Kalkamoning Pty Ltd v Zuch[2021] QCAT 269

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

Introduction

1. [1]
   Kalkamoning Pty Ltd built a home for Mr Zuch and Ms Gerlach. This proceeding involves claims and counter-claims for damages and contractual remedies.
2. [2]
   It is common ground that this is a building dispute concerning a domestic building contract, and that the remedies set out in section 77 of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’) are relevant.

Background

3. [3]
   The construction contract was signed in November 2015, and work commenced in June 2016. The total contractual price was $803,072, although this changed to some extent in the course of construction because of agreed variations. The contract provided for a series of stages and stage payments, with the practical completion stage being the final stage. The owners paid the various stage payments, prior to the practical completion stage, as work progressed. During the practical completion stage, in mid-2017, however, the parties fell into dispute about whether practical completion had been reached.
4. [4]
   On 16 June 2017 the builder notified the owners that it would reach practical completion on 23 June 2017. The builder enclosed the practical completion stage invoice for $57,580. That invoice has not been paid by the owners.
5. [5]
   Correspondence between the parties, via their solicitors, then followed. The owners wrote to the builder on 23 June 2017, attaching a building inspection report by All Inspect of the same date. The owners contended that various matters needed to be addressed before practical completion would be reached.
6. [6]
   On 17 July 2017 the builder responded to the effect that practical completion had been reached on 23 June 2017. On 24 July 2017 the owners sent a notice to the builder to the effect that if the matters set out in the 23 June 2017 All Inspect report were not remedied within ten business days, the owners may terminate the contract.
7. [7]
   It is common ground that the builder did not carry out any work in response to that notice. The builder’s position remained that it was entitled to payment of the practical completion stage invoice, and that it could then attend to any outstanding problems in the defects liability period provided for in the contract.
8. [8]
   On 9 August 2017 the owners sent a notice of termination of contract to the builder. They then had the locks to the house changed.
9. [9]
   The builder treated the owners’ actions as an invalid termination and a wrongful repudiation of the contract.

The proceeding

10. [10]
    The builder started a proceeding against the owners in the Magistrates Court in September 2017 for the amount of the practical completion stage invoice, delay damages, interest and costs. The proceeding was transferred to the tribunal, and the owners filed a counter-application. The matter proceeded to a hearing on 17 and 18 November 2020. Oral evidence was given for the builder by:

    1. (a)
       Hugh Bridle (director of the builder); and
    2. (b)
       Martin Helisma (building expert engaged by the builder for the proceeding).
11. [11]
    Oral evidence was given for the owners by:

    1. (a)
       Anne-Marie Gerlach (one of the owners);
    2. (b)
       David Tacon of All Inspect (who conducted the initial inspections for the owners);
    3. (c)
       Garry Carpenter (building expert engaged by the owners for the proceeding);
    4. (d)
       George Englert (painter); and
    5. (e)
       Rodney Schafer (director of Ashcraft Industries Pty Ltd, which provided quotations to the owners for cabinetry rectification work).
12. [12]
    There were also 20 exhibits. The parties filed written closing submissions:

    1. (a)
       the owners on 9 February 2021 and, in reply, on 29 March 2021; and
    2. (b)
       the builder on 25 February 2021.
13. [13]
    The exhibits include a joint expert report by Mr Helisma and Mr Carpenter, prepared as a result of an expert conclave. As the joint expert report was prepared in such a way that it cannot be read in isolation from the earlier individual reports of Mr Helisma and Mr Carpenter, those individual reports also form part of the evidence. There is also a subsequent report by Mr Carpenter.
14. [14]
    Ultimately, each party submits that the other party’s claims should be dismissed.
15. [15]
    Further, the builder seeks orders that the owners pay it:

    1. (a)
       $105,030.48, comprising:

       1. $57,850 being the amount of the practical completion invoice;^[1] and
       2. $47,180.48 for delay damages;
    2. (b)
       plus interest:

       1. on $57,850 from 23 June 2017 to the date of the tribunal’s decision; and
       2. on $47,180.48 (calculated in a particular way which it is not necessary to discuss here).
16. [16]
    The owners seek orders that the builder pays them:

    1. (a)
       $267,083.75 in damages; and
    2. (b)
       interest on that amount from 10 August 2017 to the date of the tribunal’s decision.
17. [17]
    The figure of $267,083.75 is said to comprise the total amount calculated by Mr Carpenter in the joint expert report (for rectification and completion work), plus liquidated damages, plus economic loss. However, those amounts as I understand them, are respectively $248,575.75, $4,050 and $17,000, which come on my calculations to a total of $269,625.75.
18. [18]
    References will be made in these reasons to item numbers. These come from the joint expert report. They relate to defects or alleged defects, non-conformances or alleged non-conformances with the contract, and incomplete or allegedly incomplete work. I have reworded some of the descriptors for clarity.

Was practical completion reached?

19. [19]
    The contract says:

‘Practical completion’ means the day when the subject work is completed:

1. in compliance with the contract, including all plans and specifications for the work and all statutory requirements applying to the work; and
2. without any defects or omissions, other than minor defects or minor omissions that will not unreasonably affect occupation; and
3. if the building owner claims there are minor defects or minor omissions, the building contractor gives the building owner a defects document for the minor defects or minor omissions.^[2]

20. [20]
    The builder points to concessions made by Mr Tacon in cross-examination that problems identified in his initial report, which was relied on by the owners in terminating the contract, were minor. However, I find that practical completion was not reached.
21. [21]
    First, not all work had been completed in compliance with plans and specifications. Examples, discussed later in more detail, include items 7, 10 and 19. It has been observed that a minimal departure from plans and specifications will not mean that work is incomplete.^[3] The departures in these examples, however, were not minimal. While the cost of rectification for those items is small in comparison with the overall contract price, the cost is not minimal and the required work, for items 7 and 19, at least, is neither quick nor simple.
22. [22]
    Second, there were defects that were clearly more than minor. Examples are items 1, 67 and 68.

Was the owners’ termination valid?

23. [23]
    Clause 25.1 of the contract says:

The owner is entitled to give a notice to remedy breach under Clause 25.3 if the builder is in substantial breach of this contract. The builder is in substantial breach of this contract if the builder:

1. suspends the carrying out of the works, other than under Clause 18;
2. has the builder’s licence cancelled or suspended; or
3. is otherwise in substantial breach of this contract.^[4]

24. [24]
    ‘Substantial breach’ by the builder is not further defined.
25. [25]
    Under clause 25.3, a notice must specify the substantial breach, require that it be rectified within ten working days, and state that if the substantial breach is not rectified, the party intends to end the contract.
26. [26]
    Under clause 25.4, if the party in substantial breach does not rectify or commence to substantially rectify the substantial breach within ten working days, the party who gave the notice may end the contract.
27. [27]
    The owners’ pre-termination notice to the builder of 24 July 2017 was expressed to be under clause 25.3 of the contract. The notice listed 28 items, but it is sufficient for present purposes to focus on one. This is because the notice will be effective, in my view, if valid in respect of at least one of the 28 items.
28. [28]
    One of the items was ‘western side concrete’. The notice contended that ‘path does not comply with the approved plans, specifically the dimensions, heights and falls in the slab plans and elevations’.^[5] The notice further contended that this involved a failure by the builder to comply with clause 33(1)(d) of the contract, under which the builder had warranted that the works would be carried out in accordance with the plans and the specifications to the contract.
29. [29]
    It is undisputed that the plans in question formed part of the contract.
30. [30]
    Later analysis by Mr Carpenter and Mr Helisma of item 7 (western yard / footpath) reveals non-conformance with the approved plans in terms of the pavement height and falls, with associated drainage problems, and there is a step-up from the pavement to the rear patio rather than the seamless transition depicted in the plans. In oral evidence, Mr Helisma said that the pavement was about 300 millimetres lower than it should have been. The cost of rectification work for item 7 was estimated at $3,189.43 by Mr Helisma. Mr Carpenter estimated a higher figure, but it is not necessary to consider that figure at this point because it also included the cost of additional work for tiling, which is a separate issue.
31. [31]
    The builder submits that the breaches asserted in the 24 July 2017 notice were not substantial.
32. [32]
    First, the builder submits that clause 33 of the contract, which is headed ‘Statutory warranties’, contains warranties rather than conditions. Nor are they ‘intermediate terms’, in the builder’s submission. Accordingly, a breach gives rise to a right to damages, but not to terminate the contract. A breach of clause 33 is not capable of amounting to a substantial breach, the builder submits.
33. [33]
    The builder refers to Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited.^[6] In that case the High Court discussed the distinction between conditions (essential terms) and warranties (non-essential terms), with the right to terminate attaching only to conditions. The Court also discussed intermediate terms, where a sufficiently serious breach of even a non-essential term enables termination. The court noted that such a breach would go to the root of the contract: for example where it would deprive the other party of a substantial part of the benefit for which they contracted and where damages would not be adequate.
34. [34]
    Second, in any event, the breach was not substantial, the builder submits. The builder points to the specific types of conduct defined in the contract as a substantial breach: the unlawful suspension of work or the loss of a builder’s licence. The builder submits that these relate to fundamental requirements, whereas a breach of a warranty is quite different in character. 
35. [35]
    The builder also points to the concessions made by Mr Tacon in cross-examination about the minor character of problems identified in his initial inspection report. The builder also points to the low cost of rectification compared with the overall contract price. The builder points to evidence from Mr Helisma that if the builder’s subcontractors had access, the outstanding work could have been completed at no cost to the builder. Items such as the western yard / footpath do not affect habitation. In these circumstances, the builder submits, any breaches specified in the 24 July 2017 notice cannot be regarded as substantial.
36. [36]
    The breach relating to the western yard / footpath was, in my view, clearly a breach of the builder’s obligation to carry out the works in accordance with the plans. The owners had entered into a contract to have the house built in accordance with the approved plans. The builder was not at liberty to depart from the plans unless it secured an agreed variation. Correspondence tendered in evidence shows that after the builder had constructed the western footpath at variance from the approved plans, it had attempted, unsuccessfully, to secure a variation by agreement. The departure from the plans was not merely minimal. It was associated with drainage problems. It would cost almost $3,200 to fix. Without correction of the non-conformance, the works would not reach practical completion.
37. [37]
    The cases on conditions, warranties, intermediate terms, and repudiation discussed in the parties’ submissions deal with termination on general principles. While they are broadly informative, in that they address similar topics, they are not directly applicable to the question in this case: whether the owners were entitled to terminate pursuant to a specific contractual provision for termination. That turns on whether there was a substantial breach.
38. [38]
    Stojanovski v Australian Dream Homes Pty Ltd^[7] dealt with a contractual right to terminate for substantial breach. There had been a breach of a warranty to carry out the works in ‘a proper and workmanlike manner’. The court observed that whether a breach is substantial must be evaluated by considering the nature and the consequences of the breach to determine if they are ‘ample or considerable or important’.^[8] The court observed that the various grounds set out in the contract as enlivening a right to serve a pre-termination notice – which included substantial breach but also other grounds such as refusing or persistently neglecting to comply with the contract – involved a ‘real and significant risk that the owner will not get what he bargained for …’.^[9] The court observed that the carrying out of the works in a proper and workmanlike manner will ‘ordinarily be fundamental to the owner’,^[10] and failure to do so will enliven the right to serve a pre-termination notice.
39. [39]
    Similarly, in my view, the carrying out of works in accordance with the approved plans will be fundamental to an owner. It may be that not every breach of that obligation will amount to a substantial breach for the purposes of clause 25: a small deviation, or one that will be corrected later in the construction process, for example, might not objectively be classified as substantial. However, a breach such as the one in question, involving the western footpath, that will prevent the works from reaching practical completion, at a time when practical completion should be imminent, is a breach of considerable gravity. Practical completion is an important milestone under the contract: triggering the builder’s right to the final stage payment, and starting the defects liability period under clause 24.1.
40. [40]
    The breach in question, even taken in isolation, meant that the works had not reached practical completion. The breach stalled completion of the contract indefinitely. It meant that the owners would not get what they had bargained for, which was a house built in accordance with the approved plans and brought to practical completion.
41. [41]
    I find that there was a substantial breach in relation to the western yard / footpath.
42. [42]
    The builder did not rectify, or commence to substantially rectify, the breach within ten working days. Instead, the builder maintained its position that practical completion had already been reached. The owners were entitled to terminate as they did. I find that their termination on 9 August 2017 was valid.

Owners’ claim for damages for rectification and completion costs

43. [43]
    The various items are listed in a table at paragraph 211 below.
44. [44]
    I will not discuss uncontentious items where Mr Carpenter and Mr Helisma agree that there is a defect, non-compliance or incompletion and about the cost to rectify or complete. It is apparent from their written and oral evidence that Mr Carpenter and Mr Helisma are both experienced and competent. I accept their opinions about the uncontentious items.

Purpose and extent of damages

45. [45]
    It is undisputed that the purpose of damages is to place the aggrieved party, as far as possible, in the position that they would have been in had the contract been properly performed. In construction contracts, loss is usually measured by the amount required to rectify, rather than by diminution in value of the building. This is subject to a qualification that the rectification work must not only be necessary but also reasonable: Bellgrove v Eldridge.^[11]
46. [46]
    In Tabcorp Holdings Ltd v Bowen Investments Pty Ltd,^[12] the High Court said that unreasonableness is fairly exceptional and noted that an example of unreasonableness given in Bellgrove v Eldridge involved the use of a technical breach to secure a profit. In Willshee v Westcourt Ltd,^[13] Martin CJ appears to have treated unreasonableness as confined to the situation of profiting from a technical breach. However, in Ruxley Electronics and Construction Ltd v Forsyth,^[14] the House of Lords decided that damages should not be awarded for rectification where the cost would be out of all proportion to the benefit that would be obtained. That view has been endorsed in Australian cases such as Wheeler & Anor v Ecroplot Pty Ltd^[15] and Tranquility Pools and Spas Pty Limited v Huntsman Chemical Company Australia Pty Limited.^[16]
47. [47]
    In my view, the concept of unreasonableness is not confined to the situation of profiting from a technical breach. It will extend to instances of disproportionality, although of course unreasonableness will remain fairly exceptional.

Item 1: ground levels below patio

48. [48]
    Mr Carpenter and Mr Helisma agree, and I accept, that the work beneath the patio is defective in two respects. First, there is inadequate drainage, so that water lies against footings, causing corrosion. Second, there is less than the clearance required under the relevant Australian Standard to allow periodic inspections of a termite barrier. Soil will need to be removed to achieve the required clearance.
49. [49]
    Mr Carpenter proposes alternate methods of rectification. One method would involve removal of the patio flooring, then excavation using power tools, and would cost $14,816.63. The other method would involve leaving the deck intact, and workers lying on the ground and excavating by hand and power tools. The cost for that method would be $4,269.48. Mr Carpenter says that both methods are feasible, but he prefers the first on the basis that the second would be onerous for workers. Mr Helisma’s estimated cost is $5,232.63 using a method similar to Mr Carpenter’s second method, though potentially also using aqua-blasting, and involving removal of a part of the deck structure.
50. [50]
    The owners submit that Mr Carpenter’s first method should be preferred because it would not require work in confined spaces. The builder’s submission, which I accept, is that Mr Carpenter’s second method should be favoured: being the most economical, it is the most reasonable solution. I assess damages at $4,269.48 for item 1.

Item 3: external staircase (landing area)

51. [51]
    Mr Carpenter and Mr Helisma agree that existing work on the landing area of the staircase is defective, including that the landing is higher than it should be, and batten screws have been used instead of bolts. Mr Carpenter estimates the rectification cost at $2,020.86, while Mr Helisma estimates $1,658.72. This reflects differences in how each expert thinks the rectification work would be carried out. This is a matter of judgment, and in my view there is no obvious reason why one method in this instance is necessarily superior to the other.
52. [52]
    Having considered the detailed evidence of Mr Carpenter and Mr Helisma in relation to various items, my overall impression is that while both are experienced and competent, Mr Helisma tends to display a more pragmatic approach to rectification. The cabinetry items discussed later in these reasons are probably the best example of that. Subject to a few exceptions, Mr Helisma also adopted a consistent approach of using a Cordell cost-estimating tool to calculate anticipated costs, and he has set out his workings. Mr Carpenter was inclined, for a significant number of items, to simply rely on contractors’ bare quotations in estimating cost. As will be seen, in relation to some items I prefer Mr Carpenter’s opinion, but they tend to be in matters of deviation from contractual requirements, as distinct from inherently defective work. It is fair to say that Mr Helisma is less focussed on such work, tending to dismiss it as a ‘contractual issue’. So far as inherently defective work is concerned, I consider that Mr Helisma’s pragmatic approach is more likely to match what would in fact be carried out by a builder undertaking rectification. For these reasons, I am inclined to have greater confidence in Mr Helisma’s proposals for rectification methods and his cost estimates.
53. [53]
    Accordingly, for item 3, I assess damages at $1,658.72.

Item 7: western yard / footpath

54. [54]
    This item has been discussed in paragraph 30 above.
55. [55]
    Mr Carpenter’s cost estimate is $4,165.78, including tiling. Mr Helisma’s is $3,189.43 for rectification, plus $479.42 for tiling, making a total of $3,668.85.
56. [56]
    The owners submit that the tribunal should award $4,165.78. The builder submits that the tribunal should award $3,189.43. It is not apparent, though, why the tiling cost should not be included, as it is common ground that tiling was not yet done but was provided for under the contract as varied.
57. [57]
    I award $3,668.85 for item 7, which includes the tiling costs, and relies on Mr Helisma’s estimate.

Item 8: external sheet cladding in contact with ground surface

58. [58]
    This item relates to an area at the front of the property. It is undisputed that contact between the cladding and the ground surface constitutes a defect because it permits water transmission to the building.
59. [59]
    Mr Carpenter and Mr Helisma propose different methods of rectification. Mr Carpenter’s involves demolishing the external pavement and then installing a new one at a lower level. The cost, including for tiling where required, would be $5,339.44. Mr Helisma’s method involves trimming the cladding without disturbing the pavement. The cost would be $1,595.24. Mr Carpenter disagrees with Mr Helisma’s proposal, on the basis that it would expose the garage wall framing plate to the elements, and the plate would be susceptible to rot over time. Mr Helisma’s response, in cross-examination, was that the termite barrier acts as a sufficient damp proof force.
60. [60]
    The owners submit that Mr Carpenter’s method should be preferred on the basis that Mr Helisma’s carries a risk of water ingress. The builder submits that such risk is not established on the evidence. On balance, I consider that Mr Helisma has proposed a rectification method that will achieve compliance with manufacturer’s and regulatory requirements, without undue risk of water ingress.
61. [61]
    Accordingly, I assess damages at $1,595.24 for item 8.

Item 10: drainage from roofs

62. [62]
    The main area of dispute in this item concerns whether water from particular parts of the roof should be sent to the street or to the retention (or rubble) pit in the back yard.
63. [63]
    The house is two-storey. Its shape, seen from above, is a long rectangle: longer along the sides than at the front or back. The front of the house, facing the street, faces south. The master bedroom is at the front of the house, on the upper level, above the garage. However, a portion of the garage extends further to the western boundary than the upper level does.
64. [64]
    Unfortunately, none of the reports contains a concise description of the as-constructed arrangements, but piecing together various pieces of evidence I find:

    1. (a)
       there is a large upper roof section covering approximately 70% of the house at the northern end (the rear of the house);
    2. (b)
       there is another upper roof section at the southern end of the house, over the master bedroom, covering about 30% of the house;
    3. (c)
       the roof over the master bedroom is a little higher than the rear roof section;
    4. (d)
       there is a relatively small garage roof on the western side, which covers the portion of the garage that extends toward the western boundary, and this roof is at approximately the level of the ceiling of the ground floor;
    5. (e)
       two downpipes run from the roof over the master bedroom down to the garage roof, and water from the garage roof is discharged to the retention pit; and
    6. (f)
       a full-height downpipe at the north-western corner of the house (at the rear) travels down to the ground and connects into an above-ground pipe running into the back yard (to, I infer, the retention pit).
65. [65]
    There are other full-height drainpipes in the rear part of the house. Mr Helisma photographed and marked some piping at the north-eastern (rear right) corner of the house. I understand his evidence about this to be that water draining from the upper roof through full-height drainpipes is being directed frontward toward the street, whereas water from lower roofs and field gullies is being directed rearward toward the retention pit. I have no reason to doubt that evidence generally, but I infer that the drainpipe at the north-western corner must be an exception.
66. [66]
    Part of the contractual documents is a schedule of amendments to standard inclusions, and at 4.14 it deals with stormwater discharge, and provides that:

Upper level downpipes are to be discharged to the street through charged lines,

Lower level roof and field gullies are to be discharged to the retention pit …^[17]  

67. [67]
    A plan forming part of the contract contains notes:

Rainwater from main upper floor roof to discharge away from house to street through sealed lines.

Rainwater from garage roof and field gullies to discharge away from house to existing rubble pit.^[18]

68. [68]
    Another plan, also forming part of the contract, depicts downpipes running from the roof over the master bedroom to the garage roof.
69. [69]
    The owners’ submissions treat the main upper floor roof as comprising both the rear section (which I have described as covering approximately 70% of the house) and the front section covering the master bedroom. They also treat, uncontentiously, the garage roof as a lower roof. The owners submit that, as-constructed, rainwater drains from the upper floor roof (above the master bedroom) into the rubble pit, via the garage roof, and this is contrary to the contractual specifications. While on this approach there is a discrepancy between a plan (depicting downpipes discharging from the roof above the master bedroom on to the garage roof) and the specifications, the contract provides in clause 13 that in the event of inconsistencies, specifications have precedence over plans. Accordingly, the owners submit, the drainage system needs to be rectified such that all water originating from the upper roof discharges to the street. The tribunal should award damages, the owners submit, of $2,480.52, which is the rectification cost estimated by Mr Carpenter.
70. [70]
    The builder submits that the contract must be read as whole, and the appropriate way to do that is to treat only the rear section of the roof as the ‘main upper floor roof’. On this basis, the discharge of rainwater from the section of roof above the main bedroom to the rubble pit, via the garage roof, is not inconsistent with the specifications. No rectification is required, the builder submits.
71. [71]
    I accept the builder’s submission on this point. The contract must be read as a harmonious whole, if possible. In signing the contract, the parties agreed not only to the specifications, but also the plans. ‘Main upper floor roof’ is not defined. It is not perverse to treat it as consisting of the rear section, covering approximately 70% of the area of the house, but not the front section above the master bedroom. The front section is distinct from, and has a slightly higher peak than, the rear section. Similarly, ‘upper level downpipes’ is not defined and could mean a number of things. Overall, the best interpretation of the contract, most in accord with the objectively-determined common intention of the parties at the time of the contract, is the one for which the builder contends.    
72. [72]
    Accordingly, I do not accept that rectification works are required in respect of this aspect.
73. [73]
    Having said that, an element of item 10 is the lack of ground cover to the drain running along the ground from the downpipe at the north-western corner. Mr Carpenter and Mr Helisma agree that such a pipe should be covered by a certain amount of soil.
74. [74]
    Of course, a more fundamental problem is that this horizontal drain serves to discharge water from the main upper floor roof to the retention pit instead of to the street. However, I am not in a position to assess damages for that defect, or alternatively for the defect of the lack of ground cover, in the absence of costing specific to those problems.
75. [75]
    Accordingly, I do not assess any damages as payable for item 10.

Item 11: barbeque area

76. [76]
    The barbeque area is on a rear deck. There are cupboards with white Caesarstone benchtops. The barbeque sits in a recessed part of the benching. The gas cylinder for the barbeque is stored in one of the cupboards. There is a connecting pipe between the cylinder and the barbeque, running through a hole cut in the Caesarstone.
77. [77]
    It is common ground that the contract specified that the benchtops were to be made of Caesarstone. However, the Caesarstone ‘installation instructions and warranty provisions state that [Caesarstone] should not be used in external applications, to do so voids any warranty of the product’.^[19] Mr Carpenter therefore proposes that the benching should be replaced with granite benchtops. Mr Carpenter says this work would cost $6,694.72, which includes the cost of plumbing to reinstall the barbeque. Mr Carpenter also points out that the hole cut in the Caesarstone for the gas pipe entry is in a position that causes the barbeque to be too far back on the benchtop. This impedes opening up the barbeque. Further, the cupboard for the gas cylinder should, but does not, have cross-ventilation. This should be attended to as part of the rectification work.
78. [78]
    Mr Helisma agrees that the barbeque is positioned too far back on the bench. He says this could be remedied by elongating the hole cut in the Caesarstone for the gas pipe. I infer from the photographs that such an elongated hole would not be prominently visible because it would be covered by the barbeque. Mr Helisma also agrees that the gas cylinder bottle cupboard should be modified to allow cross-ventilation. He says these two modifications would cost $209.25.
79. [79]
    In relation to the Caesarstone, Mr Helisma says that stress cracking can be caused when Caesarstone is placed next to heat or in direct sunlight ‘for any great length of time’.^[20] Further, white Caesarstone will not normally bleach. Mr Helisma says the warranty exclusion is related to sunlight. The barbeque area is in a shaded position such that it is not exposed to direct sunlight, and there is no evidence of ‘product failure’.^[21]
80. [80]
    On the question of sunlight, the owners point to photographs in Mr Helisma’s report which, they say, demonstrate sunlight falling over the Caesarstone benchtops. However, I do not accept this. The source of the light is not depicted in the photographs. It may well be diffuse rather than direct sunlight. Mr Helisma’s approach overall shows him to be thorough and observant, and I accept his evidence that the area is not exposed to direct sunlight.
81. [81]
    It is not suggested in the reports that the barbeque itself generates too much heat for the Caesarstone.
82. [82]
    The owners submit that the rectification work proposed by Mr Carpenter is both necessary and reasonable. The builder submits to the contrary, arguing that the rectification work Mr Carpenter proposes is out of all proportion to the problem.
83. [83]
    I accept the builder’s submission on this point, and assess damages at only $209.25 for this item. It is not reasonable to award damages for a change of benchtops in circumstances where Caesarstone was specified in the contract as the material to be used, and there is no actual problem in its performance. This is notwithstanding that the warranty is voided, but there is no obvious likelihood that the warranty would be called upon in circumstances where the benchtops have already been installed without incident and have not suffered subsequent deterioration.

Items involving kitchen cabinetry and benches: items 14, 15, 35, 36 and 37

84. [84]
    I will deal with these items, and then some other items, out of numerical order, because they all involve Caesarstone benchtops.
85. [85]
    Mr Carpenter and Mr Helisma agree that there are defects or incomplete work. However, they disagree markedly on the type and therefore the cost of rectification required. The costs are set out in the table below.

86. [86]
    Mr Carpenter considers that the kitchen cupboards and existing Caesarstone benchtops will have to be entirely removed and replaced with new cabinetry and new Caesarstone benchtops. Mr Helisma considers that modifications can be made to the existing cabinetry without removal of the existing Caesarstone benchtops.
87. [87]
    The agreed defects in the cabinetry include insufficient support for the benchtops (by way of elements such as vertical rails and beams, and under-surface structural supports for joins); lack of tops to cabinets; and the fact that the cooktop was installed over drawers, contrary to the Caesarstone installation instructions. Further, it is agreed that a bench overhang needs brackets for structural support. Brackets were provided for in the contractual specifications, but not installed.
88. [88]
    Mr Carpenter also considers that there is a lack of insulation above a dishwasher (or possibly dishwashers and dryers), which is required to protect the benchtops from heat. Mr Helisma considers that there is appropriate insulation, but adds that if he is wrong about that, it can be easily rectified in conjunction with adding supports and tops.
89. [89]
    In the joint expert report, Mr Carpenter explains that he was instructed by the owners that the cabinetmakers from whom they obtained quotations would not risk making repairs to defective work, so he has allowed for full replacement of the cabinetry. He also quoted an email from Rodney Schafer, director of Ashcraft Industries Pty Ltd, who provided one of the quotations. Mr Schafer expressed the view that the quality of the existing work is so low that it would be more costly to repair it than to replace it.
90. [90]
    In one of his reports, Mr Carpenter said that specific industry knowledge is needed to reliably quantify the cost of rectification of cabinetry. In cross-examination, he acknowledged that rectification of such work is not within his area of expertise.
91. [91]
    Mr Carpenter explained in the joint expert report that he also allowed for replacement of the Caesarstone because in his experience Caesarstone cannot be guaranteed if moved. The owners also highlight that the Caesarstone ten-year guarantee will not apply to a defect caused by inadequate support of the stone.
92. [92]
    Mr Helisma, on the other hand, says that the cabinetry is performing satisfactorily. He says that additional support elements, and the missing brackets for the overhang, can be added without having to remove the Caesarstone. In relation to whether there is sufficient ventilation for the oven, Mr Helisma says that this cannot be determined without removing the oven. He allowed $209.25 for the purpose of removing the oven and checking if there is sufficient ventilation clearance.
93. [93]
    In cross-examination, Mr Helisma demonstrated what in my view is a very sound grasp of the practicalities involved in cabinetry construction and repair.
94. [94]
    So far as the existing Caesarstone benchtops are concerned, the owners note that Mr Tacon of All Inspect observed a non-uniform finish to the kitchen benchtop outside QBCC Standards and Tolerances. I think that this must relate to item 32, in respect of which Mr Carpenter and Mr Helisma agreed upon a rectification cost of $1,704.74.
95. [95]
    The contractual specifications required ‘40mm Caesarstone’ for the ‘Kitchen Benchtop’ and ‘60mm Caesarstone’ for the ‘Kitchen Island Bench’.^[22] The owners submit that the benchtops installed were only 20 millimetres thick. However, I infer that this must be a reference to component layers, because Mr Helisma gave evidence in cross-examination about an existing 40 millimetre benchtop consisting of two 20 millimetre layers. He went on to say:

That’s the way they manufacture it.

…

Some manufacturers might come out with the full 40 mil, some laminate them together and polish the edges and you don’t see it.^[23]

96. [96]
    I accept Mr Helisma’s evidence on this issue, and I do not consider that there is a defect relating to the thickness of the benchtops.
97. [97]
    It is not suggested that the benchtops have collapsed or that they have become warped or damaged. I find that they are in good condition.
98. [98]
    The owners submit that Mr Carpenter’s overall proposal for rectification is reasonable and necessary. They point out that they were entitled, under contractual terms, to have work done in an appropriate and skilful way, and for good materials to be used. This includes following manufacturer’s instructions and recommendations. The evidence from Mr Schafer, an appropriately qualified cabinetmaker, is that the cabinetry needs to replaced rather than patch-fixed. This will inevitably involve moving the Caesarstone. The owners submit that the Caesarstone warranty has already been voided by inadequate support, and that moving the stone will be a further voiding factor. 
99. [99]
    The builder, on the other hand, submits that the rectification proposed by Mr Carpenter is out of all proportion to the problem, and should be rejected as unreasonable. The builder submits that the opinion of Mr Helisma as an expert witness should be preferred to that of Mr Carpenter, who essentially relied on the opinion of a contractor, Mr Schafer, who has provided a quotation.
100. [100]
     I prefer the builder’s submissions in respect of these items. Mr Carpenter and Mr Helisma are expert witnesses. They participated in a conclave and bound themselves to the obligation of an expert witness to prioritise the duty to assist the tribunal rather than a party. They do not have self-interest in the outcome, unlike a contractor who has provided a quotation. That is not to say, of course, that the evidence of an expert must necessarily be accepted over the evidence of a contractor. A contractor may, like Mr Schafer, have considerable experience in the particular area, while an expert, like Mr Carpenter, may not have particular expertise in some specialised aspect of their field. However, the duties and interests of different types of witnesses is a matter to be taken into account.
101. [101]
     Mr Helisma gave a detailed and, in my view, persuasive explanation of why his proposal would achieve sound rectification. Mr Carpenter, in contrast, placed heavy reliance on the undetailed opinion of a contractor who had provided a quotation.
102. [102]
     I acknowledge that rectification in accordance with Mr Helisma’s proposal would still result in defective work in that it would leave drawers under a cooktop, contrary to the Caesarstone instructions which are aimed at ensuring adequate support of the stone. However, Mr Helisma has provided a satisfactory explanation of why his proposal would achieve sufficient support. 
103. [103]
     On the warranty question, it is possible that Caesarstone might refuse a claim, if one arises, on the basis the stone had insufficient support. A claim seems quite unlikely though, because the stone has not failed and presumably will not fail in the future, after additional supports as proposed by Mr Helisma are installed. Potential voiding from movement of the stone is not an issue in my view, as I accept Mr Helisma’s evidence that the stone does not need to be moved.
104. [104]
     It should not be assumed that no contractor will carry out repair work, notwithstanding that some contractors have told the owners that they will not. Those contractors have an obvious self-interest in maximising the price of work. Similarly, there has been no incentive at this stage for the owners to seek out a contractor willing to undertake work in the way proposed by the builder.
105. [105]
     In the circumstances, I consider that the rectification proposed by Mr Helisma is achievable and reasonable, whereas that proposed by Mr Carpenter, while also achievable, is out of all proportion to the problem.
106. [106]
     I therefore assess as damages the amounts shown in the third column of the table in paragraph 85 above.

Item 21: pantry cabinetry

107. [107]
     As with the previous items, there is a radical difference between what Mr Carpenter and Mr Helisma propose. Mr Carpenter proposes removal and replacement of the entire cabinetry and Caesarstone, at a cost of $11,556. Mr Helisma proposes merely installing a laminated edge to a shelf at a cost of $275.
108. [108]
     Mr Carpenter adopts earlier observations of Mr Tacon of All Inspect that the pantry does not conform with the plan: ‘shelves have been installed incorrectly, wrong layout and cupboard missing’.^[24] However, no further detail is provided apart from some photographs which do not shed light on what the alleged problems are. Nor is light shed by later evidence produced on behalf of the owners. Mr Carpenter added in one of his reports that shelves are bowed and show inconsistent gaps, but judging from the photographs he provided, it appears that the extent of any defects must be small.
109. [109]
     No existing defect in the Caesarstone is suggested. The rationale for full removal and replacement of cabinetry and stone is, as with previous items, what contractors have told the owners about their preparedness to replace but not repair, and the warranty implications for the Caesarstone when moved.
110. [110]
     Mr Helisma says in the joint expert report that the joinery is in general accordance with the relevant contract drawing, and in cross-examination he clarified that he did not observe any deviance from the drawing. Mr Helisma, while apparently unconvinced that there was any defect in the nature of bowing or gaps that would warrant rectification, opted to allow $275 for the installation of a laminated edge.
111. [111]
     I prefer the opinion of Mr Helisma on this issue. I am not persuaded that there is any significant defect, and certainly not one that would justify over $11,500 worth of work. I assess damages at $275 for this item.

Item 34: TV unit

112. [112]
     This item is labelled ‘audio visual cupboard benchtop’ in the joint expert report, but the description ‘TV unit’ used in the contract is more encompassing. The unit consists of cupboards and a benchtop. The contract specified a Caesarstone benchtop. It is undisputed that it was known by the parties that the TV unit would also be used to hold audio-visual equipment.
113. [113]
     Mr Carpenter considers that there is a defect in the unit in that the cabinetry lacks ventilation. This means that heat can build up. Heat can damage the audio-visual equipment, such as the amplifier, and the Caesarstone.
114. [114]
     A Caesarstone published guide says that Caesarstone can tolerate moderately hot temperatures for brief periods; prolonged exposure will result in discolouring or other damage; and excessive localised heat may damage the surface or cause hairline cracks. Accordingly, the guide continues, the stone should not be exposed to excessive heat, where surfaces are exposed to temperatures higher than 70 degrees; and direct contact between the stone and very hot pots or other hot cookware should be avoided by the use of trivets or other insulation.
115. [115]
     In his initial report, Mr Carpenter said that the lack of ventilation could be addressed in a number of ways, such as by cutting holes inside the cupboard and installing vents, installing a mechanical fan vent system, or providing cross-ventilation through the external wall. However, in the joint expert report, Mr Carpenter expressed the view that all cabinetry and Caesarstone should be replaced, at a cost of $11,495.55. Again, Mr Carpenter points to what contractors have told the owners about their preparedness to replace but not repair. Although no current defect in the Caesarstone has been identified, Mr Carpenter considers that it should be replaced because of the warranty implications of moving the existing stone.
116. [116]
     Mr Helisma disagrees that there is a defect. He says the Caesarstone guide contemplates significantly more intense heat than would be generated in the TV unit. If there is any excessive heat associated with audio-visual appliances, Mr Helisma considers that it should be addressed by the installer of the appliances.
117. [117]
     The owners submit that construction of the unit without ventilation means it is not fit for purpose. The replacement of the cabinetry and benchtop is reasonable and necessary, they submit, for the reasons outlined by Mr Carpenter and because exposure to excessive heat voids the Caesarstone warranty.
118. [118]
     The builder submits that there is no evidence that the Caesarstone is exposed to excessive heat as contemplated in the Caesarstone guide. The guide contemplates very hot items such as cookware.
119. [119]
     I accept the builder’s submissions about this item. The evidence falls short of establishing that there is a defect, let alone one which it would be necessary and reasonable to address in the manner proposed. I assess damages at nil for this item.

Items 74, 75 and 76 (vanity units in bathroom number 2, ensuite and bathroom number 1); item 77 (bar in rumpus: benchtop installed over dishwasher without insulation); item 78 (laundry cupboard)

120. [120]
     It is common ground that there are defects in items 74, 75, 76 and 77 in the nature of inadequate support in cabinetry of Caesarstone benchtops. The issues and arguments are of the same nature as those already discussed in relation to kitchen and pantry items. The owners submit that Mr Carpenter’s method of rectification, involving complete replacement of cabinetry and stone, costed at $6,268.11, $6,123.56, $6,089.93 and $9,338.00 for those four items respectively should be adopted. The builder submits that Mr Helisma’s method, involving some minor modifications, at a cost of $89.75 for each of the items, should be preferred.
121. [121]
     As with the kitchen and pantry cabinetry, I consider that the method and costs proposed by Mr Helisma are reasonable, rather than the method and costs proposed by the owners. Accordingly, I assess damages of $89.75 for each of those four items.
122. [122]
     In respect of item 78, the owners contend in their submissions that the joinery was not constructed in accordance with the plans, and complete replacement of cabinetry and benchtop at a cost of $4,700 as per Mr Carpenter’s opinion is reasonable and necessary.
123. [123]
     The owners have failed to identify how the construction is not in accordance with the plans.
124. [124]
     In the joint expert report, Mr Helisma said there is no defect, but allowed $89.75 for any perimeter support that may be required. The builder submits, and I accept, that no defect has been established. I assess no damages for this item.

Item 12: paintwork

125. [125]
     An experienced painter, George Englert, carried out an inspection for the owners in September 2017. He identified a considerable number of defects in the paintwork.
126. [126]
     Mr Carpenter and Mr Helisma agree there are defects as identified in Mr Englert’s report, but disagree on the cost of rectification. The cost estimates are:

     1. (a)
        $14,832 by Mr Carpenter, based on a quotation supplied by a contractor, Rochele Painting, to the owners; and
     2. (b)
        $7,279.42 by Mr Helisma, using the Cordell estimating product. 
127. [127]
     In the joint expert report, Mr Carpenter said he had assumed the quotation reflected a scope of works necessary to rectify the defects identified in Mr Englert’s report. In cross-examination, however, Mr Carpenter agreed that the Rochele quotation went beyond the items identified by Mr Englert.
128. [128]
     Mr Helisma, in the joint expert report, said that repainting of the entire house with a two-coat system in the way proposed by Rochele is excessive, and that his costings allow for repainting with one coat. This, he says, will adequately fix defects and provide for completion of incomplete work.
129. [129]
     The owners point out that the contractual specifications called for a three-coat paint system, and that Mr Englert says that this would involve a thickness of 75 microns. Testing by Mr Englert in two places inside the house indicated a thickness of 50 microns. The owners submit that the work for which Rochele quoted is reasonable and necessary to achieve a satisfactory resolution of the many issues identified by Mr Englert, such as areas not fully painted and walls and ceiling areas not being back-rolled. The owners also submit that the Rochele quotation is a better reflection of market rates than the Cordell method used by Mr Helisma.
130. [130]
     The builder submits that Mr Helisma’s opinion should be preferred. Elsewhere in its submissions, the builder also points to Mr Helisma’s oral evidence that in his experience, the Cordell estimator is ‘conservative’ meaning that it produces a costing estimate that tends to be higher than what can be achieved in the market. I accept that evidence, and I am inclined to place more weight on that estimate than one based on a quotation given by a contractor with an obvious self-interest in the price.
131. [131]
     In light of the concession made by Mr Carpenter that his assumption about the basis of the Rochele quotation was misplaced, the measurements suggesting that two coats have been applied, and my overall confidence in Mr Helisma’s practical approach, I prefer the opinion of Mr Helisma on this issue. I assess damages at $7,279.42 for item 12.

Item 17: driveway

132. [132]
     Mr Carpenter in the joint expert report says that based on verbal instructions from the owners, there was an agreement between them and the builder for the installation of a ramp, where the driveway meets the street, to stop water running down the driveway to the house. Mr Carpenter says that a contractor’s quotation of $5,477.60, to cut back and replace part of the slab and to install the ramp, should be adopted if the tribunal decides there is a defect.
133. [133]
     There is correspondence in the exhibits showing that there were communications between the owners and the builder about including such a ramp. However, it is common ground that the ramp was not provided for in the contractual specifications, either originally or by way of any formal variation.
134. [134]
     Mr Helisma says that adding a ramp would serve to dam water, increasing rather than decreasing any flow of water down the driveway toward the house. He points out, and I accept, that as constructed, there is a crest in the driveway which buffers water flow from the street toward the house.
135. [135]
     The owners submit that the driveway is not fit for purpose for various reasons, and they say this results in excessive water at times around the house. The owners’ submissions point to issues beyond the lack of a ramp, particularly the dimensions of a strip drain and of the driveway itself. However, these additional matters are outside the focus of the joint expert report, which is upon the lack of a ramp.
136. [136]
     I accept Mr Helisma’s opinion that the lack of a ramp does not render the driveway unfit for purpose. The owners have not established that the driveway is unfit for purpose. Photographs show the driveway being used for its intended purpose of carrying vehicles. I assess damages at nil for this item.

Item 19: internal stairs

137. [137]
     It is common ground that the plans for the stairs included saw tooth stringers, but the stairs as constructed have closed stringers.
138. [138]
     Mr Carpenter and Mr Helisma agree that there are also some minor defects.
139. [139]
     Mr Helisma says that the minor defects are variously unnoticeable or will be addressed in the repainting work. In relation to the stringers, Mr Helisma says that ‘the variation to the stringer open/closed profile is a contractual issue and does not warrant replacement of the stairs’.^[25]
140. [140]
     Mr Carpenter proposes in the joint expert report that the stairs be removed and replaced at a cost of $14,894.67. He says this is based on a 19 April 2019 quotation by Ashcraft Industries, plus $2,040.27 for associated work. This, however, does not seem to quite accord with the quotation itself, which shows the figure of $14,139.84 for internal stairs.
141. [141]
     Mr Helisma also provided an estimated cost for replacement, in the event that the tribunal decided it was warranted, of $6,112.39. This was calculated using the Cordell estimating product. However, in cross-examination, Mr Helisma conceded that he had not factored in an additional cost for associated work that would be required in a bathroom. He suggested that $1,200 be allowed for that, though he acknowledged that this was an on-the-spot guess.
142. [142]
     Mr Carpenter and Mr Helisma also disagree on the cost of merely rectifying the issues other than the stringer issue: Mr Carpenter says $474.40, while Mr Helisma says $136.
143. [143]
     The owners submit that they are entitled to have the stairs constructed as per the plans. Further, replacing the stairs is justified because the appearance of the stairs, which are a focal point at the entry to the house, has always been important to them. I accept these submissions: the importance of a particular look, including the saw tooth feature, is evident in the specifications, and in correspondence between the owners and the builder during construction when some modifications were discussed. It would have been apparent to the builder that the particular look was a matter of importance.
144. [144]
     The lack of the saw tooth feature does not render the stairs unfit for purpose. However, it was a significant departure from the contractual requirements, with aesthetic consequences. In these circumstances, replacement is both necessary and reasonable.
145. [145]
     The owners submit that the tribunal should accept Mr Carpenter’s estimate for replacement, as it is based on the quotation of a trade contractor which is well-placed to indicate the market value of work. Further, the owners submit, Mr Schafer of Ashcraft Industries was not questioned in cross-examination about the reasonableness of his quotation.
146. [146]
     However, I prefer the evidence of Mr Helisma, based primarily on a careful costing using the Cordell estimating product, to the quotation from a contractor who does not have the obligations of an expert witness.
147. [147]
     I assess damages of $7,312.39 for item 19, comprising $6,112.39 (given by Mr Helisma in the joint expert report) and $1,200 (mentioned by Mr Helisma in cross-examination).

Item 23: Tiling in ensuite

148. [148]
     It is common ground that there are missing tile trims. Mr Helisma says that this is the only defect, and would cost $69.27 to rectify. The other issue, discussed below in relation to tiling over the shower bulkhead, is a contractual issue according to Mr Helisma.
149. [149]
     The shower bulkhead has not been tiled, but the parties disagree about whether it should have been. The parties agree that the plans do not show tiling of the bulkhead. However, the owners point to a contractual specification in paragraph 15.4 of the schedule of amendments to standard inclusions, that floor to ceiling tiles are to be installed in the ensuite and certain other rooms. The owners submit that where there is a discrepancy between plans and specifications, the latter prevail, under clause 13 of the contract.
150. [150]
     The builder submits that the order of precedence in clause 13 is engaged only if a party has given a notice within five working days of becoming aware of a discrepancy. The builder submits that clause 13 is therefore irrelevant, and that it was entitled to follow the plans.
151. [151]
     In my view, it is difficult to strictly apply clause 13 after termination of the contract: the notice provision is designed to facilitate the progress of works. Nonetheless, I consider that the order of precedence does give the best available indication of the parties’ objective mutual intention, at the time the contract was formed, of how discrepancies should be resolved.
152. [152]
     Accordingly, I accept the owners’ submission that the specification prevails, and that the contract required the bulkhead to be tiled.
153. [153]
     Accordingly, I assess damages at $712.81, being the cost estimated by Mr Carpenter for the tiling to be completed, and the trims added. I consider that this is reasonable as well as necessary, particularly taking into account Mr Carpenter’s observation that the tiling of the adjacent bulkhead over the vanity unit, but the non-tiling of the bulkhead over the shower, creates an odd look.

Item 24: shower niche in bathroom 2

154. [154]
     Mr Carpenter said in his initial report that the niche has been constructed to smaller dimensions than the plan. He does not indicate by how much, but one of the All Inspect reports indicates that the niche is 845 mm x 540 mm instead of 900 mm x 600 mm. Mr Carpenter estimates the cost of rectification at $842.28. Rectification would involve removing tiles, reshaping the wall, and retiling.
155. [155]
     The parties had agreed, in the course of construction, to a contractual variation to increase the size of the niche. It is not clear to me whether the dimensions of the as-constructed niche reflect the original plans, or perhaps something in between.
156. [156]
     The parties’ submissions proceed on the basis that the niche as constructed does not accord with the plans, but the parties differ about whether the proposed rectification is reasonable. The owners submit that it is, bearing in mind that the builder was required to construct in accordance with the contract. The builder submits that it is not: it would be out of all proportion given that no benefit from the rectification has been identified.
157. [157]
     Bearing in mind that the dimensions of the niche were sufficiently important to warrant a variation to the contract, I infer that it must have been mutually understood at the time of variation that they were of significance. Accordingly, I consider that rectification to achieve compliance with plans is warranted, notwithstanding the absence of evidence of any aesthetic or functional detriment.
158. [158]
     Accordingly, I assess damages at $842.48 for item 24.

Item 27: patio tile edges

159. [159]
     Mr Carpenter says that $92.60 should be allowed in the event that the cheaper of his alternatives for item 1 is adopted, whereas Mr Helisma says that the issue will be addressed in any event under item 13 works.
160. [160]
     This matter is not explored in any detail in the submissions. I see no reason to doubt Mr Helisma’s view. Accordingly, I assess nil damages for this item.

Item 31: lounge bulkhead and corner

161. [161]
     Mr Carpenter says the bulkhead has noticeable crooked lines, creating an obvious cosmetic defect. He says rectification would cost $854.25.
162. [162]
     Mr Helisma says that no defect was apparent when he initially inspected, but on reinspection ‘the trained eye can see degree of misalignment’.^[26] He agreed with the proposed cost if rectification is required.
163. [163]
     Neither Mr Carpenter nor Mr Helisma has measured the area, to determine any departure from the relevant Standard or the QBCC Standards and Tolerances Guide. Neither has included photographs. Photographs were included in an All Inspect report, under a heading ‘Lounge room Bowed Bulkhead and out of square corner’.^[27] The photographs of the bulkhead do not show any noticeable bowing, but I appreciate that such a defect might not be readily visible in such photographs. The photographs of the corner include some rulers, showing a very small departure from square.
164. [164]
     The owners point to Mr Helisma’s evidence in cross-examination: it was put to him that in the joint expert report it was agreed that the work was defective, and he responded ‘Well, I just thought it’s a difficult one to pursue and we didn’t measure onsite’.^[28]
165. [165]
     On Mr Helisma’s evidence as a whole, I do not regard him as having conceded that there is a defect. While I accept that there may be minor deviations discernible to a trained eye, I am not satisfied on the balance of probabilities that there was a departure from the relevant Standard or the Standards and Tolerances Guide. I assess damages at nil for this item.

Item 50: flashings (stacker doors in master bedroom)

166. [166]
     It is common ground that there is a defect in the flashings, and that this needs to be rectified to safeguard against potential water ingress. Although Mr Carpenter had said that there was a failure to comply with contractual plans, he conceded in cross-examination that the plan included in his report was for a different set of doors. Mr Helisma had said in the joint expert report that the doors as constructed were not as per the design, but it seems that he assumed that the plans included by Mr Carpenter were the correct ones. However, he maintained his view in cross-examination that the as-constructed doors do not accord with normal building practice.
167. [167]
     Accordingly, I am satisfied that there is a defect, on the basis of lack of adequate flashings to ensure protection from water ingress, but I am not satisfied on the available evidence that there was a departure from plans.
168. [168]
     The parties disagree on the cost of rectification.  Mr Carpenter proposes a method that involves removing the doors, as well as some patio boards, at a cost of $3,867.66. Mr Helisma proposes a method that involves removing some patio boards but not the doors, and which would cost $658.
169. [169]
     The owners submit that Mr Carpenter’s proposal accords with the design of other flashings in the contract plans.
170. [170]
     However, in the absence of proof that the particular method proposed by Mr Carpenter is required for conformity with plans for this specific location, and taking into account what I consider to be the general soundness of Mr Helisma’s assessments, I consider it appropriate to adopt Mr Helisma’s more economical proposal as the more reasonable.
171. [171]
     Accordingly, I assess damages at $658 for this item.

Item 53: TV connection

172. [172]
     The owners submit that the builder was required under the contract to install cabling for a television, but this was incomplete, and they paid $285 to have it done.
173. [173]
     The builder in its submissions indicates that both parties’ position is that no amount should be awarded for the item. This is apparently based on the absence of figures in Mr Carpenter’s column and Mr Helisma’s column in the joint expert report. However, Mr Carpenter did indicate in another column in that report that $285 would be appropriate if it is accepted that there was incomplete work.
174. [174]
     I see no reason to reject the owners’ submissions about this item, and I assess damages at $285.

Item 54: range hood connection

175. [175]
     It is common ground that the contract price included $634 for range hood ducting but this was never carried out by the builder, initially because the owners supplied an incorrect component. Ms Gerlach, one of the owners, says in a statement of evidence that the correct equipment was sourced on 8 August 2017 and delivered to site. The owners say that in due course they had the ducting installed by another contractor, at the cost of $400. They say that they were charged for the $634 amount in the builder’s final invoice. They submit that they are entitled to a credit for $634, and damages for $400.
176. [176]
     As the builder points out, however, the equipment cannot have been delivered to site by the time the owners terminated the contract on 9 August 2017. The relevant order confirmation document, from a supplier in Melbourne, indicates that the order was placed on 8 August 2017, with expected shipment to occur on 9 August 2017. I infer that the equipment would have reached the site in Brisbane on a subsequent date. So I accept that the builder was not in a position to undertake the work before the contract was terminated.
177. [177]
     The builder submits that the tribunal should reject the owners’ claim for this item given that the builder was unable to do this work before the contract was terminated. Alternatively, at most the tribunal should award $400, the builder submits.
178. [178]
     I consider that damages should be assessed at $400 for this item, being the cost to the owners of having the work done by another contractor. It is true that the builder did not have the chance to do this piece of work before the contract was terminated, but the termination occurred because of the builder’s failure to perform other aspects of the contract.
179. [179]
     I do not see a basis for the owners’ proposed credit of $634, in circumstances where that amount formed part of the final invoice amount, yet that invoice was not paid by the owners.

Item 65: Entry portico ceiling

180. [180]
     Mr Carpenter says that a repaired board was used in the portico ceiling, and this is immediately noticeable. He notes that it is directly above the door. Mr Carpenter says the board should be replaced, at a cost of $268.96.
181. [181]
     Mr Helisma says that there is a minor defect which can be satisfactorily repaired, at a cost of $30, without needing to replace the board. He observes that this matter was not commented on in the handover report.
182. [182]
     In cross-examination, Mr Helisma said he would not have identified the defect from the photograph in Mr Carpenter’s report, if it had not had a circle superimposed around it. He said he could not comment on whether repairs had been attempted prior to construction.
183. [183]
     The owners submit that Mr Carpenter’s proposal should be preferred because his evidence should be accepted that repairs had been attempted, prior to rectification, but a defect remains noticeable.
184. [184]
     The builder submits, based on Mr Helisma’s oral evidence about the photograph, that the defect is imperceptible from a normal viewing position. On this basis, the replacement of the board is not justified.
185. [185]
     Considering Mr Helisma’s evidence as a whole, I do not understand him to be saying that the defect is imperceptible. His comment in cross-examination was about whether it was noticeable from the photograph in question, but he had previously expressed the opinion, based on his own observations, that there is a defect.
186. [186]
     I accept Mr Carpenter’s evidence that there had been a repair undertaken prior to installation, but it had not been satisfactory.
187. [187]
     Accordingly, I consider that replacement of the board is both necessary and reasonable. I assess damages of $268.96.

Items 67 and 68: falls in floor in bathrooms

188. [188]
     It is undisputed that the relevant Australian Standard requires, for a bathroom with an unenclosed shower, a fall in the floor to a waste. This is to ensure adequate drainage of water.
189. [189]
     It is undisputed that there is not such a fall in the bathrooms in question, but there is disagreement about whether one is required. This is because there is disagreement about whether the showers are enclosed or unenclosed. There are frameless glass shower screens.
190. [190]
     Mr Carpenter considers the showers unenclosed. He notes that each shower is fitted with a lower deflector and small hob. He says that the owners report that ‘during periods of extended use water will egress from the shower and drain towards [adjacent areas outside the bathroom]’.^[29] Mr Carpenter says that substantial rectification work is required involving the temporary removal of the screens, tiles, water closet and so on, and then retiling to ensure adequate fall, and reinstalling the removed items. The estimated cost is $3,001.01 for bathroom 1, and $2,142.01 for bathroom 2.
191. [191]
     Mr Helisma considers that the showers are enclosed, and that there is no significant defect. However, I infer that he believes there is a minor defect because he recommends expenditure of $105 in each bathroom to improve water retention within the frameless structure. This involves installing seals and deflectors to doors, and the reinstallation of a bottom seal in one of the showers that had been installed the wrong way around.
192. [192]
     Mr Carpenter considers that Mr Helisma’s proposal involves reverse-engineering a frameless unenclosed shower into a framed enclosed one. The proposal is not standard industry practice, Mr Carpenter says, and its longevity is unknown. Mr Carpenter emphasises that the owners chose the more expensive option of frameless showers when they entered into the contract.  Mr Carpenter says, and I accept, that consumers would opt to pay a premium for frameless showers, over framed or semi-framed ones, for reasons of aesthetics and low maintenance.
193. [193]
     The relevant Australian Standard defines an unenclosed shower area as one where, ‘under normal use, water out of the shower rose is not contained within the shower area …’.^[30] It goes on to say that a frameless glass shower screen is an example of a type 1 unenclosed shower, but also that an unenclosed shower screen consists of a frameless shower screen ‘unless the shower screen is fitted with seals and deflectors, all of which control the spread of water from the shower area’.^[31]
194. [194]
     The owners point to an answer given in cross-examination by Mr Helisma during questioning about item 67 (though it can be assumed that his answer would also apply for item 68). Mr Helisma acknowledged that in normal use of the shower, water may not be contained within the shower area. Accordingly, the owners submit, the shower meets the primary definition of an unenclosed shower.
195. [195]
     However, I understand Mr Helisma’s response to be about the shower in its present state, without the modifications he recommends.
196. [196]
     The owners also reiterate Mr Carpenter’s reverse-engineering point, and submit that Mr Helisma’s proposal would defeat the contractual intention of having frameless showers.
197. [197]
     The builder, referring to Mr Helisma’s cross-examination, submits that the test in the Australian Standard is not that water ‘may not be contained’. Further, referring to the reference by Mr Carpenter to extended use, the builder submits that the Standard contemplates normal use rather than extended use. The builder submits that the owners have not established that water is not contained during normal use of the showers. The builder also emphasises that the Standard contemplates that a frameless shower screen may be enclosed by the use of seals and deflectors. If the tribunal concludes that rectification is required, the builder submits, the proposal of Mr Carpenter is neither reasonable nor necessary, particularly bearing in mind that no fall was depicted in plans.
198. [198]
     In my view, the requirement for a fall is mandatory, if unenclosed showers are installed, regardless of whether a fall is shown in plans.
199. [199]
     The reference to extended use does not necessarily imply excessive use, and in my view would come within the category of normal use. I find that the present shower framing system does not contain water within the shower area during normal use, and that the showers are unenclosed. Rectification is therefore necessary.
200. [200]
     Each of the rectification methods proposed would adequately address the problem, from a functional perspective. Mr Carpenter’s is a much more expensive method, but I consider it reasonable. I accept Mr Carpenter’s opinion that the addition of door deflectors would give the showers the appearance of framed showers, in circumstances where the owners paid a premium for the aesthetics of frameless showers. While such modified frameless showers might technically fall within the category of enclosed showers, I am satisfied that the appearance would not be what either party contemplated when they entered into the contract. It can be inferred that the builder must have considered the showers in their present state to be what was intended. Further, I accept that the modifications proposed by Mr Helisma would not be standard industry practice.
201. [201]
     Accordingly, I assess damages at $3,001.01 and $2,142.01 for items 67 and 68 respectively.

Item 70: tiled walls in ensuite

202. [202]
     Mr Carpenter considers that tiles have been affixed using a spot fixing technique, rather than the technique recommended by major adhesive suppliers, which involves back-buttering with a notched trowel. Accordingly, in Mr Carpenter’s opinion, compliance with the requirement in the relevant Australian Standard for full support of tiles has not been achieved.
203. [203]
     Mr Carpenter acknowledges that it is not possible to measure the extent of adhesive coverage across the wall without removal of the tiles. However, he was able to insert a ruler behind tiles on the edge at various points, leading him to the conclusion that adhesive coverage is in the order of 30% rather than the 65% or more that would be expected from the back-buttering technique. Mr Carpenter considers that all existing tiles will have to be removed, and retiling will have to occur at an overall cost of $3,397. This includes the cost of replacing wall sheeting damaged in the process. In cross-examination, Mr Carpenter was asked if there were defects in the finish on the front of the tiles. He responded in the negative, adding that ‘it looks like a very neat job’.^[32]
204. [204]
     Mr Helisma’s view is that there is less adhesive than there should be at the points indicated by Mr Carpenter, but he does not agree with Mr Carpenter’s suggestion of only 30% coverage. He does not think it can be extrapolated that there is inadequate coverage across the entire tiling. The tiles are neat and flush, which indicates that the tiler has taken care in laying them. Mr Helisma says tell-tale signs of poor adhesion are not present, and so he does not consider that there is a defect.
205. [205]
     The owners submit that it is open to the tribunal to infer from the conceded under-adhesion at the edge that the remainder of the work is similar, making removal and replacement reasonable. The builder submits that there is inadequate evidence of widespread under-adhesion, and that no breach of contract has been established let alone one justifying the costly rectification recommended by Mr Carpenter.
206. [206]
     On balance, I consider the builder’s submissions more persuasive on this issue. I accept Mr Helisma’s view that widespread under-adhesion would have produced tell-tale signs which are not evident in this tiling. Accordingly, I accept that no rectification work is required. I assess damages at nil for this item.

Item 72: plumbing works (testing and repair of charged water drainage system)

207. [207]
     A report by Drain Tech indicates that the fully charged system failed testing. The system was designed to send water up to the street, but it does not because it is leaking in multiple sections. To pinpoint the sections, more invasive testing, involving excavation, will be required.
208. [208]
     Mr Carpenter and Mr Helisma agree that this work is required, but disagree on the cost. Mr Carpenter proposes a provisional sum of $1,000, commenting that the actual cost cannot be predicted. Mr Helisma proposes a sum of $699.92, based on eight hours of labour for a plumber, and $100 for materials.
209. [209]
     The owners submit that Mr Carpenter’s figure of $1,000 should be preferred, as they say it is the amount identified by Drain Tech, which would be better placed than Mr Helisma to forecast the likely cost. However, I have not been able to locate in the documents a comment by Drain Tech about the cost. Accordingly, I prefer the sum proposed by Mr Helisma, which is based on an informed estimate.
210. [210]
     I assess damages at $699.92.

Amounts assessed for damages

211. [211]
     The table below sets out the amounts I have assessed as damages for the various items.

Total loss after additions for profit etc.

212. [212]
     It is common ground that certain percentages should be added to the figures shown in the joint expert report, other than the amounts derived from contractors’ quotations:

     1. (a)
        20% for ‘profit and margin’;
     2. (b)
        16% for management fees;
     3. (c)
        then 10% for goods and services tax; and
     4. (d)
        the QBCC home warranty scheme premium.
213. [213]
     The amounts of $285 (for item 53) and $400 (for item 54) should be deducted from $57,621.52 for this exercise: the full costs have been ascertained for those items as the owners have already incurred the costs. This leaves a total of $56,936.52. 36% of that figure, for profit and margin and management fees, is $20,497.15. This brings the total to $77,433.67. 10% of that figure, for GST, is $7,743.37, making a total of $85,177.04.
214. [214]
     The amount of the home warranty premium depends on the value of work. The owners submit that current premium amounts, based on the table published by the QBCC, should be adopted. As the tribunal can inform itself in any way it considers appropriate,^[33] I agree that it is fitting to have regard to the current amount. The relevant figure, from the alterations table effective 1 July 2020, for work valued up to $86,000, is $799.95.
215. [215]
     Accordingly, total damages for rectification and completion work is: $86,661.99 (comprising $85,177.04 plus $799.95 plus $285 plus $400).

Amount of damages payable to owners for rectification and completion work

216. [216]
     The parties have differing views about whether the amount of the practical completion progress claim, $57,580, should be deducted from the amount assessed for rectification works.
217. [217]
     The owners submit that it should not: the builder did not bring the work to practical completion, and so did not gain a contractual right to payment. Further, the builder has not articulated, let alone quantified, a restitutionary claim based on unjust enrichment.
218. [218]
     The builder, on the other hand, submits that the amount should be deducted, on the principle that the purpose of damages is to put the parties, to the extent possible, in the position they would have been had the contract been fully performed.
219. [219]
     I consider that the builder’s submission on this issue is correct, and it reflects the approach taken by the QCAT Appeal Tribunal  in Cochrane v Lees.^[34] Had the contract been fully performed, the work that is the subject of the assessed amount of $86,661.99 would have been done by the builder, but also the owners would have paid the final stage payment under the contract, for $57,580. The amount of $86,661.99 is intended to compensate the owners for necessary and reasonable rectification and completion works, but the amount they were not required to pay to the builder must be taken into account in reckoning their actual loss. Accordingly, I assess the damages payable by the builder to the owners at $29,081.99, which is $86,661.99 minus $57,580.

Owners’ claim for late completion damages

220. [220]
     The owners claim late completion damages under clause 29 of the contract. Relevantly, that clause provides that if practical completion is not reached by the end of the ‘building period’, the owners are entitled to liquidated damages of $50 per day for each day after the end of the building period until the date the contract is ended. The building period is the number of days stated in item 13 of the contract – 235 days – as extended under clause 16: clause 35 of the contract.
221. [221]
     The owners submit that the building period was 348 days: 235 days from 6 June 2016, plus extensions totalling 113 days; therefore the building period ended on 20 May 2017; and liquidated damages of $4,050^[35] are payable for the 81 days until 9 August 2017, when the contract was terminated.
222. [222]
     The builder submits that late completion damages are not payable because practical completion was reached on 23 June 2017. However, I have found that practical completion was not reached.
223. [223]
     The builder submits, in the alternative, that if the contract was terminated on 9 August 2017, the amount of liquidated damages should be the figure of $2,950. However, the basis for this calculation is not explained in the builder’s submissions.
224. [224]
     I accept the figure of $4,050 calculated by the owners.

Owners’ claim for economic loss

225. [225]
     The owners seek damages for the following anticipated costs associated with rectification works:

     1. (a)
        $8,000 for alternative accommodation for four weeks;
     2. (b)
        $3,180 for packing, removing and returning furniture;
     3. (c)
        $1,724 for storing furniture;
     4. (d)
        $910 for kennelling their dog; and
     5. (e)
        $644 for dog-walking.
226. [226]
     On my calculations, these amounts total $14,458. I do not know why this amount differs from the total of $17,000 that appears in the owners’ submissions.
227. [227]
     The amounts are premised on the owners having to relocate during rectification. They say the rectification work will take eight weeks and they will be unable to be on the property during five weeks. The owners acknowledge Mr Helisma’s evidence that his estimate for the rectification works is 12 days, but submit that a longer period would be required if additional rectification work as recommended by Mr Carpenter were to occur.  The owners submit that four weeks should be adopted as reasonable for the period during which they would have to move out.
228. [228]
     The owners do not point in their submissions to any particular evidence to support this estimate.
229. [229]
     The builder submits that the owners’ contention that they would need to relocate should be rejected.
230. [230]
     I am not convinced that relocation would be required. Some of the rectification works would cause a degree of inconvenience, no doubt, but the intensity of the inconvenience would depend on how the work was staggered. For example, work on the internal stairs would prevent their use for some time but presumably the rear external stairs could be used instead. Similarly, it seems unlikely that the rectification work in all bathrooms would be carried out simultaneously.
231. [231]
     As I am not persuaded that relocation would be required, I do not award any damages for this item.

Builder’s claim for payment of practical completion stage payment

232. [232]
     I accept the owners’ argument that as practical completion was not reached, no entitlement has arisen under the contract for payment of the practical completion stage claim. Accordingly, the builder’s claim for the payment fails.
233. [233]
     In any event, the amount of the practical completion stage invoice has been taken into account in assessing the loss suffered by the owners.

Builder’s claim for delay damages

234. [234]
     Part of the builder’s claim is for delay damages under clause 15.2 of the contract. That clause provides that where works are delayed by a cause for which the owner is responsible, the owner must pay the builder an amount worked out under the subclause.
235. [235]
     The builder contends that the owners refused to effect handover of the works in response to the practical completion notice, and so delayed the works. The builder submits that the owners must pay delay damages of $47,180.48.
236. [236]
     However, as I have concluded that practical completion was not reached and the owners were entitled to terminate the contract, it follows that they did not delay the works. No delay damages are payable.

Claims for interest

237. [237]
     Each party claims interest, but as the amount to be awarded is owed by the builder, the builder’s claim for interest is left without foundation.
238. [238]
     The tribunal may award interest on damages, ‘at the rate, and calculated in the way, prescribed under a regulation’.^[36] The owners submit that interest should be awarded from 10 August 2017, which they say is the day after their cause of action arose. The Queensland Building and Construction Commission Regulation 2018 (Qld), in section 54, provides that the interest rate is to be the rate provided for under the contract, or agreed between the parties, or 10%. The owners submit that the relevant rate is 18%, nominated at item 8 of Schedule 1 to the contract, or, alternatively, 10%. However, I note that the rate of 18% is nominated for clause 30 of the contract, which enables the builder to charge interest for overdue amounts. It is not nominated for other purposes, and so I consider that the relevant rate is 10%, not 18%.
239. [239]
     The builder submits that the question of interest does not arise because damages have been assessed on the basis of present costs to rectify. In my view, that submission is well-founded, except in respect of the late completion damages of $4,050. Interest should be awarded on that sum, at the rate of 10% per annum, from 10 August 2017 until 4 August 2021. I calculate the interest at $1,614.45.

Costs

240. [240]
     The parties have foreshadowed in their submissions that they wish to have the opportunity to make submissions on costs. I will make directions for submissions on costs.

Conclusion

241. [241]
     The outcome, then, is that the builder must pay to the owners:

     1. (a)
        damages of $33,131.99 (comprising $29,081.99 in damages for rectification and completion works, and $4,050 for late completion); and
     2. (b)
        interest of $1,614.45.
242. [242]
     Allowing 28 days for payment, these amounts must be paid by 1 September 2021.