a mixing up of what occurred in March 2001 and March 2003 and this was not noticed at the time the evidence was given. Some of the propositions put and answers given in cross-examination are unlikely to be correct. According to Mr Crandon's report of 6 March 2001, which is marked "Attention Mr John Chaseling" he (Crandon) inspected the Willoughby site and residence with Mr Brett Harley. Mr Crandon said that he could remember discussing the contents of his report (the letter of 6 March 2001) because "we travelled in the same vehicle back to Lismore after the meeting with Mr Palombo." That is probably incorrect. The meeting with Mr Palombo was on 4 March 2003 and it was attended by Messrs Chaseling and Crandon and the latter two men would have travelled back to Lismore together on that day. Mr Crandon said that Mr Chaseling probably made suggestions as to what he wanted in Mr Crandon's report. 782 Mr Crandon said that the fifth paragraph of his report of 6 March 2001, namely, that at the time of construction of the house the builder had raised the future problems of such a large tree in close proximity and its effect on the long term serviceability of the building foundations, was information provided by Mr Chaseling. Later he said it was provided by Mr Cox or Mr Chaseling. 783 There are a number of possibilities. Messrs Crandon and Chaseling may have discussed the tree issue either before or after the inspection on 8 February 2001, or both. Messrs Crandon and Harley may have discussed the tree issue before, during or after the inspection. Mr Cox may have told Mr Crandon. It is probable that somebody from CH raised the tree issue with Mr Crandon and either directly or indirectly suggested that it should be in Mr Crandon's report. The descriptions under three of the four photographs attached to Mr Crandon's report of 6 March 2001 each make reference to the tree and two of them attribute different aspects of the problem to the tree. 784 Mr Crandon was well aware that Mr Chaseling was going to pass his report on to the Willoughbys. Mr Crandon did not think Mr Chaseling told him that he (Chaseling) knew of the problems prior to building the house. Mr Crandon added "I was the one who raised the tree when I walked on the site." 785 Mr Crandon disagreed that the tree had nothing to do with the problems of the Willoughby's house. He thought that the tree placed the house in jeopardy because of the tree's influence on the moisture content in the earth. That affected the platform and the building. Mr Crandon said it was his opinion that the long term serviceability of the building foundations was affected by the close proximity of the large fig tree. He relied on his observations and his previous knowledge of the subdivision site conditions. He also had regard to the information supplied by Mr Cox or Mr Chaseling. 786 While Mr Crandon agreed that he was retained to look after the interests of his clients and was prepared to sign reports to suit the expressed wishes of CH, he said there were definite limits. Mr Crandon denied that he was prepared to suppress the truth. 787 Neither of the elderly Willoughbys gave evidence. There was no evidence as to their actual age, their health or their ability to give evidence. Largely, but not exclusively, the issues involving the house fell to be determined on expert assessment. There was no explanation why Messrs McLisky and Aungle were not called. Their clients had received their compensation moneys and few potential witness are keen to give evidence, especially when they have nothing or little to gain and are likely to be attacked in cross examination. Shoddy Building 788 There was a major problem with the Willoughbys house for which CHNR was responsible but that responsibility arose as a result of poor quality engineering work by a consulting engineer (not Mr Crandon) whom it had retained. To the extent that CHNR relied on the design work of the consulting engineer, it cannot be correctly said that CHNR was guilty of shoddy building practices. 789 Although open I would not in the circumstances draw the inference that nothing Messrs McLisky and Aungle could say would advance the interests of the defendants. The reports of these two experts point in the opposite direction. The plaintiffs pointed out that the only evidence was given by Mr Crandon who was cross examined. 790 On the materials before the Court the design work of the engineer (Jenkins) was faulty and negligent. There was some suggestion of, poor execution of the works, for example, poor soil compaction in the fill section of the building site and the foundations not being adequately bedded into stable ground. On the evidence I am not able to say how much of the defective work was attributable to one particular cause. 791 Mr Crandon and Mr Cox were convinced that the fig tree was either the major cause or a contributing cause to the foundations lacking long term serviceability. One question which arose was whether it was reasonably possible to devise a design to overcome the problems presented by the fig tree. The plaintiffs pointed out that there was no tested evidence to the contrary of that given by Messrs Crandon and Cox on this issue of the effect of the fig tree. Mr Crandon advanced a solution to the problem which he accepted was a compromise between effective repair and reasonable cost. It was not a reliable long term solution which was what was required and therefore could not be accepted. 792 The defendants pointed out that there was no evidence that CHNR had sued the designing consulting engineer despite the advice it had received from Mr Crandon nor that that consulting engineer had contributed to the eventual payout by Ilvarity. There may be a number of explanations and I do not propose to speculate. 793 Neither the Willoughbys nor their house was mentioned in the promo or program but reliance was placed on the defects which developed in that house and the work and conduct of Ilvarity in relation to it. Unfitness 794 As to the unfitness imputation, the defendants submitted that the Willoughbys had been the victims of a long and sorry saga of delay, ineptitude and disavowal of responsibility by Ilvarity. The initial complaint was made by letter of 30 June 2000, but it was not until 8 February 2001 that there was an inspection by Mr Crandon. He did not report until 6 March 2001 and, according to the Willoughbys he did not assess the foundations and footings for adequacy on his inspection. Mr Crandon's report was not immediately sent to the Willoughbys. It was ultimately sent after receipt of the Willoughbys' letter of 13 March 2001 enclosing a copy of Mr McLisky's report. There was a denial of liability – the Willoughbys would have to pay for the rectification. 795 Two years later, namely in mid March 2003 and after the intervention of the Department of Fair Trading, consequent upon a complaint in May 2001, Ilvarity accepted responsibility. Mr Crandon's suggested method of rectification was deemed unsatisfactory by both the consulting structural engineer retained by the Willoughbys and the structural engineer from whom the Department of Fair Trading sought advice. The latter report was sent to Ilvarity in May 2003 and apparently misplaced by it initially. 796 Mr Cox gave instructions to Mr Crandon to prepare a further engineering solution and plan. Mr Crandon apparently forwarded these to Ilvarity in early September 2003, but they were not sent promptly to either the Willoughbys or the Department. 797 By letter of 18 September 2003 the Department, not having heard from Ilvarity since May 2003, decided to settle the Willoughbys' claim. The Office of Fair Trading or FTAC cannot be expected to chase up a dilatory builder. This is especially so when the solution its engineer proposed contained a disclaimer and it had obtained its own engineering advice and notified the builder of it. 798 As the Department pointed out there had been considerable delay not only from May 2003, but prior to that. Ilvarity had been dilatory in attending to the complaint, had initially tried to avoid responsibility and even after accepting responsibility, its dilatoriness continued. The complaint involved major defects to the Willoughby's home and broadly it took from the receipt of the Willoughbys' letter of 30 June 2000 to 18 September 2003 for the matter to be resolved along with a great deal of effort on the part of the Willoughbys and the Department. The dilatory conduct of Ilvarity and Mr Cox as to remedying the serious defects raised justifies the imputation that Ilvarity and Mr Cox are unfit to remain in the building industry. An Overall View 799 Hitherto I have looked at each of the houses of the Mosses, the Allans, the Vimpanys and the Willoughbys individually and specified my findings and opinions. 800 In building a large number of houses, even with a good builder there is likely to be the odd bad job, the odd case of inexcusable delay in either building the works or rectifying defects and the odd case of an excessive number of defects. It would be unusual for a new house to be erected without some defects. Most of these would be corrected by the builder in the course of construction. There would be some defects rectified by a reasonable builder with reasonable promptitude after his attention has been drawn to them. While Ilvarity and Mr Cox placed emphasis on its record since 1982 and the large number of homes it had built the defendants concentrated on what had been built in the period 1999-2000. Truth 801 In my opinion what the evidence reveals goes beyond what can reasonably be accepted or tolerated. The defendants have established the truth of these imputations: (a) that Ilvarity was guilty of shoddy building practices; (b) that Mr Cox was guilty of shoddy building practices; (c) that Mr Cox was unfit to be allowed to remain in the business of building residential houses Unfitness 802 I have taken the view that "unfitness" may be satisfied in a variety of ways, for example, a builder may make major mistakes or there might be a significant number of smaller defects which are not promptly rectified or the building works may be unduly protracted on a number of occasions, declining to rectify defects at all or within a reasonable time, refusing to accept responsibility when responsibility should be accepted, harassing a customer with unjust demands, or otherwise refusing to continue with construction unless moneys are paid which are not due. Unfitness may incorporate conduct involving an element of moral criticism as a builder. This list is not exhaustive. A single incident of some gravity may exhibit unfitness. In determining whether a person is unfit to remain in the building industry, questions of degree and frequency are often involved. Incompetence and Shoddy Building Practices 803 As to the imputations that Mr Cox was incompetent as a building contractor and that each of Ilvarity and Mr Cox was not competent in the business of building residential houses, these are different from the imputation of being guilty of shoddy building practices though some of the facts relied upon could be classed as examples of shoddy building practices and incompetence. Examples include: (a) As to the Mosses' house the defects identified by Mr Monteith and those specified in the referee's report, Mr Neil's report and the reports of Ballina Shire Council. (b) As to the Allans' house – the construction of engaged brick piers appreciably off centre on concrete footings and the construction of bearers noticeably off centre to the piers, poor brickwork, the construction of the kitchen without an appliance cupboard, the subsequent work on installing it in relocating the power points and not installing the insulation. (c) As to the Vimpanys' house – laying the bricks wrong side out and failing to clean the brickwork. 804 Mr Cox had much experience in building matters, considerable knowledge and skill and an ability to overcome difficulties and defects. Mr Cox was not personally incompetent as a building contractor but the supervision of the work of others on houses was inadequate and therefore incompetent. Some of the work done on behalf of Ilvarity was incompetent. Neither Ilvarity nor Mr Cox ensured that adequate supervision, particularly of subcontractors, was in place. This lack reached its high water mark in the case of the Mosses' house; there were difficulties in obtaining competent and experienced subcontractors because of the volume of work available due to the impending introduction of the GST and the completion of the Olympic Villages. Some of the subcontractors had work to perform which required some care, for example, setting out and pouring the footings and locating the piers and beams and determining the correct amount of excavation. The lack of adequate supervision of the work to be done resulted in a lack of competence in the business of building the residential houses of the Mosses, Allans and Vimpanys. Ilvarity and Mr Cox were, for practical purposes, indivisible and the parties were content to approach the matters on that basis. That was realistic. (T210) 805 The four houses about which I have heard evidence constitute a small segment of the houses built by Ilvarity and Mr Cox. I express no opinion as to the competence of Ilvarity and Mr Cox to engage in the business of building residential houses as to the vast majority of residential houses which they have built. Those jobs may have been competently supervised, or the subcontractors may have done better work. 806 The evidence relied on by the defendants established that as to three houses (the Mosses, Allans and Vimpanys) each of Ilvarity and Mr Cox was not competent in the building of residential houses because Ilvarity and Mr Cox did not adequately supervise the construction of the houses, particularly the work of subcontractors. Width of Imputations 807 The plaintiffs submitted that each of the imputations on which they relied and the suggested contextual imputations are all defamatory imputations of a general state or condition and must be shown to be matters of substantial truth as general allegations. Further, the truth of general bad conduct or condition cannot be justified by proof of a single act or instance but must be 'proper' in substance as a generally applicable matter. 808 The plaintiffs also submitted that as each of the imputations was a charge of general conduct (or misconduct) on the part of each of CHNR and Mr Cox the defendants can only justify them by proving that CHNR and Mr Cox, respectively, in the conduct of their building activities habitually engaged in gross misconduct in that they were in the habit of doing the things of which they were accused of in the matters complained of. They submitted that the defendants had failed to do so. The plaintiffs submitted that the imputations related to "practices", "incompetence as a building contractor", "unfitness to remain in business" and "construct houses". There was no limitation. 809 The plaintiffs submitted that taking the most favourable view of the evidence from the aspect of the defendants: (a) They had demonstrated that out of some 800 homes CHNR had three sets of extremely difficult, if not unreasonable clients. (b) A number of faults were apparent in the Mosses' house at a time when the house was not complete, that by September 2002 the defects which then existed were not sufficiently serious to prevent the third progress payment falling due (although they had been earlier) and that the Mosses prevented CHNR from completing the house and correcting any matters requiring remedy before completion. (c) Possibly, some very minor faults in the case of the Allans and Vimpanys and in the case of the Willoughbys faults which were the responsibility of the consulting engineer and possibility of the plaintiffs and which have been almost entirely, if not entirely rectified. 810 I do not agree that the faults in the cases of the Allans and Vimpanys respectively were very minor. Some of the faults were matters of consequence as I have earlier held. The Mosses were demanding and difficult. The Allans were demanding. The Vimpanys were neither demanding nor difficult. They did make the mistake earlier mentioned. The Willoughby's complaints were substantial and they exhibited a considerable degree of patience despite the delay on the part of CHNR and Mr Cox. There is no evidence as to the final outcome of the rectification works at the Willoughbys but they did receive a substantial sum to carry out rectification. Messrs Moss, Allan and Vimpany wanted a good job. All three men had the ability to assess the quality of the work being done. Each took a keen interest in the work being carried out, on their sites. 811 In Greek Herald Pty Limited v Nikolopoulos (2001) 54 NSWLR 165 at 172-3 Mason P said: "The pleaded imputation is itself a statement extrapolating something from the matter complained of… Words, a fortiori words not found in the text, are necessarily to be read in context…" and "At the point of general principle, it is well established that the words complained of must be construed as a whole and in context…" There were observations to the same effect in the judgment of Young CJ in Eq at 175. 812 The defendants submitted: (a) There are not just four examples of shoddy building and unfitness. Each of the four houses evidences a significant number of serious faults. Also, the dealings of the plaintiffs with each of the four couples who owned these homes show a consistent course of conduct establishing the unfitness of the plaintiffs to remain in the industry; (b) The imputations were found to be conveyed in the context of three homes owned by three couples. The substance of the allegations made in the telecasts in respect of these homes has been established. As well, many other serious matters (including building faults and instances of improper conduct indicative of unfitness to remain in the industry) have been established. Although not determinative, this is an overwhelming indication that the imputations have been justified; (c) Most of the apparently adequate homes were built in the eighties and nineties prior to 1998 and were of no relevance; and (d) Some of the actions taken by CHNR against the Mosses were sufficient to establish the truth of the unfitness imputation. In particular, the defendants relied on the telling of lies to HOW, the lodging of a caveat and the institution of proceedings on the basis of a demand for moneys which the plaintiffs knew were not then due, the demand for interest and legal costs which the plaintiffs knew were not owing, and the pressuring (or, as I think the influencing) of the engineer to delete unfavourable statements in his report. Each individually established the unfitness of the plaintiffs to remain in the industry. Reliance was also placed on the many defects in the Mosses' house and the failure to rectify them. 813 I do not agree that the long record of the plaintiffs in building apparently homes apparently of some quality and the awards received were of no relevance. However, the main focus has to be on what it did in the period from 1998 to 2000. It has not been established that Mr Cox knew of the terms of the letter Mr Chaseling sent to HOW but Mr Chaseling would have told Mr Cox in general terms what was happening. They had a close working relationship in the affairs of the CH group. 814 As to the imputation that each of Ilvarity and Mr Cox constructs homes that are riddled with faults, the Mosses' house could be described as riddled with faults although that description involves a touch of colour. There were many defects. The description of "riddled with faults" is also apt to describe the condition of the Willoughbys' house. While not discounting the seriousness of the defects in the Allans' house and the Vimpanys' house, the description of "riddled with faults" is an overstatement of the position. However, with the faults which existed in these two houses, a description of the houses as having serious faults would be accurate. The description of "riddled with faults" is one of substantial truth. 815 The imputation comes mainly from this passage of Mr Munro's introduction at the start of the program: "some of his latest customers claim … that he has left them with their dream homes that are riddled with faults and it can take years to get commitments to fix them." The program then goes on to deal with the Mosses' house, the Allans' house and the Vimpanys' house. While the imputation that Ilvarity /Mr Cox construct homes that are riddled with faults is cast in general terms regard must be had to the context from which it is drawn and that is one referring to "some of his latest customers" and one in which three houses are nominated. To treat the imputation as referring to all or most or many of the houses built by Ilvarity as directed by Mr Cox, would be to go further than the program does. It is limited in the attack which it makes. 816 I have not overlooked that there were these broad remarks in the program: "Ben Fordham: Well you've left a trail of devastation on the North Coast of New South Wales" and Are you proud of the houses you build? and … All of them." These words are closely followed by Mr Fordham's assertion, "but some of his customers are far from satisfied". The program then deals with the Mosses' house, the Allans' house and the Vimpanys' house and some of their complaints. 817 Overall I think the imputation as to dream homes being riddled with faults is in the context limited, as is the program, to the houses of some of the customers of Ilvarity, namely, the Mosses, the Allans and the Vimpanys. 818 The imputation of shoddy building practices comes mainly from these opening words of Mr Munro in the promo after referring to an award winning builder: "tomorrow night we investigate some of his shoddy practices which have left home owners high and dry." In context, the imputation as to shoddy building practices is a reference to those which are going to be investigated in the program shown on the following night. That is a reference to specific instances, namely, the houses of the Mosses, the Allans and the Vimpanys. In the promo but not in the program, one example shown is of Mr Vimpany pointing to and stating "Within 2 months of moving in here these tiles have fallen off". The impression was incorrectly created that this was the work of CHNR. The following two examples in the promo are of the problems with the floor at the Mosses' house and the brickwork at the Vimpanys' house. While the portion of the promo as to the lifting tiles was untrue so far as it attributed the work to Ilvarity, there were instances on the Vimpanys' house and the houses of the Mosses and the Allans of shoddy building practices. 819 The imputation from the promo that Mr Cox was incompetent as a building contractor and the imputations from the program that each of Ilvarity and Mr Cox was not competent in the business of building residential houses are not based on specific statements to that effect in the promo and program respectively but are based on their general tenor and the assertions and depictions in those telecasts. In my opinion those imputations have to be understood in the light of the context in which they occur, that is, the three houses and the experiences of the Mosses, Allans and Vimpanys. The promo and programs are about the houses built for those three couples, the defects and their experiences. 820 The imputation from the promo that Mr Cox was unfit to be allowed to remain in the business of building residential houses is probably based on the recorded comment of Mr Moss, "I cannot believe that anyone can build something like this and remain in business". Mr Moss was reflecting on the defective work carried out on his house. That imputation has to be understood in the light of the context of the matter complained of. Read in context the imputation means that because of the defective work carried out on the Mosses' house the builder was unfit to remain in the building of residential houses. 821 Care has to be taken to read the imputations in the light of the context from which they arise. To give the imputations the wide ranging effect which the plaintiffs have suggested is to give the matter complained of in both the promo and the program a greater sting than is warranted. The program was limited to some of Mr Cox's latest customers. I have not overlooked the statements in the program of Ms Leanne Wilton. They relate principally to some alleged misconduct of Mr Cox towards his customers. The imputations do not seem to be based on her statements. 822 In my opinion, based on reading the imputations which the jury found arose from the promo in the light of the context of the matter complained of and not treating them as of more general application the defendants have established the substantial truth of those imputations. It is also my opinion, based on reading the imputations which the jury found arose from the program in the light of the context of the matter complained of and not treating them as of more general application the defendants have established the substantial truth of those imputations. Public Interest 823 This raises the next issue, namely, whether the imputations relate to a matter of public interest. The plaintiffs contended that they did not and that the particular matters of the performance of the contracts with the Mosses, the Allans, the Vimpanys and the Willoughbys were not themselves matters of public interest. It was submitted that the defendants had not established the facts necessary to establish the general matters of public interest in their particulars in their Amended Defence. The defendants contended that the matters complained of, the comment contained therein, the imputations found and the defendants' contextual imputation all related to the following subjects of public interest: (a) Ilvarity and Mr Cox as persons who market and offer their services for and to the public; (b) the conduct of Ilvarity and Mr Cox as contractors in the building industry; (c) the building industry; (d) defective building work conducted by Ilvarity and Mr Cox; (e) the use of litigation by building contractors against customers who complain about building work performance. 824 Ilvarity and Mr Cox as builders marketed their services to the public. Their conduct as contractors in the building industry as revealed by the evidence I have accepted was also a matter of public interest. That included making demands for money which was not due, causing caveats to be placed on the building owners' property, carrying out work which was seriously defective and their refusal to rectify defective work. All this is against a background of members of the public committing large sums and assuming substantial obligations to and in respect of their homes for themselves and their families, the construction of the home being the most important undertaking and investment which many families will undertake. The construction of homes of an adequate standard is a matter of considerable interest and importance to society. They impact upon the neighbourhood. Building approval has to be given by the local council and sometimes development approval is required. 825 Bellino v Australian Broadcasting Corporation (1995-1996) 185 CLR 183, was a decision on s 377(8) of the Queensland Criminal Code in the course of which Dawson, McHugh and Gummow JJ made various observations which apply to the law of defamation: "… a subject of public interest meant the actions or omissions of a person or institution engaged in activities that either inherently, expressly or inferentially invited public criticism or discussion" (p 215). and, after referring to the observations of Baron Parke that '[e]very subject has a right to comment on those acts of public men which concern him. …' continued: "Likewise when a person publicly exhibited his or her work or advertised or sold goods or services to the public, that person's conduct while engaged in those activities was regarded as a subject of public interest." 826 In the present case I hold that the matters complained of and the imputations held to be conveyed were matters of public interest. In jurisdictions where a defendant has to establish public benefit I would hold that the matters complained of, the imputations held to be conveyed and the discussion thereof were matters of public benefit. Contextual Truth 827 I have earlier set out the contextual truth defences under s 16 of the Defamation Act (NSW). On the view I have taken of the imputations, and my view that their substantial truth has been established and that they relate to a matter of public interest it is unnecessary to consider the contextual truth defences under s 16, or the roughly comparable Polly Peck plea in common law States. If I am wrong as to the ambit of the imputations and they have the more general meaning advocated by Ilvarity and Mr Cox, then the pleas of justification would need to be reconsidered. There would also need to be a consideration of the contextual truth defences. Comment 828 I proceed on the basis that the common law defence of fair comment on a matter of public interest is applicable without modification in Victoria, South Australia and the Australian Capital Territory; that statutory defences which are similar in most respects are available in Queensland, Tasmania and Western Australia; that in the Northern Territory a statutory defence of fair comment exists in addition to the common law defence and that in Western Australia the common law defence remains applicable in addition to the statutory defence. In New South Wales the Defamation Act 1974 abolished the common law defence but provided a statutory defence with many of the underlying concepts being based on the common law. The common law as to what is comment, what is a proper matter for comment and what is public interest remains of importance. Common Law 829 The position at common law will be dealt with first, but many of the matters discussed as to the common law have a measure of application to the statutory defences. These include the facts stated or identified on which the comment was based and the evidence supporting those facts. 830 The defendants submitted that all of the imputations were defensible as comment. Ilvarity and Mr Cox contended that the imputations and the matter giving rise to them were not expressions of opinion, but statements of fact and could not constitute comment. Further, they contended that the facts on which any of the comments were made were not truly stated or referred to in the promo or in the program as the case may be. They also submitted that none of the comments related to a matter of public interest. 831 The defendants relied heavily on Imputation (d) as comment. That read: "That the third plaintiff was unfit to be allowed to remain in the business of building residential houses." The defendants referred to this statement of Mr Moss, broadcast in the promo as the basis for this imputation, "I cannot believe that anyone can build anything like this and remain in business." He was referring to his house. The defendants submitted that the imputation and part of the matter from which it was derived were expressions of opinion. 832 The defendants accepted that the position with respect to the remaining imputations for both the promo and the program was less clear because they appeared to arise from many parts of the broadcast, but contended: (i) Imputation (c) arising from the promo, that Mr Cox was incompetent as a building contractor was an expression of opinion and arose from the earlier quoted statement of Mr Moss and the reference to shoddy practices at the start of the promo. (ii) Imputations (a) and (b) ("shoddy building practices") arising from the promo were also expressions of opinion. The defendants accepted that although strictly speaking the statement including the words "shoddy practices" unfolds as a statement of fact, this was a case of argumentative inference (permissible as comment) arising from the statement of fact. The defendants relied on this statement of principle: "The comment may sometimes consist in the statement of a fact, and may be held to be a comment if the fact so stated appears to be a deduction or conclusion come to by the speaker from the facts stated or referred to by him … and from which his conclusion may reasonably be inferred." O'Brien v Salisbury (1889) 6 TLR 133. (iii) Imputation (b) arising from the program (not competent in the business of building residential houses) was an expression of opinion. The defendants relied on Mr Moss' statement in item 13 after referring to a litany of errors and mistakes "that no self respecting trades person would ever do" and Mrs Vimpany's reference in each of items 15 and 17 to the laying of bricks as "a great disappointment", Mr Fordham's comment in item 28, "it 's a disgrace", Ms Wilton's comment in item 34 about Mr Cox "he was just horrible" and Mrs Allan's comment in item 50, after her reference to buying a new car and it being scratched, "you'd want a different car wouldn't you." (iv) Imputation (a) arising from the program (Ilvarity/Mr Cox "constructs homes that are riddled with faults") was an expression of opinion, defensible as comment. The defendants submitted that the imputation derives from the whole of the matter complained of but drew attention to the specific reference to "riddled with faults" in item 1. The defendants submitted that this was a case of argumentative inference permissible as comment arising from the statement of fact. 833 Ilvarity and Mr Cox contended that the imputations and the matter giving rise to them were allegations of acts and conduct and factual states or conditions and were not put forward as expressions of opinion. 834 In NSW Aboriginal Council v Perkins (1998) 45 NSWLR 340 at 344 Priestley JA said that in Lloyd (1985) 3 NSWLR 728: "their Lordships held that the comment a defendant relies on in the defence of comment is 'that which is embodied in the imputations pleaded by the plaintiff'. See at 735. They also held that the comment alleged by the defendant as a defence must necessarily be one that 'conveys such of the defamatory imputations as the jury find to have been established.' (also at 735)" 835 It also emerges from the judgment of Priestley JA when discussing the judgment of Clarke JA in Radio 2UE v Parker (29 NSWLR 448), especially at 345 that, when the defendant is endeavouring to show that the defamatory imputation was a comment and not a statement of fact, the defendant is entitled to require the tribunal of fact to consider the published matter which made the defamatory imputation in order to determine whether that matter made an imputation which was comment. At pp 344-345 Priestley JA noted that Clarke JA had said that a defendant seeking to rely on a defence of comment "is obliged to establish that the imputation which the jury has found that the published matter conveyed was conveyed by the writer or speaker as a comment. In this respect…the actual form of the pleaded imputation is not a relevant consideration." 836 I regard imputations (a) and (b) of the promo (that Ilvarity and Mr Cox respectively was guilty of shoddy building practices) as statements of fact. They follow from the assertion at the start of the promo, "Tomorrow night we investigate some of his shoddy practices which have left home owners high and dry." They are not defensible as comment. They are factual assertions that Ilvarity and Mr Cox have been guilty of shoddy building practices, details of which will be supplied.. On the following night they are, when specific instances are given. 837 I also regard imputation (c) of the promo as probably a factual assertion that Mr Cox was incompetent as a building contractor. Some illustrations were given, one of which was erroneous. The position presented was straightforward and smacked of incompetence on the part of Mr Cox. The theme of the promo was one of poor workmanship. 838 Imputation (d) of the promo (Mr Cox was unfit to be allowed to remain in the business of building residential houses) should probably be regarded as comment. It was saying that, because of his past conduct, he should not be allowed to build houses in the future. Mr Moss was expressing disbelief that the builder can remain in business after he had built a house with so many defects. As earlier mentioned unfitness can be due to many causes. The focus in the promo seems to be on poor quality work. There is also a reference to home owners being left high and dry and customers giving up trying to get Mr Cox to attend to defects. These matters bear upon his fitness to be allowed to build houses in the future. That is a value judgment and a matter for comment. The notion of unfitness in the imputation involved making an assessment of past conduct and likely future conduct. A significant element of opinion is involved. 839 Imputation (a) of the program (that (each of) Ilvarity and Mr Cox constructs homes that are riddled with faults) is a statement of fact rather than comment. It is a factual assertion that the homes built by them have many faults. The phrase "riddled with faults" appears at the start of the program. Illustrations follow. 840 Imputation (b) of the program (that (each of) Ilvarity and Mr Cox is not competent in the business of building residential houses) is probably a statement of fact rather than expression of opinion. Lack of competency covers a wide field including appreciable defective workmanship and failure to rectify defects in a timely manner. From the examples given in the program they seem to be the main areas of complaint. Facts Truly Stated or Sufficiently Identified 841 On the extended definition of comment (that is where the matters stated appear to be a deduction or conclusion from the facts stated or referred to by the speaker) another view may be taken as to whether some of the imputations constitute comment. Accordingly I propose to deal with the issue whether the facts have been truly stated or sufficiently identified. Ilvarity and Mr Cox complain that some of the facts stated were erroneous and that relevant facts were omitted. Ilvarity and Mr Cox contended that an accurate and sufficient history of each of the three jobs (Mosses, Allans and Vimpanys), and an examination of the promo and the program shows untruth or omission of interconnected and necessarily relevant facts if the true facts are to be stated or referred to. They drew attention to the following, amongst other matters, to which I have added my comments: (a) CHNR's and Mr Cox' 800 plus houses and the number and type of awards were not mentioned. Comment: The 800 homes were apparently built from 1981 onwards. Awards were received from 1982 to 1998. 1998 appears to have been a busy year and 1999 somewhat less busy but with what appears to be a reasonable amount of work. The CH documents show that 28 homes were completed by Ilvarity after 1 January 2000. In 2000 the houses for the Mosses and the Vimpanys were in the course of construction and there were disputes with the Allans and the Willoughbys. What was of importance was what was happening in 2000-2002. The promo mentioned that CHNR/Mr Cox was an "award winning builder" and the program refers to "a builder who's won several awards during his twenty years in business." These references were sufficient. The program makes it plain that it was concentrating on some of his latest customers. The effect of what was said was that good work had been done in the past but some of his latest customers were not satisfied and there were appreciable defects. I do not attach importance to this submission and complaint. (b) The Allans' Fair Trading Award of $200 as a solatium was not mentioned. The rectification work for Noel Allan's complaints (30 not 100) was not mentioned, nor was the nature of those complaints. Comment: My Hollyoak refers to being provided by Mrs Allan with a list of defects allegedly notified to the builder requiring attention and numbering 74 items. It is not clear if Mr Allan's reference to over 100 complaints includes matters notified from the start of the job and some of which may well have been rectified. The omissions mentioned do not seem to be significant. (c) The responsibility of the Vimpanys, not CHNR, for the lifting verandah tiles was not mentioned. Comment: In context, the promo should not have shown the lifting verandah tiles as if they were the responsibility of CHNR. This was the first item shown in the promo and it appeared to be defective work. (d) The rectification bricklaying and cleaning for the Vimpanys. Comment: The rectification bricklaying was minimal and the alleged cleaning did not eventuate. Neither of these matters warranted mention. (e) Mr Moss' unauthorised work was represented as part of CHNR's work. Comment The work done by Mr Moss should not have been represented as part of CHNR'S work. The work done by Mr Moss looked poor. The defendants contended that this item was of no significance given its brevity and that it was not tied to the specific point being made in the program. Also it was surrounded by defective work including one of the walls of the house with a concrete column on a timber verandah and an add-on wall of poor quality (see para 2.4.22-24 of Mr Monteith's report and photograph 48). I do not think that the matter can be dismissed as lightly as the defendants suggest. It heightened the impression of poor work. (f) The suspension of works and purported termination of contract by the Mosses, the inspection and requirements of Mr Nowlan and his direction to CHNR and the implications of those matters were not mentioned, nor the reason for CHNR being unable to complete construction to Stage 3 and subsequently, but statements were made to suggest that it was the Mosses' halting payment and CHNR, as a result refusing to complete which had prevented works and kept the Mosses out for two years. Comment: There was no need for the defendants to give a full contractual history. Having regard to the existing and unrectified defects and the wrongful demand for money not then due, it could not be said that the suspension by the Mosses was unjustified. The Mosses did decline to pay the Stage 3 progress claim and correctly so. The so called stopwork direction of Mr Nowlan lacked validity and CHNR was not entitled to act on it. It was not until June 2002 when a referee had been appointed to report on the disputes between the Mosses and CHNR that an accommodation was reached which allowed CHNR to return to the site and bring the works to Stage 3. Prior to that CHNR wanted to be paid the moneys the subject of the Stage 3 progress claim before returning to the site. CHNR had sued for these moneys and placed a caveat on the title. The root cause of the contractual stalemate which developed and the delay was the extensive defective work and CHNR pressing hard to be paid moneys to which it was not entitled. Some of the delay admittedly was due to the delay of about 18 months in the Mosses supplying particulars of their cross-claim. If the particulars had been supplied with reasonable promptitude the referee could have been appointed at an earlier date. His appointment and practical approach provided the catalyst for much progress in progressing partial resolution of some of the dispute. Of course, at the date of the program the appointment of the referee had not been made and the case was in the District Court's Lists at Lismore awaiting hearing, with both the Mosses and CHNR taking up entrenched positions. It was inaccurate for the Mosses and the program, in effect, to attribute all or most of the delay to CHNR. Through their delay in supplying particulars of their cross-claim, the Mosses were responsible for a significant portion of the delay. The delay may not have been that of the Mosses personally but that of others, whether consultants or lawyers, acting on their behalf. This was not investigated. The point is that the delay was incorrectly attributed to Ilvarity. (g) Many of the defects complained of by Mr and Mrs Moss particularised in the cross-claim were matters which, in the main, were not defects at all, did not require rectification and in any event were matters which CHNR was prevented from completing and/or rectifying by the actions of the Mosses by excluding CHNR from the site. Comment: I do not agree that many of the defects listed in the Scott Schedule did not require rectification. I would follow what the referee found. The problems arose from CHNR's defective work. 842 Hitherto I have discussed the submissions of CHNR and Mr Cox as to why the facts were not truly or adequately stated or referred to. The defendants insisted that the facts were truly and adequately stated or referred to. As to imputation (d) the defendants submitted that the comment was supported by Mr Moss' statement at item 3, "this problem is a result of the floor being put down incorrectly" and 3 pieces of footage from the Mosses' house being of the floorboards, the sliding doors (without flashing) and the supposedly engaged piers. Mr Moss' evidence was that the matters he pointed out to the defendants in the course of the ACA interview were accurate. I have earlier rejected the suggestion that Mr Moss or anyone on his behalf, or indeed anyone else, has tampered with the floorboards. I rejected Mr Cox's allegations. I did not accept Mr Cox's assertions as to the flashings. I preferred Mr Monteith's evidence. Mr Moss consistently complained about the "engaged piers" in 2000. These were the same piers shown on the program. Reference is also made to the problem in the report of Mr Hollyoak, p 4 and in item 12 of Appendix A to the referee's report. There is no acceptable evidence that the footage of the brick piers was misleading or failed to show a genuine defect. The faults identified and depicted were established. On the basis that imputation (d) from the promo was an expression of opinion the viewer could see that it was based on the true and accurate depiction of faults. The comment was sufficiently supported by facts stated and indicated. They were shown. 843 As to the other imputations arising from the promo (incompetence and shoddy building practices) in addition to the three matters just mentioned, the imputations were based on two further matters, namely the statement by Mr Allan that he thought that he had had over 100 complaints and Mr Vimpany's complaint about the tiles lifting. 844 Mrs Allan gave evidence that she and her husband "probably did" have more than 100 complaints. Exhibits 40 and 42, being letters from Mr Allan contained 51 complaints from the time of completion. These letters do not include the numerous complaints made by the Allans during construction. On the whole of the evidence, including Mr Hollyoak's report as to the Allans' list of defects containing 74 items, it is probable that Mr Allan had over 100 complaints. Irritatingly for CHNR he kept a very close eye on the construction of the Allans' house, noted the defects and complained about them. The late Mr Allan described the process, at one stage, as 'averting disasters'. 845 While the tiles on the front porch of the Vimpanys' house lifted within two months of the Vimpanys moving into their house, this was not the responsibility of CHNR and it was wrong to create the impression that this error was CHNR's responsibility. In this regard the facts were not truly stated. 846 However, in my opinion the Moss material and the Allan material and the showing of the poor brickwork in the Vimpany's house was sufficient to support the comment contained within the other imputations (incompetence and shoddy building practices.) 847 As to the imputations arising from the program, the defendants submitted that the substantial accuracy of each of the different factual allegations relating to the building of homes riddled with faults and the lack of competence of Ilvarity and Mr Cox as builders had been made out. They relied on having proved the truth of the imputations. They drew attention to the following items in the program and the supporting evidence: Item 13 – "litany of errors" – Mosses' house – see the evidence of Mr Moss, the report and evidence of Mr Monteith, the report and evidence of Mr Neil, the reports of Ballina Shire Council, Mr Hollyoak's report and the referee's report. Item 16 – bricks laid the wrong way round – see the evidence of Mr and Mrs Vimpany. I have preferred their evidence to that of Mr Cox and Mr Chaseling. Item 18 – A patio put down on fibro sheeting mounted on green timber – see also the report of Mr Monteith – paras 2.4.3 and 2.4.4. Item 21 – Mrs Moss' claim that they (CHNR) totally ignored the Mosses and had not answered their complaints – see Mr Moss' evidence and Exhibit 10 (the letters of the Mosses). Item 33 - Messy cement covered bricks – See the evidence of Mr Vimpany which I accepted on this issue, the report of My Hollyoak and the report or certificate of Mr Nowlan. I rejected the evidence of Mr Cox. Items 47-49 – the foundations on the Allans' home – see the evidence of Mr Lee, the report of Mr Hollyoak and also the evidence of Messrs Crandon, Harley and Cox. I accepted the evidence of Mr Lee. 848 I have earlier commented on the showing of Mr Moss' work at the back of the house in circumstances which suggested, wrongly, that it was part of the work done by CHNR. To this extent the facts were not truly stated and an error was made. 849 Despite the error made, the remainder of the program provided substantial and ample factual support for the statements in the imputations arising from the program of Ilvarity and Mr Cox constructing homes riddled with faults and that they were not competent in the business of building residential houses. Opinions Honestly Held 850 The opinions expressed, although couched in strong terms were capable of being held by an honest person upon the facts stated or identified. The opinions expressed were firmly and honestly held. They were also reasonable. Public Interest 851 Ilvarity and Mr Cox further submitted that if, contrary to their submissions, any of the imputations were held to be defensible as comment, no comment relates to a matter of public interest. They repeated their earlier submissions as to public interest when dealing with the defence of justification. I disagree for the reasons earlier given when dealing with that defence. Statutory Defence of Comment in NSW 852 Sections 29-35 of the Defamation Act 1974 (NSW) deal with the defence of fair comment on a matter of public interest. Most of what I have previously written deals with the position at common law, although some of what I have written has a wider application. The statutory provisions in Part 3, Division 7 of the Act incorporate the common law but also modify it. 853 Section 31 provides that the defences available under Division 7 are not available to any comment unless the comment relates to a matter of public interest . That requirement has been satisfied in the present case for reasons given earlier. Section 30 provides: "(1) For the purposes of this section, but subject to subsection (2) proper material for comment means material which, if this Division had not been enacted, would, by reason that it consists of statements of fact, or by reason that it is a protected report within the meaning of section 24, or for some other reason, be material on which comment might be based for the purposes of the defence or exclusion of liability in cases of fair comment on a matter of public interest. (2) A statement of fact which is a matter of substantial truth is proper material for comment for the purposes of this section, whether or not the statement relates to a matter of public interest. (3) The defences under this Division are available as to any comment if, but only if: (a) the comment is based on proper material for comment, or (b) the material on which the comment is based is to some extent proper material for comment and the comment represents an opinion which might reasonably be based on that material to the extent to which it is proper material for comment." 854 Thus under s 30(3) for the defence of fair comment to succeed it must be based on "proper material for comment" or based, to some extent, on proper material for comment. In the latter case the comment must represent an opinion which might reasonably be based on that material to the extent that it is proper material for comment. 855 In Sims v Wran 1984 1 NSWLR 317 at 325, Hunt J said: "The introduction of the concept of reasonableness in lieu of that of honesty as the test to determine whether a particular statement is a comment places a far greater burden upon the defendant in establishing his defence. That greater burden was no doubt intended by the legislature to offset the advantage which the statutory variant gives to the defendant by permitting the continued availability of the defence of comment notwithstanding the defendant's failure to establish the truth or the existence of the whole of the material upon which his comment was based." 856 Those remarks are of importance in the present case, particularly in New South Wales when the defendants were not able to establish the truth of the whole of the material in the promo upon which the comment was based. I refer to the filming of the lifting tiles and the accompanying text from Mr Vimpany in Item 2 of the promo. However, the Moss material and the Allan material in the promo (and especially the Moss material) provides a sufficient basis on which the comments made and contained in the imputations might reasonably be made. In other words the comment represents an opinion which might reasonably be based on that material as proper material for comment. 857 There is also as to the program, the filming, albeit a still, of works of Mr Moss giving the wrong impression that such works were those of CHNR. The remainder of the material (both verbal and visual) in the program provided ample and substantial justification for the comments made and contained in imputations (a) and (b) of the program. The comments made represent an opinion which might reasonably be based on the material which is proper material for comment. The defendants relied upon s 32 (comment of a defendant), s 33 (comment of servant or agent of defendant) and s 34 (comment of a stranger). To the extent that the imputations found by the jury contain or embody comment attributable to any of the defendants there is no evidence that such comment did not represent at the time the comment was made the opinion of the defendant to whom comment is attributable. Messrs Munro and Fordham were servants or agents of the first defendant. 858 Further, to the extent that the imputations found by the jury contain or embody comment attributable to the Mosses, the Vimpanys or Mr Allan, they were comments of strangers. It has not been shown that the publication complained of was not in good faith for public information. Statutory Defence of Comment in Queensland, Western Australia & Tasmania Queensland 859 The defendants relied on s 14(1)(b) and (g) of the Queensland Defamation Act 1889. They provide: "14(1) It is lawful - … (b) to publish a fair comment respecting the public conduct of any person who takes part in public affairs, or respecting the character of any such person, so far as the person's character appears in that conduct. … (h) to publish a fair comment respecting any communication made to the public on any subject. 860 Reference was also made to s16(1)(h) which provides that it is a lawful excuse for the publication of defamatory matter - (h) if the publication is made in good faith in the course of, or for the purposes of, the discussion of some subject of public interest, the public discussion of which is for the public benefit, and if, so far as the defamatory matter consists of comment, the comment is fair. 861 Ilvarity and Mr Cox sell the services of Ilvarity as a builder of homes to the public. The building of homes for members of the public is a matter of public interest as are the terms and conditions on which they are built, the conduct of the builder and the quality of homes that are built. The marketing to the public of the service of building homes and building them constitutes taking part in public affairs. In building homes the provisions of the relevant Planning and Local Government legislation and regulations (or ordinances) must be complied with and council consent to the development and building usually has to be obtained. It is not just a private activity. The building may affect the neighbourhood. These considerations outweigh the private contract signed by the owner and the builder. 862 There is a substantial public interest in the public discussion of the building of homes, the difficulties which may be encountered including the defects, standards of construction and the conduct of the builder. Such public discussion is for the public benefit. The builder's conduct in constructing the home constitutes public conduct. S14(1)(b) protects fair comment respecting any communication made to the public on the subject of the building of homes and the homes or proposed homes of the Mosses, Allans and Vimpanys. 863 To the extent that any of the imputations contain comment such comment is defensible in Queensland under that State's Defamation Act 1889. Tasmania 864 The relevant legislation is the Defamation Act 1957 (Tas). Sections 14(1)(b)and (h) and 16(1)(h) are in the same terms as the Queensland legislation subject to immaterial differences in drafting styles. Section 14(2) of the Tasmanian Act provides that in an action for defamation in respect of words consisting partly of allegations of fact and partly of expressions of opinion, a defence of fair comment does not fail by reason only that the truth of every allegation of fact is not proved if the expression of opinion is fair comment having regard to such of the facts alleged or referred to in the words complained of as are proved. 865 To the extent that any of the imputations contain comment such comment is defensible in Tasmania under that State's Defamation Act 1957. Western Australia 866 In Western Australia the Criminal Code Act Compilation Act 1913 established The Criminal Code 1913. That Code provides for it to be the law of Western Australia with respect to the matters with which it deals. Section 355(2) and (8) of the Code is in the same terms as section 14(1)(b) and (h) of the Defamation Act 1889 (Qld). Section 357(8) of the Code is in the same terms as section 16(1)(h) of the Queensland Act. 867 To the extent that any of the imputations contain comment such comment is defensible under the Western Australian legislation. Comment atCommon Law 868 I return to the position at common law. I have previously mentioned instances where the facts were not accurately stated: (a) The Vimpanys' house – the tiles falling off or lifting on the front porch and this being attributed to Ilvarity – the promo (b) The Mosses' house – Mr Moss' poor quality works at the rear of the house and these being attributed to the builder – the program (c) the Mosses' house – all of the delay of 2 years being attributed to Ilvarity when the Mosses were responsible for part of it because of the non supply of particulars – the program 869 In this context there are statements of principle which I should recall. In Hawke v Tamworth Newspaper Co [1983] 1 NSWLR 699 Hunt J said: "The material upon which the comment is based must be stated expressly or impliedly in the matter complained of or it must constitute a matter of contemporary history or general notoriety and thus, in one way or another, be made known to the readers to enable them to judge for themselves whether they agree with the published opinion based upon that material." 870 In Pervan v North Queensland Newspaper Co Ltd (1994) 68 ALJR 1 at 16 in dealing with the case where the facts are not stated but identified McHugh J said: "The difference between identifying the subject matter or sub-stratum of fact of the comment, and the facts which justify the comment is vital. The comment must indicate the subject matter or sub-stratum of fact of the comment, but the defence does not fail because the publication does not indicate the individual facts which are the basis of the comment. It is the substratum of fact not the individual facts which must be identified." 871 In the present case the promo and the program were dealing with the construction of the homes of the Mosses, Allans and Vimpanys, the conduct of Ilvarity and Mr Cox in such construction and the quality of that construction. The promo and the program mentioned and showed some of the defects. There was also the section in the program in which Ms Wilton appeared. The substratum of fact was justified. 872 Underlying the requirement that the facts be truly stated or referred to is the principle that if the facts on which the comment is based are true the viewer can agree or disagree with the opinion expressed but if they are not true, or are incomplete, it will not be possible for the viewer to assess the comment accurately. See Peter Walker and Son Ltd v Hodgson 1909 1 KB 239 at 256. 873 In Hunt v Star Newspaper Company Limited 1908 2 KB 309 at 317 Cozens-Hardy M R said: "The defence of fair comment only arises in the event of the plea of justification failing, but the plea of justification may fail by reason of the facts stated not being substantially true. But there still remains the question whether if, and only if the facts are substantially true, the comment made by the defendants, based upon those true facts, was fair and such as might, in the opinion of the jury be reasonably made." 874 Turning to the promo and the Vimpanys although there was the mistake as to the tiles falling off, the comment contained in the imputations turned primarily on the defects highlighted by Mr Moss. The assertion by Mr Allan of over 100 complaints helped to explain the extent of the defective work in the Allans' house. Putting aside the Vimpanys' mistake as to the tiles there remained the major defect of the brickwork in the Vimpanys' house. Putting together the defects indicated in the Mosses' house, the over 100 complaints mentioned by Mr Allan and the defective brickwork indicated by Mrs Vimpany the facts were truly stated and amply supported the comments in the imputations arising from the promo. Overall it can be concluded that the facts on which the comment was based were substantially true. 875 I have earlier referred to the two instances in which the facts were not accurately stated in the program, one being in error and one being a lack of completeness. The error as to the back steps constructed by Mr Moss appeared but briefly. There were a number of serious defects in the Mosses' house. The delay in the progress of the Mosses' house through the failure to supply particulars of the cross-claim for some considerable time was somewhat indirect although it did hold up the resolution of the court proceedings and thus the completion of construction. The many defects were the prime cause of that delay. However, apart from completing Stage 3 to obtain the Stage 3 progress payment, it is unlikely that Ilvarity would have resumed work without further moneys being paid to it. The two matters mentioned could not be regarded as major. It can be concluded that the facts on which the comment was based were substantially true. Conclusions (as to defamation defences) 876 I have earlier held that all imputations save imputation (d) arising from the promo (unfitness) were in the context statements of fact and that the defence of justification had been established (truth and public interest and truth and public benefit). In the event that I am wrong and some more or all of the imputations should be classed as comment then the defence of comment or fair comment has been established in respect of each of the States and Territories. As to the causes of action in defamation of Ilvarity and Mr Cox I would enter a verdict for the defendants. Trespass – Edmondson Park 877 The defendants did not dispute that there had been a trespass. Nor did they dispute that Mr Cox was entitled to sue for damages. The defendants disputed that Craftsman Homes Australia Pty Limited and Ilvarity were entitled to sue in respect of the trespass on the ground that neither was entitled to the actual or exclusive possession of the Edmondson Park premises. 878 Mr Cox was the lessee of the residential premises. The term of the written lease was for 6 months beginning on 20 July 2001. In February 2002 Mr Cox was holding over on a monthly basis. Mr Cox said that he paid the rent on the premises, used them as a place of residence and to run part of his business on a temporary basis. There was an office in part of the premises. He and his daughter worked there. He usually resided in the premises four to five days per week, that is from Monday to Thursday or Monday to Friday. Occasionally he resided there on the weekends. Mr Cox said that his daughter, Desley, who did the paperwork for "the business", lived there as well. Ilvarity conducted the business of building private contract houses in the Sydney area where it trades as Craftsman Homes, Sydney South West and also on the Far North Coast of New South Wales. 879 Mr Cox said that he directed and basically ran almost all of the Craftsman Homes business in the Sydney South West. It had traded as Craftsman Homes Sydney South West for almost two and a half years. Mr Cox said that the two things he controlled from Edmondson Park were the contract housing and the franchising. 880 Mr Cox said that Ilvarity also conducted its business from Alstonville. It formerly traded under the name of Craftsman Homes Northern Rivers but now trades mainly under the name of Craftsman Homes Richmond Valley. Mr Cox was the managing director of Craftsman Homes Australia Pty Ltd and Ilvarity in the period 2000-2002. He and his wife were the shareholders in both companies. 881 Mr Cox said that in the period 2000-2002 in the office at Edmondson Park he organised plans for Craftsman Homes Australia Pty Limited (to be made available to franchisees), spoke to the franchisees of that company and helped them as required. He re-organised all the franchise documents from Edmondson Park. Generally, he worked in conjunction with the office at Alstonville. Mr Cox said that Mr Chaseling helped him with Craftsman Home Australia Pty Limited that he (Cox) controlled what happened from Edmondson Park, that generally Mr Chaseling asked him (Cox) what should happen and that he gave directions to Mr Chaseling on what was going to happen. Mr Chaseling did not have a free and easy hand. Mr Cox said that there was not a lot done at Edmondson Park in relation to CHNR except that he exercised control from there to make sure that its operations stayed on course and ran reasonably correctly. Mr Cox added that he did all the designing, and supervision of the daily workings from Edmondson Park. He did the pricing for Craftsman Homes South West Sydney from Edmondson Park but not for CHNR, that being done at Alstonville. Mr Cox said that the payment of the staff of CHNR was mostly done from Edmondson Park. His daughter organised that and she also conducted most of the banking from Edmondson Park. Mr Cox confirmed that he understood that for Ilvarity to succeed in its trespass claim it had to show that it operated a business from the Edmondson Park premises. 882 Mr Cox said that he referred to and treated Craftsman Homes Australia Pty Ltd and Ilvarity as one and the same; what happens in one, happens in the other. It would be expected that there would be a free inter-change of design work. Mr Cox said that Craftsman Homes Australia Pty Limited was a franchise company and did not build homes. It marketed franchises and supplied franchisees with information (plans, designs etc). Ilvanity was a building company and did not sell franchises. The two companies had separate businesses. It was apparent from Mr Cox's evidence that there was a lot of interchange between them. 883 Senior Counsel for the defendants sought to establish in cross examination that it was not until after Mr Chaseling left at the end of February 2003 that any of the business relating to the franchises and franchisees was conducted from the Edmondson Park premises. Mr Cox explained that while Mr Chaseling was the manager he (Cox) still dealt with the franchisees and that when Mr Chaseling left he (Cox) assumed full responsibility for all the work done for the entire franchise operation, except for the accounting. Mr Cox said that he never lost touch with the franchise operation. He kept in touch with all the franchisees. Mr Cox was very much "a hands on" managing director. While he valued and welcomed Mr Chaseling's work and assistance with the franchisees and the franchise operations Mr Cox always remained in control of them and directed what was to be done. He also attended to the design work. Mr Chaseling referred matters concerning the franchises to Mr Cox for decision. 884 Mr Cox stated that he was the managing director of Craftsman Homes Australia Pty Limited and that where he was Craftsman Homes Australia Pty Limited was. He took the same stance with Ilvarity. Basically he operated these businesses and controlled them from where he was based. 885 Mr Cox was taken to the evidence he gave at the section 7A trial in February 2003 where in answer to the question "Craftsman Homes Australia also carried on its franchise business at the Edmondson Park address didn't it?", he replied "No". 886 In the hearing before me Mr Cox explained, "the business would be run from both offices when I'm present." In answer to the further question, why didn't you say that rather then the answer "No", Mr Cox replied, "I didn't think it was relevant". When asked whether the answer "No" which he had given was inconsistent with the evidence given earlier in these proceedings Mr Cox replied, "Possibly, yes". 887 Mr Cox explained his position further by saying that prior to Mr Chaseling leaving the majority of the business of Craftsman Homes Australia Pty Limited was carried on at Alstonville but he carried on a small part of that business at Edmondson Park. As the managing director of that company he was consulted on a regular basis and he was at Edmondson Park. 888 Ms Desley Cox was working in the Alstonville office of Craftsman Homes in 2000. She signed the claim dated 27 June 2000 for the Stage 3 progress payment but was unable to recall the circumstances in which she came to prepare and sign it and who told her to send it. She did not discuss it with her father before sending it. She believed that she did not move to Sydney until 2001. When her father came down to Sydney to take over a franchise operation which had been running in Western Sydney and was in difficulties she came down from Alstonville to Sydney to help him. 889 Ms Cox said that at Edmondson Park in relation to Craftsman Homes Australia she again did the wages, superannuation and helped her mother (Helen Cox) with the accounts and any general printing or anything else Mr Chaseling asked her to do. She helped "get stuff ready for the tax and stuff". Her father was paid by Craftsman Homes Australia. Ms Cox said that in relation to Craftsman Homes Australia her father spoke to franchisees regarding any plans they wanted, helped organise conferences (of franchisees); he basically designed the plans for the draftsmen to draw "and any time the franchises needed anything he made sure they got it". This was the case from February 2000 to February 2002. In re-examination Ms Cox gave this evidence: "Q. In relation to Craftsman Homes Australia carrying out its activities Alstonville (sic) after you came down to Sydney, did it carry out the financial or other matters about which you gave evidence. A. No." 890 I am not sure what this answer means. One meaning is that after Mr Cox and his daughter came to Sydney Craftsman Homes Australia did not carry out the financial or other matters of which she had previously spoken. I do not think that that was meant. The franchisees' needs still had to be met and the wages of officers and employees still had to be paid. Secondly, the answer could mean that those needs and the financial matters were attended to at Alstonville. Thirdly it could mean that those needs and the financial matters were no longer attended to at Alstonville but in Sydney. That is probably what was meant. 891 The question which was asked (as recorded) is a little obscure. I propose to act on Ms Cox's earlier evidence as to what she and her father did in relation to Craftsman Homes Australia when they moved from Alstonville to Edmondson Park. 892 In response to the question what did she do for Ilvarity at Edmondson Park in the period up to February 2002 Ms Cox replied: "I did the wages, superannuation, I answered all the phones, all clerical work for Ilvarity down there, purchase orders." (T282). She was referring to the wages etc generally and the jobs Ilvarity had in Sydney. 893 When asked what her father did for Ilvarity in Sydney in the period 2000-2002 she responded: "He spoke to clients, He went on site and met clients on site. He went around the jobs and had a look. Did all the costings and he got all the information ready for me to do the purchase orders or what I needed. He took off the quantities on the jobs and everything." (T282-T283.) 894 Ms Cox recalled that in February 2002 she opened the door of the Edmondson park premises to a young couple (Miss Stinson and Mr Fordham) who were subsequently related to a camera crew from ACA. 895 I am troubled by the evidence which Mr Cox gave at the section 7A hearing. He there gave evidence that Ilvarity permitted Craftsman Homes Australia to carry on business from premises in Kays Lane Alstonville as at February 2002 and continued (T1278 26/2/03): "Q. Craftsman Homes Australia also carried on its franchise business at the Edmondson Park address didn't it? A. No. 896 He was asked if he was sure about that. Mr Cox requested that the question be rephrased and gave the following evidence: "Q. Craftsman Homes Australia also carried on its franchising business at the Edmondson Park address, didn't it? A. So far as building was concerned, it does. But it builds under Ilvarity Pty Ltd name and it traded as Sydney South west. Q. You would agree with me, wouldn't you, that Craftsman Homes Australia Pty Ltd occupies the premises at 250 Jardine Avenue, Edmondson Park as franchisor of the brand name, Craftsman Homes? A. Edmondson Park is not the franchise, there has been no franchise document drawn for it, it is part of Ilvarity Pty Ltd and it is traded as Sydney South west. Q. Is this true or false; the property at 250 Jardine Avenue, Edmondson park is occupied by Craftsman Homes Australia Pty Ltd as the franchisor of the brand name "Craftsman Homes"? A. Well, I'm not exactly sure how that works because the, I mean, I'm the managing director of Craftsman Homes Australia and also Ilvarity Pty Ltd and I'm at Edmondson park, so it quite possibly would be. Q. Thank you. What I'm suggesting to you is that Craftsman Homes Australia doesn't only carry on business as a franchisor at the Alstonville premises, does it? A. The Alstonville premises carries out all the dealings with the franchise operation. I just have run this one here." 897 The reference, "I just have run this one here" is not clear but probably refers to Craftsman Homes Sydney South West. 898 When he gave evidence at the 7A hearing Mr Cox was endeavouring to show that the asserted imputations extended to Craftsman Homes Australia Pty Limited. His evidence in the hearing before me on the point at issue, was directed not to the defamation proceedings but to the trespass proceedings. That should not alter the basic facts. 899 Mr Cox was a "hands on" managing director whose expertise lay in the general design of the homes, in ensuring that the franchisees had what they needed and in building matters including the mechanics of construction. He also seemed to be familiar with the work of at least some of the sub-contractors whom he used. Mr Cox exercised control over what happened in Craftsman Homes Australia Pty Limited and was consulted about and made many of the important decisions. Mr Chaseling operated under Mr Cox's direction and kept him informed about what was happening. The majority of the business of Craftsman Homes Australia Pty Limited in early 2002 was done at Alstonville and was attended to by Mr Chaseling. Apart from Mr Cox probably making some decisions affecting Craftsman Homes Australia Pty Limited at Edmondson Park and contacting franchisees I am not satisfied that Craftsman Homes Australia Pty Limited carried on business there other than in a minor way. I am faced with two accounts from Mr Cox and they are not consistent. Ms Cox was probably correct in the description of the work she did at Edmondson Park. 900 The business of Ilvarity trading as Craftsman Homes South West Sydney was carried on at Edmondson Park almost exclusively. A small portion of the business of CHNR was carried on at Edmondson Park. Again Mr Cox was consulted on or made decisions on some of the major matters affecting CHNR. Mr Cox was in Alstonville every weekend and on about every second Friday. 901 The defendants submitted, correctly, that to the extent that either of the corporate plaintiffs was present on the property, it was only by leave of Mr Cox. In McIntosh v Lobel (1993) 30 NSWLR 441 Mr Lobel was the proprietor of a photographic business. The business was operated in the name of Photo Art and Sound (Cremorne) Pty Ltd (Photo Art). It was virtually a "one man" company, the alter ego of Mr Lobel who was a director and employee. Photo Art had leased a shop in the Cremorne Centre for some years. In its last manifestation the lease expired on 1 July 1983. It contained an option to renew and it was held by the Court of Appeal that the landlord was estopped from denying that a right to a renewed lease had arisen but no renewed lease could be granted as the Centre had been sold. Thus it was a case for compensation based on trespass. 902 Mahoney JA at 476 said: "Insofar as there was anyone in possession, in law or de facto it was Photo Art. Mr Lobel was not himself in possession of the premises, in law or de facto. What he did, he did only as an officer of Photo Art. It is…a claim based upon an allegation of possession and wrongful dispossession of land. If… there was no claim to possession by Mr Lobel himself during the proceeding then…he cannot claim that the relevant wrong was done to him." 903 Cripps JA was not persuaded that Mr Lobel had a sufficient interest in the shop entitling him to maintain an action for trespass to land. 904 Kirby P at 454-455 said: "I consider that Mr Lobel had sufficient "possession" to support his action….I would not want this finding to be misunderstood. It does not mean that any officer or employee of a company has sufficient possession in law to sustain proceedings based on this tort (trespass to land). There would be clear authority against that proposition. But where, as here, there is a one man company in undoubted physical possession and that company is nothing more than the alter ego of its director and principal employee, an invasion of the company's "possession" is also an invasion of that of such a director and employee." 905 That statement of principle was not accepted by the other members of the Court of Appeal. In one sense that case was the reverse of the present one. 906 The plaintiffs submitted that they were joint occupiers and that each was entitled to bring proceedings against a third party with an inferior title. Reliance was placed on Newington v Windeyer (1985) 3 NSWLR 555 at 563E and 564A. McHugh JA pointed out that a plaintiff did not have to be the owner of the land to be able to maintain an action of trespass. He continued (at 563E-F): "The modern law of real property continues to invoke the medieval doctrine that possession is prima facie evidence of seisin in fee and that an estate gained by wrong is nevertheless an estate in fee simple…Seisin gives ownership good against everyone except a person who has a better, because older title." (Citations omitted). and at 564A "…Conduct which indicates the taking of possession of land varies with the type of land concerned." (Citations omitted). 907 In Newington a review of the evidence showed that for nearly 50 years the owners of Nos 1-4 The Grove had engaged in many acts of ownership of the disputed land in The Grove. They occupied the land and told uninvited visitors that The Grove was private land and that they were trespassing. Those owners were in possession of The Grove. That is a very different case from the present. The corporate plaintiffs relied on it to establish that as occupiers they were in possession of the land and could maintain an action for trespass. 908 The corporate plaintiffs also relied on Harris v McKenzie (1987) 9 NSWLR 139. That was a very different case from the present one and turned on the construction of provisions of the Liquor Act 1982. In the course of his judgment Kirby P at 147B made these remarks: "Occupier' normally means the person who has the immediate supervision and control of premises and the power of permitting or prohibiting the entry of other persons…"(citations omitted). 909 Mahoney JA after pointing out at 152E that "occupy" and its derivatives take their meaning essentially from the context in which they are used said at 153A: "In the end, occupation, as a term, describes what a person is doing in relation to particular premises. To assign a meaning to the word is, in this sense, to determine what that person must be seen to do or, possibly to be able to do in relation to the premises. This will involve, not merely what he may do by way of exclusion of strangers: see Newcastle City Council v Royal Newcastle Hospital (1959) 100 CLR 1 at 4; but also what he does or may do in relation to them generally." 910 In Newcastle City Council at 4 Lord Denning in delivering the judgment of their Lordships said: "But legal possession is not the same as occupation. Occupation is a matter of fact and only exists where there is sufficient measure of control to prevent strangers from interfering: see Pollock and Wright on Possession in the Common Law (1888) pp1213. There must be something actually done on the land, not necessarily on the whole, but on part in respect of the whole". 911 The corporate plaintiffs contended that Mr Cox was the alter ego of each of Craftsman Homes Australia Pty Ltd and Ilvarity as well as the lessee and represented them and licensed them to carry on and by him they carried on the business of each of them in varying degrees at the premises. They were joint occupiers, each with a right to control entry and presence on the premises, exclusive of all others except themselves. It was further contended that Ilvarity as Craftsman Homes South West Sydney necessarily required such a licence for its activities, as did Craftsman Homes Australia Pty Ltd as the franchisee. The appointment was made by Ms Stinson to gain evidence for ACA that is, for the defendants and it was represented that she and her companion (who turned out to be Mr Fordham) were intending or possible purchasers of a Craftsman Home from Ilvarity managed by Mr Cox and franchised by Craftsman Homes Australia Pty Ltd. 912 Each of the corporate plaintiffs was the alter ego of Mr Cox. The premises were let to Mr Cox using the standard Residential Tenancy Agreement (1997 edition) of the Real Estate Institute of New South Wales. The agreement provided that no more than 4 persons may ordinarily live in the premises at any one time. The holding over provision states that at the end of the term "the tenant can stay in the residential premises…unless or until the agreement is ended…" 913 Under clause 6 the landlord agrees to make sure the residential premises are vacant so the tenant can move in on the date agreed and under clause 13.1 the tenant agrees to keep the residential premises reasonably clean. From a study of the terms of the lease it is apparent that the premises are to be used for residential purposes. No other use is envisaged. In the definitions "residential premises" means any premises or part of premises (including any land occupied with the premises) used or intended to be used as a place of residence. 914 By clause 20 the tenant agreed to be responsible to the landlord for any act or omission by any person the tenant allowed on the residential premises who broke any of the terms of the tenancy agreement. By clause 21 a tenant may with the landlord's prior permission assign the whole or part of the tenant's interest under the agreement or sub-let the residential premises. 915 The tenancy agreement does not envisage any business being conducted from the premises but it does not expressly prohibit Mr Cox or his companies from carrying on business from such premises. Mr Cox did conduct part of the business of Ilvarity from the residential premises at Edmondson Park. He also conducted a very small part of the business of Craftsman Australia Pty Ltd from there, that is, principally making some decisions. The premises at Edmondson Park were being used for residential and business purposes. 916 The tenancy agreement was in Mr Cox's name and he was entitled to and did control what happened at the Edmondson Park premises. He used them to run part of his businesses and this was probably intended initially to be a temporary measure. Franchisees or intending franchisees could come to the Edmondson Park premises to sort out business details and discuss, receive or refine house plans. Prospective customers and customers having legitimate business with Ilvarity could also come to the Edmondson Park premises to discuss their proposed homes or homes in the course of construction. Similarly sub-contractors of Ilvarity trading as Craftsman Homes South West Sydney could come to the Edmondson Park premises or telephone and obtain information or directions. While Mr Cox would primarily attend to their requirements his daughter would also speak to them and handle enquiries. The evidence establishes that Mr Cox and his daughter were engaged on behalf of each of the corporate plaintiffs. As might be expected, Mr Cox left the Edmondson Park premises to attend site inspections and other meetings. If, while Mr Cox was absent from the Edmondson Park premises and people be they suppliers, sub-contractors, franchisees or customers came to the site in respect of the business of either of the corporate plaintiffs they could be asked or told to leave. 917 For practical purposes, but not legally, Mr Cox and Craftsman Homes Australia Pty Limited were inseparable and so also were Mr Cox and Ilvarity. Mr Cox regarded himself as operating through his companies and he authorised each of them to conduct part of its business from the Edmondson Park premises and assisted each to conduct that business and also conducted it on their behalf. While Mr Cox was the tenant of the premises he licensed each of the corporate plaintiffs which he regarded as his companies to operate from the premises. Mr Cox enjoyed a coincidence of interest with his companies. 918 In McIntosh v Lobel, supra at 454 Kirby P quoted with approval a passage from Clarke and Lindsell on Torts 16th Ed (1989) which included the sentences: "Possession means generally the occupation or physical control of land. The degree of physical control necessary to constitute possession may vary from one case to another, for by possession is meant possession of that character of which the thing is capable." 919 Wheat v C. Lacon and Co Ltd 1966 AC 552 involved the liability of occupiers for dangerous premises. At 578 Lord Denning said in that context: "In order to be an occupier it is not necessary for a person to have entire control over the premises. He need not have exclusive occupation. Suffice it that he has some degree of control. He may share the control with others. Two or more may be "occupiers". And whenever this happens each is under a duty to use care towards persons coming lawfully on to premises, dependent on his degree of control." 920 As with the other members of the House he agreed that an occupier is "he who has the immediate supervision and control and power of permitting or prohibiting the entry of other persons." However, Lord Denning thought that test was too narrow and he gave a number of examples. While I do not question the applicability of those principles to cases dealing with the liability of occupiers for dangerous premises the question remains whether they should be applied to a case such as the present one. 921 I would not cavil with the proposition that two or more persons may be occupiers and that for a person to be an occupier it is not necessary for the person to have entire control over the premises. In the present case all control over who enters the premises is vested in Mr Cox and the activities of the corporate plaintiffs are subject to his direction and control. I am not persuaded that either corporate plaintiff has some degree or control over who enters the premises. 922 Not without some doubt I have reached the conclusion that the corporate plaintiffs do not have sufficient title to sue the defendants in trespass. Is Mr Munro Liable for the Edmondson Park Trespass 923 Mr Munro was the permanent ACA presenter. He introduced the ACA promotional segment and the ACA program. Mr Munro knew and worked with Mr Fordham. I was also asked to hold that Mr Munro must have known of the intending segment and investigations and proposed interview for it, ACA's history of trespass (TCN Channel Nine Pty Limited v Anning (2002) 54 NSWLR 333) and the tactics employed or proposed to be employed by Mr Fordham. He was Mr Munro's and ACA's reporter. 924 Mr Fordham was an employee of TCN Channel Nine Pty Limited and a reporter with the ACA team. There is no evidence that Mr Munro instructed Mr Fordham to commit the trespass or had any part in its commission. Nor is there any evidence of Mr Munro instructing Ms Stinson to set up the deceptive meeting with Mr Cox or having any part in that ruse. There was no evidence that Mr Munro had any part in producing the promo or the program about CHNR. 925 Mr Cox relied on Mr Munro not giving evidence. However, the real difficulty is that there is no evidence on which it could be held that Mr Munro was responsible for or participated in the commission of the trespass. With Ms Stinson setting up the meeting and camera crew from TCN Nine attending there is no doubt that that company was responsible for the trespass committed by Mr Fordham. Indeed, it was not seriously argued that that company and Mr Fordham were not responsible. 926 The claim against Mr Munro based on the Edmondson Park trespass has not been established. Damages for the Edmondson Park Trespass 927 This was a very bad trespass against Mr Cox. There was a calculated course of deception to gain entry to Mr Cox's premises for the purpose of gathering evidence critical of Mr Cox and showing the television viewers the man whom they believed was responsible for some poor building work in parts of the far north coast of New South Wales. The footage (or part of it) was intended to be shown nationally. By the trespass Mr Cox was confronted without notice and expected to be able to deal with serious allegations and complaints about a number of houses. Even when told to leave Mr Fordham and the television crew were slow to do so with Mr Fordham and the television crew hovering around the front door of the house with Mr Fordham calling out to Mr Cox to respond to the allegations and not to avoid them. The phrase used was "running away". 928 I have derived considerable assistance from the judgment of the Chief Justice in Anning supra. I am bound by that decision. The major debate in the present case centred on how much Mr Cox should receive for this blatant and high handed trespass. 929 Mr Cox is entitled to compensatory, aggravated and exemplary damages. If, as is the case, neither of the corporate plaintiffs was entitled to sue, Mr Cox sought $150,000 by way of general damages to compensate him for the harm caused to him by the wrongful acts of TCN Nine and Mr Fordham (the first and third defendants). 930 Mr Cox submitted that the first and third defendants acted with demonstrable contempt for his rights as the occupier and a person of good character. Those defendants were not prepared to provide details of specific matters so the files could be retrieved and studied prior to any interview and deliberately engaged in deception to gain entry for Ms Stinson and Mr Fordham. There was also the obviously pre-arranged telephone call on Mr Fordham's mobile telephone and his opening the door of the house to admit the TCN Nine camera crew. Part of what occurred at the house was shown on the promo and the program to Mr Cox's disadvantage. Mr Cox also relied on what happened after he told Mr Fordham and the camera crew to leave. Mr Cox pointed out that the defendants were aware of the awards won for excellence in building and the franchise operations. Mr Cox complained that the first and third defendants had complete disregard for any damage the results of their incursion and trespass might do and that the conduct in which they engaged was for TCN Nine's commercial purposes, in promoting and gaining ratings for ACA. 931 Mr Cox relied on ACA being telecast nationally during prime viewing time and having a viewing audience in New South Wales of 694,000. The first defendant's financial reporting package (confidential Ex AJ) shows a large operating revenue for the last 2 years and a fluctuating operating profit. It was part of the Publishing and Broadcasting Limited (PBL Group), a major public company. 932 It was submitted correctly, that Mr Cox was affronted by the incursion and trespass and the conduct during it and felt offended, angry, stitched up, feared for his reputation and was shocked and horrified. 933 It was submitted that a substantial award for aggravated damages in the order of $75,000 should be made to compensate Mr Cox for his injured feelings as his sense of injury resulting from the wrongful physical act was justifiably heightened by the manner in which the first and third defendants committed the trespass. 934 It was further submitted that a very substantial award of exemplary damages to punish TCN Nine and its reporter was merited and that award should be between $500,000 and $1 million. In XL Petroleum v Caltex Oil (1985) 155 CLR 448 after holding that exemplary damages may be awarded against only one of several defendants the High Court went on to consider whether the award of the jury of $400,000 by way of exemplary damages was so large as to be unreasonable and whether the reduced sum of $150,000 was excessive. XL which intended to set up in business in New South Wales as a seller of petrol at discount prices acquired the right to occupy certain land as a service station. The land had formerly been used as a service station by Caltex, a large oil company, which had installed underground petrol tanks but it had not been so used for about two years before XL obtained its right of occupancy. On the morning XL took possession, Caltex employed an industrial plumber to spike the tanks. In an action for trespass, the jury awarded XL $5527 for damages for the cost of replacing the tanks and the loss of profits and $400,000 exemplary damages against Caltex. Gibbs CJ held that the Court of Appeal was correct in reducing the amount of $400,000. He regarded the amount of $150,000 as neither too low nor excessive and said that the circumstances justified a large award. Mason J and Wilson J agreed. 935 At 471 Brennan J said: "As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories. In Merest v Harvey substantial exemplary damages were awarded for a trespass of a high-handed kind which occasioned minimal damage, Gibbs CJ saying: "I wish to know, in a case where a man disregards every principle which actuates the conduct of gentlemen, what is to restrain him except large damages?" (footnotes omitted). 936 That passage was referred to with approval in Lamb v Cotogno (1987) 164 CLR 1 at 9 and by Spigelman CJ in Anning, supra at 363. 937 Anning was the legal occupier of 92 acres at Wyee on which he had built a motorcycle track constructed with second hand tyres 1.68km long. It was used to train young motor cyclists. Others used the track as well. The property was also used for the storage of used tyres. Anning purchased used tyres which were delivered to the property by truck. At the relevant time he had been receiving at least one thousand tyres every week. The presence of the tyres was a worry to the Environmental Protection Authority (EPA). The EPA had been watching the road near the property. On 10 November 1995, a journalist – employee of TCN Channel Nine accompanied by a camera crew was waiting near the property. Upon a delivery of tyres arriving by truck and being admitted to the property by Anning and the truck and Anning leaving the area of the entrance gates a number of vehicles containing persons employed respectively by the EPA, the Lake Macquarie City Council, the NSW Police Service and TCN Channel Nine travelled through the entry gates onto the property. Anning began to sort the newly arrived tyres. Four camera men about 50 feet away held video cameras pointed towards him and filmed him. On asking and being told by an officer of the Lake Macquarie City Council that the camera men were the media Anning told them, "Get off the property, I don't want you here". A little later he came across the journalist and when she said that she wanted to do a story now he replied, "I just want you to go." At 349 the Chief Justice held that the implied licence was limited to entering the land to request permission to film but TCN Nine did not enter for that purpose. It entered to film the raid, record Anning's use of the land, and conduct such interviews as it could with a view to broadcasting a program. 938 I have narrated the background facts to show that Anning was a markedly different case from the present and in response to Mr Cox's contention that it should not be used as a guide as to amounts in the present case. However, the discussion of damages in the case is helpful. 939 At [178] the Chief Justice said: "General damages should reflect the significant purpose of vindicating [Anning's] right to exclusive occupation. This requires a substantial award. (See Plenty v Dillon (1991) 171 CLR 635 at 654-655 per Gaudron J and McHugh J). I would assess such damages as $25,000." 940 The right of exclusive occupation was important in the present case. The first and third defendants intruded into the home occupied by Mr Cox and his daughter and in which they were working and carrying on business on behalf of Craftsman Homes Australia Pty Limited and, mainly, Ilvarity. The first and third defendants were aware that no such intrusion would have been permitted if the significance of the identities of Ms Stinson and Mr Fordham, their employment by the first defendant and their purpose had been known. Further once inside the premises Mr Fordham facilitated a further violation of Mr Cox's rights by admitting the camera crew. This was close to a virtual 'take-over'. The first and third defendants knew that Mr Cox would never have sanctioned this. The first and third defendants were slow to withdraw after being asked to leave and continued the intrusion from the doorway. A substantial award is required. I assess the general damages at $60,000 in the present case. 941 As to aggravated damages the Chief Justice in Anning at [179] said: "This is also an appropriate case for aggravated damages. The hurt to feelings, humiliation and affront to dignity experienced by the respondent was aggravated by the way in which the appellant acted in the course of its trespass. It confronted the respondent with cameras rolling and indicated clearly that it was filming for purpose of broadcast to the public at large. Furthermore, whether before or after the confrontation with the respondent, it widened the trespass from merely approaching him and felt able to film elsewhere on the property, both in front of the stacks or tyres and in the interview with the truck driver. This conduct justifies an award of aggravated damages which I assess in the amount of $25,000." 942 The present case is also an appropriate one for aggravated damages. The hurt to feelings, humiliation and affront to dignity experienced by Mr Cox was aggravated by the way in which the first and third defendants acted in the course of their trespass. That included Mr Fordham letting the camera crew into the home at Edmondson Park, then, with cameras rolling, confronting Mr Cox with broad general allegations of poor work and an accusation of having left a trail of devastation and filming him. No prior notification was given. The statement that Mr Cox should answer questions rather than "running away" aggravated the hurt, especially when it was shouted out from the front door while Mr Fordham and the camera crew were hovering around. Mr Cox must have been aware that his reputation and the business in which he was deeply involved were being attacked and damaged. 943 The conduct of the first and third defendants justifies an award of aggravated damages which I assess at $50,000. 944 As to exemplary damages Spigelman CJ in Anning said at [180] – [188]: "Exemplary damages are awarded for "conscious wrongdoing in contumelious disregard of another's rights" (Whitfeld v De Lauret & Co (1920) 29 CLR 71 at 77), a phrase which covers "at least the greater part of the relevant field": Gray v Motor Accident Commission (at 7 [14]). Other expressions used have included "high-handed, insolent, vindictive or malicious" conduct. (Uren v John Fairfax (at 129) per Taylor J. See also Gray v Motor Accident Commission (at 5 [8]-[12]).) The conduct on the part of the appellant to which I have referred in my consideration of aggravated damages, is conduct of a character that could justify an award of exemplary damages. A number of additional factors could also support such an award. The public appeal of a program like "A Current Affair", in the success of which the appellant has a clear financial interest, is significantly enhanced by actual footage of "dastardly deeds" and "guilty men" or "guilty women". Intrusion onto the respondent's land was an important part of the value to the appellant of its investment in the story, of a character that it could not obtain without committing a trespass. Furthermore, the power of the mass media in comparison with an individual like the defendant is, in my opinion, a material consideration when determining whether conduct should be punished or should be deterred. In a democratic society power is not wielded only by instrumentalities of government. (Cf Uren v John Fairfax (at 130-131) per Taylor J.) High-handed conduct approaching arrogance may well be manifest by private corporations. (See, eg, Wasson v California Standard Co (1964) 47 DLR (2d) 71 esp at 79, 80, 86. Note XL Petroleum (at 461) "a large company" per Gibbs CJ.) I would not, myself, have interfered with her Honour's award of exemplary damages on the basis that it was not open to her Honour to find that the circumstances were such as to justify such an award. In view of the errors of law committed by her Honour, the discretion falls to be re-exercised by this Court. I have come to the conclusion that, on balance, this is not an appropriate case to award exemplary damages. Such damages are awarded rarely and require something more than a finding of fault. (See Gray v Motor Accident Commission esp (at 6[12], 9 [20]). See also Ellison v L [1998] 1 NZLR 416 at 419.) In my opinion, the appellant's conduct was not, in the circumstances of this case, of sufficient gravity to be described as contumelious disregard of the respondent's rights. In reaching this conclusion I have in mind the fact that the conduct did not, for the reasons I have expressed above, affect privacy interests in the way an intrusion into a residence with respect to personal, rather than business, affairs would do. Furthermore, the issues involved raised matters of genuine public interest in the context of investigations by public regulatory authorities. Finally, the tone of the appellant's questioning, while forceful, was not insulting or overbearing. The context of the confrontation is also of significance. At one point the respondent engaged the appellant's representatives in discussion about telling his side of the story. Furthermore, when specifically asked to leave, Ms Brown indicated that they would. There is no evidence that they did not do so promptly. In all the circumstances, in my opinion, exemplary damages should not be awarded." 945 In the joint judgment of four Justices in Gray v Motor Accident Commission (1998) 196 CLR 1 at 7 this passage appears: "In considering whether to award exemplary damages, the first, if not the principal, focus of the inquiry is upon the wrongdoer, not upon the party who was wronged. (The reaction of the party who is wronged to high-handed or deliberate conduct may well be a reason for awarding aggravated damages in further compensation for the wrong done. But it is not ordinarily relevant to whether exemplary damages should be allowed). The party wronged is entitled to whatever compensatory damages the law allows (including, if appropriate, aggravated damaged). By hypothesis then, the party wronged will receive just compensation for the wrong that is suffered. If exemplary damages are awarded, they will be paid in addition to compensatory damages and, in that sense, will be a windfall in the hands of the party who was wronged. Nevertheless, they are awarded at the suit of that party and, although awarded to punish the wrongdoer and deter others from like conduct, they are not exacted by the State or paid to it." 946 I have applied those principles. I would also refer to the discussion of exemplary damages and the reasons of Palmer J by Heydon JA in Harris v Digital Pulse Pty Ltd (2002-2003) 56 NSWLR at [241]-[256] 947 In my opinion the present case is one of those rare cases where exemplary damages should be awarded. I rely on this combination of factors: (a) the calculated deception practised to gain entry to the premises occupied by Mr Cox both as a residence and office; (b) the calculated deception and manoeuvre adopted to admit the camera crew. (c) the delay in leaving when asked including Mr Fordham and the camera crew hovering around the front door with Mr Fordham telling Mr Cox it would be better to answer questions rather than running away; (d) the making of the general allegations of poor work and leaving a trail of devastation when no prior notice had been given and there had been negotiations with Mr Chaseling for an interview; (e) the knowledge that Mr Cox and his companies had received excellence in building awards; (f) and the confrontation of Mr Cox in unfair circumstances where he could not effectively answer his critics, the sustained attack being made on Mr Cox's reputation and businesses without regard to the damage being done and the hurt being done to Mr Cox's feelings. (g) the public appeal of ACA in the success of which the first and third defendants had a clear financial interest is significantly enhanced by actual footage of poor work and "guilty men", and (h) the first and third defendants engaged in high handed conduct of a grave kind. The first defendant is a substantial well sourced company with ready access to legal advice with its own in house legal advisors. Its television station has a large viewing audience. 948 I would respectfully follow the observation of Spigelman CJ in Anning at 183 that the power of the mass media is a material consideration when determining whether conduct should be punished or deterred. 949 The circumstances of this trespass were so bad that they should be punished and future like trespasses firmly discouraged. 950 I assess the exemplary damages at $120,000. 951 In fixing separate amounts for the various heads of damage I have followed the Chief Justice in Anning at [166] when he pointed out the difficulties of computing interest when exemplary damages are included in a single award of damages. Exemplary damages should not incur interest until the date of judgment. The total damages I have awarded for the Edmondson Park trespass is $230,000. Alleged Trespass at the Mosses 952 Ilvarity claims that shortly prior to 22 February 2002 Mr Fordham as a servant and/or agent of TCN Channel Nine Pty Limited and/or Mr Munro together with other servants or agents of TCN Channel Nine Pty Ltd unlawfully entered and remained upon the Mosses' property being a building site occupied by and in the lawful possession of Ilvarity, such conduct amounting to trespass. It was not in issue that the first and third defendants entered the Mosses' property at their invitation and gathered material critical of Ilvarity and Mr Cox. Some of this appeared in the promo and the program. Mr Fordham asserted that he had a look at the Mosses' place and it was a disgrace. 953 As previously mentioned, Ilvarity relies upon the building agreement between it and the Mosses, cl 19.01 of which provides: "The contractor shall be entitled to exclusive possession of the land from the commencement of the works until the date of receipt by the builder of all moneys due under the contract pursuant to clause 9.01 hereof." '9.01' should probably read 10.01. 954 Clause 10.01 reads: "Upon a certificate of practical completion being issued to the proprietor, the contractor shall be immediately entitled to receive all moneys due and payable under this contract and variations and upon receipt of such moneys, the contractor shall hand over all keys of the works to the proprietor…" 955 It was Ilvarity's contention that although the progress of the works had been suspended by the letter of 30 June 2000 from the Mosses' solicitors the contract remained on foot and was never validly terminated. Ilvarity contended that while the Mosses attempted to terminate the contract by their solicitors' letter of 7 July 2000 they were not entitled to do so and their conduct was repudiatory. Their repudiation had not been accepted and the contract remained in force. Ilvarity also relied on the letter of 5 June 2002 from the Mosses' solicitors earlier set out ending the suspension and requiring Ilvarity to complete the works described in the building agreement. That letter continued: "For the avoidance of doubt, it is accepted that the agreement is still on foot and that, more particularly, it was not brought to an end by the letter from Messrs Stephensons dated 7 July 2000." Messrs Stephensons were the solicitors for the Mosses in July 2000. 956 In my opinion there is no evidence that Mr Munro, the program's presenter was in any way responsible for, or liable for, this alleged trespass. 957 The defendants contended that Ilvarity could not maintain this claim because, as at early 2002 when the first and third defendants visited the Mosses' land and the house being built for them, Ilvarity was not in actual possession of the site and therefore did not have suffciient title to maintain an action for trespass. Having received the notice of suspension of progress of the works about 30 June 2000 Ilvarity was required to cease work and vacate the site after the removal of all equipment and building materials on or about the site (cl 5.01). It Is not easy to reconcile a requirement for Ilvarity to vacate the site upon being served with a written direction of suspension and an entitlement to exclusive possession under cl 19.01 "from the commencement of works until the date of receipt by the builder of all moneys due under the contract pursuant to clause 9.01 hereof". Assuming 9.01 should be 10.01, as I believe, that is a reference to the contractors entitlement upon the issue of a certificate of practical completion "to receive all moneys due and payable under this contract and variations". Under clause 9.01 the works are deemed to be practically completed when they are reasonably fit for occupation by the proprietor or when the proprietor takes possession whichever may be earlier. Practically, subject to any rectification of defects under the defects liability clause, that is, virtually at the end of the job. 958 The resolution of this difficulty may be that the entitlement to exclusive possession of the land is also in suspension while the progress of the works remains suspended. The builder has to secure the site and remove all equipment and materials. Those are significant steps to avoid the risk of injury to persons coming onto the land. Upon suspension the builder may have to notify both its insurer and the Home Owners Warranty insurer but that is another issue. 959 The facts reveal that Ilvarity was not present on the site after July 2000 save for three visits. and therefore not in actual possession, whatever its entitlement may have been. Mr Crandon visited the Mosses' property in August 2000 at the behest of Ilvarity and Mr Cox. Mr Chaseling was present at the inspection of Mr Larry James on 18 October 2000 and indicated the course which Ilvarity was going to take. Mr McDonald inspected the property in April 2002. Ilvarity did not physically return to the site until June 2002 when the suspension was lifted. 960 Mr Moss was entitled to be on the property to attend to matters such as the ducted vacuum air conditioning and electricity trench back filling. The Mosses were in sole possession of the property from August 2000 until early June 2002 and had sole access to the partly built house except for the inspections. Mr Moss went to the property at least two or three times per week undertaking general maintenance works, gardening and mowing. With the size of the property there was much to be done. Mr Chaseling was aware of this. 961 By fax of 25 February 2002 to Mr Fordham, ACA, which was written after Mr Chaseling became aware of ACA's intended program, he stated that if Mr Fordham had been to the Mosses' site he may be subject to prosecution for trespass as CH had exclusive possession of the site under the terms of the building agreement. Mr Chaseling did not suggest that Ilvarity was in actual possession of the site. He had previously advised Mr Fordham by letter (or fax) of 21 February 2002 that Mr Moss had exercised a cease work clause in the building agreement on 29 June 2000 and that the Mosses' home had a stop work order issued by the certifying authority due to unapproved and deficient works completed by Mr Moss and not by CH. I do not think that either fax affects the position. 962 As at February 2002 the Mosses were in exclusive possession of their land and had been since at least August 2000. Ilvarity had vacated the site as it was bound to do and the progress of the works was suspended and had not resumed. The first and third defendants were present at and on the Mosses' land with the consent and approval of the Mosses, the owners. 963 In the circumstances which existed as at February 2002 Ilvarity was not entitled to sue the defendants in trespass. It did not have sufficient title. 964 I have found it unnecessary to resolve the question whether the Mosses had validly terminated the building agreement by their solicitors' letter of 7 July 2000. There is the Mosses' contention that as at that date the works were serious defects, that the defects were not being remedied, that Ilvarity was intending to cover up the defects and that Ilvarity was demanding moneys to which it was not entitled. Ilvarity has denied the extent and seriousness of the defects alleged and contended that it was prepared to fix any defects. It rejects the suggestion of a covering up of defects being in contemplation. 965 The defendants submitted that it was completely irrelevant that following settlement negotiations in June 2002 the contract was effectively re-instated. Ilvarity would challenge that this is a correct summary of what had occurred. The alternative view is that the letter of 5 June 2002 was an acknowledgment on behalf of the Mosses that the building agreement had not been terminated by the letter of 7 July 2000 from the Mosses' solicitors. 966 The defendants also rejected the suggestion that they were put on notice of Ilvarity's claim to exclusive possession of the Mosses' property contending that the letter of 25 February 2002 arrived some six days after the interview on the Mosses' property. The letter arrived before the promo and the program showing shots of the Mosses' house were screened. The issues raised in this and the two preceding paragraphs do not need to be determined. As at February 2002, Ilvarity was not in possession of the Mosses' property. There must be a verdict for the defendants on the trespass count in respect of the Mosses' property. False Representation and Misleading and Deceptive Conduct 967 In recapitulating the plaintiffs' claims I will go into greater detail: (a) TCN Nine and Mr Fordham were guilty of fraudulent misrepresentation by Mr Fordham and Ms Stinson on or about 22 February 2003 representing to each of the plaintiffs that Mr Fordham's name was John Stinson and that he was a prospective customer of one or more of the plaintiffs and was seeking an appointment and meeting for Mr Fordham under the name of John Stinson and one Sarah Stinson his wife with Mr Cox to discuss and obtain advice concerning the construction of a Craftsman Home. [In fact the representations were made prior to 22 February 2002 by Ms Stinson] That representation was alleged to be false with each of the first and third defendants knowing it to be false and intending to deceive each of the plaintiffs. It was also alleged that in reliance upon the representation each of the plaintiffs agreed to an appointment and meeting with Mr Cox, met Mr Fordham and Sarah Stinson and suffered loss and damage (para 13A). (b) TCN Nine and Mr Fordham contravened section 52 of the Trade Practices Act 1974 (TPA) and section 42 of the Fair Trading Act 1987 (NSW)(FTA) by reason of the matters set out in paragraphs 13A (summarised in sub-para (a)), 13B and 13C of the Third Amended Statement of Claim. Para 13B alleged that on a date prior to 21 February 2002 the defendants by Mr Fordham requested the plaintiffs to grant an interview but until 26 and 27 February 2004 and thereafter failed and refused to meet all the conditions requested by the plaintiffs and in particular to provide particulars in writing of the questions to be asked to enable the plaintiffs to have available the relevant files. 968 Para 13C alleges that A. The first defendant has by itself and by its servant or agent the third defendant, in trade and commerce engaged in conduct that is misleading and deceptive or likely to mislead or deceive in contravention of section 52 of TPA and s42 of the FTA; and B. The third defendant has in trade and commerce engaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of s42 of the FTA; and C. The second and third defendants have aided, abetted, counselled and procured and been directly and indirectly knowingly concerned in the contravention by the first defendant of TPA s52 and FTA s42 within the meaning of TPA s75B and FTA s61 respectively and are liable in damages for those contraventions. 969 In support of these allegations in para 13C the plaintiffs relied on: (1) TCN Nine and Mr Fordham entering and remaining upon the Edmondson Park premises which was occupied by and in the lawful possession of the plaintiffs and remaining upon the premises for the purpose of filming or taking video recordings of Mr Cox and telecasting the whole or part of that matter; and (2) Obtaining entry by the misrepresentations and conduct earlier mentioned; and (3) Doing so in the circumstances and with the knowledge of the plaintiffs' request and other matters pleaded in paragraph 13B (summarised earlier); and (4) Acting as pleaded in sub-paragraphs (1) (2) and (3) for the purpose of filming or taking video recordings and telecasting the whole or part of that matter in a program concerning the plaintiffs and for the purpose of damaging the plaintiffs (I have corrected the typographical errors in sub-para (4)) 970 The plaintiffs further and alternatively relied on the matters referred to in sub-paragraphs (1)-(4) and by ( 5) including the matter filmed or videoed and referred to in sub para (1) above, in the matter complained of in paragraph 5 (the promo – both the text and the visual images) and/or in the matter complained of in paragraph 7 (the program – both the text and the visual images) and publishing and telecasting that matter for general reception (nationally). 971 In paragraph 13D of the Third Further Amended Statement of Claim the plaintiff alleged: (a) Each of the Mosses and the Vimpanys and Noel Allan, in trade and commerce, engaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of s42 of FTA; and (b) The first, second and third defendants have aided, abetted, counselled and procured, and induced and been, directly and indirectly knowingly concerned in, the contravention by those persons of s42 of FTA within s61 and are liable in damages for those contraventions. 972 In support of those allegations the plaintiffs relied on: (1) Each of the Mosses and the Vimpanys and Noel Allan consenting to an interview and publishing to the defendants by the third defendant the matter attributed to them respectively in the matter complained of in the promo and for the matter complained of in the program for the purpose of the publishing and telecasting of the matter by the defendants for general reception; and (2) the publication and telecasting of that matter by the defendants. 973 Senior counsel for the plaintiffs explained (T1027) that their more straightforward pleadings as to misleading and deceptive conduct were paragraphs 13A, 13B and 13C (summarised earlier) and that paragraph 13D was an alternative formulation. 974 What tends to mark out this case is that there were four instances of misleading or deceptive conduct namely, when Ms Stinson first spoke to Ms Santin by telephone, when the initial appointment for an interview was made with Mr Cox, when access to the Edmondson Park house was gained without telling Ms Cox that they were from ACA and in the initial part of the interview when Mr Fordham and Ms Stinson told Mr Cox that they were considering building a house. Mr Fordham and TCN Nine realised that they would not be admitted to the house if it was realised who they were and the purpose of their visit. 975 The defendant's submitted that paragraph 13A of the Third Further Amended Statement of Claim appeared to be in the nature of fraudulent/negligent misrepresentation at common law. They noted that it was also used to support the trade practice claims in paragraphs 13B-D. 976 The plaintiffs replied that the claims have nothing to do with negligent mis-statements, that the intentional misrepresentation was clearly established. It was intended to gain material unfavourable to the plaintiffs to achieve (or enhance) publication. 977 The defendants submitted that the defendants or their agents made no representation to Craftsman Homes Australia or Mr Cox. In their interrogatories the plaintiffs set out the substance of the telephone conversation allegedly held between Ms Stinson on behalf of the defendants and Ms J Santin on behalf of Ilvarity, the former being in Sydney and Ms Santin in Alstonville. With the exception of the telephone number furnished by Ms Stinson the defendants in their answers to interrogatories accepted that such a conversation occurred. In it Ms Stinson said she wanted to build two homes on two blocks of land she had in the Alstonville area and that she needed "to talk to a builder to explain what she wanted and see how you build". Ms Stinson declined Ms Santin's offer of assistance and stated that she needed to see someone in Sydney. Ms Santin replied, "Our boss is in Sydney. I will give you the phone number for Fred in Sydney to talk to him and then we can make a time to go and look at your land". Ms Stinson stated, "That would be fine". 978 The defendants admitted in their answers to interrogatories that prior to 22 February 2002 Ms Stinson telephoned Mr Cox and asked in substance if she and her husband John could make an appointment with Mr Cox to discuss the construction of a Craftsman Home on land in northern New South Wales. An appointment was made for 1pm on 22 February 2002. 979 The defendants admitted that a camera used to produce the images on video number four was contained in a bag carried by Ms Stinson so it would not be obvious to onlookers, that Mr Fordham was not married to Sarah Stinson and that Mr Fordham and Ms Stinson were not prospective customers of the 1st, 2nd and 3rd plaintiffs and that they (Fordham and Stinson) were not seeking an appointment with Mr Cox to discuss and obtain advice concerning the construction of a Craftsman Home and did not have such an intention or any intention to commission the construction of a Craftsman home. 980 From the terms of the conversation between Ms Santin and Ms Stinson it is obvious that Ms Stinson was angling to have a conversation in the Sydney premises of Mr Cox with a builder. Hopefully, that would be Mr Cox. The "sham" interest displayed was a way of gaining access to the Sydney premises and Mr Cox. 981 The defendants pointed out that the subject of franchising was not mentioned. That was not a matter of interest to them. In the circumstances which prevailed it was not possible to separate Ilvarity and Mr Cox. While the representation to Ms Santin was primarily made to Ilvarity, the misrepresentation to Mr Cox was made to him and Ilvarity both when Ms Stinson made the appointment and in the early part of the interview with him (Cox) on 22 February 2002 before the camera crew was admitted. 982 The plaintiffs' submitted that in seeking to arrange an interview via Mr Chaseling at Lismore (Alstonville) the defendants were seeking to deal with all the plaintiffs. They relied on the correspondence which passed before the trespass and the conduct of the defendants during the interview, the ACA promo and the ACA program. In my opinion the defendants were seeking to deal with the homes constructed by Ilvarity under the direction of Mr Cox, the defects in the recent homes constructed and the conduct of Mr Cox and Ilvarity towards the building owners. The defendants were not concerned with the franchises which were the province of Craftsman Homes Australia Pty Limited. In my opinion no representation or misrepresentation was made to Craftsman Homes Australia Pty Limited. The defendants submitted that the only potential damage which flowed from the representations was the trespass and that any damages available from the misrepresentation claim were only damages that could flow from the trespass. The defendants further submitted that even if this claim were to succeed none of the plaintiffs could fare better than on the trespass cause of action and that Ilvarity, the real recipient of the representations, was not in possession of the premises and accordingly suffered no damage from the representations in any event. 983 The plaintiffs submitted as to damage and causation that it was sufficient if the damage was the natural and probable result of the intentional tort and that was the present case. I will return to the question of damages after I have dealt with the allegation of false and misleading conduct. 984 The defendants submitted that there was no adequate proximity between the plaintiffs and the defendants at the time the misrepresentation was made to ground the cause of action of fraudulent misrepresentation. I do not think that there was adequate proximity between Craftsman Homes Australia Pty Ltd and the defendants and between Ilvarity and Mr Cox on the one hand and Mr Munro on the other. The misrepresentations had nothing to do with the franchises or Craftsman Homes Australia Pty Limited. It has not been proved that Mr Munro as the ACA presenter had anything to do with the making of the misrepresentations. However, the misrepresentations were made to Ilvarity and Mr Cox and resulted in TCN Nine and its operatives gaining entry to the Edmondson Park premises, confronting him without notice and putting him in a bad light in the film which was taken and later telecast. There was adequate proximity between Ilvaarity and Mr Cox on the one hand and TCN Nine and Mr Fordham on the other. The defendants submitted that the natural and probable consequence of the representations was the trespass. It was one natural and probable consequence. The consequences of the trespass were marked. 985 As to paras 13B and 13C of the Third Further Amended Statement of Claim the defendants made a series of general and primary submissions and then some specific submissions. The primary submissions were: (i) The conduct was not in trade or commerce (ii) Other than the possible exception of the material in para 13A (being the representations prior to the Edmondson Park trespass) none of the material pleaded is capable of being construed as misleading or deceptive. Further there was no reliance by the plaintiffs on the conduct said to be misleading and deceptive and no connection between any reliance and the supposed damages sought (iii) Much of the matter pleaded falls under the exemption for prescribed information providers in s65A, TPA 986 The defendants pointed out that para 13B contained an allegation that they refused to grant an interview to the plaintiffs on the terms and conditions they specified. Those conditions which were specified in the letter of 25 February 2002 of CH included that the Mosses' matter not be discussed and that written questions be supplied by 4:30pm that day. The interview was scheduled for 26 February 2002. The series of letters written by Mr Chaseling from 21-26 February 2002 were on the letterhead of Craftsman Homes Australia Pty Limited. However, when the solicitors wrote in protest to the first defendant they stated that they acted for Ilvarity trading as Craftsman Homes – see Exhibit C. 987 The defendants submitted that para 13B was irrelevant and incapable of grounding or contributing towards a trade practices action and that neither para 13A nor para 13C related to conduct that is in trade or commerce. The only actual relevant "conduct" of the defendants pleaded in para 13B, was the refusal to meet the conditions set by the plaintiffs' for that interview. 988 In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 602 the joint majority judgment stated that the words "trade" and "commerce" in s52 of the TPA are not terms of art but are terms of common knowledge of the widest import, that the real problem involved in the construction of s52 does not spring from the use of the words "trade or commerce" but from the requirement that the conduct be "in" trade or commerce and that the phrase "in trade or commerce" in s52 has a restrictive operation and qualifies the prohibition against engaging in conduct of the specified kind. 989 At 603-604 the majority judgment continued: "Indeed, in the context of Pt V of the Act with its heading 'Consumer protection', it is plain that s52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage, in the course of, or for the purposes of, its overall trading or commercial business…What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not with whom it (or those interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature bear a trading or commercial character. Such conduct includes promotional activities in relation to or for the purposes of, the supply of goods or services to actual or potential customers, be they identified customers or merely an unidentifiable section of the public". The judgment gave a number of informative illustrations of what did and did not amount to misleading and deceptive conduct in trade and commerce. 990 The defendants submitted that the refusal to accept the conditions formulated by Mr Chaseling was not an activity or transaction bearing a trading or commercial character. The defendants submitted that in para 13B there was no misleading or deceptive conduct pleaded, that no element of reliance was alleged that there was no suggestion that any reliance led to loss or damage nor that the defendants actually misled the plaintiffs by refusing to meet their conditions for the interviews. Further, it was submitted, that there was no suggestion of impropriety or of breach of some legal obligations. 991 The plaintiffs replied that the conduct of the defendants was in trade and commerce and referred to Miller, Trade Practices Act para 1.4.125 the principles there propounded and the many cases there cited by way of example, especially Re Ku-ring-gai Co-op 36 FLR 134 at 167 (per Deane J). At 139 Bowen CJ had said, that the term 'trade or commerce' describes "all the mutual communings, the negotiations verbal and by correspondence, the bargain, the transport and delivery which comprised commercial arrangements". This description is indicative of the width of the term. 992 Deane J emphasised the width of the terms 'trade and commerce' and said, amongst other things: "They are not restricted to dealings or communications which can properly be described as being at arms length in the sense that they are within open markets or between strangers or have a dominant objective or profit making. They are apt to include commercial or business dealings in finance between a company and its members which are not within the mainstream of ordinary commercial activities and which, while being commercial in character, are marked by a degree of altruism which is not compatible with a dominant objective of profit making". 993 The plaintiffs submitted that TCN Nine's conduct was one inseverable stream from program preparation, misrepresentation trespass and interview to editing and telecast and that the activity and aim was always publication as part of the business of commercial television. The plaintiffs submitted that it was necessary to look at the totality of this course of conduct. Part of the preparation of the program to be telecast involved contacting those attacked and obtaining their responses hopefully in a live interview. That contact had begun prior to 22 February 2002. After the trespass on that day and before the promo was shown negotiations for a live interview continued but TCN Nine (and Mr Fordham) was not prepared to agree to the conditions proposed on behalf of Ilvarity and Mr Cox. Thus a live interview (or part of it) was not able to be included in the program. 994 One of the objects of a television station is to attract viewers or potential viewers to watch the programs which it telecasts. This involves showing programs which viewers or potential viewers want to watch. Advertisers and potential advertisers, subject to questions of costs, are likely to prefer programs with substantial viewing audiences. Revenue from advertising and promotional activities is important for the financial wellbeing of the television station. The accounts of TCN Nine show that it had substantial operating revenues. A commercial television station is operated for profit. That is not a criticism. 995 A program such as ACA is much enhanced by showing those alleged to be responsible for the conduct or work being attacked and the conduct or work. This gives intimacy and immediacy to the program. Running a commercial television station is a commercial enterprise and making programs, especially ones that attract viewers is an integral part of that commercial enterprise. 996 In my opinion, what took place between 21 and 26 February 2002 was part and parcel of the making and telecasting of the program and in consequence, I hold that what occurred was conduct in trade or commerce. 997 Generally as to paragraph 13B of the Third Further Amended Statement of Claim I regard the matter pleaded as being on the periphery of the claims of Ilvarity and Mr Cox and of little or no consequence and Craftsman Homes Australia Pty Limited having no claim in respect of it. I do not see how or why a refusal to meet all the conditions of interview requested by Ilvarity and Mr Cox bears upon the claim of false misrepresentation and misleading or deceptive conduct. The events of 22 February 2002 and earlier which gave rise to the false misrepresentation and the misleading or deceptive conduct took place before the failure or refusal to agree to the conditions of interview. 998 Generally as to paragraph 13C, the activity (or conduct) there specified was part of the preparation for and making of the program and promo for telecasting and telecasting each of them. I hold this to be conduct in trade or commerce. 999 The defendants mounted a detailed defence to the claims contained in para 13C of the Third Further Amended Statement of Claim, namely, conduct which is misleading or deceptive or likely to mislead or deceive firstly, on the part of TCN Nine secondly Mr Fordham and thirdly Messrs Munro and Fordham aiding, abetting counselling and procuring and inducing TCN Nine in contraventions of s52 of TPA and s42 of FTA. 1000 The defendants submitted that the conduct referred to in para 13C(1) (summarised earlier) attempted to link the trespass and the broadcast. That link is not illusory. The trespass occurred in the course of TCN Nine and Mr Fordham trying to obtain footage which they could not obtain by legitimate means. The defendants submitted that insofar as there was a reference to telecasting this was covered by the exemption under s65A TPA. That section provides, inter alia (1) Nothing in s52…applies to a prescribed publication of matter by a prescribed information provider. 1001 A "prescribed information provider" means a person who carries on a business of providing information including the holder of a licence granted under the Broadcasting Services Act 1992. There was no issue that TCN Channel Nine Pty Limited was a prescribed information provider. A publication by a prescribed information provider is a prescribed publication if in any case – the publication was made by the prescribed information provider in the course of carrying on a business of providing information or the publication was by way of a television broadcast by the prescribed information provider. 1002 Miller's Annotated Trade Practices Act, 27th Edn, 2006, para 1.65A.5 records that s 65A has the effect of exempting the media from s52 and other provisions of Pt V in relation to editorial stories and news. Care must be taken to distinguish between the telecast which is exempt and other conduct preceding it which is not exempt. 1003 The defendants submitted that neither the telecasting nor the act of filming or videotaping was misleading or deceptive. They contended that there was no reliance and that insofar as there was a reference in the paragraph to the Edmondson Park trespass or the preceding representations this was not conduct in trade or commerce. As drafted para 13C is not easy to follow, but the misleading and deceptive conduct occurred on four occasions mentioned earlier, that is, when speaking to Ms Santin, when speaking to Mr Cox and making an appointment to see him, when Ms Stinson and Mr Fordham were admitted to the Edmondson Park house and when speaking to Mr Cox before the camera crew was admitted. The representations made led to Mr Fordham being allowed to enter and later the camera crew. The actual entries occurred as a matter of fact and Mr Fordham, Ms Stinson and the crew remained upon the premises after being directed to leave but only for a relatively short period. They filmed or took video records of Mr Cox and the surrounds. They telecasted part of this material. The false and misleading conduct was the precursor which led to the occurrence of the subsequent events. 1004 Paragraph 13C(2) relies on obtaining entry by the misrepresentations and the conduct pleaded in paragraph 13A which is summarised previously. As earlier explained I regard this as conduct in trade or commerce. 1005 Paragraph 13C(3) relies on the matters alleged in paragraph 13B. The defendants submitted that what was alleged in paragraph 13B was not conduct in trade or commerce and was not misleading or deceptive. In my opinion the refusal to accept the conditions for an interview of Messrs Cox and Chaseling could not be regarded as misleading or deceptive. 1006 The defendants submitted that the attempt to link the material referred to in paragraph 13B into the large claims in para 13C has no merit. While the interview negotiations were part of the preparation for and making of the program the refusal of TCN Nine and Mr Fordham to agree to the interview conditions could not be classed as misleading or deceptive conduct. 1007 The defendants submitted that paragraph 13C(4) emphasised the broadcast as the heart of the plaintiffs' claim in misleading and deceptive conduct. That puts the matter too highly. That sub paragraph draws together the assertions in sub-paras (1),(2) and (3), incorporating, inter alia, paragraphs 13A and 13B and alleges that the defendants acted as pleaded in sub paras (1), (2) and (3) for the purpose of filming or taking video recordings and telecasting the whole or part of that matter in a program concerning the plaintiffs for the purpose of damaging them. The complaint includes the means used to achieve the purposes alleged. The misrepresentations were designed to obtain access to Mr Cox and his premises so as to film the allegedly guilty person and his re-actions and to show him in an unflattering light and his work and that of Ilvarity on three jobs as faulty. The damage suffered extended beyond that to Mr Cox's reputation. Mr Cox suffered a serious trespass and much distress as a result of the misrepresentations. The misrepresentations led to Ilvarity and Mr Cox being confronted without notice. 1008 The defendants reiterated that the broadcast (or telecast) fell within the exemption in s65A but if that exemption did not apply it was clear that what was being claimed was damage to reputation and that the proper remedy was therefore in defamation and only in defamation. I do not agree that the damage being claimed is limited to damage to reputation. 1009 The defendants complained that the words in para 13C(4) "for the purpose of damaging the plaintiffs" were obscure. They submitted that while such an allegation may be relevant in a claim for exemplary damages they had no relevance in a claim for misleading and deceptive conduct. Perhaps the pleader is including an allegation of damage because it is the gist of the cause of action. The situation could be clearer. 1010 As to paragraph 13C(5) the defendants contended that as to the telecasting they enjoyed the exemption conferred by s65A TPA and that the proper remedy was in defamation and only in defamation. 1011 While in my opinion, s 65A operates to exempt the telecast of the program from s52 it does not operate to exempt wrongful conduct leading up to that telecast or the fruits of that wrongful conduct. There is a further question as to the promo. S65A does not apply in relation to advertisements. The question arises whether the promo is in essence an advertisement. 1012 In Horwitz Grahame Books Pty Ltd v Performance Publications Pty Ltd (1987) 8 IPR 25 at 29 Wilcox J said: "[Section 65A] … does not exclude s52 in a case where the relevant matter relates to the supply, or possible supply, of goods or of services, being goods or services put out by the information provider itself. Thus a promotional statement in a newspaper or a magazine, or on television, regarding future issues of that newspaper or magazine or future programs of that television channel is excluded from the operation of s65A and, therefore, remains governed by s52 and the other provisions referred to in the opening words of s65A(1)." This means that the promo does not enjoy the protection of s65A and s52, TPA applies. 1013 As to paragraph 13C(C) earlier set out, the defendants submitted that there was no evidence to support the claim of aiding and abetting. In the case against Mr Munro the plaintiffs relied on Mr Munro being the permanent ACA presenter and his not giving evidence. The plaintiffs submitted that he must have known of the intending story. Mr Fordham was 'his' and ACA's reporter. The plaintiffs stressed the beginning and end of both the promo and the program. The plaintiffs submitted that there was sufficient evidence of Mr Munro's knowing involvement. I disagree. 1014 In Yorke and Anor v Lucas (1985) 158 CLR 661 the joint judgment of Mason ACJ, Wilson, Deane and Dawson JJ after noting at 666 that it was established that contravention of s52 does not require an intent to mislead or deceive went on to consider ss82 and 75B, TPA. Section 82 allows a person who suffers loss or damage by conduct by another person that was done in contravention of s52 to recover the amount of the loss or damage against that other person or against "any person involved in the contravention". Section 75B provides that a reference to a person involved in a contravention shall be read as a reference to a person who – "(a) has aided, abetted, counselled or procured the contravention; (b) has induced, whether by threats or promises or otherwise, the contravention; (c) has been, in any way, directly or indirectly, knowingly concerned in or party to the contravention; or (d) has conspired with others to affect the contravention." 1015 The High Court noted that "aided, abetted, counselled or procured" are taken from the criminal law and that a person will be guilty of the offences of aiding and abetting or counselling and procuring the commission of an offence only if he intentionally participates in it. To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows that those matters amount to a crime. The joint judgment held that s75B(a) imported the requirements of the criminal law. 1016 In the present case there is no evidence that Mr Munro knew of the representations which were made. 1017 After dealing with s75B(a) the joint judgment considered s75B(c) and held that a person cannot be knowingly concerned in a contravention unless he has knowledge of the essential facts constituting the contravention. It was held (at 670); "…the proper construction of par (c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention." 1018 The evidence does not establish that Mr Munro had the requisite knowledge or intent or permit that knowledge or intent to be inferred. 1019 The defendants submitted that there was not enough evidence with respect to Mr Fordham to hold him liable having regard to the high standard required by the law. On admission to the house at Edmondson Park and in the early part of their interview with Mr Cox, Mr Fordham and Ms Stinson maintained the pretence of being interested in constructing a home. Mr Fordham knew the difficulties of gaining entry for his camera crew. I would infer from the materials in evidence that Mr Fordham was aware of the representations made and their falsity. It is sufficient if I hold, as I do, that Mr Fordham was directly and knowingly concerned in the contravention of s42(1), FTA. See also s 61, FTA. 1020 There is no evidence, in respect of each of paras 13A, 13B and 13C that any representations were made to the first plaintiff, Craftsman Homes Australia Pty Limited. The defendants were not interested in the franchises. 1021 By reason of the findings I have made against Mr Fordham, an employee of TCN Nine the procuring of the interview with Mr Cox was part of a whole course of conduct in trade or commerce. TCN Nine, in trade and commerce, engaged in conduct that was misleading or deceptive in contravention of s52, TPA and s42 FTA. 1022 Paragraph 13D (summarised earlier) alleges misleading conduct by each of the Mosses, each of the Vimpanys and Mr Allan. The defendants submitted that in giving an interview to Channel Nine this was not conduct in trade or commerce. The plaintiffs submitted that all these people when they gave the interviews knew that they were speaking to Ben Fordham of ACA and were being filmed for the purposes of the program, Mr Moss organised all the interviews and each hoped they would be telecast over ACA on commercial television. The interviews were an integral and important part of both the promo and program, considerably enhancing them. They provided valuable support and added a human dimension. The disappointment (to use a mild word) of the Mosses, Vimpanys and Allans at what had happened was manifest. The participation of these building owners was conduct in trade and commerce. 1023 The defendants submitted that neither of the Mosses, neither of the Vimpanys nor Mr Allan participated in conduct that was misleading or deceptive. In substance this is correct. However, mistakes were made. Mr Moss erroneously attributed much of the delay in the construction of his house to Ilvarity where a substantial portion of that delay was due to particulars not being supplied. (This delay was not the fault of Mr Moss and his wife personally and I doubt if they were aware of the problem). Mr Moss stated that he explained to TCN Nine that the stairs at the back of the house was not the work of Ilvarity. 1024 By way of particulars the plaintiffs alleged that each of the statements attributed to each of Wayne Moss, Jacquie Moss, Ian Vimpany, Gloria Vimpany and Noel Allan insofar as they conveyed or were part of the matter conveying the imputations pleaded (set out near the start of this judgment) were false, untrue and inaccurate. 1025 Neither the Mosses nor Mr Vimpany believed at the time of their interviews that what they said was false. Viewed objectively the mistakes were inaccuracies and created the wrong impression by attributing faulty work to Ilvarity. However, what they said was, on the whole, substantially true. No damage flows from the mistakes which were made having regard to the serious defects which were detailed and shown. 1026 The defendants submitted that for them to be liable for aiding and abetting they must have possessed actual knowledge of the elements constituting the contravention and that there was no evidentiary basis on which to fix TCN Nine with knowledge that what they were being told was false. The plaintiffs responded that the first defendant by the third defendant and the third defendant knew of the falsity relied upon in contravention of FTA, s42. The plaintiffs relied upon the correspondence of 21-27 February 2002. 1027 In his letter of 21 February 2002 Mr Chaseling set out the case of Ilvarity against the Mosses. Amongst other things, the letter stated that the Mosses had exercised a cease work clause in the building agreement, that the certifying authority had issued a stop work order because of works carried out by Mr Moss which were not council approved and were structurally deficient, that District Court proceedings had been instituted to recover moneys owed by the Mosses but unpaid, that Home Owners Warranty insurer had visited the site declined the Mosses' application and were satisfied that CH would complete the work and that after nearly two years the Mosses had not presented one piece of admissible evidence to support their cross claim of defective work. Mr Chaseling wrote that in respect of other "dissatisfied clients" any approach made to CH would be addressed and if rectification was required CH would complete the necessary works. Mr Chaseling referred to CH having completed over 900 homes on the North Coast over the last 20 years and having been awarded 42 Excellence in Housing Awards by the HIA and MBA. 1028 Ilvarity's solicitors wrote to TCN Nine by fax on 27 February 2002 that should the proposed program containing various unsubstantiated allegations against Ilvarity be broadcast that day it would institute proceedings for defamation and trespass. That letter referred to the pending District Court proceedings against the Mosses, the alleged trespass in entering upon the Mosses property and filming there, the trespass at the Edmondson Park premises including the conduct of Mr Fordham. The letter stated that Mr Allan's claim had been discredited and resolved in Ilvarity's favour before the Fair Trading Tribunal and described Mr Vimpany's allegation that the bricks had been laid the wrong way around as false. The letter protested that written details of the allegations to be made had not been provided and that this had denied them the opportunity of making an adequate response. 1029 By the time of the correspondence Mr Fordham had seen the Mosses house and had conducted interviews with the Mosses, the Vimpanys and the Allans. The various points made in the correspondence by Mr Chaseling, Ilvarity and its solicitors lost some of their force when regard was had to the poor quality work of Ilvarity on the Mosses' house and the defects in the Vimpanys' house (bricks laid the wrong way around and dirty cement covered brickwork) and on the Allans' house (the footings). There were also the other complaints. 1030 Mr Chaseling's description in para 6 in his letter of 21 February 2002 of what happened on the visit of Mr James (on behalf of HOW) is less than accurate. Mr Chaseling undertook to retain a practising structural engineer and a licensed pest control company and to carry out the necessary rectification works. A practising structural engineer was not engaged nor were the necessary rectification works executed. 1031 HOW suspended its consideration of the matter pending these retentions and the execution of the necessary works. I have earlier set out the position in more detail as to the site inspection by Mr James and the result of that inspection. 1032 The correspondence contained warnings but TCN Nine and the third defendant were not bound to accept the assertions made by Mr Chaseling, Ilvarity and its solicitors. 1033 In my opinion the second and third plaintiffs (but not the first plaintiff) have in substance established the cause of action in paragraph 13A against TCN Nine and Mr Fordham save that the initial representations were made shortly before 22 February 2002. They led to Ilvarity and Mr Cox granting Ms Stinson and a man described as John Stinson (Mr Fordham) an appointment on 22 February 2002 to discuss the building of a house at Lennox Head by Ilvarity (CHNR). The deception continued on their admission to the house at Edmondson Park and when they first talked to Mr Cox inside the house before the admission of the camera crew. There is no sustainable defence to paragraph 13A save as to Mr Munro and the real question is one of damages. Paragraph 13B does not as such raise a cause of action. 1034 As to paragraph 13C which raises causes of action based on s52 TPA and s42 FTA I have held that Craftsman Homes Australia Pty Ltd has no cause of action and that Mr Munro has no liability. Ilvarity and Mr Cox do have a sustainable and proven cause of action against TCN Nine in accordance with paragraph 13C(A) and a sustainable and proven cause of action against Mr Fordham in accordance with paragraph 13C(B) and 13C(C). 1035 As to paragraph 13D, it follows from what I have earlier written that these causes of action must fail. Damages 1036 The defendants submitted that: (1) Even if any of the causes of action in paragraphs 13A and 13C were made out Ilvarity and Mr Cox would not be entitled to any additional damages. (2) Insofar as the representations prior to and conduct during the Edmondson Park trespass were relied upon, this could give rise to no additional damages than that claimed for the trespass itself. (3) Otherwise directly or indirectly, all of the other claims in paragraphs 13A-13D ultimately rely on the broadcast of the matters complained of themselves (which are subject to the s65A exception). (4) No additional damages should be recoverable from those broadcasts above and beyond the defamation claims because: (a) Should the matters complained of be properly defensible as for instance matters of substantial truth, the plaintiffs are not entitled to damages flowing from them including damages to reputation and/or hurt feelings (b) Just as the law of negligence has a limited role to play in the matter of communications, and the publication of material damaging to the plaintiff's reputation is properly the subject of a claim for defamation and not a claim for negligence (Sattin v Nationwide News (1996) 39 NSWLR 32 esp 44-45), trade practice claims are, in principle, no different and if they are in substance a claim for damage to reputation they ought to be dismissed. 1037 The damage said by the plaintiffs to flow from the making of and reliance on the misrepresentations and by the misleading and deceptive conduct, according to the letter of particulars of 27 July 2004 comprised: (a) general damages for trespass; (b) loss and damage to the plaintiff's reputation which was caused by the publication containing matter obtained unlawfully by reason of the misrepresentations and misleading and deceptive conduct; (c) damages for pain and suffering to Mr Cox (hurt to feelings affront and such like); (d) exemplary damages. The letter also stated: "The plaintiffs contend that all these heads of damage arise both by reason of the trespass and by reason of the misleading and deceptive conduct and representation". 1038 The defendants submitted that apart from damage to reputation (which only arises in defamation actions) all of the damages claims relate to and are co-extensive with those of the Edmondson Park trespass. Exemplary damages are not available under s82, TPA, and by analogy, under s68, FTA: Miller's Annotated Trade Practices Act, 27th Edn 2006 1.82.85 and cases there cited. 1039 The defendants submitted that when exemplary damages (not available), damage to reputation (only available in defamation actions) and that part of hurt to Mr Cox's feelings attributable to the broadcasts (also damage relevant only to the defamation actions) were excluded, all that was left was general damages for the Edmondson Park trespass and hurt to Mr Cox's feelings from the Edmondson Park trespass. In respect of that trespass an award has already been made. 1040 The plaintiffs submitted that there is no public policy to limit recovery of damages for fraud or misleading and deceptive conduct under legislation to a cause of action in defamation and that the causes of action do not overlap; the mischief they seek to remedy is different. Sattin v Nationwide News was a very different case. The plaintiffs submitted that the presence of s65A TPA and corresponding sections in FTA show that absent s65A etc the Acts apply. 1041 The plaintiffs submitted that s65A did not operate to nullify s52 in its application to the present case. They contended that the causes of action under s52 were not the mere publication by the prescribed information provider but they start with the deceitful conduct which led to the trespass followed by the false and misleading statements in the publications, that is in the promo and the program. It was submitted that there was a course of conduct going far beyond what s65A protects. I accept that the false and misleading conduct starts with the deceitful conduct which led to the trespass. Except to the very limited extent which I have indicated, I do not accept that there were false and misleading statements in the promo and the program. What was there said was substantially true. 1042 In contending that s65A had no application Mr Garnsey QC invited the Court to look at the whole course of conduct from the initial misrepresentations to the telecasts. Mr McClintock SC contended that the core of the matter and the damage lay in the publication of the promo and of the program. This involves focusing on the words in s65A(2)(b) that the publication was by way of a television broadcast by the prescribed information provider. Once the publication was treated as exempt there was either no damage or nominal damage. It was the publication which caused the damage and gave rise to the imputations. 1043 The calculated deceit constituted both a false representation and false and misleading conduct and led to the trespass and the trespass led to TCN Nine and Mr Fordham questioning and filming Mr Cox and this was distressing for Mr Cox. He was particularly angry at being asked about the Moss house. The telecast not only showed Mr Cox and his reactions but portions of the allegedly defective works and the Mosses, Vimpanys and Allans with their complaints. There were portions of the "meeting" with Mr Cox which were recorded but not telecast. However, it was the telecast of the program which caused him the major damage and that enjoys the protection of s65A. For the reasons given earlier the promo does not enjoy that protection. 1044 The plaintiffs further submitted that the test for causation ("by") under s82, TPA and s68 FTA meant that on the facts of the present case, damages in respect of trespass and injury to reputation (irrespective of any trespass or defamation defences) is recoverable by each of the plaintiffs as a result of the publication achieved by the initial misrepresentations, conduct and intentional trespass and that this included general damages and aggravated damages where appropriate. 1045 I do not accept this proposition nor do I think that the authorities of Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525 require it and Marks v GIO Australia Holdings Ltd & Ors (1998) 196 CLR 494 require it. It would be anomalous to take into account the trespass or defamation but not the defences when considering the damages to which the plaintiff was entitled when there had been false or misleading conduct leading to a trespass and thence in part to a defamation publication. 1046 In Wardley at 525 the joint judgment states: "As loss or damage is the gist of the statutory cause of action for which s82(1) provides, the cause of action does not accrue until actual loss or damage is sustained. The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person." (footnote omitted) 1047 After remarking that the concept of loss or damage, like the concept of causation must be applied in a wide variety of situations they said at 525-526 as to a contravention of s52(1) in the form of misleading conduct constituted by misrepresentations: "In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connexion to satisfy the concept of causation. And, if those acts result in economic loss, that is, loss other than physical injury to person or property, that economic loss will ordinarily be recoverable under s82(1). In the context of the area of commercial conduct in which the Act operates, the reference to "loss or damage" in s82(1) plainly includes economic or financial loss. In determining when a plaintiff first suffers economic loss or damage in an action under s82(1) based on misleading conduct constituting a contravention of s52, it is necessary to have regard to the applicable measure of damages. In this respect, it would not be right to conclude that the measure of damages recoverable under the sub-section necessarily coincides with the measure of damages applicable in an action for deceit or in an action for negligent misrepresentation. The measure of damages recoverable under s82(1) can only be fully ascertained after a thorough analysis of those provisions in Parts IV and V of the Act for contravention of which the statutory cause of action may be maintained. But the common law measure of damages will in many cases be an appropriate guide, though it will always be necessary to look to the provisions of the Act with a view to ascertaining the existence of any relevant legislative intention. In a case such as the present, it may safely be assumed that the plaintiff is entitled to recover "a sum representing the prejudice or disadvantage [the plaintiff] has suffered in consequence of his altering his position under the inducement"of the misleading conduct or "the actual damage directly flowing from" that conduct, to take up and adapt well-known statements of the measure of damage applicable in an action of deceit." (footnotes omitted) 1048 The misrepresentations led to Mr Fordham and Ms Stinson gaining access to Mr Cox and speaking to him. While there was a real trespass for which Mr Cox must be compensated most of the damage which followed came from the contents of the program, that is from what the Mosses, the Vimpanys, the Allans and Ms Wilton said, what was shown of the defects alleged and Mr Fordham's comments. While the exchanges between Mr Cox and Mr Fordham and the pictures shown of what occurred enhanced the program the core of the program came from what was otherwise said and shown. Apart from the trespass I am not persuaded that the act of granting Mr Fordham and Ms Stinson access to the house at Edmondson Park and an interview with Mr Cox resulted in economic loss. It is necessary to avoid any form of double counting when the same misrepresentations lie behind the action of trespass and false and misleading misconduct and defamation proceedings have been instituted. 1049 In Wardley, as a result of untrue representations made by it to the State of Western Australia that State executed an indemnity in favour of the National Bank under which the State was obliged to make a payment when the loss of the party to be indemnified was ascertained and quantified. It was held that the indemnifier suffered no loss until the contingency was fulfilled and that time within which to commence proceedings did not run under s82(2), TPA until that event occurs. The present case is very different. 1050 In Marks v GIO Australia Holdings (1998) 196 CLR 494 the High Court considered the operation of ss52, 82(1) and 87, TPA. In the joint judgment of McHugh, Hayne and Callinan JJ this passage appears at 509: "Secondly, s82 provides, in effect, that the loss or damage that may be recovered by action is the amount of the loss or damage suffered "by conduct of" another person that was done in contravention of Pt IV or V. It contains no stated limitation of the kinds of loss or damage that may be recovered and contains no express indication that some kinds of loss or damage are to be regarded as too remote to be recovered." 1051 At p510 this passage appears: "It can be seen therefore, that both ss82 and 87 require examination of whether a person has suffered (or, in the case of s87, is likely to suffer) loss or damage "by conduct of another person" that was engaged in the contravention of one of the identified provisions of the Act. That enquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s82 or 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s82(1), or that the orders that may be made under s87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg, s52) or with equity (eg, s51AA) but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies." 1052 In my opinion there is a causal connection between the contravening conduct and the trespass. The question of a causal connection between the contravening conduct and the injury to the reputation of Ilvarity and Mr Cox is more difficult. There is no causal connection between the misrepresentations and that part of the program comprising the statements of the Mosses, the Vimpanys, the Allans and Ms Wilton and those of Mr Fordham when engaging in discussion with them. However, as to the confrontation and exchanges between Mr Fordham and Mr Cox, which were deliberately engineered by Mr Fordham, these would not have occurred but for the misrepresentations and the access they produced to the Edmondson Park premises and Mr Cox. Those exchanges, which were shown in the program produced some strong and defamatory remarks from Mr Fordham. There was also the confrontation and exchange shown in the promo and the program between Mr Fordham and Mr Cox which did not flatter Mr Cox. I think that there is a sufficient causal connection between the misrepresentations and the parts of the program and promo which I have indicated. But for the misrepresentations this would not have occurred. There was real damage. 1053 At p513 of the joint judgment reference was made to the Court's earlier decision in Wardley. At 513-514 after noting the observation in Wardley that "[e]conomic loss may take a variety of forms" the judgment continued: "But central to them all, when it is said that the loss was or will probably be caused by misleading or deceptive conduct, is that the plaintiff has sustained (or is likely to sustain) a prejudice or disadvantage as a result of altering his or her position under the inducement of the misleading conduct. … A party that is misled suffers no prejudice or disadvantage unless it is shown that the party could have acted in some other way (or refrained from acting in some way) which would have been of greater benefit or less detriment to it than the course in fact adopted". 1054 These remarks at 514 were made in a different context in that the Court was illustrating what may happen in a contractual setting and whether a chose in action which was acquired was worth less the amount paid for it. 1055 In the present case but for the representations Ms Stinson and Mr Fordham would not have been granted access to the Edmondson Park premises for an appointment with Mr Cox to discuss a purported building proposal. Mr Cox would not have admitted them if he had known that they were from ACA and were going to confront him. The refusal of entry would have robbed the program of its enhancement by questioning Mr Cox suggesting to him that the work of CHNR was poor and filming him. The questioning and filming was not flattering and did not assist Mr Cox. The refusal of entry, would not have altered the substance of what the Mosses, the Vimpanys, the Allans and Ms Wilton had to say or the defective work which was shown. 1056 At 515 the joint judgment stated: "The central enquiry is what consequence has the contravention of the Act had on the party in question. That requires comparison between the position in fact of the party which alleges loss and the position that would have obtained had there been no contravention." A like approach should be taken to the counterpart provisions in the FTA. 1057 Gaudron, Gummow and Kirby J each delivered separate judgments. Gaudron J noted at 503-504 that all members of the Court agreed that relief under s82 is not to be confined by analogy either with actions in contract or in tort. 1058 At 501 Gaudron J pointed out that for a person to obtain relief under s82 he or she must have suffered loss or damage and that there is no punitive aspect of that provision. At p504 she pointed out that an applicant for relief under s82 must establish what he or she has lost. 1059 At 526-527 Gummow J made these comments as to s82: "Section 82 has at least five discrete elements. First, it identifies the legal norms for contravention of which the action under the section is given. Secondly, it identifies those by and against whom that action lies. Thirdly, the section specifies the injury for which the action lies as the suffering of loss or damage. Fourthly, it stipulates a causal requirement that the plaintiff's injury must be sustained "by" the contravention. Finally, the measure of compensation is "the amount of" the loss or damage sustained." At 527 he continued: "Section 82 provides a remedy not only against a defendant who contravened Pt IV or Pt V but also against those "involved" in that contravention. The reference is to s75B which requires that the party with alleged accessorial liability have intentionally aided, abetted, counselled or procured the contravention by the principal. Section 82 is attracted only if there be "conduct" of another person that was done in contravention of a provision of Pt IV or V." 1060 At 531 after referring to Wardley at 525 with its stated view that the word "by" in s82(1) expresses "the notion of causation without defining or elucidating it" Gummow J stated: "A significant causal connection between two events would not be established merely because one contributed to the occurrence of the other unless the terms of the statute clearly indicated that this was so." At 532 Gummow J said: "The purpose and scope of s82 is to provide compensation for the injuries sustained, by contravention, in the present case, of s52." 1061 Returning to the facts of the present case, it is apparent that from the time of Ms Stinson's telephone call to Ms Santin of Ilvarity (CHNR) and Ms Stinson's lies that she was angling to set up an appointment in Sydney with Ilvarity and Mr Cox. Ms Stinson, with an untruthful story made an appointment with Mr Cox to see him at Edmondson Park along with "John Stinson" at 1pm on 22 February 2002. The latter role was to be filled by Mr Fordham. 1062 If Mr Cox had been told that Ms Stinson and John Stinson were from ACA or TCN Nine they would not have been given an appointment nor access to the house at Edmondson Park. In turn Mr Fordham would not have been able to admit the camera crew. 1063 After admitting the camera crew Mr Fordham said, "Fred I just wanted to ask you a couple of quick questions, we're from A Current Affair". The text and the video footage is covered by items 2 to 11 and 25-32 of the program. Item 25 was preceded by a question from Mr Fordham, What about the Mosses? I have at the start of this judgment summarised what else occurred. That did not appear on the program. 1064 The misleading and deceptive conduct of TCN Nine and Mr Fordham was carefully contrived. Both Mr Cox and Ilvarity suffered damage over and above the trespass and the core of the defamatory material, namely the statements made by the Mosses, Vimpanys, Allans and Ms Wilton and some of those of Mr Fordham. 1065 The misleading and deceptive conduct enabled TCN Nine and Mr Fordham to obtain access to Mr Cox, to surprise and confront him, to film him and to ask a series of questions and make assertions. Although not in the program Mr Fordham's exhortation (or harangue) to come out and talk to them, and especially his comment that Mr Cox was running away were offensive. He was under no obligation to grant interviews to TCN Nine. All this distressed Mr Cox and rightly so. 1066 The misleading and deceptive conduct enabled TCN Nine and Mr Fordham to move into a position whereby TCN Nine could enhance its program and give it a greater sting at the expense of CHNR (Ilvarity) and Mr Cox. They, and especially Mr Cox were visually held up to public criticism. This increased the damage which they suffered. Visual representation is telling and adds an extra dimension, a dimension that words alone do not have. With the visual representation added to the words, the criticisms and allegations are more memorable and tend to linger longer in the recollection of the reasonable viewer. 1067 This case does not fit within any of the recognised categories and the combination of facts is potent including the repetition of the misleading and deceptive conduct. I refer to the representations made on the telephone to Miss Santin and then to Mr Cox, Mr Fordham and Ms Stinson not telling Ms Cox what their purpose was and giving her the impression that they were the young couple who were calling to discuss the building of a home. The initial discussion between Mr Fordham and Ms Stinson and Mr Cox before the camera crew was let in was also deceptive as Mr Fordham and Ms Stinson persisted in the story of wanting to enquire about building a home on the far north coast of New South Wales. The ploy and remark about leaving the mobile telephone on were deceptive. The call on the mobile telephone was the signal for the camera crew to be let in to Edmondson Park. All this led to TCN Nine being able to increase the impact of the promo and the program. 1068 I note the following: a) Loss under s82 is not limited to economic loss. Section 4A, TPA provides that loss may include injury. (b) General principles of the assessment of damages give way in particular cases to solutions best adapted to give the injured plaintiff that amount in damages which will more fairly compensate for the wrong suffered: Johnson v Perez (1988) 166 CLR 351 at 355-356 (Mason CJ) and 367 (Wilson Toohey, Gaudron JJ). c) The passage earlier quoted from Wardley at 525 d) A comparison must be made between the position in which the person who suffered loss or damage is in and the position that person would have been in had there been no contravention. This may not be decisive. (e) In Enzed Holdings Ltd v Winthen Pty Ltd 57 ALR 167 at 182 the Federal Court said: "If the court finds damage has occurred it must do its best to quantify the loss even if a degree of speculation and guess work is involved…We emphasise, however, that the principle applies only when the court finds that loss or damage has occurred. It is not enough for a plaintiff merely to show wrongful conduct by the defendant" See also Jones v Schiffmann (1971) 124 CLR 303 at 308. f) Damages for mental stress may be awarded in appropriate cases: Miller's Annotated Practices Act, 27 Edn (1.82.68) g) Exemplary damages are not available under either ss 82 or 87, TPA: Musca v Astle Corp Pty Ltd (1988) 80 ALR 251; Marks v GIO Australia Holdings Ltd supra. 1069 If the misleading and deceptive conduct had not occurred there would have been no admission to the Edmondson Park premises, no discussion with Mr Cox, no filming of Mr Cox and no opportunity for TCN Nine to enhance its program by a personal confrontation in unfair circumstances. He would not have been harrangued and accused of running away which is often associated with guilt. Mr Cox would not have suffered the damage of his visual representation being exposed to hundreds of thousand people in adverse circumstances. He was stunned, distressed and seething at what happened. 1070 While I have held the imputations were justified and also covered by the comment defences, he and Ilvarity have suffered damage as a result of the representations. 1071 It is not easy to assess the damages. I take into account that s 65A, TPA does not apply to the promo. The damages which I assess do not include aggravated damages or a punitive element. The principal damage was suffered by Mr Cox. I take into account that he has been awarded damages and that the defences to the imputations have been upheld. I must avoid double counting and be careful not to award damages in respect of the material in the promo and the program covered by the imputations. In assessing the compensatory damages I can do no better than make an estimate of the damage flowing from the misleading or deceptive conduct. I assess the damage suffered by Mr Cox by the misleading and deceptive conduct as $50,000. 1072 Ilvarity (CHNR) was not entitled to damages for trespass but it was the builder of the houses under attack in the promo and the program. The name of Craftsman Homes Northern Rivers is mentioned four times in the program and there is a video picture of "Craftsman Homes" signage in the promo. The misleading and deceptive conduct practised on Mr Cox also affected CHNR adversely and led to the enhancing of the program against it but to a lesser extent than Mr Cox. 1073 Ilvarity is entitled to compensatory damages which I assess at $30,000. 1074 As to the count for the false representation (para 13A) any damages to which Ilvarity and Mr Cox are entitled are covered by the awards made to each of them in respect of the misleading and deceptive conduct. To award further sums would be to engage in double counting. In view of the award made in the trespass action of Mr Cox for aggravated and exemplary damages I would make no further award of such damages. That would not be warranted. Verdicts 1075 Consequent upon these reasons there will be: 1. Verdict for each of the defendants on the defamation counts (the promo and the program). 2. On the trespass count by Mr Cox against TCN Channel Nine Pty Limited and Ben Fordham, verdict for Mr Cox for $230,000. 3. On the trespass count by Craftsman Homes Australia Pty Limited and Ilvarity Pty Ltd, verdict for TCN Channel Nine Pty Limited, Mike Munro and Ben Fordham 4. On the trespass count by Mr Cox against Mike Munro, verdict for Mike Munro. 5. On the count of false and misleading conduct (para 13C), verdict for Mr Cox for $50,000 against TCN Channel Nine Pty Limited and Ben Fordham and verdict for Ilvarity Pty Limited for $30,000 against TCN Channel Nine Pty Limited and Ben Fordham. On these counts as between Craftsman Homes Australia Pty Limited and TCN Channel Nine Pty Limited, Mike Munro and Ben Fordham, verdict for the defendants. On these counts as between the plaintiffs and Mike Munro, verdict for Mike Munro 6. On the count of false and misleading conduct (para 13D) verdict for the defendants. 7. As to the false representation count (para 13A) as between Craftsman Homes Australia Pty Limited and each of the defendants, verdict for each of the defendants. 8. As to the false representation count (para 13A) as between Ilvarity Pty Limited and Mr Cox on the one hand and Mike Munro on the other, verdict for Mike Munro. 9. As to the false representation count (para 13A) between Ilvarity Pty Limited and Mr Cox on the one hand and TCN Channel Nine Pty Limited and Ben Fordham on the other declare that these defendants shortly prior to 22 February 2002 falsely represented to Ilvarity Pty Limited and Mr Cox that Ben Fordham's name was John Stinson and that he was a prospective customer of Ilvarity Pty Limited and Mr Cox and was seeking an appointment and meeting with Mr Cox to discuss and obtain advice concerning the construction of a Craftsman Home and that all damages have been awarded under the other counts. 1076 I acknowledge, with thanks, the appreciable and skilled industry of all counsel and the solicitors representing the parties in this unusual and difficult case. 1077 Questions of costs and interest remain. I stand the matter over to 16 June 2006 for argument on these matters. I direct the parties to deliver draft short minutes of the orders which they contend should be made to each other by 5pm on 13 June 2006 and to my associate by 2pm on 15 June 2006 in the event of disagreement. The parties may approach my associate to arrange another mutually agreed hearing date. ********** 07/06/2006 - Index omitted - Paragraph(s) no change 07/06/2006 - index omitted from front of judgment - Paragraph(s) no change 31/10/2006 - Inclusion of index - Paragraph(s) N/A DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.