The Owners SP 78035 v Banksia Development Group Pty Ltd, Nadim Moujalli, Wilhemina Maria Moujalli, Karin Ambrosius [2014] NSWCATCD 18

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: The Owners SP 78035 v Banksia Development Group Pty Ltd, Nadim Moujalli, Wilhemina Maria Moujalli, Karin Ambrosius [2014] NSWCATCD 18 Hearing dates: 1 October 2013 Decision date: 17 January 2014 Jurisdiction: Consumer and Commercial Division Before: J Bordon, Senior Member Decision: ORDERS 1. The respondents Banksia Development Group Pty Ltd, Nadim Moujalli, Wilhemina Maria Moujalli and Karin Ambrosius are to pay to the Owners Strata Plan 78035 $500,000.00 within 28 days of this order. 2. In addition the respondents are to pay to the applicants costs of and incidental to the proceedings as agreed or as assessed within 28 days of this order. Legislation Cited: Consumer Trader and Tenancy Tribunal Act 2001 Home Building Act 1989 (HBA) Category: Principal judgment Parties: The Owners SP 78035 (Applicant) Banksia Development Group Pty Ltd (First respondent) Nadim Moujalli (second respondent) Wilhemina Maria Moujalli (third respondent) Karin Ambrosius (fourth respondent) Representation: Ms Shaw (the Applicants) File Number(s): HB 12/50119

reasons for decision

Introductory 1This matter came fore hearing before the Tribunal on 1 October 2013. There was no appearance of or on behalf of any of the respondents. I was however satisfied that Notices of Hearing were sent to all of the respondents. There was no indication that these Notices of Hearing had not been received. On previous occasions at Directions Hearings from time to time the respondents did appear. I did note that none filed a response to the application or any pleadings. On this basis the matter proceeded ex-parte. 2The first respondent Banksia Development Group Pty Ltd is the builder. This is evidenced by twelve certificates of home warranty insurance. The second, third and fourth respondents are the developer. These persons owned the land upon which the residential building work was done. I am satisfied that the residential building work was done on behalf of the second, third and fourth respondents by the first respondent. 3The applicant is an Owners Corporation established by registration of Strata Plan 78035 on 10 November 2006 and is the successor in title to the developer. As such it is entitled to the benefit of the statutory warranties as against the builder (sections 18D and 18B of the HBA) and is also entitled to the benefit of the statutory warranties as against the developer section 18C of the HBA. 4I am satisfied that these proceedings were commenced within 7 years after the completion of the work to which the proceedings relate. 5I accept the submission that there is evidence of the date of the issue of the occupation certificate on 11 October 2006 (Exhibit A5) I agree that by operation of s 3B(3)(c) of the HBA the date of practical completion and therefore the date of completion of the works was 11 October 2006. The application having been filed before 11 October 2013 was filed within time. 6As indicated earlier, I satisfied myself that I should proceed to hear the matter in the absence of the respondents being satisfied that Notice of Hearing were received. I note that the representative of the applicant had also advised the respondents of the hearing date by letter dated 30 August 2013 (Exhibit A6). 7The evidence before the Tribunal included the following: * RHM Consultants Report on Building Defects (the author is Bruce Hodson) dated 3 July 2012 (Exhibit A1) (RHM), * RHM Letter dated 17 October 2012; (Exhibit A2), * RHM Letter dated 11 September 2013 (Exhibit A3) This evidence is summarised in the Scott Schedule which is annexed to these reasons for decision marked "B" 8Other evidence relied upon by the Owners Corporation is as follows: * The report by Spicer Consultants dated 6 June 2013 * Statutory Declaration of Mr John Palmer (a licensed builder and director of Building Durability Pty Ltd) dated 27 September 2013 , * A further statutory declaration of Mr Palmer dated 24 October 2013, * Lannock loan facility agreement , * Correspondence from Lannock concerning drawdowns from the facility and bank statements evidence as to drawdowns, * Statutory declaration of Bruce Hodson dated 27 September 2013 attaching invoices for urgent rectification works and invoices for supervision of rectification works (Exhibit A13). 9A report by Matthew James Spicer (The Spicer Report) is an estimate of the costs of the items in the RHM scope which were still pressed. Mr Spicer, a quantity surveyor, had assumed that the rectification works will be performed by or under the supervision of a specialist rectifications works contractor and completed within a period of 14 weeks. 10The estimated costs include the direct cost of the work, trade cost and materials. 11I did express concern in relation to the claim for preliminaries, overhead margin and contingency as well as superintendence of the rectification contract by a third party on behalf of the Owners Corporation. The concern was broadly that these various heads suggested overlap and duplication. 12After considering Mr Spicer's evidence and the submissions which have been filed, I am persuaded that the applicant has made out its claim for preliminaries. These include amounts for labour and administration, site survey, site accommodation and security, small tools, scaffolding, materials handling, temporary power and water, insurance and cleaning. I accept the submission that given the number and the complexity of the defects, some form of management and administration is required. The rectification of waterproofing defects required coordination of various trades. 13As to the claim for contingencies, I am referred to Owners Corporation SP 74584 v Sezone (2013) NSWSC 999 where His Honour McDougall J said that such an allowance was appropriate. 14In relation to superintendence of the rectification contract, the cost of which has been estimated at $25,920.00, I am referred to Mr Spicer's report where he states that it would be reasonable for an allowance of a contract administrator to administer the building contract on behalf of the Owners Corporation. The allowance is based on a time basis. The tasks would include tender review, inspection of the works on a weekly basis, meetings, assessment of and recommendations as to progress claims and variations and final accounts on completion of the works as well as provision of post construction services such as defects inspections and management. It is submitted that, in the light of the number and complexity of the defects and the absence of any skills on the part of the Owners Corporation to administer the rectification contract are reasons to allow the costs of superintendence of the contract. I was referred to Axa Global Risks (UK) Ltd v Haskins Contractors Pty Ltd (2004) NSWSA 138 as authority for the appropriateness of such a claim. 15As at the date of the hearing, the applicant had incurred $10,395.00 in contract and administration costs and an estimated $19,885.00 was estimated will be incurred prior to completion of the remedial work. 16I am persuaded that I should allow overhead and margin costs, contingency costs, superintendence of the rectification contracts as well the preliminary costs. 17I agree that the best evidence of the reasonable costs for rectification is evidence of the actual costs incurred by the applicant (Hyder Consulting (Australia) Pty Ltd v Wilhemson Agency Pty Ltd & Another (2001) NSWCA per Giles JA). 18In his statutory declaration Mr Palmer declared that Building Durability Pty Ltd (BDPL) had provided a quotation for the works comprising the RHM Scope. The Owners Corporation entered into a contract on or about 1 August 2013 at a cost of $406,000.00 plus GST; works commenced on 7 August 2013. 19As at 27 September 2013 BDPL had completed the works required to rectify defects 9.6, 9.9, 11.1, C2, R1 and R2; fifty percent of the defects at 9.1, 9.2, 12.1 and 12.2 had been completed. Four progress claims for the works totalling $237,568.95 including GST had been issued. 20In his second statutory declaration, Mr Palmer explains that the costs contained in the quotation and charged by BDPL had not been calculated on a defect by defect basis. He estimates the direct cost of each of the defects as of the date of the hearing. Seventy five percent of the preliminaries, including scaffolding, had been charged as at 27 September 2013 and fifty percent of the amount allowed for overheads (including profit) had been charged at 27 September 2013. I accept that, in relation to defects referred to above, there is evidence of estimated costs (Mr Spicer) and estimated actual cost (Mr Palmer's calculation). 21I note that Mr Spicer did give evidence in relation to the costs for preliminaries partly on the basis of actuals and partly on the basis of Mr Spicer's estimated cost; the mechanism for this was to allow an amount of $6,366.00 exclusive of GST per week, a total of $89,124.00. 22In addition invoices were provided to show that the sum of $10,395.00 in supervision costs to 27 September 2013 had been incurred. 23On the basis of the principle set out in Hungerford v Walker (1989) 171 CLR 125 the applicant is also entitled to finance costs incurred on the loan acquired by to pay for the works. 24I am also satisfied, as stated in Mr Hodson's statutory declaration that certain works were undertaken on an urgent basis in early 2013. These should be allowed.