Witkowska v McGann [2014] NSWCATCD 177

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Witkowska v McGann [2014] NSWCATCD 177 Hearing dates: 29 August 2014. Decision date: 25 September 2014 Before: S F Smith, General Member Decision: 1. The application is dismissed. Catchwords: None Legislation Cited: Consumer Claims Act; Australian Consumer Law. Cases Cited: Hadley v Baxendale (1854) 9 Exch 341; L'Estrange v Graucob [1934] 2 KB 394. Texts Cited: None Category: Principal judgment Parties: Grazyna Witkowska (applicant) Brendan McGann (respondent). File Number(s): GEN 14/13263 Publication restriction: Unrestricted

reasons for decision APPLICATION 1This was an application for compensation made by a consumer against a trader who operated a building inspection service. 2The respondent inspected a dwelling house on behalf of the applicant. Relying on the inspection, the applicant bought the house but on taking possession found it defective and commenced action against the respondent.

JURISDICTION 3The jurisdiction of the Tribunal is to be found in the Consumer Claims Act 1989. PROCEEDINGS 4The matter was commenced on 9 March 2014. There was a directions hearing at Gosford on 14 April 2014 and the evidence was taken at Gosford on 29 August 2014. EVIDENCE 5I heard oral evidence from the applicant and from Mr McGann. Both parties had submitted materials which were before me at the hearing. 6Ms Witkowska filed a comprehensive brief of materials which included a narrative account of the matter, expert reports of Halcrow and Associates civil engineers, a copy of the respondent's inspection report, medical certificates, letters from a plumbing contractor, invoices from moving contractors and from veterinarians together with correspondence from real estate agents. THE BACKGROUND 7The applicant seems to have known of premises at 16 Palm Springs Ave, Glenning Valley before it came on the market in about August 2013. When it was offered for sale she instructed Mr McGann, who trades as Vital Inspections, to prepare a pre-purchase report. 8It is not disputed that she requested him to look for such matters as dampness, chemical irritants and dust as she was sensitive to these substances. 9On 30 August 2013 Mr McGann and an associate pest inspector attended the premises to prepare their reports. The report done by Mr McGann was before me and was 13 pages long. It claimed to comply with AS 4349.1 and contained many disclaimers which is normal in such matters. Specifically it limits itself to areas that are readily observable. The report was mostly favourable and in particular made no adverse findings relating to dampness, dust or chemicals. 10The dwelling has a timber floor of bearers and joists sitting on isolated brick piers or masonry walls. The report mentions an inspection of the subfloor and states that subfloor ventilation "Appears to be adequate". 11Ms Witkowska proceeded with the purchase but soon after moving in found that the house was too damp for her purposes such that it stimuluated allergic reactions in her. There was also some evidence that there was internal dampness and mould inside the house. She called Vital back and sought further advice when Mr McGann stood by his report. 12The main evidence relied on by Ms Witkowska is a set of reports by Halcrow and Associates, civil engineers. There was also evidence from TNT Plumbing Contracting about the cost to install site storm water drainage. 13Part of the applicant's evidence is a set of photos of dampness at the dwelling. Some show efflorescence in concrete blocks under the house, other show moss and efflorescence on brick work supporting an entrance patio and others show mould growing on items inside the house. 14It was the applicant's case that the dampness associated with the premises aggravated her allergy to the extent that she had to sell the house. Indeed Ms Witkowska placed the home on the market not long after moving in, it was sold and she moved into other accommodation. 15Her case is that the report prepared by the respondent should have been more responsive to the instructions she gave Mr McGann about her sensitivity to damp among other allergens. If susceptibility to damp had been mentioned in the report Ms Witkowska says she never would have purchased 16 Palm Springs Avenue. 16The applicant says that the respondent is liable to her for all of the costs associated with the sale and purchase of the property as well as other consequential losses such as moving expenses. When I pointed out to the applicant that the amount of the claim would far exceed the $30,000 monetary jurisdiction of the Tribunal in the relevant division, she formally abandoned all in excess of that amount. APPLICANT'S CASE 17Ms Witkowska says that her evidence, chiefly in the form of her expert engineering report, indicates that the susceptibility of the site to surface water, that this should have been obvious to the respondent and mentioned in his report. The report prepared by Angela Halcrow suggests that the site has or might have several storm water drainage problems. 18I observe that in its original iteration the Halcrow report did not mention the "Chairperson's Direction" relating to the independence of expert reports. Ms Halcrow has prepared a letter 'ex post facto' purporting to refer to the Direction. However I find that I cannot give full weight to the report. A perusal of it indicates to me that some of it is speculative and the tone is not as objective as one would like in an expert report. Conclusions are drawn on the basis of scant evidence. For example, the entry of water to the subfloor area. She says that this is through some ventilation or weep holes in the brickwork and seepage through concrete blocks. I note that no water ponding was identified under the house by anyone who has inspected it. Ms Holcrow might be correct but when the totality of the evidence is reviewed it is hard to see how any firm conclusions can be justified. 19No doubt many of the suggestions for improving the house and gardens are worthy but they are not to the point of the question before the Tribunal. For example, the engineering assessment contains an interesting discussion of the construction and efficacy of a retaining wall which Ms Halcrow found (no doubt quite properly) on excavation not to conform to the BCA. It was, however, not Mr McGann's task to examine the house at that level of detail. 20Ms Witkowska's evidence also includes some comments and quotes from a plumbing contractor and from two real estate agents. One agent purports to give what looks like expert advice on shortcomings in site drainage and how they might be remedied. I could give no weight to that evidence as there was no foundation of expertise nor any reference to the Chairperson's Direction. 21Her material also itemised the monetary basis of her claim. Even though the house was sold at a premium over the purchase price, the costs of sale and purchase when added to other expenses, more than wiped out the paper profit. The expenses were itemised in a detailed spread sheet and amounted to $112,000 (in round figures). They included legal expenses, moving and storage costs, stamp duty, wasted garden expenditure and even veterinary expenses for 100 chickens which became infected. RESPONDENT'S CASE 22Mr McGann was called back to the property soon after the applicant detected dampness. I think it is fair to say that his case is that he correctly conducted a pre-purchase inspection and that the report accurately reflects what he found on that inspection. 23The respondent says that his inspection and the resulting standard form report were faithful to the relevant Australian standard. Although it is not mentioned in the "Specific Requirements" section of his report, he acknowledges that the dampness/allergy matters were specifically mentioned to him when he took instructions. 24Mr McGann says that he has inspected the premises twice. It was dry on both occasions. He says that he paid particular attention to site drainage and noted that a storm water drainage system had been installed and that it was probably constructed as a normal condition of building approval. He found it "well designed and extensive" and he found no evidence that it was not fulfilling its design function. 25Specifically, he said there was no internal evidence of dampness and in oral evidence before me and in his written materials said that the interior was tested with a moisture meter which showed normal levels. 26In short, Mr McGann says he applied his mind to dampness, reviewed the site in accordance with AS4951 and found nothing to justify and adverse comment. ANALYSIS 27The main specific conflict of evidence concerns indications of the presence of storm water in the subfloor area under the house. As the matter evolved before me this was the most important contentious point. Ms Halcrow says she detected old evidence of flowing water in the form of channels. Mr McGann says he saw these too but did not see them as an indication that stormwater does or has flowed under the house. 28The burden of proof is on the applicant and for her to succeed she would have to establish that the respondent has breached his contract with her. She would also have to establish that she has suffered loss as a result of the breach and that any losses she claims are sufficiently proximate in accordance with the two limbs in the rule in Hadley v Baxendale (1854) 9 Exch 341. 29As a result the first question is whether the inspection and report by Vital was in accordance with the contract between the parties. Although one might be reluctant to call in aid the 'hoary old cry' of obviously implied terms, I am satisfied that the objectively ascertained common intention of the parties must have been that the Vital report would conform to the industry standard AS4349 but that particular mention would be made of the dampness and allergy matters cited by Ms Witkowska to Mr McGann. 30It is normal for many types of professional reports to contain as many pages of disclaimers as of operative text. And so with the Vital pre-purchase inspection it is not surprising that there are several pages of limitations, exclusion clauses and disclaimers. The main thrust of the text of these pages is to limit the scope of the report rather than to absolve the inspector from his own negligence. 31Mr McGann's submissions assume that the limitations and clarifications in the report itself and in an 'application for an inspection' are binding on Ms Witkowsk. Neither document seems to have been signed by the applicant so the principle in L'Estrange v Graucob [1934] 2 KB 394, that party is ordinarily bound by a document he signs, does not apply. Mr McGann says that the agreement provides at page 8 that the inspector is to comment on "Major Defects and Safety Hazards evident and visible on the date and time of the inspection". 32Although the applicant did not formally accept the provision as a term of the contract before it was made, I think she is bound by it as a commonsense statement of what must have been in the contemplation of the parties, subject to the special requirement relating to dampness and so forth. 33There is also the disclaimer or clarification on page 10 "The report does not and cannot comment upon:...defects...which may be subject to the prevailing weather conditions..." The effect of storm water flow is par excellence a factor that is subject to weather conditions. Both Ms Halcrow and Mr McGann stated that dry conditions prevailed at the times of all their inspections. 34I am satisfied from the evidence put before me that Mr McGann performed a reasonable and proper pre-purchase inspection and specifically turned his mind to the matters of drainage and dampness in preparing his report. 35The only question that merits more detailed consideration is whether he missed evidence of water flow under the house that he should have detected as required by the express term of the contract. Ms Halcrow says she observed channels indicating erosion by running water when she looked at the subfloor area. She says that efflorescence on external brickwork and on a concrete block wall fortified her in the conclusion that water was getting under the house. 36Mr McGann says he saw all of that but it does not indicate that water was flowing under the house. He says that the masonry efflorescence he saw is normal in dwellings and that the markings on the ground under the house were more consistent with normal subsoil ground water than free flowing stormwater. He says that if there were quantities of water there would be signs of it ponding, stagnating and evaporating. He says he looked for it but saw no indication of water detention was visible. It seems to me that water would have to lie for a long period to cause the problems attributed to it by the applicant. 37I consider it a weakness in the Halcrow report that it does not explain how enough storm water could flow through three small holes to the subfloor area to cause the 'channelling' and then evaporate to leave no trace of moisture nor of ponding. 38I observe that no photos of the subfloor area were in evidence before me. I am not therefore given a means to evaluate Ms Halcrow's assessment. 39In consequence I am not satisfied that Mr McGann failed to identify a defect in the stormwater drainage system which he should have reported to Ms Witkowska. 40I find that none of the other alleged shortcomings in the inspection and report amount to an operative breach of contract although they might amount to useful advice about domestic maintenance. CONCLUSION 41Having carefully evaluated the oral and written evidence put before me I am unable to conclude that there was anything wrong with the Vital report on 16 Palm Springs Avenue. While I have assessed the report and the evidence on common law principles I do not think that Ms Witkowska's position is improved by referring to statutes such as the Australian Consumer Law. 42A fault in the Vital report is a threshold issue in this matter. If the report is not defective the applicant has no right to a remedy. ORDERS 43The application is dismissed. S Smith General Member Civil and Administrative Tribunal of New South Wales 25 September 2014 I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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. Decision last updated: 20 November 2014