Ornelas v Director-General, Department of Services, Technology & Training [2011] NSWADT 163

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Ornelas v Director-General, Department of Services, Technology & Training [2011] NSWADT 163 Hearing dates: 6 October 2010 and 10 March 2011 Decision date: 05 July 2011 Jurisdiction: General Division Before: R Wilson, Judicial member Decision: 1. The decision under review is set aside and in lieu thereof the Tribunal finds that the applicant has performed defective building works upon the subject premises to the extent set forth in these reasons. 2. A penalty of $2000-00 is imposed upon the applicant which sum is to be paid within 28 days of the date upon which a copy of these orders and reasons for decision is served, or taken to have been served, upon the applicant. Catchwords: Disciplinary proceedings in relation to builders licensed under the Act; penalty for defective works done pursuant to a building contract; mitigation of penalty Legislation Cited: Home Building Act 1989; Administrative Decisions Tribunal Act 1997 Category: Principal judgment Parties: Nelio Mark Ornelas (Applicant) Director-General, Department of Services, Technology & Training (Respondent) Representation: N Ornelos (Applicant in person) B Bourke (Respondent) File Number(s): 103182

Back to top REASONS FOR DECISION 1By these proceedings the applicant seeks review of a decision made by the respondent pursuant to the provisions of the Home Building Act 1989 whereby a penalty was imposed upon the applicant for building works, performed by the applicant, which the decision maker found to be defective in nature. 2The Tribunal notes that the applicant attended on the first hearing day, 06.12.10, but failed to attend on the adjourned hearing, on 10.03.11. He was unable to be contacted by telephone that day. Consequently, the proceedings continued in the absence of the applicant. 3The applicant had agreed, sometime in late 2007, with a third party to perform certain building works upon land owned by that third party. At the time of agreement there was already an existing dwelling erected upon the land, consequently the scope of works may be adequately described as being additions and alterations. The applicant had met the third party through the offices of the architect who prepared relevant plans and specifications concerning the works to be done. Contractual arrangements were put in place. The applicant commenced building works in early 2008, according to the applicant, or in December 2007, according to the respondent. On 28 March 2008 the parties entered into a further agreement to vary the original scope of works in some respects. This involved additional plans and specifications. Further, the applicant alleges that some 3 or 4 months after he commenced the works, the third party started to do their own works upon the property. Particular aspects of the evidence may be more usefully considered in the deliberations that follow. 4The respondent's decision to impose a penalty was based upon the 17 defective items of work identified by its inspector, Patrick Daley, and recorded in the inspector's report dated 23.07.09 (exhibit R1, pp122 to 145). Whilst this actual decision now falls by the way, the respondent presses for the imposition of the same penalty by reason of 16, of the original 17, defective items of work identified in this report. In addition, the respondent also relies upon the fact that the applicant failed to comply with a rectification order issued by the respondent under the Act. The Tribunal notes that one of the alleged defective items mentioned, namely item 17, is not pressed by the respondent with the explanation that it was not in fact taken into account at the time of the original decision. Therefore only 16 items identified in the report require consideration in these proceedings. 5Item 1 in Inspector Daley's report is the first item for consideration. Here it is alleged that insulation material was improperly placed in a cavity wall as it was in contact with the external wall and therefore could permit the transfer of moisture, which penetrated the external wall, to internal timber framework. The applicant's answer to this allegation is twofold. Firstly, he refers to a relevant photograph (exhibit R1, page 124) and points out that the photograph does not in fact show that the insulation is touching the external wall, there being in truth a significant gap between the insulation and the external wall. Secondly, he says that during construction he inspected the installed insulation and observed that it was stapled to the internal timber framework and was not in contact with the external wall. In response, the respondent accepts that the photograph does not depict actual contact between the insulation and the external wall, but explains that this was because a photograph could not be taken where contact existed without disturbing the insulation that was in place (exhibit R 3, paragraph 5, item 1). 6The photograph does in fact depict a significant gap between the insulation and the external wall at the place in the cavity to which the photograph refers. This is the correct method of affixation. The evidence does not show why the correct method would be used at one place and not in others. However, Inspector Daley's evidence clearly implies that whilst he did in fact observe contact at some specific place, he was unable to photograph the relevant section of the wall. On this evidence the Tribunal is not persuaded that it should find that the insulation material did in fact make contact with the external wall. To make any such finding the Tribunal would need evidence whereby it could resolve the conflicting evidence one way or the other. On the evidence, the Tribunal is unable to do this. This of course does not reflect adversely on Inspector Daley as a witness as the Tribunal accepts him as advancing his evidence truthfully and to the best of his recall. However, he may simply have been mistaken on this point. In addition, it is difficult to see why visible contact could not have been the subject of photographic evidence and without a detailed explanation of why this was so the Tribunal is unable to be satisfied of the finding for which the respondent contends. Consequently, the Tribunal is unable to make any finding of fact in relation to whether the insulation in the cavity was in contact with the external wall at locations other than that depicted in the photograph. 7Item 2 is the next one for consideration. Here it is alleged that timber framework abutted to a brick wall which could allow the entry of water. The relevant photograph in the report shows this to be in fact the case (exhibit R 1, page 125). The applicant' answer was that the brick wall is in fact an internal wall, not an external one, and therefore moisture penetration was not a potential issue. Inspector Daley accepted that the relevant wall was an internal one (exhibit R3 paragraph 5, item 2). Whilst there may still be a problem with moisture penetration in the event that a dampcourse had not been installed, Inspector Daley was unable to say whether or not such a dampcourse was in fact in place (exhibit R 3, paragraph 5, item 2). This additional aspect therefore remains inconclusive. Consequently, the defective works alleged in item 2 has not been established. 8Item 3 in the report is the next item. The photographic evidence, and Inspector Daley's report, shows dampness penetrating an external wall to the laundry section of the dwelling, thereby suggesting the absence of suitable waterproofing (exhibit R1, page 127). This aspect was the subject of the original complaint by the third party (exhibit R 1, page 69, paragraph 12) and the rectification order (exhibit R1, page 92). The applicant's argument is that the only works he was required to do in the laundry was to install a new door (in the back wall of the laundry) and relocate the hot water system (exhibit A4 pages 47 & 50 and exhibit R 1, pages 51 & 54). The plans and specifications confirm this, particularly by reference to the legends to the several plans which show existing walls in heavy black line work. The laundry walls are shown in the plans as existing walls. By way of evidence in reply, the respondent accepts this position but argues that, in any event, the applicant constructed a " masonry wall (new brick) outside and attached to this wall" (exhibit R 3, page 3, item 3). It is not clear from the evidence as to what masonry wall the respondent here refers. However this may be, the respondent argues that the building of this wall gives rise to one of two possible situations, both of which put the applicant at fault. 9The first is that when constructing this masonry wall the builder ought to have noticed that the existing laundry wall suffered water penetration and therefore ought to have advised the third party appropriately and sought a variation of the contract so that he, the applicant, could remedy the penetration. This argument is problematical. The respondent accepts that it does not know whether the existing laundry wall was suffering water penetration prior to the applicant commencing works. Also, there is no evidence showing the extent of any such water penetration, if it was then present, so that it is not possible to determine whether any such penetration was noticeable or not during periods when there was no rainfall. The argument is therefore too speculative to be able to succeed. 10The second is that, if the water penetration did not occur until after the applicant constructed the masonry wall referred to then "there is the probability that the work (in constructing the said masonry wall) has contributed in some way (to the water penetration)" (exhibit R 3, page 3, item 3). This argument is also speculative as there is no evidence as to when the water penetration commenced but, more particularly, there is no evidence of any aspect of the construction of the masonry wall which may have caused, or contributed to, the water penetration of the laundry wall which Inspector Daley observed. This argument therefore cannot succeed on the evidence available. 11In this regard the Tribunal notes that the original complaint referred to "dampness increasing to South-East laundry" (exhibit R 1 page 69). Therefore it is most likely that the water penetration existed prior to the applicant commencing works. This brings into play the first of the respondent's arguments, but for the reasons given above this argument is speculative and cannot succeed. 12The next item is item 4 in Inspector Daley's report. This concerns termite protection in what is described as the storeroom area and adjacent stairway. This storeroom is not shown in some of the plans, but appears in the "Lower ground Plan" (exhibit R1 page 55). This plan shows that part of the walls of the storeroom are existing walls by reason of the heavy black line work. However, the respondent identifies three specific instances where there has been a failure to install adequate termite protection (exhibit R 1, pages 128 and 129 and the three photographs there depicted). The applicant accepts that all three of these photograph depict works that he carried out on the premises. 13As to the top photograph depicted on page 128 of exhibit R 1, the respondent says that there is "No evidence of termite prevention measures to wall behind store room". The red arrow drawn on the photograph points to a join between a brick wall (of some 5 or 6 brick courses) with a timber and board wall above. The applicant stated that ant capping is in fact in place, but that it is behind the brick wall and cannot be seen in the photograph. Here, the parties are referring to the question whether metal ant capping has been installed between the low brick wall and the timber/board wall above it. The respondent, in reply to the applicant's argument, states that the areas behind the storeroom were not easily accessible at the time of inspection. From this evidence the Tribunal infers that Inspector Daley did not look at the area behind the storeroom and therefore is unable to confirm or deny the applicant's position. The respondent then repeats the argument that termite protection is not evident. In substance, the respondent's argument is that termite protection is not evident in this instance. The applicant says that the protection is in fact there but cannot be seen in the photograph. Given this position, the Tribunal cannot find that termite protection is absent when there is no evidence adduced which will enable a resolution of this factual dispute. Consequently, this aspect of the respondent's argument cannot succeed. 14As an additional argument in relation to this top photograph, the respondent also said that insufficient access has been allowed to the area behind the storeroom so as to enable detection and prevention by way of application of termite sprays. However, the evidence shows that entry is difficult, but not impossible. Therefore this argument must fail as well. 15As to the middle photograph depicted on page 128 of exhibit R 1, the respondent argues, upon the basis of this photograph, that there is "No evidence of termite prevention measures to wall behind stairwell" (exhibit R 1 page 128). The red arrow drawn upon this photograph points to the small gap between the natural land and the brick pillar therein depicted. The applicant states that ant capping was in fact placed upon the top of the pillar and at the top of the wall studs. In reply, the respondent argues that, irrespective of what termite protection is above the area depicted in the photograph, the timber works actually depicted in the photograph, by reason of their proximity to the natural ground earth, are vulnerable to termite attack and properly require some form of protection, even though they may be no more than simple stud walls. In this regard the respondent's argument is correct and the Tribunal finds that inadequate protection has been provided in the building works. 16As to the bottom photograph depicted on page 128 of exhibit R 1, the applicant accepts that the works are inadequate to provide termite protection, the protection in place having been negated by the timber stud which forces the ant capping against the brick pillar. In this regard the Tribunal finds that inadequate protection has been installed during the works. The applicant argues that he would have rectified this if he had not been prevented from doing so by the actions of the third party. This however goes to penalty, rather than to fault. 17The next item is item 5 in Inspector Daley's report. Here it is alleged that weep holes in the brickwork were not cleaned properly so as to allow the exit of water from behind the wall, should water enter that location. An example is provided in the photograph of a particular weep hole (exhibit R 1, page 130. This photograph clearly shows some obstruction in the weep hole, although clearly there is sufficient gap so as to allow the exit of any water that should build up behind the wall. It is also alleged that the failure to properly clean the weep holes is a feature which detracts from the overall appearance of the dwelling, this being said to involve a performance of the works in a proper and workmanlike manner. 18The applicant said that when the masonry walls were constructed, water was run down the back of the wall, party to clean the brickwork and partly to clear the weepholes. He also makes the point that the weep hole depicted in the photograph shows that the majority of the weep hole is clear. This is certainly true in relation to this particular weep hole. He makes the further point that any failure to clean the weep holes is, in truth, incomplete works, rather than defective works. In this regard he points to the fact that the general cleaning of the masonry walls had yet to be done and at this time the weepholes would have been properly cleaned. The applicant does not contest that further cleaning of the weep holes was required. In reply, the respondent accepts that this aspect could be properly treated as incomplete work. 19Consequently, on this evidence, the Tribunal finds that the works necessary to clear the weep holes were incomplete. The fact that the applicant was prevented from doing these works goes to mitigation of penalty, rather than to breach. 20Item 6 in Inspector Daley's report is the next matter. Here it is alleged that the sarking in the roof area had not been properly affixed. The applicant concedes that this is the case. He explains that he sub-contracted the sarking works to another person and that, if he had been allowed to complete the works, he would have required this person to attend and affix the sarking properly. The works are therefore incomplete. Liability is established on this point, although the factors mentioned will be required to be considered when penalty is considered. 21Item 7 in Inspector Daley's report concerns the dimensions to which the rear porch upper and lower concrete slabs were constructed (exhibit R 1, pages 132 and 133). These slabs were properly constructed in accordance with the original plans, but following the second variation to the works, they fell short (some 150 or 160mm) of what the plans associated with the variation required. The applicant accepts this. However, he explains that both concrete slabs were built, prior to the variation, in accordance with the plans that pertained at the time of construction. The variation, which works the applicant agreed to do at an accepted price, required the construction of brickwork around the entire building, which had not been the case under the original plans. The effect of this, as the applicant accepts, was that both the concrete slabs did not extend so as to properly meet the line of the new brickwork adjacent to the slab. The variation plans show that the concrete slabs should have met the new brickwork so as to form a neat join, rather than to leave the gap as shown in the photograph (exhibit R 3, annexure "B", "Ground Floor Site Plan"). 22The applicant seeks to explain this away upon the basis that he did not quote on the variation so as to include an extension of the two slabs as at the time of the new quote he had not seen the fresh plans associated with the variation. There may well be some truth in what the applicant says on this point. The respondent though refers to the applicant's signature on the site inspection report (exhibit R 3, annexure "C") and the variation plans (annexure B, "Ground Floor Site Plan") and submits that it would have been most unusual for the applicant to have quoted o the variation without having inspected and assessed the revised plans. Therefore, the respondent argues, the applicant's evidence that he did not see the variation plans should not be accepted. Clearly, there is much sense in this submission as well. Determining the factual issue of whether the applicant did in fact inspect the variation plans prior to giving his quote is difficult on the evidence given. The reason for this is that the respondent has not had the opportunity, given the applicant's failure to attend on the last hearing day, to fully cross-examine him on the issue. Although there was some cross-examination of the applicant on the first day of hearing this was not adequate given that the respondent had only just been apprised of the case the applicant was making out. Despite this, the evidence is sufficient to enable the Tribunal to determine the item under consideration in three different ways. 23First, with respect to this item, the respondent argued that the applicant, in any event, was aware that new brickwork was required by the variation and that, it necessarily follows, that certain aspects of the original works, the dimensions of the two concrete slabs in particular, would require further works to be done. This would have been apparent, the respondent argues, to the applicant even if he had not seen the variation plans. The Tribunal agrees with this argument. The new brickwork was not a small matter and the Tribunal is well satisfied that any competent builder would have recognised this need. The applicant clearly was an experienced builder. Consequently, the Tribunal finds that the applicant, by leaving the two slabs as they had been constructed following the original plans, has failed to construct the slabs in a proper and workmanlike manner, given the variation that was put in place. 24Secondly, the variation document (exhibit R 3, annexure "C") is signed by the applicant and the third party. This document refers to plan number MA 07/0351 as being the basis for the quote and that plan (exhibit R 3, annexure "B", "Lower ground Plan") does in fact show that the slabs, upon which the covered balcony was to be constructed, are to be in line with the side walls of the dwelling. By signing this document the applicant has agreed to do the works as depicted in the plans, irrespective of whether he in fact perused those plans at the time. Thus the breach alleged is established for this reason as well. 25Thirdly, whilst the formwork for the two slabs may well have been in place prior to the second variation on 28.03.08, the slabs were not poured until some time after 15.05.08 (exhibit R 3, page 4, item 7 commentary and annexures "D", "E" and "F"). By reason of this evidence the Tribunal is unable to accept the applicant's evidence that the two slabs had been fully constructed prior to the second variation. 26Item 8 is the next matter. This concerns the size of the posts used to support the upper rear porch (exhibit R 1, pages 134 & 135). The size of the posts was not specified in the original plans, but the variation plans specify a size of 100x100mm. This item cannot be determined in the absence of an engineer's evidence as to whether the size used (90x90mm) is, or is not adequate (exhibit R 3, page 4, comments to item 8). Consequently, the Tribunal is not satisfied that the evidence has established the breach alleged. 27Item 9 in Inspector Daley's report concerns the alignment of the southern external wall of the garage with the adjacent external wall of bedroom 2. As the photographs show, these two walls are not in a straight line alignment (exhibit R 1, pages 136 and 137). This per se is not said to be defective work, as walls may properly be constructed in this way, that is, with a 120mm return. However, all of the plans depict the two walls as being in straight alignment without a return of any size. Here, the respondent argues that the work should be regarded as faulty upon the basis that it does not comply with the plans. This argument is clearly correct, and the Tribunal so finds. 28The applicant's explanation is that an agreed variation to the original works (exhibit A , page 5) together with a further variation (exhibit R 3, annexure "C") required him to provide brick veneer external walls to the entire dwelling. In relation to bedroom 2 external wall, he constructed the new wall outside the existing wall, leaving that wall in situ. However, as the garage wall had an existing suspended concrete slab above it, which could not be extended, he necessarily had to construct the garage wall in the way that was done. This resulted in the garage wall being stepped back from the bedroom wall. Clearly there was a difficulty here, given that modifications were being made to an existing dwelling. However, this aspect goes to penalty and not to the question whether the relevant walls were constructed as the plans require. Clearly they were not. 29Item 10 in Inspector Daley's report concerns the dimensions of the garage area, the actual area built being smaller than that specified in the variation plans. The applicant accepts that this is so, and explains the difference upon the basis that whilst he built the garage area on the basis of the original plans, the variation plans require brick walls, which make the area potentially larger. However, this does not avoid the fact that the plans specify a larger garage area. For the reasons given at paragraph 24 above the applicant must be taken to have agreed with the relevant plans to which the variation refers and the alleged breach is hereby established. 30Item 11 in Inspector Daley's report concerns the use of incorrect bricks under the front porch, being bricks other than those specified in the agreement. The applicant concedes this, but asserts that the third party wanted these bricks covered with cement render. If this was the case then the use of unspecified bricks would have become immaterial. The respondent is unaware of whether such variation was put in place (exhibit R 3, page 5, item 11). The Tribunal accepts the applicant's evidence on this point and therefore no breach as alleged has been established. 31Item 12 in the report concerns the size of the lintel beam above the garage door opening. The beam installed is less that that specified in the structural engineers plans. The applicant concedes this, but with the explanation that the third party supplied this beam, as the agreement between them required (see exhibit A 4, pp 4 and 5, and pp 35 and 36). The tribunal accepts this evidence. Consequently, the applicant has not breached the agreement in this regard as it was not his obligation to supply the lintel in question. Here, the Tribunal notes the applicant's evidence that before installing the lintel, the applicant verified with the engineer that the size of the supplied lintel was adequate. 32Item 13 in the report is that the steps to the rear porch were not completed by the applicant as the agreement required. The applicant accepts this, but explains that this was unfinished work which he was prevented from completing by the actions of the third party. This aspect requires examination at this stage as the question here goes to liability rather than penalty. In this regard, the item in question differs from the other incomplete works mentioned above as the applicant had not commenced to do the relevant works, as he had in relation to the above items. 33The applicant's evidence is that after the rectification order issued he commenced to do further works but he was threatened by the third party (exhibit R 1 page 94, exhibit A 2, pp 4 to 12). It appears from this correspondence, and from the applicant's oral evidence, that he had been in dispute with the third party for some little time at least before the issue of the rectification order. Clearly this was the case prior to the third party's complaint in January 2009, although the applicant was clearly continuing to do works on the property in July 2008 (exhibit A 4, p35). This evidence satisfies the Tribunal that at some stage during the construction process the parties fell into dispute and that, more likely than not, the third party prohibited the applicant from doing further works at the premises. Consequently, the applicant has an adequate explanation for the failure to complete the works alleged in item 13 of the report, namely that, more likely than not, he had not commenced to do these works at the time that the relationship between the parties broke down. 34Items 14 and 15 of Inspector Daley's report are incomplete works as alleged, however, for the reasons just given above, the applicant was prevented from completing these works by the actions of the third party. Consequently, the Tribunal finds that there are no breaches as alleged by these two items. 35Item 17 of the report identifies the installation of a control joint at a corner of the dwelling (exhibit R 1, page 144). The control joint does not extend all the way up the wall, as Inspector Daley says that it should. Here the respondent does not identify any part of the contractual arrangements that required the installation of a control joint along the entire length of the join between the two walls, but rather, relies upon sound building practise. The purpose of the control joint at this location is to control cracking. The plans do not show any relevant specification at this location (exhibit R 1, pp48 and 52and exhibit R 3, annexure "B", "lower Ground Floor Plan" and "Ground Floor Plan") although the plans do refer to control joints as being in accordance with "Architectural and/or Structural Engineering details (for example Note 9 "Ground Floor/Site Plan", annexure "B", exhibit R 3). Prima facie the method of construction appears to be in breach of the sound building practise of which Inspector Daley speaks. 36The applicant explains this method of construction as being by reason of the presence of the bathroom window as shown in the photograph at exhibit R 1 page 144. He says that adjacent to the window there is some 10 courses of half brick and therefore he constructed the upper section of the join with interlocking bricks rather than by continuing the control joint. He says that he spoke with the architect about this, the implication here being that the applicant's method was approved. Whilst there is no further evidence advanced by either side on this point, it is significant that, in reply, the respondent does not proffer any evidence to contradict what the applicant has put before the Tribunal (see exhibit R 3). Inspector Daley's evidence is that he did not know who made the decision to insert a control joint at this location. 37In view of this evidence the Tribunal is unable to comfortably reach a conclusion that the insertion of a control joint at only a part of the join between the two walls was defective work. Consequently, the alleged breach has not been made out. 38As noted above, item 17 in the report does not require consideration. 39It is common ground that the applicant did not perform all the requirements of the rectification order, his argument being that he was prevented from doing so. 40As these reasons show, the Tribunal is satisfied that the applicant has done the works contracted for in a way that gives rise to breaches as to items 4, 5, 6, 7, 9 and 10 of the report, to extent noted above in these reasons. The question of penalty must therefore be addressed. 41The respondent's submissions set forth the principles relevant to the question of penalty (exhibit R 2). Clearly matters of public interest are involved together with numerous considerations that may, or may not, surround the contraventions in question. Some of the contraventions are capable of simple rectification (termite protection, weepholes and sarking) whilst the others involve significant difficulty (items 7, 9 and 10), the extent of which has not been addressed in the evidence. Indeed, the size of the garage (item 10) may not be rectifiable at all. Despite the lack of evidence, these latter contraventions must be regarded as serious in themselves so as to attract significant penalty. However, the situation is not simply one where the plans and specifications clearly outline the additional works to be done in relation, in particular, to items 7 (the two porch slabs), 9 (the non-alignment of the two walls) and item 10 (the garage area). If they had done so Inspector Daley would have brought these particular specifications to the Tribunal's notice. He has not done so and without such expert assistance the Tribunal ought not to embark upon its own unassisted analysis of the plans and specifications. Rather, the Tribunal is well persuaded that as the contractual variations came into play the actors involved did not give sufficient consideration as to what consequences the variations might have had and how to deal with the problems arising from the fact that the works were to be done on the existing works as they progressed from time to time. Clarity and precision was therefore lacking in the variation plans and specifications. In addition there is the compounding factor that the applicant was prevented from doing some of the remedial works by the actions of the third party. 42The applicant argues that given his lengthy history as a competent builder the Tribunal ought only to issue a warning and not impose a penalty. However, the Tribunal is persuaded that this is not the appropriate course as the applicant ought to have been well aware of the issues that could have arisen when the variations were discussed so as to require him to consider thoughtfully and competently the requirements that would be the necessary matters on which he should render his fresh quotations. It is therefore appropriate that a penalty be imposed. 43Taking these circumstances into consideration, the appropriate penalty is one of $2000-00. 44The Tribunal makes orders, set forth above, in accordance with these reasons.