Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Glen MacFadyen and Heidi MacFadyen v George Tadrosse [2014] NSWCATCD 194 Hearing dates: 3 June 2014 Date of orders: 14 October 2014 Decision date: 14 October 2014 Jurisdiction: Consumer and Commercial Division Before: D Goldstein, Senior Member Decision: 1. The respondent's defence that the Tribunal does not have the jurisdiction to hear this building claim pursuant to section 48(K)(7) of the Home Building Act 1989, is dismissed. 2. The respondent must pay the applicants the sum of $18,070.93 immediately. 3. Either party is at liberty to make a costs application in these proceedings. 4. Any costs application must be lodged in the Tribunal and served on the costs respondent within 21 days of the date of this order either attaching or referring to the documents relied upon in support of the application 5. The costs respondent will have 21 days after the date of receipt of the costs application referred to above, to lodge in the Tribunal and serve on the costs applicant the submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon 6. The cost applicant will have 14 days after the date of receipt of the cost respondent's submissions to lodge in the Tribunal and serve on the costs respondent the submissions, if any, in reply, such submissions either attaching or referring to the documents relied upon. 7. The Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal. Catchwords: Statutory warranties Legislation Cited: Home Building Act 1989 Cases Cited: Allianz v Waterhouse [2009] NSWCA 224, Bailey v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293, Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55]. Texts Cited: Building Disputes & The Home Building Act 1989 (NSW) P. Bambiogotti Category: Principal judgment Parties: Glen MacFadyen and Heidi MacFadyen (applicants) George Tadrosse (respondent) Representation: Counsel: Mr T Bland for the applicants Mr Gourlie (solicitor) for the respondent Solicitors: Hunt & Hunt for the applicants Watson & Watson for the respondent File Number(s): HB 13/63897 reasons for decision 1. These proceeds arise out of a sale by the respondent to the applicants of a residence situate at [XXX] Cherrybrook in or about 15 November 2012 (the 'residence'). 2. The respondent was an owner builder. In these reasons for decision I will refer to the applicants as the owners and to the respondent as the owner builder. 3. The owners claim for building defects in the sum of $92,649.49. 4. There is no dispute that the owners' claim is a 'building claim' for the purposes of the Home Building Act 1989 (the 'Act') and that I have the jurisdiction to determine it pursuant to the Act. Subject to the jurisdiction point referred to below, there is also no dispute that pursuant to section 18C of the Act the owners are entitled to the implied warranties set out in section 18B of the Act as if the owner builder had carried out the relevant works under a contract with the owners to do such work. 5. This application was lodged in the Tribunal on 6 December 2013. The application was heard on 3 June 2014. Both parties were legally represented at the hearing. 6. At the conclusion of the hearing I made order for the filing of written submissions. Submissions have been filed on behalf of the owners. The owner builder has filed and served written submissions late. The owners have filed a reply. 7. The owners relied upon a report prepared by Mr John Worthington and dated 16 April 2013. The report described 17 areas of defective work and in section 5 set out a calculation of the costs that in Mr Worthington's opinion would have to be incurred in order to rectify the defective work. Mr Worthington also prepared a scott schedule on behalf of the owners. The total amount of rectification costs were calculated as $92,649.49. 8. The owners have not filed or served evidence in these proceedings to establish a factual foundation for their expert's reports. 9. Mr Andrew Daniels prepared a report dated 22 March 2014 on behalf of the owner builder. He completed the scott schedule and in his opinion the total rectification costs were $820.00. In certain instances Mr Daniels estimated rectification costs on an 'if found basis'. The owner builder did file and serve a statement, which is exhibit 4 in the proceedings. 10. Mr Worthington also prepared a supplementary report dated 14 April 2014 in reply to Mr Daniels' report. 11. I accept both Mr Worthington and Mr Daniels as experts appropriately qualified to give expert evidence in the Tribunal. 12. At the same time as they filed their written submissions the owners attempted to serve an electrical report by Argo Electric dated 29 June 2014. The basis for filing the report was not stated. No order has been made to justify its filing. The owner builder will be denied procedural fairness if I were to have regard to the report and take it into account in these reasons for decision. For this reason I will pay no regard to it. Were these proceedings commenced out of time? 1. The owner builder asserts that the owners claim is out of time. This submission was not developed in oral argument before the Tribunal. The owner builder's written submissions deal with the issue. 2. The application was lodged in the Tribunal on 6 December 2013. 3. Section 48K (7) of the Act provides: 'The Tribunal does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E).' 1. Section 18E of the Act as at 6 December 2013 stated so far as is relevant that: '(1) Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions: (a) proceedings must be commenced before the end of the warranty period for the breach, (b) the warranty period is 6 years for a breach that results in a structural defect (as defined in the regulations) or 2 years in any other case, (c) the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work),' 1. Section 3B of the Act states in relation to the question of when is work completed: '(1) The completion of residential building work occurs on the date that the work is complete within the meaning of the contract under which the work was done. (2) If the contract does not provide for when work is complete (or there is no contract), the completion of residential building work occurs on practical completion of the work, which is when the work is completed except for any omissions or defects that do not prevent the work from being reasonably capable of being used for its intended purpose. (3) It is to be presumed (unless an earlier date for practical completion can be established) that practical completion of residential building work occurred on the earliest of whichever of the following dates can be established for the work: (a) the date on which the contractor handed over possession of the work to the owner, (b) the date on which the contractor last attended the site to carry out work (other than work to remedy any defect that does not affect practical completion), (c) the date of issue of an occupation certificate under the Environmental Planning and Assessment Act 1979 that authorises commencement of the use or occupation of the work, (d) (in the case of owner-builder work) the date that is 18 months after the issue of the owner-builder permit for the work. (4) If residential building work comprises the construction of 2 or more buildings each of which is reasonably capable of being used and occupied separately, practical completion of the individual buildings can occur at different times (so that practical completion of any one building does not require practical completion of all the buildings). (5) This section applies for the purposes of determining when completion of residential building work occurs for the purposes of any provision of this Act, the regulations or a contract of home warranty insurance.' 1. In my view to succeed in its application the owner builder is obliged to establish on the balance of probabilities that the application was lodged more than two years after completion of the work the subject of the contract between the parties. The application was lodged in the Tribunal on 6 December 2013. To put it another way, as expressed in Bailey v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293, to be successful the builder 'needed to establish that the work was completed more than' two 'years before the date of the lodgement of the claim'. 2. The owner builder asserts that construction was completed in or about November 2011. Two years from that date is November 2013. If the owner builder is correct regarding completion, the proceedings have been commenced out of time as they were commenced on 6 December 2012. 3. Owner builder work is often carried out by the owner builder him or her self, or by the owner builder engaging a series of tradesmen or contractors to carry out discrete parts of the works. In this case the Tribunal has been informed about how the works were actually carried out. The owner builder has given evidence that he engaged subcontractors to construct the ground and first floor of the residence. 4. The owner builder has put his owner builder permit into evidence. The permit states that it was issued on 28 July 2010 to the owner builder in connection with the residence. 5. Section 3B of the Act will determine when the warranty period commences and therefore when it expires for the purposes of section 48K (7) of the Act. 6. In my view section 3B(1) of the Act has no application to the question of when the residential building work was complete as there is no evidence of the contract under which the work was done. The owner builder's evidence was that the works were completed by a number of subcontractors. The implication to be drawn from this evidence is that there were a number of contracts in existence under which the work was done. 7. Given that section 3B(1) of the Act has no application to the question of when the residential building work was complete, section 3B(2) of the Act applies. Further, in my view the presumptions in section 3B(3) of the Act will apply to establish when practical completion occurs as referred to in section 3B (2) of the Act. 8. Pursuant to section 3B(3)(d) of the Act, practical completion of residential building work is presumed to have occurred in this case on 'the date that is 18 months after the issue of the owner-builder permit for the work', which as stated above was 28 July 2010. 9. The date that practical completion occurred in accordance with section 3B(3)(d) of the Act was therefore 27 January 2012. 10. At paragraph 17 above I stated 'to succeed in its application the owner builder is obliged to establish on the balance of probabilities that the application was lodged more than two years after completion of the work the subject of the contract between the parties.' 11. Since the residential building work was completed on 27 January 2012 by the application of section 3B of the Act, the proceedings must be brought within two years of that time as required by section 18E of the Act. Two years from 27 January 2012 is 26 January 2014. The proceedings were commenced on 6 December 2013. They have on that analysis been commenced well within time. 12. However, the owner builder asserts that asserts that construction was completed in or about November 2011. If this evidence were to be accepted, the proceedings would be brought out of time since the two year warranty period would expire at the end of November 2013. These proceedings were brought after that time, on 6 December 2013. 13. Section 3B(3) allows an earlier date for practical completion than the dates referred to in sub-paragraphs (a) – (d), if such an earlier date can be established. 14. It will be necessary to consider the owner builder's evidence to ascertain whether he is able to establish that construction was completed in or about November 2011. The owner builder's assertion that construction work for the residence was completed in or about November 2011 is contained in paragraph 10 of his affidavit which is exhibit 4 in these proceedings. This is a bald statement of fact. There is no factual material to support that assertion. The facts that the owner builder obtained a survey on 15 February 2012 or a final occupation certificate on 24 May 2012 do not support the assertion that the residence was completed in or about November 2011. 15. The owner builder's written submissions do not advance the question of practical completion as asserted by him. 16. The owner builder must establish that the residence was completed in or about November 2011 on the civil standard of proof. The relevant principles in relation to discharging the burden of proof in civil cases were recently summarised by McDougall J. in the New South Wales Court of Appeal in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55] as follows: 1. A finding that a fact exists (or existed) requires that the evidence induce, in the mind of the fact-finder, an actual persuasion that the fact does (or at the relevant time did) exist; 2. where on the whole of the evidence such a feeling of actual persuasion is induced, so that the fact-finder finds that the probabilities of the fact's existence are greater than the possibilities of its non-existence, the burden of proof on the balance of probabilities may be satisfied; 3. where circumstantial evidence is relied upon, it is not in general necessary that all reasonable hypotheses consistent with the non-existence of a fact, or inconsistent with its existence, be excluded before the fact can be found; and 4. a rational choice between competing hypotheses, informed by a sense of actual persuasion in favour of the choice made, will support a finding, on the balance of probabilities, as to the existence of the fact in issue. 1. Having regard to the owner builder's evidence on this issue, the evidence falls far from inducing in me an actual persuasion that the residential building work was completed in or about November 2011. The owner builder's evidence goes no higher in my opinion than a self-serving unsupported assertion. 2. For the reasons stated above, I dismiss the owner builder's application to strike out the owners' application on the basis that the Tribunal has no jurisdiction to hear it pursuant to section 48K (7) of the Act. Defects 1. As stated at paragraph 4 of these reasons, there is no dispute that pursuant to section 18C of the Act the owners are entitled to the implied warranties set out in section 18B of the Act as if the owner builder had carried out the relevant works under a contract with the owners to do such work. In their written submissions the owners state that the builder will be liable for defects that come within the statutory warranties in the Act. 2. Section 18B of the Act states that: 'The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work: (a) a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result' 1. The owners are required to establish their defective work claim on the balance of probabilities which term has recently been discussed by the New South Wales Court of Appeal in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55], as referred to above. 2. The owners' submissions confirm that they are relying on the warranties in section 18(B) of the Act. Insofar as the owners rely on section 18(B)(a) of the Act it will be necessary for the evidence called on their behalf to state the reasoning or basis for asserting that the work in question was not carried out in a proper and workmanlike manner, or in accordance with the relevant plans and specifications. 3. The decision of the Court of Appeal in the case of Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 makes it clear that a reasoning process is to be stated by an expert when giving opinion evidence. In particular, I have had regard to paragraph 85 of Heydon JA's (as he was then) judgement, where his Honour states: '85 In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of "specialised knowledge"; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be "wholly or substantially based on the witness's expert knowledge"; so far as the opinion is based on facts "observed" by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on "assumed" or "accepted" facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based", applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight. And an attempt to make the basis of the opinion explicit may reveal that it is not based on specialised expert knowledge, but, to use Gleeson CJ's characterisation of the evidence in HG v R (1999) 197 CLR 414, on "a combination of speculation, inference, personal and second-hand views as to the credibility of the complainant, and a process of reasoning which went well beyond the field of expertise" (at [41]).' [Emphasis added] 1. In the course of his judgement, commencing at paragraph 80, Heydon JA referred to a number of decisions of Anderson J. in the Supreme Court of Western Australia. In Pownall v Conlon Management Pty Ltd (1995) 12 WAR 370 at 389-90 his Honour Anderson J. stated: 'Expert opinion is to be judged like any other evidence. It must be comprehensible and reach conclusions that are rationally based. The process of inference that leads to the conclusions must be stated or revealed in a way that enables the conclusions to be tested and a judgment made about the reliability of them.' 1. When being cross examined, the owners expert witness Mr Worthington stated that when he looks at a residence to compile a defects list he looks at it as a builder would, and when preparing a list of defects if he thought an item of work was incorrect he would say so and that he would say why it was incorrect and in most cases he would give a cost of rectification. Mr Worthington went on to say that he would stop at that point and that he does not look at a defect and evaluate it in accordance with the Act. He stated that he is 'looking at a defect'. To be fair to Mr Worthington, the reason he gave for not looking at a defect in terms of the Act was because of his perception that to do so could or would relate to the time periods in the Act for commencing proceedings. 2. Mr Worthington also stated that he deliberately does not invoke the Act in order to characterise a defect to be of a type that might fall within one or other of the periods of time referred to in section 18E of the Act. In other words Mr Worthington said that he was not stating whether a defect was a structural or non-structural defect for the purposes of section 18E of the Act. 3. At a later point Mr Worthington stated that every item in his report is what he considered to be a defect and work that was not done with due diligence. He stated that his opinion in coming to this conclusion was based on his considerable experience in the building industry. 4. The question of due diligence arose specifically because Mr Worthington was asked about section 18 B(d) of the Act. That sub-section in my view goes to time issues, not the quality of building work and materials which subjects are, in my view, dealt with by sub-sections 18B(a) and (b) of the Act. As regards section 18B(d) of the Act going to time issues, I note that the learned author of Building Disputes & The Home Building Act 1989 (NSW) at page 82 is of the same view as I have reached. 5. A number of issues arise out of Mr Worthington's evidence as referred to above. While Mr Worthington's evidence ought not reach a conclusion that there has been a breach of one or more of the sub-clauses of section 18B of the Act, it should provide evidence that would allow such a conclusion to be drawn by the Tribunal. For example, evidence that work does not comply with the Building Code of Australia would establish a basis for a finding that sub section 18B(c) of the Act has been breached. Evidence of the details in which work does not comply with the contractual plans and specifications would form the basis for a finding that sub section 18B(a) of the Act has been breached. Evidence of work not being carried out in a proper and workmanlike manner would in my view involve identification of the work in question, a statement of how the expert would expect it to be carried out in in a proper and workmanlike manner and then identification of the factors which establish that the way in which the work has been carried out falls short of it being carried out in a proper and workmanlike manner. Evidence of this nature, if accepted, would form the basis for a finding that sub section 18B(a) of the Act has been breached. 6. Mr Worthington's evidence is that he considers whether an item of work is incorrect. The first point to make is that the Act does not provide a remedy for work that is 'incorrect'. However, it may be that the basis he provides for stating that work is incorrect will enable the Tribunal to decide whether one or more of the warranties implied by section 18B of the Act has been breached. If Mr Worthington's evidence does not disclose that, his evidence will not assist the owners in discharging their onus of persuading me that there has been a breach of one or more of the statutory warranties contained in section 18B of the Act. 7. Finally, the fact the fact that Mr Worthington is of the view that work is defective because it was not done with 'due diligence' indicates so far as section 18B of the Act is concerned, that Mr Worthington has misdirected himself. If Mr Worthington meant something else when he referred to 'due diligence' that is not addressed in submissions. 8. In his report Mr Daniels resorts to an argumentative position that the defect complained of was apparent at the time of purchase. How Mr Daniels knows this is not stated. Nor is it explained how this type of an observation comes within, or is relevant to Mr Daniels expertise. The owner builder does not raise the case of Allianz v Waterhouse [2009] NSWCA 224 in his submissions which would make the condition of the premises at the time of purchase relevant. I will ignore all Mr Daniels references to defect's complained of being apparent at the time of purchase. I regard them as Mr Daniels improperly acting as an advocate for the owner builder. 9. Another issue in connection with Mr Daniel's evidence is that in a number of instances while agreeing that an item is defective, he then states that it is to be dealt with as a matter of maintenance. As I have stated in connection with M Worthington's evidence, in a case where the issue is whether there has been a breach of statutory warranties it is necessary for the expert evidence to address whether or not there has been a breach of the subject matter of one or other of the statutory warranties. In giving evidence on behalf of a party who is denying a breach of a statutory warranty, it is appropriate that Mr Daniels actually addresses the issue. To state that a defect raised by the owners should be treated as maintenance avoids concentrating on that issue and, without anything more, descends to an expert acting as an advocate. The expert ought to state whether in his opinion the matter complained of has, for example, been carried out in a good and workmanlike manner, and if so the reasons to support that conclusion. Evidence of that nature addresses the question in issue. Once that is addressed it may be appropriate to expand further to state the role of maintenance to prevent building work from deteriorating with the passage of time and normal usage. For example if there is an allegation of a failure to grout joints between tiles, as there is here, it does not address the question of whether there was a failure to carry out that particular work in a good and workmanlike manner to assert that the remedial work is a matter for maintenance. To do so is unhelpful and amounts to the expert acting as an advocate by introducing such an issue in exculpation of his client without addressing the matter in issue. 10. I will now deal with the owners' defects case. I will deal with each defect in the scott schedule in turn. The headings below are taken from the scott schedule. Inappropriate & poorly installed flashing – amount claimed $2,342.00 1. Mr Worthington states that the metal flashing has been 'inappropriately screw fixed to cement rendered brick wall and not effectively sealed'. 2. Mr Worthington has not stated the reasoning process which leads to the establishment of the matters referred to in the preceding paragraph. As stated by Anderson J in Pownall v Conlon Management Pty Ltd, supra, there must be a reasoning process that enables 'conclusions to be tested and a judgement made about the reliability of them'. In relation to this defect, that reasoning process is absent. 3. However in cross examination Mr Worthington stated that this work was not carried out in accordance with good building practice. He stated that a competent builder would have provided more than 'half a flashing'. 4. On the basis of Mr Worthington's evidence in cross examination the owners have produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this defect constitute a breach of the warranties implied by the Act. 5. The owners' claim in connection with this defect is allowed. Re-grout tiles and install flexible sealant – amount claimed $277.00 1. Mr Worthington states that the floor tiling is inappropriately sealed and that an edge junction is not sealed with a flexible silicone. 2. Mr Daniels for the owner builder concedes that some of the internal wall junctions have not been sealed with a flexible silicone. 3. There is little evidence relating to this item. The owners have not filed a statement establishing the basis Mr Worthington's evidence. 4. Given that Mr Daniels concedes that some of the internal wall junctions have not been sealed with a flexible silicone and there is mortar shedding at tile joints, albeit minor, I will accept this defect item as breach of the statutory warranties and find for the owners in the amount claimed of $277.00. Poorly Hung Door – amount claimed $65.50 1. In connection with this item, Mr Worthington states no more than 'Adjust bedroom door'. Mr Daniels states he has tested the door and found it to be hung within tolerances. 2. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 3. The owners' claim in connection with this item is rejected. Poorly installed skirting – amount claimed $1,248.00 1. In connection with this item, Mr Worthington states no more than 'Skirting poorly fixed'. 2. Mr Daniels agrees that the skirting fix is incomplete. He estimates the cost of rectification as $320.00. Otherwise, Mr Daniels raises the issues of the defect being apparent at the time of purchase and the issue of maintenance. 3. Despite the perfunctory explanation of this defect by Mr Worthington, I find that there is agreement from Mr Daniels that the item is a defect. 4. Mr Worthington has given a break-up of the amount claimed. Mr Daniels does no more than provide a figure. How it is broken up is not stated. I prefer Mr Worthington's estimate as it is detailed. 5. For the reasons expressed, I will find in the owners' favour in connection with this item in the sum of $1,248.00. Poorly finished walls – amount claimed $1,088.00 1. In connection with this item, Mr Worthington states no more than 'Walls are poorly finished'. 2. On its own Mr Worthington's evidence does not establish, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 3. Mr Daniels states there is only evidence of a slight series of blemishes when light strikes the wall at an oblique angle. Mr Daniels goes on to say that walls have received what he refers to as a builder's coat of paint which has a short life 'and is expected to be refreshed within four to six years of first painting'. 4. I have found that pursuant to section 3B(3)(d) of the Act, practical completion of residential building work is presumed to have occurred on 28 July 2010. On Mr Daniels own evidence, the painting was expected to have a life of between four to six years from what I assume is practical completion which I have found was 27 January 2012 or November 2011 on the owner builder's evidence. Given the defect was raised by Mr Worthington in his 16 April 2013 report, I find that the paint did not last the minimum period referred to by Mr Daniels. 5. Again, despite the perfunctory explanation of this defect by Mr Worthington, I find that there is agreement from Mr Daniels that the item is a defect. 6. As with the previous item Mr Worthington has given a break-up of the amount claimed. Mr Daniels does no more than provide a figure. How it is broken up is not stated. I prefer Mr Worthington's estimate as it is detailed. 7. For the reasons expressed, I will find in the owners' favour in connection with this item in the sum of $1,088.00. Excessive efflorescence - amount claimed $1,385.00 1. Mr Worthington's first report does no more than describe the alleged defect, for example, 'Excessive efflorescence.' In his reply report Mr Worthington states his instructions in connection with the items which make up this defect. The instructions referred to are not otherwise in evidence. 2. Mr Daniels agrees that some efflorescence is apparent. He states that in his opinion the cost of remedial work is $982.00. Despite Mr Daniels not openly admitting that the item is defective work, the effect of his evidence does precisely that. 3. Mr Worthington has given a break-up of the amount claimed. Mr Daniels does no more than provide a figure. How it is broken up is not stated. I prefer Mr Worthington's estimate as it is detailed. 4. For the reasons expressed, I will find in the owners' favour in connection with this item in the sum of $1,385.00. Unsealed tiles - amount claimed $1,812.00 1. Mr Worthington does not refer to this item in his reports, except that he gives a break up of costs in relation to the item. Mr Daniels states that there is no evidence that the tiles were not sealed. 2. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 3. The owners' claim in connection with this item is rejected. Rusting to steel - amount claimed $1,008.00 1. In connection with this item, Mr Worthington does no more than describe the defect. A photograph shows the alleged defect. Mr Daniels agrees that this item is a defect, but states that it is his view that the surface corrosion is due to impact. There is no evidence before the Tribunal which supports a finding of corrosion caused by impact damage. I reject Mr Daniels' opinion of impact damage as being unsupported by evidence. 2. I find on the evidence of the experts that it is agreed that this item represents defective work. 3. Mr Worthington has given a break-up of the amount claimed. Mr Daniels does no more than provide a figure. How it is broken up is not stated. I prefer Mr Worthington's estimate as it is detailed. 4. For the reasons expressed, I will find in the owners' favour in connection with this item in the sum of $1,008.00. Repaint rusting steel - amount claimed $938.00 1. I find in the owners favour in connection with this item which is to repaint the steel after rectification work has been carried out. 2. I will find in the owners' favour in the sum of $938.00 which figure is taken from Mr Worthington's break up in his first report. Metal border holds water - amount claimed $624.00 1. In connection with this item, Mr Worthington does no more than say the metal edge does not allow water to run off the balcony. Be that as it may, Mr Worthington does not provide any reasoning to support his conclusion that something is amiss. 2. Mr Daniels does not agree that this item is a defect. 3. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is rejected. Inappropriate edging - amount claimed $321.00 1. In connection with this item, Mr Worthington does no more than say 'Install brick edging to replace treated pine timber to paving under meter board.' 2. Mr Daniels does not agree that this item is a defect. 3. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is rejected. Inappropriately finished steps - amount claimed $554.00 1. In connection with this item, Mr Worthington does no more than say 'Finish off steps to Western side of residence at driveway.' In his evidence in chief, Mr Worthington states that there is an issue with compliance with the Building Code of Australia (BCA) and the risers and treads being equal. Mr Worthington did not give evidence of measuring the risers and treads. In my view this evidence in chief falls short of establishing a breach of the BCA. 2. Mr Daniels does not agree that this item is a defect. 3. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is rejected. Stair tread does not match other treads – amount claimed$1,108.00 1. In connection with this item, Mr Worthington does no more than say 'Finish off bottom tread to rear steps.' 2. Mr Daniels does not agree that this item is a defect. 3. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of one or more of the warranties implied by section 18B of the Act. 4. The owners' claim in connection with this item is rejected. No shower screen installed - $1,000.00 1. In connection with this item, Mr Worthington does no more than say 'No shower screen has been installed and water ponds around Pan.' Nothing further is stated as to why this amounts to defective work. In his evidence in chief Mr Worthington states that there has been a breach of the BCA. He provides no further evidence of the provisions of the BCA that have been breached or the basis of the breach. In my view this evidence in chief falls short of establishing a breach of the BCA. 2. Mr Daniels states that he agrees that there was no shower recess. He does not agree that this item constitutes defective work. 3. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is rejected. Steel beams uncoated & rusting – amount claimed $2,720.00 1. In connection with this item, Mr Worthington does no more than say 'Steel support beams have not been painted and are rusting.' This area is stated by Mr Worthington to be on the ground floor. Nothing further is stated as to why this amounts to defective work. 2. Mr Daniels does not agree that this is defective work. He states that the steel beams did not form part of the work carried out by the owner builder and are a matter for maintenance. The owner builder in his statement which was exhibit 4 states that his scope of work did not include the basement structure including the ground floor slab. 3. Mr Worthington's reply report states his instructions regarding the owners' beliefs about this issue. I do not find this hearsay material to be of assistance to me. I have not taken it into account. 4. The owners have not established that the work complained of was part of the work carried out by the owner builder and therefore subject to the warranties contained in section 18B of the Act. Nor have they produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 5. The owners' claim in connection with this item is rejected. Walls are finished in styrene which is damaged and inappropriate as a finished material – amount claimed $21,780.00 1. This item is not contained in the Scott schedule. However it is contained in Mr Worthington's report. Mr Worthington states in connection with this item 'Walls are finished in styrene which is damaged in many places and inappropriate as a finished material.' 2. Mr Daniels deals with this item in his report. He states that the work was part of the pre-existing building. 3. The owner builder in paragraph 5(b) of his affidavit states that the concrete structure and the basement below was existing and completed. At paragraph 9 of his affidavit the owner builder states that the work he carried out did not include the basement structure. His evidence is un-contradicted. 4. The photographs to Mr Worthington's report indicate that the areas of the residence referred to were in the basement. 5. In connection with this item, I find on the evidence that the owner builder did not carry out the work that this item relates to. As a result the work does not fall within section 18C of the Act. That section only relates to the building work that the owner builder did on the land. 6. As a result of the reasons above, this item of the owners' claim is dismissed. Aluminium nosing not securely fixed – amount claimed $200.00 1. I have formed the view on the evidence of the experts that this item is agreed, despite Mr Daniels stating that there is no evidence that the failure was caused by the owner builder. Mr Worthington states that the aluminium nosing was not securely fixed. The owner builder would in my view have been responsible for securely fixing the nosing to begin with. 2. I will find in the owners favour in connection with this item in the sum of $200.00. Drummy tile – amount claimed $50.00 1. This item and the amount claimed has been agreed as a defect by Mr Daniels. 2. I will therefore find in the owners favour in connection with this item. Cracked tile – amount claimed $50.00 1. The owner builder's evidence is that he did not recall the cracked tile at the time of sale. However that is not the issue. The issue is whether the tile has become cracked by reason of a breach of the statutory warranties. 2. This item and the amount claimed has been agreed as a defect by Mr Daniels. 3. I will therefore find in the owners favour in connection with this item. No bottom tread installed – amount claimed $1,108.00 1. This item relates to the front entry steps of the residence 2. The owner builder's un-contradicted evidence is that the residence or 'Property' as he refers to it in his affidavit did not include steps in this area. This leads to the inference that the defect complained of did not form part of the owner builder works. 3. The owners have not established that the work complained of was part of the work carried out by the owner builder and therefore subject to the warranties contained in section 18B of the Act. 4. For the reason stated in the preceding paragraph, the owners' claim in connection with this item is rejected. Tiling not fully grouted – amount claimed $163.50 1. In connection with this item, Mr Worthington states that 'Tiling has not been fully grouted with flexible joint at junction with walls and steel (red) beam'. In his evidence in chief Mr Worthington stated a lack of grouting can allow water to penetrate and the lack of sealant also allows water ingress. 2. Mr Daniels does not agree that this item constitutes defective work. 3. I accept the owners' evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is allowed. Poorly finished junction of beam and wall – amount claimed $624.00 1. In connection with this item Mr Worthington states steel beams have not been finished in a tradesmanlike manner at the junction with walls. Details or reasoning to make good the conclusion that here has been un – tradesmanlike work are not provided by Mr Worthington. 2. Mr Daniels does not agree that this item constitutes defective work. 3. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is rejected. Loose tread – amount claimed $151.00 1. In connection with this item Mr Worthington states no more than 'Secure top sandstone tread.' In his reply report, Mr Worthington states that the tread should be secure. 2. Mr Daniels does not agree that this item constitutes defective work. 3. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is rejected. Metal Window angle flashing not installed – amount claimed $312.00 1. In connection with this item Mr Worthington states 'Flashing to windows has not been correctly finished.' Details or reasoning to make good the assertion of incorrect installation or finishing have not been provided by Mr Worthington. 2. Mr Daniels does not agree that this item constitutes defective work. 3. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is rejected. Holes in wall – amount claimed $131.00 1. This item relates to holes in a wall adjacent to a downpipe. 2. How or why these holes appeared is not addressed in the evidence. 3. Mr Worthington states that the holes should be made good at a cost which he nominates. His evidence does not persuade me that there has been a breach of section 18B of the Act by the owner builder for which the owner builder should be found liable in damages. 4. Mr Worthington's evidence only persuades me that there are, in fact, what appear to be drill holes in the wall. 5. The owners' claim in connection with this item is rejected. Control joints inappropriately finished – amount claimed $2,396.00 1. Mr Worthington states that control joints are inappropriately finished in that they are too wide. He states that they should be filled with a matching flexible sealant. 2. Mr Daniels' evidence was that he does not agree that the joints were defective. 3. Mr Worthington's evidence does not persuade me that there has been a breach of section 18B of the Act by the owner builder for which the owner builder should be found liable in damages. As a result the owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 4. The owners' claim in connection with this item is rejected. Poor finish to base of wall – amount claimed $272.00 1. In connection with this item Mr Worthington states that he base of the external wall is inappropriately finished at the base of the dining room. He has attached a photograph to his report which demonstrates his complaint. 2. Me Daniels states that the base of the wall has been exposed due to landscaping carried out by persons other than the owner builder. The owner builder's evidence was that the landscaping has changed since the time when he sold the residence. 3. Having regard to the photographic evidence attached to Mr Worthington's report, the matter complained of goes beyond landscaping. 4. I accept Mr Worthington's evidence in connection with this item. I will find in the owners' favour in the sum of $272.00. Poor finish to the head of the power board – amount claimed $181.00 1. The experts are in agreement that this item is a defect. I have not taken Mr Daniels' evidence about the defect being apparent at the time of purchase into account. 2. I will find in the owners' favour in the sum of $181.00. Poor finish to face of wall – amount claimed $272.00 1. In connection with this item Mr Worthington states no more than 'Make good to face of wall at front path'. 2. The owner builder in his evidence states that the landscaping has changed since the time when he sold the residence. I accept his un-contradicted evidence in connection with this subject. 3. In reply Mr Worthington states his instructions that there has been no change to the state of landscaping which was performed by the owner builder. I do not accept this hearsay evidence. 4. Mr Daniels does not agree that this work constitutes a defect. 5. Mr Worthington's evidence does not persuade me that there has been a breach of section 18B of the Act by the owner builder for which the owner builder should be found liable in damages. As a result the owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 6. The owners' claim in connection with this item is rejected. Poor finish to corner – amount claimed $504.00 1. In connection with this item Mr Worthington states that there has been poor painting and finishing to an angled corner at the front of the residence. In his evidence in chief Mr Worthington stated that the damage could be impact damage and otherwise stated that work was not finished properly. 2. Mr Daniels acknowledges that there is damage to this work, but states that it is impact damage and presents as wear and tear. 3. Again Mr Worthington's evidence is in the nature of a conclusion. There is no supporting reasoning to establish that the building work referred to has breached one or more of the warranties implied by section 18B of the Act. 4. As a result of my reasons in the preceding paragraph. I find that the owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 5. This item of the owners' claim is rejected. Crack to retaining wall – amount claimed $136.00 1. In connection with this item Mr Worthington states that there is a crack in a north facing wall on the western side of the residence. 2. He has not measured the crack to ascertain whether it is a defect, or whether it is not wide enough to be classified as a defect. The evidence on this item is not sufficient. 3. Mr Daniels does not agree that this item is a defect. 4. The owners have not produced evidence which establishes, on the balance of probabilities, that the matters complained of in connection with this item constitute a breach of the warranties implied by the Act. 5. This item of the owners' claim is rejected. Faulty wiring – amount claimed $816.00 1. In connection with this item Mr Worthington states no more than globes have blown and lights flicker. 2. The owners have sought to supplement their case after the close of evidence on 3 June 2014 by the production of a report, for the first time, on 8 July 2014 from Argo Electric Pty Ltd. I will not take this report into account. It was produced without an order from the Tribunal authorising it. To accept its contents would be to cause the owner builder procedural unfairness as he will have been denied the opportunity to call evidence to rebut its contents. 3. Mr Daniels does not agree that there has been defective work as alleged under this heading. 4. There is no evidence at all to support this item. 5. The owners' claim in connection with this item is rejected. Incorrectly located Electrical Turret junction – amount claimed $3,000.00 1. The complaint regarding this item is that it is located in the wrong position. Namely, inside the fence line and it is not accessible from the street. 2. Mr Daniels does not agree that this work is defective. 3. Mr Worthington has failed to make out a basis for this item of claim. He has supplied no information or reasoning to form the basis for a finding that any one of the warranties in section 18B of the Act have or may have been breached. In particular Mr Worthington was unable to give evidence of any regulatory requirement for the Electrical Turret junction to be accessed outside of the residence. 4. This item of claim is dismissed. Exhaust fan faulty 1. The amount claimed for this item is included in the item Faulty wiring – amount claimed $816.00, which has been rejected. 2. As this item of claim has no independent quantification I will not deal with it as effectively there is no amount claimed for it. Unrepairable Zip hot water heater – amount claimed $3,940.00 1. This item of claim relates to zip hot water heater that formed part of the residence acquired by the owners. 2. The owner builder's evidence was that the hot water system was second hand. 3. The only evidence that this hot water system is not performing adequately arises out of Mr Worthington stating what his instructions are. There is no evidence of him having carried out an independent examination of the hot water system. 4. The owners have not filed any evidence in these proceedings. They seek to put their evidence where relevant into evidence through Mr Worthington's report. I do not accept this method of putting hearsay material into evidence, despite the fact that I am not bound by the rules of evidence. To accept this evidence by way of Mr Worthington's report would shield the owners from cross examination. 5. I have decided to reject the hearsay aspects of Mr Worthington's report in connection with this item. 6. However at paragraph 16.3 of his statement the owner builder refers to a conversation with one of the owners where he was informed that the Zip hot water unit not working. In paragraph 15 of his statement the owner builder responded to various paragraphs of Mr Worthington's report. He states in connection with the Zip Hot water Heater that the hot water system was a second hand hot water system. 7. Sub section 18B(b) of the Act provides for: '(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,' 1. The owner builder's own evidence has in my view established a breach of this warranty in that the Zip hot water unit was in breach of the sub-section, second hand. 2. As a result of this admitted breach, I find for the owners in the amount claimed of $3,940.00 being for the replacement of the failed second hand Zip hot water unit. Laundry door and jamb – amount claimed $161.00 1. In connection with this item Mr Worthington states that the external door of the laundry is poorly painted and the architrave is badly scratched. 2. Mr Daniels does not agree that this item constitutes defective work. He raises issues such as fair wear and tear. 3. As regards the scratching of the door, the owner builder states that when he sold the residence the scratches complained of did not exist. His evidence is un-contradicted. In that regard, I do not accept the hearsay evidence going to this item contained in Mr Worthington's reply report for the reasons given in connection with the above item. 4. The owners have not tendered any evidence to establish that the architrave of the external door of the laundry was badly scratched at the time that they purchased the residence or that the door has been painted in breach of the warranties implied by the Act. This item of claim is dismissed. Holes in study wall – amount claimed $100.00 1. In connection with this item Mr Worthington states no more than 'Holes in wall have not been patched'. Mr Worthington's evidence does not establish how or when the holes formed or that there has been a breach of section 18B of the Act. 2. This item of the owners claim has not been established and is dismissed. Water leaking to basement 1. In connection with this item Mr Worthington states no more than 'Water is leaking into the Storage area.' 2. The amount claimed in connection with this item is included in the amount claimed under the heading Walls are finished in styrene, which is dealt with above. 3. The owners' evidence in connection with this item is inadequate to describe the defect let alone to establish on the balance of probabilities that the matters that they complain of have arisen as a result of the owner builder's breach of one or other of the warranties implied by section 18B of the Act. 4. This item of the owners claim has not been established and is dismissed. Overhead and Profit 1. Mr Worthington has stated that overhead should be 15% and profit 30%. Mr Daniels states there should be an allowance for 25% builder's margin. Given that there are not a large number of defective work items found in the owners' favour, the remedial works will not, in my view, be significant requiring a large overhead cost. I prefer Mr Daniel's 25% builder's margin to Mr Worthington's 45% for overhead and profit. 2. The items of claim where the owners have been successful are compiled in the table below. Description of Defect Amount found in owners' favour 1. Inappropriate & poorly installed flashing $ 2,342.00 2. Re-grout tiles and install flexible sealant $ 277.00 3. Poorly installed skirting $ 1,248.00 4. Poorly finished walls $ 1,088.00 5. Excessive efflorescence $ 1,385.00 6. Rusting to steel $ 1,008.00 7. Repaint rusting steel $ 938.00 8. Aluminium nosing not securely fixed $ 200.00 9. Drummy tile $ 50.00 10. Cracked tile $ 50.00 11. Tiling not fully grouted $ 163.50 12. Poor finish to base of wall $ 272.00 13. Poor finish to the head of the power board $ 181.00 14. Unrepairable Zip hot water heater $ 3,940.00 Total $13,142.50 Builder's margin 25% $ 3,285.62 Total $16,428.12 GST 10% $ 1,642.81 Final Total $18,070.93 1. The owners will for the reasons stated above be entitled to an order in their favour that the owner builder must pay them the sum of $18,070.93 immediately. COSTS 1. Either party is at liberty to make a costs application in these proceedings. 2. Any costs application pursuant to section 60 of the Civil and Administrative Tribunal Act 2013 or rule 38 of the Civil and Administrative Tribunal Rules 2014 must be lodged in the Tribunal and served on the costs respondent within 21 days of the date of this order either attaching or referring to the documents relied upon in support of the application. 3. The costs respondent will have 21 days after the date it receives the costs application referred to above, to lodge in the Tribunal and serve on the costs applicant its submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon. 4. The cost applicant will have 14 days after the date it receives the cost respondent's submissions to lodge in the Tribunal and serve on the costs respondent its submissions, if any, in reply, such submissions either attaching or referring to the documents relied upon. 5. The Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal D Goldstein Senior Member Civil and Administrative Tribunal of New South Wales 14 October 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 Amendments 02 February 2015 - MNC number reused for this decision 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: 02 February 2015