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  • Unreported Judgment

Nel v Octoclay Pty Ltd

 

[2020] QDC 200

DISTRICT COURT OF QUEENSLAND

CITATION:

Nel v Octoclay Pty Ltd (formerly Dwyer Corporation Pty Ltd t/as Dwyer Quality Homes) [2020] QDC 200

PARTIES:

MARIA JOHANNA NEL

(plaintiff)

v

OCTOCLAY PTY LTD ACN 010 839 139 (FORMERLY DWYER CORPORATION PTY LTD TRADING AS DWYER QUALITY HOMES)

(defendant)

FILE NO/S:

D151/18

DIVISION:

Commercial

PROCEEDING:

Trial

ORIGINATING COURT:

District Court of Queensland, at Brisbane

DELIVERED ON:

21 August 2020

DELIVERED AT:

Brisbane

HEARING DATE:

29 and 30 July 2020

JUDGE:

R S Jones, DCJ

ORDERS:

  1. Judgment for the plaintiff in the sum of $500,246.98
  2. I will hear further from the parties as to any consequential orders

CATCHWORDS:

NEGLIGENCE – where plaintiff owner of land – where plaintiff and defendant entered into a building contract – where during construction design changes were made to pitch of roof – where dwelling suffered major water damage during heavy rainfall events.

DUTY OF CARE – whether water damage was a consequence of defendant’s negligence – whether conduct on the part of the plaintiff might have contributed to the damage – whether plaintiff’s claim was barred pursuant to s 10 of Limitations of Actions Act (1974)

QUANTUM – whether damages to be assessed according to valuation evidence on the before and after method – whether damages ought be assessed pursuant to cost of rectification and consequential loss and damage

LEGISLATION:

Civil Liability Act 2003 (Qld)

Limitation of Actions Act 1974 (Qld)

CASES:

Astley v Austrust Ltd (1999) 197 CLR 1

Hawkins v Clayton (1988) 164 CLR 539

Melisavon Pty Ltd v Springfield Land Development Corporation Pty Ltd 1 Qd R 476

Robt Jones v First Abbott Corporation Pty Ltd [1999] QCA 49

Voli v Inglewood Shire Council & Anor 110 CLR 74

COUNSEL:

Mr P Travers for the plaintiff

SOLICITORS:

Axia Litigation Lawyers for the plaintiff

Mr W Dwyer, Director acting in person for the defendant

Introduction

  1. [1]
    This proceeding is concerned with an action brought by Maria Johanna Nel (the plaintiff) against Octoclay Pty Ltd (formerly Dwyer Corporation Pty Ltd trading as Dwyer Quality Homes) (the defendant) in negligence.  For the reasons set out below the orders of the court are:
  1. Judgment for the plaintiff in the sum of $500,246.98
  2. I will hear from the parties as to any consequential orders.

The matters for determination

  1. [2]
    Central to the outcome of this proceeding are the answers to the following questions:
    1. (i)
      Did the defendant owe a duty of care to the plaintiff with respect to the design and construction of the roofing structure of a dwelling constructed pursuant to a contract entered into between it and the plaintiff?
    2. (ii)
      Whether the defendant breached that duty of care?
    3. (iii)
      In the event that the roof structure was negligently designed and constructed, did that cause loss to the plaintiff?
    4. (iv)
      Did the plaintiff contribute to loss and damage suffered and/or did the plaintiff fail to mitigate her loss and damage?
    5. (v)
      In the event that negligence was found against the defendant what was the appropriate assessment of damages?

Background and the Roof Pitch

  1. [3]
    The plaintiff was the registered proprietor of land situated at 15-19 Pheasant Lane, Doonan, Queensland.  The defendant held a contractor’s licence (number 002078) in the class Builder-Open.  At all material times its Managing Director was Wayne Dwyer and its General Manager Mr Ben Murphy.  Mr Dwyer was a very experienced builder having informed the court that he and/or various entities he has had association with have built somewhere in the order of 3,500 homes.
  2. [4]
    On or about 27 July 2007, the plaintiff and the defendant entered into a written contract for the construction of a new home located on the aforesaid parcel of land.  Pursuant to that contract, the defendant was responsible for preparing the plans and specifications including roof design and construction.  Insofar as the roofing was concerned, the contracted form of tiling was “Boral Flat Linear Concrete Tiles – Charcoal Grey – standard profile Ridge Barge – insulated with Sisalation.”
  3. [5]
    At the time the dwelling was being constructed the plaintiff and her husband, Mr Theo Nel, were living in Birdsville.  It was uncontroversial that after the initial roof tiles were selected the plaintiff and Mr Nel returned to Birdsville where they were later informed by a representative of the defendant that the tiles selected were no longer available and that it was necessary to select a new roof covering.  The uncontradicted evidence of Mr Nel was that after a range of different roof tiles were forwarded to them at Birdsville, an alternate tile was selected and that on or about the same time, he and the plaintiff were informed that the overall height of the dwelling as designed, exceeded the height limitations pursuant to, as I understand it, the Noosa Shire Council’s planning scheme. 
  4. [6]
    According to Mr Nel, which was again uncontradicted, he and the plaintiff were informed that to meet the relevant height restrictions the pitch of the roof would have to be lowered.  At no time did the defendant and/or its agents advise the plaintiff of any potential consequences or difficulties that might arise as a consequence of reducing the pitch of the roof.  After the change of tiles had been selected and the decision to lower the pitch of the roof made, a variation to the building contract was entered into between the plaintiff and Dwyer Corporation Pty Ltd dated 12 December 2007.  That variation relevantly provided:

Upgrade To Terracotta Tiles As Discussed With Supervisor.

First Floor Roof Pitch To Be Adjusted To Comply With Council Height Restriction Of Maximum 8.5M Above Natural Ground Level.

Variation total $8,500.00.

  1. [7]
    That variation was signed off on by the plaintiff on 17 or 19 December 2007.
  2. [8]
    During the cross-examination of Mr Nel by Mr Dwyer, he expressly denied that the decision to change the pitch of the roof had anything to do with either he or the plaintiff other than to agree to the design change proposed by the defendant.[1]  I am satisfied that the decision to achieve the 8.5m height restriction by reducing the pitch of the roof was a decision made by the defendant without any regard to the potential consequences of that decision.  The decision to reduce the pitch of the roof was a decision made without any, or any proper, consideration of the design specifications provided by Boral, the suppliers of the roof tiles.[2]  Indeed, at one stage during cross-examination of Mr Nel, Mr Dwyer said:[3]

   but we didn’t see it.  Dwyer – I mean Dwyer Quality Homes didn’t see it.  Boral didn’t see it.  They just looked at the headline figures and everybody at that point thought that it complied.  Boral got it wrong.  DQH got it wrong and it was simply to achieve the overall building height of 8.5.  One area in which they looked at to try and get the house to the reduced height was the roof.  Somebody just looked at it and said, “Okay.  We can try the roof.  Multiplied that out.  We’ve managed to get under the 18.5 and everything complies”.  Without spending four hours on the Boral brochure to produce what then should have been a 19 degree pitch instead of a 17 degree pitch?.”

  1. [9]
    In response Mr Nel replied:

So what you’re saying is someone should have spent four hours look [sic] at it in such a big build.  It would have saved a lot of trouble today.

  1. [10]
    Before asking his next question, Mr Dwyer responded to the rhetorical proposition posed by Mr Nel and said:

Possibly.  They could have spent four hours and still come to the same conclusion.  It’s hypothetical.  So there’s been – you’ve got to liken this situation more to a air crash investigation.  It’s not just one thing.  If there was a normal roof put on there problem solved.  A [indistinct] roof has to be – you know – we’ve done – I’ve built over three and a half thousand houses, yours is the shingle roof we every put on.  There won’t be a third.  It’s not something that we deal with every day and even the companies are shying away from them.  They’re not producing them anymore.  Boral I know are not producing a single shingle roof.  These [indistinct] are about the only ones that are [sic].  And they’re pretty critical about it.

So it’s a – it’s a combination of things that’s led to the leaks in the upper – in the upper floors.  Its leaking in the upper floors, there’s no – there’s – there’s no argument there.  So it’s a combination of things.  Reducing the height, using a shingle roof, changing the ridge – the ridgeline.  Which I won’t get into the technical issues. …”

  1. [11]
    Mr Carpenter, who described himself as a defects and quality expert with 44 years’ experience in the construction industry, confirmed that the roof was constructed with an incorrect degree of pitch.  Mr Carpenter’s expertise was not challenged in any way by Mr Dwyer who was also, as already pointed out, a builder with considerable experience.  In his report Mr Carpenter identified that in the relevant manufacturer specifications it was stated that:

Maximum rafter length; at the minimum roof pitch the maximum rafter length allowed is 4.5 metres.  For rafter lengths over 4.5 metres, Boral Roofing recommends you add 2º to the pitch for every metre of additional rafter length.  AS2049 roof tiles, and AS2050 installation of roof tiles.

  1. [12]
    Thereafter the specifications provided details concerning the maximum rafter length and corresponding degree of roof pitch.  Essentially, the table showed that for a 4.5m rafter length, the roof pitch could range between greater than or equal to 18º but less than 20º.  For a 5.5m rafter length the recommended degree of pitch was greater than or equal to 20º but less than 22º and, for 6m length, greater than or equal to 22º.  After referring to that table Mr Carpenter went on to say in his supplementary report:[4]

Externally rafter lengths were measured from the roof point of the ridge or abutment to the wall, down to the facia line.

The rafter length over the Rumpus was measured at 6205mm; 1705mm longer than the 4500mm maximum length requires the roof pitch to be increased to a minimum 22º.

The rafter length over the Garage was measured and found to be 6250mm long; 1750mm longer than the 4500mm maximum length requires the pitch to be increased to a minimum of 22º.

The upper roof rafter length over the Main Bedroom and Ensuite was scaled off the drawings and found to be 7000mm.  2500mm longer than the 4500mm maximum length requires the pitch to be increased to a minimum 22º, note: this roof was previously measured and found to be installed with a pitch of 15.2º.”

  1. [13]
    While Mr Dwyer and Mr Carpenter both agreed that the roof was designed and constructed with an inappropriate roof pitch, they differed about what the actual pitch of the roof was and what it should have been.  According to Mr Dwyer, the existing roof pitch was 17º and it should have been 19º.[5]  According to Mr Carpenter, the existing roof pitch was 15.2º and ought to have been 22º.  Mr Dwyer did not take the court to any evidence supporting his estimate of the existing and appropriate roof pitch.  On the other hand, Mr Carpenter did explain how he reached his conclusion about the existing roof pitch and, notwithstanding being cross-examined on his methodology, I found his evidence to be convincing and I accept it. That is, I am satisfied that the existing roof pitch is at or about 15.2º and it ought to have been, as a minimum, 22º.
  2. [14]
    There is little room for doubt that the defendant constructed the roof covering the subject dwelling at a pitch which was materially lower than it ought to have been.  And, the decision to construct the roof at that pitch was a decision made on the part of the defendant without any, or any proper regard, to the manufacturer’s specifications.  Indeed, in this regard, Mr Dwyer said as much himself.

The consequences of the wrong roof pitch

  1. [15]
    Mr Nel gave convincing evidence about what occurred after he and the plaintiff moved into the house at or about 15 December 2008.  The first event was in 2009 when two points of water entry were located at the ground floor level.  The house is designed in such a way as the master bedroom sits above the remainder of the house which is set at ground level.[6] Mr Nel’s evidence was that those leaks were reported to the defendant and a representative of the defendant attended the property and stated to the effect that the leaks were a consequence of the failure to insert, what were referred to as spreader bars under the tiles to disperse rainwater.  According to Mr Nel, spreader bars were then installed and no problems of water entry were observed until late 2015.  At that time, according to Mr Nel two locations were observed were he could see what he described as being wet spots or dampness.  These wet spots were again located at the ground floor however, Mr Nel said that he had no real concerns about them as he considered them probably being the result of a broken roof tile. 
  1. [16]
    In a severe rain event in 2016 a disastrous situation arose.  On this occasion serious water entry was observed in the lounge room at the ground floor. According to Mr Nel “there was just water coming down the walls, onto the ceiling.  It was just – there was, like, yes, there’s a big problem.”[7]
  1. [17]
    That incident was also reported to the defendant and one or two days later workmen arrived and carried out work described by Mr Nel in the following way:[8]

Well, it was – it was raining then, and it was still coming through, and they actually came, and then I find them again, said it’s not working, and they came back – would've been the day – day after that and realised it’s not fixing the problem because there's no sarking there to – to hide all the problem, take it down.  So what they did is they cut that spreader bar off and put a – just a normal PVC pipe – laid over my roof, like, not – just because I've got this nice black slate all over the roof, and they just took a PVC pipe, just put it from the top roof down, over the whole roof. 

Yeah, over the whole roof, just into the – onto the lawn, not onto a – a gutter or downpipe somewhere, just the pipe over the roof, onto the lawn and just left it, and that was – and then that was all.”

  1. [18]
    Mr Dwyer described the works carried out in the following terms:[9]

“In 2016 we did go up there and put some pipes in place to try and mitigate or at least reduce some of the – some of the water ingress into the property, even though the property was out of warranty.  There was water leaking in there, and we went up there at our cost to just try and help out and divert some water off that lower roof. ”

According to Mr Nel, whose evidence I again accept, those works were largely ineffective.

  1. [19]
    The next major event occurred on 3 and 4 February 2018.  On those dates there was an extremely heavy rainfall event which resulted in substantial water penetration in the master bedroom and ensuite at the upper level.  The extent of the water penetration was so severe on this occasion that it required Mr Nel and the plaintiff to take quite extraordinary steps to dispose of the water.
  1. [20]
    There can be no doubt about the extent of the water penetration on those two days in February 2018 nor about the damage the water penetration had caused to timber framing within the roof.  All of which was captured on Mr Nel’s mobile telephone, the videos of which were tendered during the course of the hearing.[10]
  2. [21]
    Following that event, the plaintiff retained Mr Carpenter to prepare a building report.  That report, through her lawyers, was then forwarded to the defendant.  Following that, the aforesaid Mr Murphy attended the premises and identified that the cause of the problem was the angle of the roof pitch.  Mr Nel’s evidence, which was not challenged, was to the effect that Mr Murphy said, after identifying the problem with the pitch, that “they”, being the defendant, would fix the problem.[11]  However, notwithstanding those representations by Mr Murphy, no such rectification work occurred.  I would point out that Mr Murphy was not called to give evidence by either the plaintiff or the defendant. 
  3. [22]
    The evidence of Mr Nel and that of Mr Carpenter, and indeed on some occasions the statements made by Mr Dwyer, leave little room for doubt that the cause of the water penetration and resultant damage suffered by the plaintiff was the failure to design and construct the roof with an appropriate angle of pitch.
  4. [23]
    During final submissions, when asked to articulate the defendant’s position concerning liability Mr Dwyer said:[12]

Well, your Honour, everybody makes mistakes and this one got through, made it to the end.  Now, it’s not the first mistake the company’s ever made and it won’t be the last one the company’s ever made.  It wasn’t our first mistake and we’ve fixed them all.

It wasn’t our first mistake.  It wasn’t the company’s first mistake that it’s ever made but every single one’s been fixed, I can tell you that right now.  We’ve offered to fix this one.  The offer wasn’t accepted.  Here we are.  That's why I think you should find in our favour, your Honour.  Secondly, if you don't find in our favour, the amount of money sought is just astronomically ridiculous.  Nothing to support it.  Just saying.

Other alleged causes

  1. [24]
    In the defendant’s amended defence it was asserted to the effect that the water damage was caused by, or at least contributed to by the conduct of the plaintiff and/or her husband.  In this context it was alleged that the problems might have been caused by the installation of solar panels and/or the cutting of the roof sarking by the plaintiff or her husband.  It was also asserted that the defendant was not liable because the plaintiff had failed to “mitigate against future leaks that allegedly started to occur from 2009.”  And had otherwise “failed to instigate remedial works to prevent leaks occurring.”  Finally, in this context it was also asserted that the defendant was not liable because it was the plaintiff who had “negligently” instructed the defendant to change the pitch of the roof during construction.
  2. [25]
    Dealing with each of those matters in turn, the evidence satisfies me that it is highly improbable that the installation of the solar panels could have contributed to the water inundation that occurred.  Those panels are located well away from the master bedroom area and from the lounge/dining area at the ground floor level.  In any event, the defendant made no serious attempt to place any meaningful evidence before the court as to how the installation of the solar panels might have caused the problems complained of.
  3. [26]
    Insofar as the cutting of the sarking is concerned, that can also be readily disposed of.  The evidence of Mr Nel, largely confirmed by the videos he took using his mobile telephone, make it sufficiently clear that the cutting of the sarking occurred after the major water inundation events and were carried out by Mr Nel in an attempt to identify the source or cause of the inundation.
  4. [27]
    Insofar as it is alleged that the plaintiff had failed to take adequate steps to instigate remedial works or to take steps to militate against any future leaks, those assertions cannot be maintained on the evidence.  I am more than satisfied that the plaintiff, together with Mr Nel, took every reasonable step to not only identify where the water leaks were occurring, but to also to prevent repetition of those leaks occurring and to minimise any damage that those leaks might have caused.  That is particularly so in respect of the events that occurred in 2016 and February 2018.
  5. [28]
    Finally in this context, I am again sufficiently satisfied that the reduction in the pitch of the roof was a solution to the height problem advocated for by the defendant.  The only role the plaintiff and/or Mr Nel played insofar as the change to the pitch of the roof was concerned, was to rely on the defendant’s advice and to agree to that solution.
  6. [29]
    For the sake of completeness I would note that at one stage during the crossexamination of Mr Nel, Mr Dwyer raised the possibility that a failure to maintain or keep clean the roof tiles might have been a cause of the water penetration.  That proposition was not seriously prosecuted by Mr Dwyer and, in any event, the evidence makes it quite clear that the real cause of the problem was the failure to properly design and construct the appropriate roof pitch.

Did the defendant owe the plaintiff a duty of care and, if so was that duty breached

  1. [30]
    In paragraphs 22 and 23 of the plaintiff’s further amended statement of claim it was pleaded:

The Defendant owed the Plaintiff a duty of care:

(a)  to take reasonable care and exercise reasonable skill_ in (sic) performing the work;

(b)  to supply and use materials fit for purpose; and

(c) to warn the Plaintiff of any deficiency in the selection of materials or design.

(Collectively, the Duty of Care)

In accordance with the Duty of Care, the Defendant was reasonably required to:

(a)  carry out the Works in accordance with the Contract, the approved plans and specification as agreed (or as amended) and in accordance with the Building Code of Australia, and the relevant manufacture’s product manuals;

(b) accurately advise the Plaintiff in relation to the selection of materials and methods of construction that arise in relation to the performance of the Works;

(c)  identify and address any defects in the Works; and

(d)  exercise due care, skill and diligence having regard to the risk of harm to the Defendant, including diminution in the value of the Property.”

  1. [31]
    In the defendant’s further amended defence, in paragraphs 15 and 16 it was pleaded:

With respect to paragraph 22 of the statement of claim, the defendant:

15.1 denies it owed the duty of care as alleged.

15.2 says further if the defendant did owe a duty of care, it was limited to a duty of care to perform work to a standard of a reasonably competent builder of residential houses.

With respect to paragraph 23 the defendant denies the allegations therein because:

16.1 the defendant denies it owed the duty of care as alleged.

16.2 denies there were defects as alleged.

16.3 denies the defendant failed to exercise due care, skill and diligence.” (emphasis added).

  1. [32]
    The so called limited duty the defendant said it owed to the plaintiff is consistent with its obligations pursuant to the contract where in clause 10.1 it is stated that the builder’s warranties included that it would carry out the works in an appropriate and skilled way and with reasonable care and skill.  The contract also made it clear that all plans and specifications, including those for the roof structure were the responsibility of the defendant.[13]  In Voli v Inglewood Shire Council & Anor[14] Windeyer J said in respect of the duty owed by an architect:

“An architect undertaking any work in the way of his profession accepts the ordinary liabilities of any man who follows a skilled calling. He is bound to exercise due care, skill and diligence. He is not required to have an extraordinary degree of skill or the highest professional attainments. But he must bring to the task he undertakes the competence and skill that is usual among architects practising their profession. And he must use due care....

....but whether or not that duty was performed is ultimately a question of fact, to be judged by what, in the circumstances of the particular case and in the light of the apparent risks, a reasonable man would or would not do....

.... And what an architect must do to avoid liability for negligence cannot be more precisely defined than by saying that he must use reasonable care, skill and diligence in the performance of the work he undertakes....

.... Put shortly, an architect is not ordinarily liable because someone falls down in the building and is injured. He may be if the building falls down and someone is injured.”

  1. [33]
    The observations made by his Honour, while clearly directed towards the duty of care owed by an architect are nonetheless applicable in respect of the duty owed by a builder.  There can be no doubt that the defendant, despite its denial, did owe a duty of care to the plaintiff.
  2. [34]
    In cases such as this it is common that the nature and extent of the common law duty of care corresponds with the actual terms of the contract.[15]
  3. [35]
    As to whether or not the defendant breached its duty of care by failing to use reasonable care, skill and diligence in the performance of the work it undertook, the answer to that question must clearly be found in favour of the plaintiff.  The largely unchallenged evidence of Mr Gardiner makes it clear that there was a failure to design and construct the roof pitch with an appropriate degree of slope.  In this context I would note that quite the opposite to there being any real challenge to the evidence of Mr Carpenter, Mr Dwyer said that he agreed with 95 percent of what Mr Gardiner reported.[16]  Indeed, as has already been observed, on more than one occasion Mr Dwyer accepted that the pitch of the roof was incorrectly designed and constructed and that it did not accord with the manufacturer’s specifications.[17]
  4. [36]
    Pursuant to s 9 of the Civil Liability Act 2003 (CLA) a person does not breach a duty to take precautions against a risk of harm unless:
    1. (i)
      the risk was foreseeable (in the sense that it is a risk of which the person owing the duty knew or ought reasonably to have known); and
    2. (ii)
      the risk was not insignificant; and
    3. (iii)
      in the circumstances, a reasonable person in the position of the person owing the duty of care would have taken the precautions.
  5. [37]
    In deciding whether a reasonable person would have taken precautions against a risk regard must be had to, relevantly here,
    1. (i)
      the probability that the harm would occur if care was not taken;
    2. (ii)
      the likely seriousness of the harm;
    3. (iii)
      the burden of taking precautions to avoid the risk of harm.
  6. [38]
    Here the risk of significant property damage occurring as a consequence of a failure to properly design and construct the roof was not only a risk that was foreseeable but was highly likely if not inevitable if not addressed.  To adopt the language used in s 11 of the CLA, the breach of duty was a necessary condition of the occurrence of the harm.  Again by reference to the evidence of Mr Carpenter the level of property damage that might result as a consequence of the defendant’s negligence were serious and, insofar as the burden of taking precautions to avoid the risk of harm, that risk could have been avoided by constructing the roof with an appropriate pitch in accordance with the roof cladding specifications.  In this case there is little, if any, room for doubt that the scope of the defendant’s liability warrants that the responsibility for the harm suffered by the plaintiff being sheeted home to the defendant.

The damage caused and appropriate rectification works

  1. [39]
    Consistent with a number of observations recorded by Mr Nel in the rain event that occurred on 3 and 4 February 2018, the extent of the damage to timber battens and tile fixings resulting from the degree of water penetration that had occurred was significant.  In Mr Carpenter’s report he stated:[18]

It is fortuitous that the property owner has discovered the rotting timber battens and tile fixings at this time.  Left undiscovered, the tiles would eventually fall into the roof.  If the roof is left in its current condition, the rate of timber decay would indicate the roof will deteriorate exponentially and would not last a reasonable expected period of that of a building i.e. 50 years.

  1. [40]
    According to Mr Gardiner the only reasonable method of addressing the current situation is to remove the existing roof structure and replace it.  In his first report, he concluded:[19]

There are no actions the owner can take to mitigate the damage to the property, taping back the sarking or renewing the sarking will still result in further rotting of tile battens and premature deterioration of roof tile retention clips unless the roof pitch is raised.

I do not believe there is a ‘fix’ for the water ingress from the ‘as constructed’ roof and tile combination.

Construction methodology to increase the roof slope to a suitable pitch for the shingle tiles would likely include replacing the roof trusses and framing.  Associated work with this would include substantial demolition and renewal of internal linings and services throughout the roof framing.

The occupants would need to be relocated for the duration of the work to replace the roof framing and reinstatement of the services and internal finishes.

  1. [41]
    Attached to his supplementary report was a suggested scope of works required to replace the roof.[20]
  2. [42]
    In respect of the actual scope of works required and the calculated cost of rectification that was addressed by Mr Helisma who holds an Associate Diploma of Applied Science (Building); a Masters’ Degree in Construction Management (University of Western Sydney) and also holds a Certificate in Adjudication.  There was no challenge to the qualifications and/or expertise of Mr Helisma and I accept his expertise and experience permits him to express the opinions that he did. 
  3. [43]
    At no stage did Mr Dwyer challenge the accuracy of Mr Helisma’s costings of his scope of works.  Instead, in cross-examination he put an alternate and cheaper method of rectification which, as I understood it, would have involved taking off the existing tiles and laying down a form of “weather proof integrity” and then replacing the existing roof tiles over that waterproof membrane “basically as a cosmetic issue”.[21]  Unfortunately, no further details were put to Mr Helisma who clearly had concerns about the acceptability of the type of solution advanced by Mr Dwyer.  At one stage it was also suggested that his scope of works might have been “rather intrusive”, which I took to mean excessive, but Mr Helisma’s unchallenged evidence was that he adopted what he considered to be the “most cost effective way”.[22]
  4. [44]
    During his closing address, Mr Dwyer advanced yet another alternative form of rectification namely putting a “Colorbond roof over the top” at a cost of $60,000.[23]  Unfortunately, as was the situation concerning the other method of rectification proposed by Mr Dwyer, there is simply no evidence that might satisfy me that first, the rectification works could be achieved at a price anything like that contended for and, perhaps more importantly, whether those rectification works might in fact be effective.
  5. [45]
    On the evidence before me, I am satisfied that the nature of the problem and the extent of the damage caused would require rectification works of the type identified by Mr Helisma at the cost also estimated by him.

The statute of limitations point

  1. [46]
    The defence that a cause of action is statute-barred pursuant to s 10 of the Limitation of Actions Act 1974 only arises when pleaded on behalf of the defendant and the defendant bears the onus of establishing that the plaintiff’s claim is in fact statute barred[24] pursuant to the statute of limitations point.
  2. [47]
    In Hawkins v Clayton,[25] in considering the operation of s 10 of the Limitations of Actions Act insofar as pure economic loss was concerned, it was said that the clock started ticking when the “defect was actually discovered or became manifest, in the sense of being discoverable by reasonable diligence.”  In Melisavon Pty Ltd v Springfield Land it was said:[26]

It follows that the appellant's contention that the respondent's claim was statute-barred turns on when the respondent's cause of action against the appellant first arose. It is well-established that, ordinarily, a cause of action in tortious negligence arises when a plaintiff first suffers material damage or relevant loss, providing the damage is more than negligible.  And the loss measurable.  The cause of action is complete even if the plaintiff is unaware of the damage” (footnotes deleted)

  1. [48]
    In paragraph [31] of Melisavon Pty Ltd v Springfield Land, the then President of the Court of Appeal, McMurdo P referred to the following passages from Hawkins v Clayton:

Commonly… the building never existed and was never owned without the defect and (in the absence of consequential collapse or physical damage or injury) the only loss which could have been sustained by the owner was the economic loss which would be involved if and when the defect was actually discovered or became manifest, in the sense of being discoverable by reasonable diligence, with a consequence that a damage was then sustained by the then owner… .

The position is different in cases where all or some of the damage, be it in the form of physical injury to person or property or present economic loss, is directly sustained in the sense that it does not merely reflect diminution in value or other consequential damage which occurs or is sustained only when a latent defect which has existed at all relevant times becomes manifest.  In those cases, damage is sustained when it is inflicted or first suffered and the cause of action accrues at that time.

  1. [49]
    In this case it is true that there was evidence of water intrusion as early as 2009 when two points of water entry were observed at the ground floor level.  However, when that incident that was reported to the defendant it was, according to the defendant, rectified by installing spreader bars intended to disperse the rainwater.  There was no reason for the plaintiff to suspect, let alone know, that the installation of those spreader bars would not solve the problem.  As to the incident that occurred in late 2015, where two locations also at the ground floor, were observed to be damp, Mr Nel described them as leaving minor wet spots.  According to him he was not overly concerned having regard to the extent of this incident as he considered it to be most likely associated with a broken tile or something similar. It was not until the heavy rainfall event in early February 2018 that the true extent and nature of the problem was revealed.
  2. [50]
    In circumstances where the plaintiff commenced her action by way of claim and statement of claim filed 16 October 2018, there is no scope for the operation of s 10 of the Limitation of Actions Act.  Even accepting that the defect “was actually discovered or became manifest in the sense of being discoverable by reasonable diligence” by the plaintiff in 2015, the action was still not one that was statute-barred.  The proceedings brought by the plaintiff were still clearly within time.

Quantification of damages

  1. [51]
    In her further amended statement of claim, damages were assessed by reference to what was said to be the diminution in the value of the property as a consequence of the negligence of the defendant.  That was calculated in the sum of $1,200,000.  In the alternative damages were sought in the sum of $500,246.98 made up of $487,046.98 (including GST) rectification costs together with $13,200 being the estimated cost of alternative accommodation and temporary storage of household goods.  In his closing submissions, bearing in mind the monetary jurisdictional limits of this Court, it was submitted that on behalf of the plaintiff that judgment be entered in her favour in the amount of $750,000 or, in the alternative, $500,246.98.[27]
  1. [52]
    The damages claim in the amount of $750,000 is dependent upon my acceptance of the valuation evidence of Mr Anderson, a registered real estate valuer.  According to him, he carried out was is referred to as a “before and after” valuation.  In the before case (i.e. where no property damage and appropriate design and construct methodology was used) the market value of the house and land was assessed in the sum of $2,350,000.  On the other hand, the “as is” value was assessed in the sum of only $1,150,000.  As far as I could follow Mr Anderson’s methodology, that sum was arrived at by adding to the rectification costs of $487,046.98, an allowance for “health impact” that would, without placing a dollar value on it, “also lead to a further notable discount.”  In addition, according to Mr Anderson, there should be further discounts to take into account the risk that the height of the building as rectified would not be accepted by the council and that, even after the works were completed, the subject property would be subject to what he described as a negative stigma, in the sense that the history of the dwelling would be used by agents to cause “a great deal of uncertainty in any prospective buyers mind and will lead to more cautious offers”.[28]  As was the situation in respect of the so called health impacts, neither the risk of the rectification works being approved by the Council nor the so called negative stigma impacts were given a dollar value. 
  2. [53]
    My concerns about the approach of Mr Anderson are so serious as to cause me to reject his methodology.  Insofar as the risk of not obtaining Council approval is concerned, the evidence of Mr Helisma made it clear that, insofar as there might be any risk, it would lead to only a minimal, if any, diminution in value.[29]  Further, insofar as Mr Anderson’s concerns about buyer resistance because of health problems (i.e. mould etc.,) are concerned they were clearly unfounded.  Unsurprisingly, Mr Helsima’s evidence was to the effect that when the rectification works were completed, there would be no residual damp/mould problems.[30]
  1. [54]
    Turning then to Mr Anderson’s theory about “stigma”, I have even graver concerns.  First, at no stage was I taken to any evidence, be it market evidence or anything else, which would support this theory.  When asked what value he might place on this element, Mr Anderson’s answer was:[31]

Well, I – I assess that anywhere as, sort of, between 10 and 20 per cent as a reduction in the – in the short to medium term.  Once you – once you get out into a longer term, people tend to forget and as – as the agents through the area cycle out, they tend to – to forget it.  But in the short to medium term they’ve got strong memories and if they can put the figuratory boot into a competing property they do.  And – and try and talk it down.

  1. [55]
    I was not informed as to what the short to medium term might be, let alone what the longer term might be.  I can find, and indeed no acceptable basis was advanced, to warrant any meaningful discount on this basis.  In respect of this evidence, I would also note that according to Mr Helsima, the cost of demolishing the existing building and constructing a new building of an equivalent standard would have been “probably anywhere from $950 to $1.2m”.[32]  If any further reason was required, that evidence highlights the deficiencies in Mr Anderson’s valuation approach. 
  2. [56]
    Having rejected the valuation approach in assessing the diminution in the value, I consider the only reasonable method of quantifying damages is to adopt the alternative approach.  Accordingly, judgment will be entered in favour of the plaintiff in the sum of $500,246.98.

Orders

  1. Judgment for the plaintiff in the sum of $500,246.98.
  1. I will hear further from the parties as to any consequential orders.

Footnotes

[1] T1-35, l 47.

[2] T1-40.

[3] T1-41, l 37–45; see also T1-42, l 1 – 15.

[4] At paras 17-20.

[5] T1-41, l 40-45.

[6] Exhibit 1A, Tab B04.

[7] T1-19, l 28-30.

[8] T1-22, l 29-36 and l 44-46.

[9] T1-46, l 14-17.

[10] Exhibit 1A at tab BO3.

[11] T1-32, l 27-43.

[12] T2-42, l 10-22.

[13] Exhibit 1B, tab E at p2.

[14] 110 CLR 74 at pp 84-85: cited with approval in Robt Jones (363 Adelaide Street) Pty Ltd & Anor v First Abbott Corporation Pty Ltd & Ors [1999] QCA 49 at [26].

[15] Robt Jones v First Abbott Corporation Pty Ltd [1999] QCA 49: Astley v Austrust Ltd (1999) 197 CLR 1 at [36] and [47].

[16] T1-84, l 19.

[17] eg. T1-40, ll 1-5; T1-41, ll 37-45; T1-42, ll 1-22; T1-84, ll 19-35; T2-38 to T2-42, ll 7-23.

[18] Exhibit 1A, tab B at para 7.

[19] At [10]-[13].

[20] Exhibit 1A, tab B02 and B03.

[21] T1-78, l 1-27.

[22] T1-78, l 45-47; T1-79, l 1-5.

[23] T2-38, l 27-37.

[24] Melisavon Pty Ltd v Springfield Land Development Corporation Pty Ltd 1 Qd R 476 at [26].

[25] (1988) 164 CLR 539 at 587-588 per Deane J with Mason CJ and Wilson J agreeing.

[26] At [28].

[27] Before further amendment damages were sought in the sum of $600,000 by way of diminution in value or $492,046.98 made up of $487,046.98 in recultivation works and $5,000 in alternate accommodation.

[28] Exhibit 1B, Tab D, pp 20-21.

[29] T1-80, l 14-43; T1-81, l 12-20.

[30] T1-75, l 18-20.

[31] T1-75, l 11-17.

[32] T1-81, l 1.

Close

Editorial Notes

  • Published Case Name:

    Maria Johanna Nel v Octoclay Pty Ltd (formerly Dwyer Corporation Pty Ltd t/as Dwyer Quality Homes)

  • Shortened Case Name:

    Nel v Octoclay Pty Ltd

  • MNC:

    [2020] QDC 200

  • Court:

    QDC

  • Judge(s):

    Jones DCJ

  • Date:

    21 Aug 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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