tyler & miller v rawson homes p.l (home building) [2005] nswcttt 153

CTTT-COMMON\REASONS\ HB\02-42025.RTF 1

Tyler & Miller v Rawson Homes P/L (Home Building) [2005] NSWCTTT 153 (8 March 2005)

CONSUMER, TRADER AND TENANCY TRIBUNAL

Home Building Division

APPLICATION NO:

HB 02/42025 APPLICANTS:

G Tyler and N Miller

RESPONDENT:

Rawson Homes Pty Ltd

APPEARANCES:

Mr. Carpenter, Solicitor for the applicants Mr. J Doyle, Solicitor for the respondent

HEARING:

25 May 2004, 26 May 2004

Final submissions filed 23 September 2004 LEGISLATION:

Home Building Act 1989

Consumer, Trader and Tenancy Tribunal Act 2001

ISSUES:

Defective works

CASES CITED:

Coshott v Fewings Joinery Pty Ltd NSW, Court of Appeal 15 July 1996 (unreported)

Oshlack v Richmond River Council (1998) 193 CLR 72 Makita (Aust) Pty Ltd v Sprowles

(2001)NSWLR 705

KEYWORDS:

Defective works; costs; cost of investigation of defects

On 25 February 2005 the following findings and orders were made:-

SUMMARY OF FINDINGS AND ORDERS

1. The Tribunal finds that the respondent is liable to pay to the applicants

the following amounts for each of the items set out below.

Agreed items (except 7.1.7.3 which amount is allowed)

7.1.6.1 Sawn joint instead of const. joint

$750.00

http://www.austlii.edu.au/cgi-bin/sign.cgi/au/cases/nsw/NSWCTTT/2005/153


7.1.6.3 Garage floor slab $700.00

7.1.7.2. Cavity weep holes, DPC $766.00

7.1.7.3 Brickwork to garage $3,520.00

7.1.9.1 Internal floor tiles $1,014.00

7.1.9.2 Internal wall tiles $670.00

7.1.9.3 External verandah tiles $440.00

7.1.10.1 Main roof $490.00

7.1.10.3 Gutters and downpipes $2,000.00

7.1.11.1 Electrical $408.00

7.1.11.3 Plumbing See 7.11.2/7.1.11.3

below

7.1.11.4 Gas heating $1,037.00

7.1.12.3 Topsoil $455.00

7.1.12.5 Ground surface adjoining walls

$200.00

7.1.13.1 Plasterboard, wall and ceiling $416.00

7.1.14.1 Painting $1,593.00

TOTAL $14,459.65

+GST $1,445.97

+ Further agreed GST $80.00

$15,985.62

Items originally not agreed GST included in the amounts:

7.1.6.5 Concrete driveway $3,109.95

7.1.7.1;

7.1.7.2 A & 7.1.7.2C

Brickwork / external face

work

$4,469.66


7.1.8.1 Windows $31,678.96

7.1.10.1 Main roof $3,250.00 (including $1,000.00 solatium)

7.1.10.2 Bullnose verandah $7,861.97

7.1.11.2 and 7.1.11.3 Drainage and plumbing

(including investigation and reports)

$5,459.62

TOTAL $59,702.87

TOTAL $75,688.49

2. The respondent is to pay to the applicants by 31 March 2005 the sum of $75,688.49.

3. The parties are to file and serve further submissions in relations to

costs within 14 days of this decision.

4. Full reasons for this decision will be given separately.

The following are full reasons for the decision.



REASONS FOR DECISION APPLICATION

On 8 October 2002 the applicants, G Tyler and N Miller, lodged an application

for an order that the respondent builder, Rawson Homes Pty Ltd, pay to them an amount of $250,000.00 as compensation for breach of statutory warranty. The applicants described their dispute with the builder as being about

defective work in the construction of their house at “…”, Orange, “all as detailed in attached inspection report on dwelling” dated 30 June 2002 by A.

Rendell and Associates Construction Consultants (4 of 4 volumes). (sic)” History of the dispute

The applicants entered into a building contract with the respondent company

on 7 January 2000. Practical completion occurred in September 2000. The respondent’s submission contains a chronology from which the following

history of the attempts at resolution of the dispute can be extracted.

After the application was filed, the then Building Conciliation Service of the Tribunal appointed an independent expert, Mr. F Adams. Mr. Adams prepared a report dated 11 December 2002 estimating the costs of

rectification work at $17,500.00. This, however, did not result in a resolution of the dispute.

On 30 July 2003, a joint expert report was filed (the “Joint Claim”). Again, this did not result in an agreement being reached between the parties. The

respondent submits that on 28 August 2003, the applicants had advised that they were not bound by the agreement reached by the experts in conclave as

formalised in the “Joint Claim” filed in the Tribunal. According to the respondent they “then proceeded to renegotiate all items in the Scott Schedule of the “Joint Claim” as if the conclave had not occurred.”

The respondent argued that the applicants were compelled to accept the

agreement as endorsed by the experts. It also submitted that there had been no explanation as to why the applicants did not accept the experts’ opinion as set out in the “Joint Claim”.

The applicants, however, submit that this represents a mistaken view about

the role of an experts’ conclave. An experts’ conclave is part of the mediation process of the Tribunal.

The applicants further submit that the conclave was able to agree on a number of issues and in only two instances where the experts had agreed did

the applicants seek to pursue a further claim over and above the amount agreed by the experts. This was in respect of the brickwork (item No. 7.1.7.1) because it was unclear from the experts’ joint conclave as to what they had

contemplated to be the extent of the work agreed. Neither of the experts was present at the case conference and for that reason (the applicants claim)



Member Halliday made certain directions on 28 August 2003 in relation to the conclave.

The other aspect of brickwork where the applicants did not accept the joint

experts’ finding was in respect of the brickwork to the garage. At the case conference on 28 August 2003, it had been indicated by the respondent that the structural engineer, Mr. J Saran, had approved the method of rectification

of the brickwork to the garage in accordance with a sketch plan. The sketch plan had apparently been supplied by Mr. Tyrrell to Mr. Rendell during the

conclave. Neither Mr. Tyrrell nor Mr. Rendell was present at the case conference and no one present at the case conference had a copy of the sketch plan. It is submitted by the applicants that the sketch had never been

certified by the engineer and that indeed Mr. Saran was unwilling to certify such a sketch. This was confirmed by his new sketch submitted with a

covering letter of the same date, 4 March 2004. The applicants’ claim is that this sketch differs significantly from the original sketch supplied by Mr. Tyrell during the conclave.

It is submitted by the applicants that it is misleading for the respondent to

state that the applicants then proceeded to renegotiate all items in the Scott Schedule as if the conclave had not occurred. Apart from the two items regarding brickwork, the only items which remained open to renegotiation

were the items where the experts had failed to conclude an agreement or where their findings were conditional upon further investigations.

In summary it would be fair to say that the processes designed to define issues and narrow the areas of dispute between the parties were time

consuming and had limited results.

When the matter came to be heard on 26 and 27 May 2004, the applicants’ claims had been crystallised into a claim for rectification costs totalling $76,233.73.

While there is agreement about many of the items previously in dispute on the

issue of liability and, in many cases, quantum, what characterises this dispute (because proceedings have been prolonged) is that legal costs are possibly the major item in contention. These have been estimated at over $100,000.00

by the applicants’ solicitors. The applicants in fact submit that the particular issue of costs should be determined at the same time as the remaining

substantive issues in dispute. The reasonableness of the conduct of the parties in the course of proceedings

in incurring these costs (or causing costs to be incurred) is therefore an issue. However, I shall return to this later. The substantive issues for determination

will be considered first.

Hearing and Evidence



In arriving at my findings, I have had regard to the oral evidence given at the hearings on 26 and 27 May 2004 and all the documentary evidence. I should

indicate that, because of a malfunction of the recording equipment, there was no sound recording (and hence no transcript). I have relied on the parties’

submissions to guide me to the issues in contention, and my own notes and recollection of the proceedings.

A view was conducted on 27 May 2004. The expert evidence referred to in this decision includes the following:

The joint experts’ report , 30 July 2003; Rendell and Associates

(4 volumes) (Mr. A Rendell, 30 June 2002); A Rendell and Associates

Supplementary Report (Mr. Rendell), 17 March 2004; Colin, Mott, McDonald report (Mr. Lalas), 8 March 2004 (together with

supplementary reports); D J Dillon Report, 23 December 2003 (Mr. Dillon); Barnson Pty Ltd (Structural Engineers); J Tyrell (Building Consultant); A Gramlick; Baker Saran Pty Ltd (Structural Engineer)

(Mr. J. Saran); Draincam, 20 June 2003 (Mr. J. Howarth); Mr. T. Kelly Report, 2 March 2003.

As to general matters regarding the approach which should be taken to the evidence, I am not satisfied that any finding as to a higher standard of quality

of construction which, the applicants submit, they were entitled to expect (given the contractual and pre-contractual arrangements), would lead me to

different conclusions on the issues which were left for determination. I also have had regard to the respondent’s submission on the application of

Makita (Australia) Pty Limited v Sprowles to the expert evidence, particularly that of Mr. Rendell. In particular, I am satisfied that the expert opinion

expressed by Mr. Rendell in relation to the items considered was based on factual observations and the reasoning for the conclusions reached was disclosed.

On the substantive items which were left for my determination, I did not find

that the expert evidence which was relied upon, offended from Makita. Agreed items

In the submissions, the applicants list the following items as being agreed:

7.1.6.1 Sawn joint instead of const. joint

$750.00

7.1.6.3 Garage flow slab $700.00

7.1.7.2. Cavity weep holes, DPC $766.00


7.1.9.1 Internal flow tiles $1,014.00

7.1.9.2 Internal wall tiles $670.00

7.1.9.3 External verandah tiles $440.00

7.1.10.1 Main roof $490.00

7.1.10.3 Gutters and downpipes $2,000.00



7.1.11.1 Electrical $408.00

7.1.11.3 Plumbing $1,800.00

7.1.11.4 Gas heating $1,037.00

7.1.12.3 Topsoil $455.00

7.1.12.5 Ground surface adjoining walls

$200.00

7.1.13.1 Plasterboard, wall and ceiling $416.00

7.1.14.1 Painting $1,593.00

TOTAL $16,259.65

+GST $1,625.00

+ Further agreed GST $80.00

$17,965.62

Brickwork to garage (7.1.7.3)

The respondent submits that the item 7.1.7.3 in the amount of $3,520.65, excluding GST for rectification cost of brick work to the garage, has not been

agreed to by the respondent. The respondent contends that on 28 August 2003, as a result of the case conference, the agreed amount was $436.00.

The applicants had required further written certification of the sketch by Mr. Tyrrell for the rectification works. The applicants had not been satisfied until 12 March 2004 when the certification was reissued by Baker Saran (the

structural engineer) in the form requested.

This has been referred to earlier. The applicants submit that the structural engineer, Baker Saran, never certified the Tyrrell sketch. It ultimately certified a substantially different method of rectification which had never been costed.

Further, it had been the understanding of the applicants that Mr. Rawson (director of the respondent) had indicated that this item had been agreed and

that the Barnson method of rectification was the most cost effective solution (costed at $3,872.71).

In the end result, taking into account all of the evidence, I agree with the submission by the applicants that the subsequent, amended sketch provided

by the engineer on 4 March 2004 makes the sum of $436.00 relating to the Tyrrell sketch, irrelevant. I accept that the rectification proposal by Baker Saran was never costed. I agree that the method of rectification and the

costing of it contained on page 15 of Rendell’s Supplementary Report is the only evidence as to the cost of rectification before the Tribunal. I therefore

accept it. Drainage /Plumbing (7.1.11.2 and 7.1.11.3)

The submissions in respect of these items were somewhat confusing, particularly those of the applicants.

According to the respondent, the applicants’ original claim was shown as being $4,200.00 exclusive of GST and included a total replacement in

accordance with Mr. Rendell’s Report. It had been agreed between the parties that the respondent was to be reimbursed the reasonable cost of repair in

accordance with a tax invoice in the amount of $1,445.63. However, the



experts had not reached agreement regarding rectification of odour arising from floor wastes. Mr. Tyrrell, the respondent’s expert believed that the odour

was negligible and suggested that it could be rectified “if floor wastes traps were kept fully charged.”

The parties have agreed to an amount of $3,165.00 in respect of this item. This includes Mr. Dillon’s repairs costing $575.00, the T Kelly inspection and

reports at $790.00 and the reimbursement for repairs (by T. Kelly) at $1,800.00. In addition the respondent agrees to pay $470.00 in relation to

plumbing (T Kelly). It was submitted by the respondent that the remainder claimed by the applicants should be considered on the question of costs.

The applicants claim as a specific cost the sum of $2,037.50 in relation to investigation of this issue as well as reports.

In view of the confusion between these two items and costs, it is my view that at least in part costs such as Draincam and the invasive inspection to

determine the cause of the problem, could be viewed as rectification costs. I propose to consider the applicants’ claim for investigation and reports in

relation to this item here rather than leaving it to be considered on the question of costs. This includes the Draincam Report, the cost of opening up the brickwork and repairing it afterwards, and the T Kelly inspection. In my

view the money spent by the applicants, in the light of the dispute about the issue, was justified. While some of these items might properly be viewed as

costs, I believe that a total amount should be awarded in this regard. I am satisfied that the costs incurred are reasonable. In summary I allow the following as claimed by the applicants:

$1,800.00 + $335.00 (T Kelly repairs water hammer arrester, loose

water spout, secure water pump) $790.00 (T Kelly repair of plumbing under bath and spa) $575.00 (Dillon opening up of brickwork)

$981.75 (Draincam report plus copy to respondent ($96.00) $385.00 (T Kelly inspection) The concrete driveway

The chief concern in relation to this item, from the applicants’ point of view, is that the driveway is the only all weather access to the residence from the

street. The lack of cross fall and the fact that what cross fall there is, lies in the opposite direction of the natural slope of the block, would result in the pooling of water which during winter months becomes a hazard. Mr. Rendell’s

Report of 30 June 2002 as well as Mr. Adams’ Report dated 11 December 2002, provide evidence of this.

The respondent contends that on 5 September 2000, the parties agreed to ‘amend the contract’ by providing a credit of $800.00, for the imperfections in

the driveway. Accordingly the respondent submits, the applicants are estopped from claiming for any defects regarding the driveway.



The applicants dispute this and maintain that there was no agreement by the applicants to accept $800.00 in final satisfaction of the issue.

On the evidence before me and having regard to the correspondence

between the parties, I am not satisfied that there had been a variation to the contract as claimed by the respondent nor that an estoppel has been established. In particular I am satisfied the applicants had not represented to

the respondent that the $800.00 amount would absolve the respondent from liability in respect of the defects in the driveway.

In the Rendell report it was originally claimed that the most practical and expedient method of rectifying the defects in the driveway was to “firstly

demolish and remove the site from side concrete; regrade and prepare sub grade etc and re-pour concrete to driveway strictly in accordance with contract

conditions and specifications ensuring correct falls, cross fall dimensions and finish.”

Mr. Tyrrell in his report stated that although there were some areas of uneven finish and edging and surface the workmanship was considered to be within

acceptable grade quality. The respondent submits that the “Joint Claim” indicates that there was an

agreement to remove and replace “at least 1 bay or 2X ½ bays the driveway and regrade fall new south west sump connected to storm water drainage”.

Alternatively prepare existing surface and apply granolithic topping graded to cross falls for total cost of $1,340.00 exclusive of GST.”

The applicants maintain that this does not accurately represent what the “Joint Claim” in fact states. The “Joint Claim” indicates that there was no agreement

in relation to the driveway. The Tribunal member had listed two alternatives neither of which were completed or endorsed finally by the experts.

Mr. Rendell’s solution ultimately was to apply granolithic topping to the surface (all to correct crossfalls) as well as the installation of a grated catchdrain along

the eastern edge for a total cost of $4,867.56. I am satisfied that the applicants have established the importance of

preventing the pooling of water on the driveway, it being the only all weather access to the residence. I accept that this is of particular importance given

the cooler winters in Orange. On balance, I accept that the preparation of the existing surface and the

application of granolithic topping would provide a reasonable solution to the defects in the driveway. I accept the respondent’s submission however, that

the applicants should have the responsibility of landscaping the garden to allow more effective discharge of surface water. I am not satisfied that I should allow the additional costs of the grated drain proposed by Mr. Rendell.

I do, however, allow his costing for the preparation of the existing surface and the application of the granolithic topping including the extra amounts for the

falls and crossfalls.



External Brickwork (7.1.7.1)

On 28 August 2003, the Tribunal noted that the experts of both the applicants

and respondent were to confer in respect of the brickwork with particular attention to be given to:

I. Brickwork above both sliding doors and the mail room II. Brickwork to the left hand side of front door

III. Wide prp joints around the house IV. Brickwork around front expansion joint V. Residual mortar in wall cavity

At the conclave the experts had agreed on a costing of $2,500.00. However,

in respect of some of the additional work outlined at the directions hearing of 28 August 2003, there was an offer of an additional $1,000.00 from the respondent. The applicants contend that the expert report of D Dillon on the

costing of the brickwork rectification should be accepted. This amounted to $4,063.33, $4,469.66 with GST. The respondent contends that on 1 March

2004, so far as the GST on the additional $1,000.00 was concerned, there had been an agreement that this was to be borne equally by the parties.

In the end result, I accept the submission that there had been no agreement reached between the parties in relation to the quantum of this item. I also

accept that the only evidence as to the costs of repairs in this regard is the report of Mr. Dillon which is $4,469.66, GST inclusive. I allow this amount. The Roof

The applicants contend that the complaints in relation to the workmanship in the construction of the roof dated back to 29 February 2000. These had been the subject of numerous letters from the applicants to the respondent. While

some items were dealt with by the respondent, other items remained, as shown in the Rendell Report of 30 June 2002. The applicants’ submission

explains that, in addition to what was visible, Mr. Rendell was concerned about a number of matters which led to his conclusion at that time, that the way to rectify all the items required the removal and replacement of the whole

roof. Some of these concerns were subsequently satisfied by certification by Baker Saran (the engineer) in relation to the spacing of the batons and by

agreement between the experts at the conclave as to further rectification work.

Issues which were not resolved include: the swarf stains and further scratches which had been over sprayed with the pressure touch up paint. The solution

proposed by the Rendell supplementary report is based on the quotation obtained by S Cornford (a tradesman approved by BHP Lysaght in relation to the painting of Colorbond products). The complete steam cleaning and

overpainting of the roof with a total cost of $7,193.50 GST exclusive, is recommended by Mr. Cornford and Mr. Rendell. According to the applicants,

while this solution will not restore the standard BHP warranty, Mr. Cornford in



his quotation provides the applicants with a continuing guarantee of workmanship on the finished product. Hence this will result in “a secure, long

lasting and aesthetically pleasing roof akin to what they could have reasonably expected on completion of their new residence”.

A question which the applicants pre-empt is why should they enjoy a new for old replacement. They point to the fact that they have been trying to have the

roof satisfactorily rectified since prior to completion of the residence. According to the applicants, even if all the rectification work as recommended

in the Rendell supplementary report is completed, the applicants will still not have the roof they originally contracted for. It is argued by the applicants that the agreement before the two experts is subject to the roof sheet

manufacturer providing (a) a warranty on matching colour coating; and (b) a confirmation that the original warranty remains unaffected.

Mr. Rendell in his report dated 17 March 2004 comments that it had been confirmed that there was no original warranty provided, nor would one have

been provided due to previously documented defects in the roof, and that the manufacturer does not provide any warranty on matching colour coating, even

when such is applied strictly in accordance with their technical bulletin TB-2 (Overpainting and restoration of colorbond pre painted steel sheet). Mr. Rendell also comments that, while many of the defects may not be obvious

from ground level, the numerous areas where touch up pressure pack paint has been used, are not only visible from ground level but can be seen from

some distance away. If there was a proposed sale on the property, a pre purchase inspection would reveal the defects and would result in diminution of the true market value of the building, according to Mr. Rendell. The applicants

contend that, as the respondent has not provided any additional evidence in response to the final recommendation of Mr. Rendell, the costing which

should be allowed is, as recommended by him, $7,703.50. The respondent maintains that no evidence could be found at the site

inspection of the swarf stains continuing to “eat into and cause rusting and deterioration to the roof sheets and particularly in the valleys of existing roof

and that the roof had been certified as being structurally adequate.” The rectification method in the “Joint Claim” “should be enforced” and an amount of $2,250.00 should be allowed in respect of this item, according to the

respondent.

While I accept that cleaning and painting of the roof are justified, I am not satisfied that the more expensive process and costing by Mr. Cornford has been shown to be necessary. Neither this nor the agreed amount in the “Joint

Claim” will result in the original BHP warranty remaining unaffected. While there may be no guarantee that there would be matching colour coating, in my

view the approach set out in the ‘Joint Report’ is a reasonable one. While perfection may not be achieved aesthetically by this process, I am not satisfied that it has been established that the more expensive process

proposed by Mr. Cornford is the one that should be accepted. I am of the view that the claim of possible diminution of value in the event of sale is

speculative only. Give that perfection would not be achieved and that there



will not be compliance with what was provided for in the contract, I propose to allow the sum of $1,000.00 by way of solatium to compensate for the

disappointment of not setting exactly what the applicants were entitled to expect. (Coshott v Fewing Joinery Pty Ltd NSW Court of Appeal, 15 July 1996

(unreported)). Bullnose Verandah (7.1.10.2)

In the Rendell report the original recommendation was the removal and replacement of the bullnose verandah. This remains the position of Mr. Rendell in his supplementary report dated 17 March 2004. In answer to what I

perceive to be the respondent’s expert’s comments with regard to this item, (that is, that “a roof pitch of 2 degrees is acceptable and there is no evidence

of leaking and if that there was such leaking would be of no consequence”), Mr. Rendell states that the minimum recommended roof pitch is 5 degrees. Furthermore, there was now documented evidence that the roof was leaking.

Such leaking would only be of no consequence in instances where there were no soffit linings, and no concealed timber frameworks supporting the lining.

Apart from water leaks staining or discolouring the paint finish of the fibre cement soffit lining, it was not considered good industry practice to allow concealed timber framing members to be subjected to moisture and

dampness.

It is pointed out that the Barnson Pty Ltd (Consulting Engineers) Report (10 March 2004) states that the pitch is less than 5 degrees. The effect of this will be roof water leakage through side laps. This will cause damage to the fibre

cement ceiling sheeting, paintwork and supporting timbers. A section of the fibre cement soffit lining has been removed and this confirms that a structural

framing member adjacent to the walls above the front entry door, had been omitted. The verandah beam is “pulling away” from the main external wall and otherwise the soffit is pulling away from the brickwork. The rectification

details provided by Baker Saran have not been complied with and the span of the roof sheet exceeds the maximum permissible to comply with AS 1170.

The bullnose roof sheeting has been screw fixed into the metal fascia of the main roof from below. As this screw fixing is totally concealed upon installation of the soffit lining, this means that none of these bullnose roof

sheets can be removed for access for electrical maintenance, repairs or replacement without first removing the fibre cement soffit lining.

Mr. Rendell estimates a total of $7,861.97 for replacement of the bullnose verandah roof. It is submitted by the applicants that the only evidence in

relation to the bullnose adduced on behalf of the respondent remains the Tyrrell Report of April 2003.

I have noted the submissions made on behalf of the respondent, that Mr. Dillon in his report does not appear to be critical of the structural support of

the roof other than the sagging of the soffit lining (agreed in the “Joint Claim”). I have taken into account that the issue of the pitch of the roof was covered in

the “Joint Claim”. I have noted the respondent’s claim that the item had been



certified by Baker Saran. However, I prefer the evidence of Mr. Rendell as indicated earlier. I accept the submission that the certification by Baker

Saran of 12 March 2004, had no application because the bullnose verandah roof was not reconstructed in accordance with drawing no. 15267-S-005 as

confirmed by the Dillon Report. Mr. Dillon was critical of the structural support of the roof as evidenced by the absence of the structural support beams. It is clear from the Dillon Report that the bullnose roof does leak and that it does

not comply with BHP specifications.

Mr. Tyrrell in cross examination accepted that it did leak. I accept the submission that the rectification of such defects cannot form part of the applicants’ normal annual maintenance. Mr. Dillon, while acknowledging in

cross examination that the insulation of foam could address the back flow of storm water due to the very low roof pitch, also indicated that this was not an

easy fix because the roof sheeting has been fixed directly underneath the fascia. Accordingly, in order to install the foam, the sheets would have to be removed by access to the fixing screws from underneath. This would involve

the removal of the soffit lining and then the sheeting. I agree that it is misleading to indicate that these problems could be fixed for the cost of the

foam. In summary I accept that the weight of evidence supports the complete

replacement of the bullnose verandah. I accept the conclusions of Mr. Rendell in his supplementary report that the roof pitch was inadequate, that it

leaks, that the leaks will cause damage, that a structural membrane has been omitted, and that the span of the roof sheet exceeds the maximum permissible to comply with AS 1170.

I accept that the cost of rectification for this item is $7,861.97.

7.1.8.1 The Windows

The Rendell 2002 report observed that the windows still leaked. They were

drafty and noisy during windy weather, did not slide smoothly, were difficult to operate and had, on two occasions, failed a simple hose test. This was after the manufacturer had completed a total of 12 service calls to the premises “in

order to fix water leaks, sliding doors and windows which would not lock, vibration, whistles and myriad of other issues regarding the windows and

sliding door”. Mr. Tyrrell in his report was of the opinion that the design of the windows was

satisfactory, that the manufacturer had provided a post completion commitment to rectify any outstanding defects and that Trend (the window

manufacturer, a subsidiary of James Hardy Industries) had agreed to complete this work under its usual warranty. Mr. Tyrrell did not consider infrequent minor leaks as being a fault if the leaks occurred due to pressure

above the rating for which the windows had been designed. Reference is made to a letter from the manufacturer (Trend) dated 8 April 2003, which

states that “in severe weather conditions where storm conditions exceed the



design wind and water rating, minor water penetration may occur. We also don’t recommend the use of garden hoses or similar to clean windows as the

water pressure created from the hose may also exceed the design strength of the windows.”

The “Joint Claim” recommended that the Australian Windows Association carry out an independent water penetration test.

The respondent relies on the Gramlick Report for the solution to the window

problem. The applicants challenge the status of Mr. Gramlick an independent expert on

the grounds that his wife is the technical director of the Australian Window Association (the manufacturer is a member of that body) and that during his

inspection he was accompanied by a Trend representative. They also claim that the report does not address the fundamental design deficiencies. Furthermore, on the point of independence, it is pointed out that Mr.

Gramlick’s resume indicates that he provides a private consultancy service for the manufacturer.

While the applicant accepted that a Trend representative, if called, would give evidence of the fact that they were willing to return to the applicants’ residence

to carry out rectification work, they argue that no further evidence was led to indicate within which time frame that work would occur, the extent to which

Trend were prepared to go in order to rectify the problem (for example would complete replacement be considered) and whether, in view of the fact that Trend had already made 12 service calls, it had the ability to effectively rectify

the windows. The applicants furthermore submit that it was significant that Mr. Gramlick admitted in cross examination that Trend had changed its

windows design for the ‘Quantum’ range of windows from the original design. It is argued that this adds support to the conclusion by Mr. Lalas that the original Trend design is fundamentally flawed and that the windows need

replacement.

I should indicate that in my view the preparedness of the manufacturer to attend to rectification of a defective product does not, in present circumstances, affect the liability of the respondent for breach of statutory

warranty.

I have carefully considered all the evidence. In the end result I am persuaded that I should accept the evidence of Mr. Lalas that the windows are fundamentally flawed in their design and that they fail to meet the basic needs

of domestic windows. I am so persuaded because of the extensive and detailed report of Mr. P Lalas (Connell Mott McDonnell’s report). His expertise

is impressive. He has 20 years’ experience in the design, manufacture, quality control testing and installation of commercial windows and glazing systems. He was clear and authoritative in giving evidence and was unshaken in cross

examination.



I also have had regard to the supplementary report of Mr. Lalas regarding the technical information provided by Trend. I accept his view that the testing

procedures referred to, do not cover all the windows installed in the applicants’ residence. I also accept that most of the technical tests carried out

by Trend post date the installation of the windows in the applicants’ residence. On the other hand, Mr. Gramlick’s conclusions do not appear to me to

address the problems which have been experienced by the applicants. Mr. Gramlick reports the general appearance of the windows as being satisfactory

and points out that the windows under the verandah would not be subject to the same water penetration. His proposed remedial action for the windows is to remove all sashes, clean sill and remove excess sealant, check sash

glazing channel, re glaze if necessary, replace all seals and sashes, replace guide blocks and sashes, fit new submarine seals to sashes, fit new sash to

master bedroom, modify window sash locks to incorporate ‘push away’ feature, fit top sash cover to all windows and touch up any minor scratches. In relation to the doors, he suggests the removal of sliding panels, fitting of

new seals and new rollers, and adjusting and lubricating. All this is estimated to cost $4,100.00 for labour and material (GST not included).

I should indicate that while there may be some basis for the applicants’ raising an issue about Mr. Gramlick’s independence as an expert, I make it clear that

I do not make any adverse finding in relation to Mr. Gramlick’s integrity as an expert witness. I do not doubt that his opinions are honestly held. However,

for the reasons indicated, I prefer the evidence of Mr. Lalas to that of Mr. Gramlick. In the light of the previous problems which had been experienced, particularly the numerous service calls, I accept the evidence of Mr. Lalas

that, because the windows leaked due to a design problem, they cannot be easily rectified without changing the design. I note that Mr. Lalas concludes

that the windows cannot pass a simple hose test. He points out that the test required by AS2047, requires a water spray and suction and this makes it a much more severe test than the host test. Therefore the windows are not

capable of passing the water test. It follows that they do not have the requisite rating claimed by the manufacturer. Furthermore, as has been

pointed out, Trend had not been able to rectify the verandah windows. Also a long and costly research program would be required to determine the necessary rectification of these windows to prove their performance. Mr.

Lalas advises against this and, in his view, the windows and doors should be replaced.

I accept his evidence.

As the only available evidence regarding the estimated cost of replacement of the windows is that contained in Mr. Rendell’s supplementary report, I accept

that this amount should be awarded. I allow $31,678.96. COSTS



Both parties made extensive submissions in relation to costs. Although I note that the respondent submits that costs should be reserved and that a decision

in relation to costs should be given after further submissions having regard to the substantive findings, it is appropriate in the present case that I give some

preliminary indication of my views on this question. The applicants claim that there were a number of items where the costs of obtaining reports are specifically related to a lack of action or cooperation by the respondent. It is

claimed that the applicants were put to the expense of obtaining reports where such costs would otherwise have been avoided.

I have already made findings in relation to the drainage and plumbing investigation and reports. I am satisfied that of the costs of investigation and

reports were costs which were incurred by the applicants to support their claim in circumstances where the claim made was being resisted by the

respondent. In regard to the other specific costs sought in relation to a breach, I am

satisfied that it has been established that the applicants were justified in obtaining the reports in question, having regard to the conduct of proceedings.

In particular, I am satisfied that in the report costs and the costs of inspection by Barnson Pty Ltd, of the brickwork to the garage, were necessitated in substantial part because of the difference between the original Tyrell sketch

plan and the sketch plan certified by Baker Saran. In view of my findings on the substantive issue, I accept that it was necessary for the applicants to

obtain the Barnson report. In relation to the bullnose verandah, in the light of my findings on the

substantive issues, I accept the applicants’ submissions so far as the costs of inspection by Barnson Pty Ltd.

As to the windows, I am persuaded that to establish their case, the applicants were justified in obtaining the report in question. I am satisfied that the

applicants were entitled not to agree to be bound by any report of the expert selected by the respondent (Mr. Gramlick) for the reasons referred to earlier.

In those circumstances it appears to me that they were entitled to engage an alternative expert. COSTS GENERALLY

Section 53 of the Consumer, Trader and Tenancy Tribunal Act 2001 relevantly provides as follows:

53 Costs

(1) Subject to this section and the regulations, the parties in any proceedings are to pay their own costs.

(2) The Tribunal may, in accordance with the regulations, award costs in relation to any

proceedings.

The relevant part of the Consumer, Trader and Tenancy Tribunal Regulation

2002, clause 20(4) provides that:



“(4) In any proceedings in respect of which the amount claimed or in dispute is more than

$25,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit.”

It is my view, and I believe that the general approach of this Tribunal has

been, that in matters where the above clause applies, the Tribunal should follow the principles enunciated by the courts in relation to costs. In short,

costs are discretionary. The discretion has to be exercised judicially. As McHugh J said in Oshlack v Richmond River Council, “ the expression “the usual order as to cost” embodies the important principle that, subject to

certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour .” And later “….cost are not awarded to punish an

unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party.”

In this case the applicants have clearly been the successful party. However, it is appropriate to consider whether there has been any conduct of the

proceedings by the applicants which disentitles them to the usual order as to costs.

In the alternative, if costs are awarded in favour of the applicants should there be a reduction because of disentitling conduct?

As I have already indicated in my decision on the substantive issues, I have accepted the applicants’ submissions in relation to the conduct of proceedings

by the applicants following the “Joint Claim”. I accept that the outstanding items after the case conference were largely disputed issues in relation to areas where the experts were unclear or where findings by the experts were

conditional. In view of this it would be difficult to attribute any conduct to the applicants which led to any unnecessary prolongation of the case following

the “Joint Claim” (with the possible exception of the Motion in relation to costs.)

On the issue of the original claim by the applicants being in the sum of $250,000.00 (later amended, on 21 January 2003, to a claim for $187,121.00), the question is raised whether the maintenance of this claim for

the period it was maintained, amounts to conduct which disentitles the applicants from the usual order, that is, either wholly or at least in part. My

preliminary view is that, in the apparent absence of any Calderbank offer of compromise (not accepted by applicants) which equals or exceeds the final amount awarded, it may be difficult to classify this as being disentitling

conduct. However, I am going to ask the parties to make further submissions both in relation to the matters raised above as well as submissions in relation

to any conduct which may have resulted in costs being thrown away. I stress however, that if an order is made, it will be in the form of an order that a party pay the whole or a portion of costs as agreed or as assessed. It is the function

of an assessor under the Legal Profession Act 1987 to consider whether or not it is reasonable to carry out the work to which the costs relate and whether

or not the work was carried out in a reasonable manner, as well as the



fairness and reasonableness of the amount of the costs in relation to that work.

J. Bordon

Senior Member Consumer Trader & Tenancy Tribunal

8 March 2005


tyler & miller v rawson homes p.l (home building) [2005] nswcttt 153

Documents

respondent builder

decision application

rawson homes pty

n miller respondent

home building act

respondent hearing

v sprowles

g tyler