Supreme Court New South Wales Medium Neutral Citation: Chan v Acres (No 2) [2016] NSWSC 557 Hearing dates: On the papers Date of orders: 06 May 2016 Decision date: 06 May 2016 Jurisdiction: Equity - Technology and Construction List Before: McDougall J Decision: Two paragraphs of earlier reasons withdrawn and corrected. Parties to submit draft orders to give effect to these and (as corrected) earlier reasons. Catchwords: PROCEDURE – application for correction to earlier reasons pursuant to UCPR r 36.17 – rule does not apply – discretion by the Court to withdraw reasons for the purpose of correction – correction of earlier reasons Legislation Cited: Uniform Civil Procedure Rules 2005 Category: Procedural and other rulings Parties: Rebecca Chan (First Plaintiff) Warren Cox (Second Plaintiff) Robert Acres (First Defendant) Alpha Building Services Pty Ltd (Second Defendant) Mitchell Howes Civil & Structural Engineers Pty Ltd (Third Defendant) Ku-ring-gai Council (Fourth Defendant) Representation: Counsel: M Walsh (Plaintiffs) R R Acres (First Defendant) (In person) P J Bambagiotti (Fourth Defendant) Solicitors: Snelgroves (Plaintiffs) R R Acres (First Defendant) (In person) Mills Oakley (Fourth Defendant) File Number(s): 2012/48496 Judgment 1. HIS HONOUR: The plaintiffs own a residence at Wahroonga. It is severely affected by defective building work. The plaintiffs sued the defendants seeking to cover the costs of rectification. On 11 December 2015, following a 12 day hearing between 29 September and 15 October 2015, I published reasons for judgment ([2015] NSWSC 1885) holding that the plaintiffs were entitled to recover, from the second and fourth defendants only, some but not all of the damages they sought. 2. I directed the parties to seek to agree on the orders to be made following delivery of my reasons. The parties could not agree. Instead, they raised further issues for my decision. 3. Before I describe those further issues, I set out [1] to [10] of my earlier reasons, to give some content to what follows: 1 HIS HONOUR: The plaintiffs (Ms Chan and Mr Cox) own a house situated at Roland Avenue, Wahroonga. They bought it from the first defendant (Mr Acres) and his then wife in March 2010. Mr Acres' former wife played no part in these proceedings. No one took the point that she should have been, but was not, a party. I shall refer to activities in fact undertaken by Mr Acres and his then wife as though he alone had undertaken them. 2 Mr Acres, as an owner-builder, carried out significant renovations and extensions to the house in 2008 and 2009. He had obtained a development consent issued by the fourth defendant (the Council) on 22 April 2008, and a construction certificate issued by the Council on 6 May 2008. He engaged the Council as Principal Certifying Authority (PCA) for the purposes of Part 4A of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act) and Part 8 of the Environmental Planning and Assessment Regulation 2000 (NSW) (the EPA Regulation). 3 Mr Acres engaged what he called an architect, but what appears in fact to have been a design or drafting company, called Actron Design Pty Ltd (Actron). Actron is not a party to these proceedings. 4 On the advice of Actron, Mr Acres retained the third defendant (MHE) to prepare certain structural drawings, and to carry out inspections of the structural work as requested from time to time. 5 Mr Elliott of Counsel, for MHE, submitted that the retainers were each ad hoc, not all effected by the one contract. I think that this is correct, but in the event, nothing seems to turn on it. 6 Before the plaintiffs bought the house, they procured a pre-purchase inspection report from the second defendant (Alpha). The claim against Alpha has been settled. 7 Essentially, the plaintiffs' case is that, based on the pre-purchase report prepared by Alpha and other matters, they decided to buy the house knowing of some defects (relating principally to water damage to the ceiling and walls in a bedroom located in the extension that Mr Acres had constructed, at the rear, or west, of the house). There were some other problems relating to surface water, drainage and subfloor ventilation, and some cosmetic matters. However, the plaintiffs say, after they moved into the property, they discovered that there were very serious structural and other defects, particularly in the work that Mr Acres had carried out. The real issues in dispute 8 The plaintiffs sue: (1) Mr Acres, for breach of some of the statutory warranties set out in s 18B of the Home Building Act 1989 (NSW) (the HB Act), the benefit of which was extended to them by the "deemed contract" for which s 18C of that Act provides; (2) MHE, for breach of a common law duty of care said to be owed by it to them in respect of its inspections of elements of the structural works carried out by Mr Acres; and (3) the Council, for breach of a common law duty of care said to be owed by it to them in its capacity as PCA, in respect of inspections and certifications from time to time carried out and given by a Council building surveyor, and in respect of the Occupation Certificate issued by the Council, again in its capacity as PCA. 9 The defendants deny liability. Further, each argues that if he or it is liable, the others should be held responsible in whole or in part. 10 The essential issues are: (1) did either MHE or the Council owe the plaintiffs any common law duty of care in respect of the work each did under its contract with Mr Acres? (2) Did Mr Acres breach the statutory warranties, and did MHE or the Council breach any duty of care owed to the plaintiffs? (3) What work was defective, and what is the cost of rectification? (4) How should any liability be apportioned between the three active defendants? The further applications 1. The plaintiffs sought "corrections" to my earlier reasons, they said pursuant to UCPR r 36.17. In terms, that rule is irrelevant. It provides for the correction of judgments and orders, in the circumstances to which it applies. There is no relevant judgment or order to be corrected in the present case. However, it is unnecessary to say more, since it is clear beyond doubt that the Court has power, in an appropriate case, to withdraw part or all of its reasons for the purpose of correcting them. It is equally clear that the power should be exercised, where appropriate, to prevent needless appeals. 2. The first correction sought by the plaintiffs relates to their claim for the costs of relocation and alternative accommodation whilst the repair works are carried out. By oversight, I did not deal with that claim in my earlier reasons. 3. This correction was sought as between the plaintiffs and the Council. The Council accepted that I had overlooked this claim in my reasons. 4. The second, third and fourth corrections relate to [90], [91] of my earlier reasons. I set out those paragraphs: [90] Mr Acres said that some of the works that had been the subject of complaint were not works done by him as owner-builder. The works that Mr Acres said fell into this category were (by reference to the list set out above) items 12, 15 and 16. In addition, as to item 20, Mr Acres said that he did not carry out or arrange for the carrying out of any work on the existing roof or skylight. Finally, as I have noted, Mr Acres said that if there were defects in the skillion roof over the western extension, he was not responsible because that roof had sustained storm damage when a tree fell on it, and had been repaired by tradesmen retained by his insurer. [91] Those aspects of Mr Acres' evidence were not challenged. Accordingly, I accept them. It must follow that Mr Acres cannot be held liable for those defects. But he is liable for the others. 1. The plaintiffs submit that I erred in what I said at [90] because: 1. item 12 (of the version of the Scott Schedule that had been agreed between the experts, and by reference to which I dealt with the plaintiffs' claims) included two matters – rectification of external ground levels (12a), and rectification of the front patio structure (12b) – that in fact did relate to work done by Mr Acres; and 2. as to Item 20, Mr Acres' evidence did not go so far as to say that he had not been responsible for the construction of the roofing over the new entry portico that undoubtedly he did cause to be constructed. 1. Mr Acres' submissions on this application appeared to accept that [90] of my earlier reasons went too far in respect of items 12a and 12b. However, he continued to insist that he had not been responsible for any roofing, and thus that what I have said as to item 20 was correct. 2. Mr Acres then raised two applications of his own. First, he said, in respect of items 12a, 12b and (if I found against him) 20, he was entitled to be indemnified by the Council. Second, he submitted, I had erred in my treatment of the question of his liability for a "Dincel" retaining wall on or adjacent to one of the boundaries of the property. 3. As I have said, the Council accepted that I had erred in overlooking the claim against it for the costs of relocation and alternative accommodation. The Council accepted that the claim had been quantified in the amount sought by the plaintiffs. 4. However, the Council itself raised two issues. First, it referred to the settlement as between the plaintiffs and Alpha. It said that the settlement sum, $90,000.00, should be brought to account in reduction of its liability to the plaintiffs, on the basis that otherwise there would be double recovery. Second, the Council submitted (although in the course of a further directions hearing, not in the written submissions that it provided pursuant to my direction), on my findings it and Alpha were concurrent wrongdoers in respect of the same loss, and I should apportion responsibility between them. 5. Neither of those issues had been raised by the Council in the course of the 12 day hearing, and it will be seen that neither of them is reflected in my statement at [10] of my earlier reasons of the essential issues for decision. It may be noted that the Council has never submitted that I had misconceived, or failed to state all of, the issues in dispute. Costs of relocation and alternative accommodation 1. The repair works required to the plaintiffs' residence are extensive. Both for that reason and because of the risk of harm should the premises collapse in the course of repair (a possibility that cannot be discounted), it is clear that the plaintiffs will be forced to relocate themselves to alternative accommodation for the duration of the works. 2. The costs were quantified in total at $42,648.00. There was no challenge to that quantification. It follows that the plaintiffs are entitled to recover that sum also, and that it is recoverable (as the plaintiffs submit and the Council accepts) from the Council. Correction of the earlier reasons at [90], [91] Item 12a 1. The analysis of the defects proceeded by reference to a schedule prepared by the experts and annexed to their joint report. It is clear that what I said at [90] was in part incorrect, because it did not differentiate between the different components of item 12 of the schedule. 2. Item 12a, which did not relate to a structural defect, concerned external ground levels, and it related to paving at the front entry. It is correct to say, as I did at [90] of my earlier reasons, that Mr Acres gave unchallenged evidence that he had not installed the patio or made any additions or alterations to it. However, he did say that he applied top soil and turf "to the original patio area for cosmetic reasons". 3. The plaintiffs' expert, Mr Iskowicz, identified the raising of the ground level as a defect. The reasons do not matter, since they were not challenged to be. He said that as a result of this particular defect, moisture ponded at the front of the house and entered both through the sliding door threshold and into the subfloor region. He added that another consequence of this aspect of the works was to prevent the subfloor ventilation from functioning properly. 4. Mr Iskowicz costed the rectification at $12,140.00. The plaintiffs are entitled to recover 80% of that sum from Mr Acres, together with margins and GST. The 20% reduction is made in accordance with [434] of my earlier reasons. Item 12b 1. Item 12b related to the new entry portico that Mr Acres caused to be constructed. The work was defective, among other reasons because the designed foundation structure for that new portico (including its supporting columns) was not constructed. The columns sit on a pre-existing slab and their load is transferred to the driveway retaining wall. Messrs Iskowicz and Stubbs agreed that this work was defective. Plainly, it was; nor did it comply with the construction details shown on the drawings approved by the Council, and the subject of its Construction Certificate. 2. Mr Iskowicz costed the rectification work at $15,830.00. The plaintiffs are entitled to recover 80% of that sum (see, again, [434] of my earlier reasons) with margins and GST. Item 20 1. The plaintiffs also submitted that I had erred, in relation to [90] of my earlier reasons, when I said without qualification that Mr Acres was not responsible for defects in the roof. They accept that there was evidence from Mr Acres that he was not responsible for any defects in the existing roof or skylight, or in the skillion roof over the western extension. However, they submitted, there was a defect in the roof over the new entry portico which Mr Acres had caused to be constructed, and he should be held responsible for the cost of rectification of this. 2. I do not accept this aspect of the plaintiffs' submissions. The relevant passage of Mr Acres' evidence was: At no stage during my possession of the house did I arrange for the performance of work on or relating to the existing roof or skylight. 1. The plaintiffs submitted that the particular area of roofing, being that over the portico that Mr Acres constructed, did not fall within that general description. I am not sure that this is correct, in circumstances where the new roof (assuming there to have been one) must have been tiled so as to join up with, and provide continuous cover from, the existing tiled roof. In my view, if the plaintiffs wished to make this point, they should have made it by cross-examination of Mr Acres on the relevant paragraph of his statement, so that it was clear that they were treating the roof over the portico as a new roof and not one that related to the existing roof. Mr Acres' claim for indemnity 1. As I have noted, Mr Acres submitted that if he were held to be liable for these aspects of the defects (items 12a, 12b and 20), he would be entitled to contribution or indemnity from the Council. I do not agree. Those parts of the works were not part of the "critical stage" works that were the subject of any inspection. There is no evidence that the Council's inspector was required to, or that he did, inspect those works. The certificate that the Council gave was expressly based on the critical stage inspections (supposedly) undertaken. Conclusion 1. For those reasons, I withdraw [90] and [91] of my earlier reasons and in their place publish the following: [90] Mr Acres said that some of the works that had been the subject of complaint were not works done by him as owner-builder. The works that Mr Acres said fell into this category were (by reference to the list set out above) items 12 (in part), 15 and 16. In addition, as to item 20, Mr Acres said that he did not carry out or arrange for the carrying out of any work on or relating to the existing roof or skylight. Finally, as I have noted, Mr Acres said that if there were defects in the skillion roof over the western extension, he was not responsible because that roof had sustained storm damage when a tree fell on it, and had been repaired by tradesmen retained by his insurer. [91] Mr Acres' evidence as to items 15, 16 and 20 was not challenged. Accordingly, I accept it. However, Mr Acres was responsible for the consequences of items 12a and 12b. He is not liable for the other defects described at [90] above. The Dincel Wall 1. Mr Acres submitted that this wall had been discussed with the Council and MHE, and constructed in the form it was with their agreement. He submitted, further, that there was no deterioration and the wall still worked. 2. Those submissions were not supported by any evidence. They were not put to any relevant witness in cross-examination. The engineering experts agreed that the wall was unsafe, and required rectification. 3. In truth, Mr Acres appears to be seeking to reopen the hearing and to adduce further evidence. Whilst I accept the difficulties under which he labours as a self-represented litigant, I do not propose, after 12 hearing days (and the further time taken up with the issues the subject of this judgment) to permit that to occur. The Council's applications 1. As will be seen from the statement of the essential issues at [10] of my earlier reasons (set out above), neither of the further issues that the Council sought to be agitated had been raised by it during the course of the hearing. I note at this stage that, in the course of a directions hearing related to the residual disputes, I asked Mr Bambagiotti of Counsel, who appeared for the Council, to identify the passages in the transcript where either of those issues had been raised, in circumstances where the Council had not submitted that my statement of the essential issues in dispute was inaccurate or incomplete. Mr Bambagiotti did not avail himself of the opportunity thus given. 2. The direction given to the parties, to seek to agree the orders to be made following delivery of my earlier reasons, was not intended to permit any party to raise freestanding issues that had not been the subject of evidence and submissions in the course of the 12 days of hearing. I do not propose to permit the Council to raise those further issues that I have identified. I do however wish to say a little about each. 3. As to the settlement sum, the plaintiffs accept that they cannot recover more than once in respect of the same items of loss. How that works out, in a practical sense, is a matter that can be dealt with once the full extent of the defendants' liabilities (including as to costs) to the plaintiffs are known. 4. It may very well be the fact that the Council only became aware of the precise terms, and the settlement sum, at some recent time. However, there is no doubt that the Council was aware of the fact of settlement from the commencement of the hearing. Had it wished to do so, it could have ascertained the details, and raised whatever it wished to raise as a result, whilst all parties were present and represented, and (if the Council were given leave to raise the point) evidence, if necessary, could have been adduced. 5. As to the "concurrent wrongdoer" argument, the necessary factual matters were not explored at the hearing. Thus (by way of example) there is no evidence as to any overlap between the damages items for which Alpha may have been liable and those for which, in my view, the Council is liable. Nor is there any evidence that would enable a decision to be made on proportions of responsibility for any items in respect of which both might be liable. Conclusion 1. That resolves the various further issues that have been raised. 2. I direct the plaintiffs to submit to the active defendants within fourteen days of today a draft of the orders that they seek, supported by calculations showing how the judgment sums are arrived at. 3. For the avoidance of doubt, MHE is included in the expression "the active defendants". I say that because although on my findings, MHE has no liability, it does have a contingent interest in the quantification of the judgment sum, in the event that an appellate court takes a different view to mine on the issue of its liability. 4. The defendants are to respond within a further fourteen days. As I will be on leave at the conclusion of that process, the parties may approach the list judge for entry of judgment in accordance with these and my earlier reasons. In the event that there continues to be dispute as to the orders to be made, they should seek directions from the list judge to enable that dispute to be articulated so that I can deal with it upon my return. ********** 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: 06 May 2016