VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
building & PROPERTY LIST	vcat reference No. BP2024/2020
	
CATCHWORDS	
Domestic building work - terms of settlement agreed in VCAT proceeding - alleged breach of the terms. 	

APPLICANT	Adrian Misuraca and Xiaopei Jing	
FIRST RESPONDENT	Red Rose Constructions Pty Ltd
(ACN 142 310 307)	
WHERE HELD	Melbourne	
BEFORE	Her Honour Judge S Kirton, Vice President	
HEARING TYPE	Hearing, by video conference 	
DATE OF HEARING	5 April 2023 and 31 October 2023	
DATE OF ORDER	20 June 2024	
CITATION	Misuraca v Red Rose Constructions Pty Ltd (Building and Property) [2024] VCAT 572	

Order
1.	I find that the answer to the question posed by the parties, “(h)as the respondent complied with the Terms of Settlement?” is no.
2.	By 3 July 2024 at 4.00pm, the parties must each file and serve with the Tribunal (by email to the chambers of the Vice President judgekirton.chambers@courts.vic.gov.au) the form of orders they propose should be made following these findings, together with any written submissions in support (of no more than 4 A4 pages). The parties’ attention is drawn to paragraphs 114-118 of these Reasons.
3.	By 3 July 2024 at 4.00pm, the parties must each file and serve with the Tribunal (by email to the chambers of the Vice President judgekirton.chambers@courts.vic.gov.au) any submission in response (of no more than 4 A4 pages).
4.	There is liberty to apply on the question of costs. The parties’ attention is drawn to s 109(1) of the Victorian Civil and Administrative Tribunal Act 1998 and to the matters noted at paragraph 119. Any application for costs should be made by 3 July 2024 at 4.00pm by way of written submissions (limited to 4 pages) and affidavits, filed with the Tribunal (by email to the chambers of the Vice President judgekirton.chambers@courts.vic.gov.au). Further orders will be made for the filing of responsive material and the application/s will then be decided on the papers. 

HER HONOUR JUDGE S KIRTON
VICE PRESIDENT	

APPEARANCES:		
For the Applicants	Mr Misuraca and Ms Jing, in person	
For the Respondent	Mr Lapirow, Counsel 	

Reasons
Background
1.	The applicants own a home in Fawkner which had been constructed by the respondent. They originally brought this proceeding in 2020 claiming compensation for water leaks in the property. The parties resolved that dispute and entered into a written terms of settlement dated 25 January 2022 (Terms of Settlement, or, Terms). Under the Terms, the respondent agreed to perform certain works. 
2.	In mid-2022, the applicants complained that the respondent had not complied with the Terms of Settlement.  The proceeding was consequently reinstated.  After several directions hearings and various submissions and applications from each party, it was resolved that the scope of the hearing was to determine the following question: “Has the respondent complied with the Terms of Settlement?” 
3.	For the reasons set out below, I have determined that the answer to that question is no; the respondent has not complied with the Terms of Settlement.
4.	As a result of this finding, the next question to be determined will be: “What are the parties’ remedies under the Terms?” The parties have not yet made submissions on this question and so orders will be made giving them that opportunity (see paragraphs 114 - 120 below).
The Terms of Settlement 
5.	The Terms provide relevantly as follows:
2.	By 22 April 2022 the Respondent agrees to undertake and complete all rectification works as reported by Zeher Khalil in the report dated 22 November 2021 (“the first expert report”) and ensure all rectification works comply with all relevant Australian Standards, regulation and requirements.
3.	The parties agree that by 9 February 2022, Zeher Khalil will attend the Applicants’ property… (at the expense of the Respondent) to inspect the front porch box gutter and the parapet above the garage. Mr Khalil will prepare a report in respect of the condition of the said box gutter and parapet, and whether the same complies with all relevant Australian Standards, regulations, and requirements (“the supplementary expert report”).
4.	By 22 April 2022, the Respondent agrees to undertake and complete all rectification works as reported by the supplementary expert report (if any) and ensure all recommended rectification works comply with all relevant Australian Standards, regulation and requirements.
5.	… [not relevant]
6.	… [not relevant]
7.	In the event that the Respondent fails to comply with its obligations in paragraphs 2, 3 and 4 herein, the Applicants shall be entitled to:
(a)	reinstate the proceeding;
(b)	make application to this Honourable Tribunal and upon the filing of an affidavit as to the failure by the Respondent to carry out its obligations under these terms;
(c)	seek orders from the Tribunal that the Respondent carry out all works as reported in the first expert report and the supplementary expert report;
and in the event of the Applicants so doing, the Respondent consents to these terms of settlement being produced by the Applicant as conclusive evidence of the Respondent consent to the entry of such judgment in accordance with paragraph 7(c) therein...
The facts 
6.	The background facts are not in dispute. The respondent constructed the home between 2015 and when the occupancy permit was issued on 15 April 2016. The applicants purchased the home in April 2017.
7.	The applicants made an application to Domestic Building Dispute Resolution Victoria (DBDRV) and that organisation carried out an assessment of the home in September 2020. The assessor identified a number of areas of water entry, and other more minor items.
8.	The applicants then commenced this proceeding seeking compensation for various items related to water leaks and roof plumbing. They relied on the report of the DBDRV assessor and other documents. 
9.	The respondent filed a defence to the claim, and relied on an expert report of Zeher Khalil of Simply Inspections dated 22 November 2021 (the First Khalil Report). Mr Khalil concluded that certain rectification works were required.
10.	The parties entered in to the Terms of Settlement on 25 January 2022. 
11.	In accordance with the Terms, Mr Khalil carried out a further inspection and provided his supplementary report dated 8 February 2022 (the Second Khalil report). In his Second Report he repeated the items from his First Report and he identified two further items:
a)	The box gutter over the porch area of the property is non-compliant as its depth is less than 75 millimetres; and
b)	The lear gutter to the garage parapet is non-compliant as its depth is less than the required 75 millimetres. 
12.	The respondent said that it engaged its plumber, Aidan Harrison, to undertake the necessary rectification works identified in the First and Second Khalil Reports. Mr Harrison issued a compliance certificate dated 20 July 2022 certifying that he had attended to the following items:
a)	Create an overflow provision for the rain head.
b)	Seal rain head to box gutter.
c)	Install fixings on pressure flashings at 100 centimetres.
d)	Install fixings on cappings not exceeding 500mm.
e)	Install new flashing as per HB39 2015.
13.	The applicants submitted that Mr Harrison did not carry out the following items in the Second Khalil Report: page 6, item 01; pages 7 item 02; page 12 item 08; page 13 item 09; and page 14 item 10.
14.	Mr Harrison did not undertake any works to alter the depth of the box gutter or the lear gutter (the items in the Second Khalil Report) as, in his opinion, both comply with Australian Standards.
15.	The applicants said that the building continued to leak, despite the works carried out by the respondent. They engaged an expert, Alan Sherrard of Alan Nicholas and Associates to provide his opinion of the works, and he inspected the property on 22 September 2022. He then provided two reports dated 17 October 2022: 
a)	The Sherrard Report addressed the items which were to be carried out under the Terms of Settlement.
b)	His second report identified new items. The brief for that report was to identify “any building defects…”. 
16.	As this application concerned only the compliance with the Terms of Settlement, the applicants agreed that the second report was not relevant at the present time. The respondent conceded that the applicants would be able to pursue other complaints not covered by the terms of settlement at a later time.
17.	The director of the respondent said that upon receipt of the Sherrard Report, he re-engaged Mr Khalil, who reinspected the property and prepared a further report dated 18 November 2022 (the Third Khalil Report), responding to the First Sherrard report.
18.	In the Third Khalil Report, Mr Khalil observed that only the pressure flashing was outstanding. He disagreed with Mr Sherrard’s other observations. I will deal with the experts’ opinions in more detail when I address each of the items below.
The evidence and the hearing
19.	Regrettably the hearing took place over an extended period. It was unable to be concluded in the originally allocated time and after coordinating the availability of all participants, it did not conclude until six months later. 
20.	Evidence was given by each of the applicants and Mr Sherrard. As it is empowered to do, the Tribunal adopted an informal approach to the giving of evidence. The applicants’ evidence included their submissions. They also had prepared an affidavit sworn 18 October 2022 which I accepted into evidence. The affidavit contains matters which the applicants gave evidence about orally and satisfies the requirement in the terms of settlement for them to file an affidavit with their application to have the proceeding reinstated.
21.	Mr Umit Erpolat, the director of the respondent, tendered an affidavit dated 1 December 2022, and gave evidence orally. Mr Aidan Harrison, the roof plumber engaged by the respondent also gave evidence. Mr Khalil was not called, although I do not draw any inference from that, as his relevance largely ended after he had identified the items in his First and Second Reports which the respondent agreed to carry out. 
Has the respondent complied with the terms of settlement?
22.	It is uncontroversial that in determining whether works required to be performed pursuant to the Terms are defective, regard must first be had to the wording of the Terms themselves. In P & JM De Leo Pty Ltd v Alphonso, Ginnane J stated:
64.  In accordance with principles applicable to the construction of contracts, the meaning of ‘defect’ in this case should be determined by reference to the Terms of Settlement alone from the objective standpoint of what a reasonable person would have understood them to mean. However, as stated in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, that determination normally requires consideration not only of the text of the agreement, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
23.	As set out above, the Terms recorded that the Respondent agreed to carry out the items in the First Khalil Report and any other items identified in the Second Khalil report.
24.	The applicants complained of 13 items, which they say Mr Sherrard identified as being outstanding. They are mostly related to roof plumbing work undertaken by the respondent:
i.	the box gutter over the porch area of the home has a depth of less than 75 mm and is non-compliant;
ii.	the lear gutter to the garage parapet has an up stand depth of less than 75 mm and is non-compliant;
iii.	the rain head to the south facing wall of the home does not have any overflow provisions and is non-compliant;
iv.	the rain head to the south facing wall of the home is not sealed to the box gutter and is non-compliant;
v.	the pressure flashing to the south facing wall above the porch area is inadequate;
vi.	the capping to the south facing wall above the porch area is not adequately fixed;
vii.	the flashing joins to the south and north facing wall are not adequately fixed;
viii.	 the installation of the capping to the south facing wall above the  exterior sliding door of the living  area is inadequate;
ix.	 there is an incomplete flashing join to the north facing side of the house above the front porch area which would allow water to enter the home;
x.	roof tiles and flashing on the north facing side of the house above the front porch encroach the gutter;
xi.	there is evidence of water staining to the internal ground floor ceiling;
xii.	gaps in the architraves of the south facing sliding doors are outside tolerances; and
xiii.	gaps in timber floorboards facing the south facing sliding door.
25.	Prior to the hearing, the respondent conceded that it had not complied with one item, namely item v (above) (the pressure flashing). During the hearing, it also accepted that a further downpipe should be installed in the porch area, once Mr Harrison gave that evidence. 
26.	My findings are set out below. It is convenient to deal with some of the items together.
1. 		The “box” gutter above the porch 
27.	In summary, issue 1 concerned the nature of the gutter above the porch. In his Second Report Mr Khalil called it a “box gutter” and said it was not deep enough to comply with the relevant standards for a box gutter. Mr Sherrard agreed. Mr Khalil later changed his opinion (in his Third Report), and said this is not a “box gutter”, but is a “lear gutter”. A lear gutter has different depth requirements to a box gutter in the Australian Standards, and what has been constructed complies. This was also Mr Harrison’s opinion.
28.	In the Second Khalil Report, Mr Khalil noted: 
The box gutter over the porch area of the home has a depth of less than 75 mm. This is a breach of [Plumbing Regulations] SA HB 39:2015 5.3.2 (g).
Mr Khalil recommended that the respondent should:
- Remove roof tiles and box gutter. 
- Supply and install new box gutter as [per] HB 39.
29.	Mr Sherrard agreed and said in his Report: 
The box gutter installed to the south side over the front entry porch is not complying with AS 3500.3 …
The gutter to the front did not have a minimum depth of 75 mm at the high-end, and remains as per the observations made in the [Second Khalil Report]…
30.	The respondent conceded that it has not altered the depth of this gutter. However it relied on the evidence of Mr Harrison, who said that this is not a box gutter, but instead it is a lear gutter and it complies with the Australian Standard. 
31.	In his Third Report, Mr Khalil agreed this is a lear gutter, not a box gutter. He said:
Alan Sherrard states in his expert report applicant part 4.2, that the roof above the south side front porch area of the home … contains a Box Gutter and that the installation of the Box Gutter is non-compliant.
5.2.1. The gutter that was installed to the roof above the south side front porch area of the home … is not a Box Gutter, and it is a Lear Gutter in accordance with HB 39 2015 Installation code for metal roof and wall cladding.
5.2.2. HB 39 2015 Section 5.3.2 (l) Gutter design states the following:
Box gutters to be straight (without change of direction).
5.2.3. HB 39 2015 Section 5.3.2 (m) Gutter design states the following:
Gutter profile  In a cross-section, box gutters to have a horizontal constant width base (sole) with vertical sides. [For gutter profiles see Figure 5.3.2(A).]
…

5.2.4. Alan Sherrard evidence is regarding a box gutter which does not apply to this section of the home. The Lear Gutter installing is adequate.
32.	I heard evidence from Mr Sherrard and Mr Harrison about this issue. Mr Sherrard explained that a lear gutter is a subset of a box gutter. A box gutter can be any shape except a V shape, as long as the base of it is a minimum of 200 mm wide on domestic construction. The difference is the angles of the vertical walls. If the side wall is on a less than 90° angle to the base, then it is a lear. This is permissible, but all the requirements for a box gutter apply equally to a lear gutter.
33.	Mr Harrison has been a roof plumber since 2006. He agreed that a lear gutter is a form of box gutter. He explained that the vertical lear is at an angle to the horizontal base, rather than 90°, as the lear follows the contour of the roof trusses. In this particular case, he said the vertical wall of the gutter (on the outside of the dwelling behind the parapet) was about 100 mm deep. It met the base of the gutter at a right angle. The base of the gutter was about 200 to 220 mm wide. The opposite vertical side of the gutter then went up at right angles for about 15 mm, then continued on an angle of about 22° and followed the roof pitch for 200 mm. In other words, in reverse, the lear side of the gutter followed the pitch of the roof down to the base of the gutter, with a 15 mm step between the lear and the base.
34.	Mr Harrison said that in his opinion, what had been constructed was compliant in terms of depth. He said it would not be very unusual to build a gutter with a vertical side rather than a lear, as it is usual to follow the roof trusses. He said that the design of the lear gutter in this case did not subject the building to a risk or a certainty of inundation from rainwater.
35.	However, he conceded the criticism that that there was an outlet missing. He acknowledged that the gutter must be straight without a change in direction and discharge at the downstream end. As the porch gutter contained a change of direction, an additional outlet and downpipe should be installed on the western side of the porch, so that each straight section had a point of discharge. 
Conclusion 
36.	The applicants referred to the working drawings stamped by the building surveyor which state this is a “box gutter”, and note the dimensions are to be at a minimum of 350 mm wide x 100 mm deep. On the basis of the evidence that a lear gutter is a form of box gutter, I do not accept that this drawing is determinative of what was required to be constructed. 
37.	Instead, I accept the evidence of Mr Harrison that the gutter over the porch is a lear gutter. I also accept Mr Harrison’s evidence that the depth of the vertical side of the gutter (adjacent to the parapet wall) is approximately 100 mm, and that the lear side of the gutter extends for approximately 200 mm along the roof trusses. I also accept Mr Harrison’s evidence that what has been constructed complies with the plumbing regulations and Australian standards, at least in respect of depth. 
38.	Mr Sherrard agreed that a lear gutter is a type of box gutter and did not dispute the measurements given by Mr Harrison. Mr Sherrard was not able to point to any standard or regulation relevant to a lear gutter’s depth which he said had been breached. Further, I note that while Mr Sherrard has experience as a builder and building consultant, he does not have specific plumbing qualifications or expertise. Accordingly I prefer Mr Harrison’s evidence insofar as it differs from Mr Sherrard’s opinion. Accordingly, I do not accept Mr Sherrard’s original opinion that the gutter in question was non-compliant and must be replaced.
39.	Mr Khalil did not give evidence, and so I am not aware of why he changed his mind between his Second and Third Reports. 
40.	Although I am satisfied that the gutter in question is not non-compliant and that it therefore did not need replacing, that does not absolve the respondent of liability. The requirement in the Terms of Settlement was for the respondent to comply with the works identified in the Second Khalil report. There is no provision for what will happen if Mr Khalil changes his mind later, as he did in this instance. Accordingly, I am satisfied that the respondent has failed to comply with the Terms of Settlement regarding item 1.
41.	This is a technical breach of the Terms. The effect of this breach will need to be considered further when the second part of the application is determined, namely what are the appropriate orders to be made to remedy the breach. The Terms of Settlement state that the remedy is for the applicants to obtain an order requiring the respondent to comply with the Terms. I will therefore hear submissions as to whether it will be reasonable to order the respondent to carry out works which are unnecessary. 
42.	There is one further matter to be mentioned. Both Mr Harrison and Mr Sherrard agreed that the as-built lear gutter does not comply with the requirement to run in only one direction. Mr Sherrard said that it should be rebuilt. Mr Harrison said that the breach can be resolved by installing an extra outlet and downpipe on one run. 
43.	There was a requirement in the Terms of Settlement for the rectification works to be compliant. Clause 4 of the Terms stated:
… The respondent agrees to … ensure all recommended rectification works comply with all relevant Australian Standards, regulation and requirements.
44.	As both Mr Harrison and Mr Sherrard agreed that an additional outlet and downpipe should be installed to make the gutter compliant, I consider this work should be done as part of the Terms. The respondent has conceded in its closing submissions that it should carry out this work.
2. 		The lear gutter to the garage parapet 
45.	This was a similar issue to the previous, save that all experts described the garage gutter as a lear gutter from the beginning. 
46.	In the Second Khalil Report, Mr Khalil noted: 
An inspection of the lear gutter to the garage parapet found that the upstand has a depth of less than 75mm. This is a breach of SA HB 39:2015 5.3.2 (g).
Mr Khalil recommended that the respondent should: 
- Remove roof tiles and box gutter. 
- Supply and install new box gutter as [per] HB 39.
47.	Mr Sherrard agreed and said in his report: 
The garage gutter was defective as:
The gutter to the garage did not have a minimum depth of 75mm at the high end, and remains in the condition of the [Second Khalil Report].
The sole was not smooth to preventing permanent pending with the gradient between the ranges of 1:40 to 1:200
48.	In his Third Report, Mr Khalil’s comments were as set out at paragraph 31 above , save that they referred to the garage gutter, as follows:
Alan Sherrard states in his expert report applicant part 4.2, that the roof … above the garage contains a Box Gutter and that the installation of the Box Gutter is non-compliant.
5.2.1. The gutter that was installed to the roof above … the garage is not a Box Gutter, and it is a Lear Gutter in accordance with HB 39 2015 Installation code for metal roof and wall cladding.
…
5.2.4. Alan Sherrard evidence is regarding a box gutter which does not apply to this section of the home. The Lear Gutter installing is adequate.
49.	The respondent conceded that it has not altered the depth of this gutter. However it relied on the evidence of Mr Harrison, who said that this lear gutter complies with the Australian Standard. 
50.	Mr Sherrard’s opinion was that the lear on the garage was no longer than 25 mm, and that the plumber should not have issued a compliance certificate for this gutter. Mr Harrison said that the garage gutter and the porch gutter are constructed in the same style and it is compliant.
51.	For the reasons set out above, I do not accept that the garage lear gutter is non-compliant. Mr Sherrard agreed that this was a lear gutter and was not able to point to any standard or regulation relevant to a lear gutter’s depth which he said had been breached. 
52.	Having said that, as with the previous item, the respondent is technically in breach of the Terms of Settlement regarding item 2, for failing to comply with the works identified in the Second Khalil report. There is no provision for what will happen if Mr Khalil changes his mind later, as he did in this instance. The effect of this breach will need to be considered further when the second part of the application is determined; namely, what are the appropriate orders to be made to remedy the breach. As the Terms of Settlement state that the remedy is for the applicants to obtain an order requiring the respondent to comply with the Terms, I will hear submissions as to whether it will be reasonable to order the respondent to carry out works which are unnecessary. 
3 & 4. The rain head to the south facing wall 
53.	The respondent’s obligation under the Terms of Settlement was to complete the work identified by Mr Khalil. In his First and Second Reports, in respect of item 3, he said:
The rain head to the south facing wall does not have any overflow provisions. Therefore this is a breach of SA HB 39:2015 and AS/NZS 3500.3 2018…  The overflow provision needs to be adequately sized and to prevent surcharge, needs to be 25 mm below the sole of the box gutter.
54.	In respect of item 4 Mr Khalil said:
The rain head to the south facing wall is not sealed to the box gutter. This is a breach of SA HB 39:2015 and AS/NZS 3500.3 2018… Therefore, this item is a defect, in my opinion, when considering the requirements of SA HB 39:2015 clause 5.3.2… Box gutter is to be sealed to the rainheads and sumps.
55.	Mr Sherrard agreed. He said that that rain head does not have any overflow provisions and is not sealed as required to the end of the box gutter, and so it does not comply with AS/NZS 3500.3. He also said the over opening is undersized and incorrectly installed, and the attachment to the wall is loose.
56.	Mr Harrison gave evidence that he had rectified the item as identified by Mr Khalil. He said he had cut in an overflow and showed a photograph to establish that had been done. He also said he had raised the rain head to comply with the regulations and had flashed and sealed it. He issued a compliance certificate dated 20 July 2022 for these works. He later confirmed that the regulations he had complied with were the current requirements.
57.	In Mr Khalil’s Third Report he confirmed that an overflow had been cut with a hole saw.
58.	The applicants did not dispute that an overflow had been cut in, notwithstanding that Mr Sherrard initially said that he could not see whether it had been done. 
59.	Their concern now was that the work done by Mr Harrison had not solved the problem that the rain head is non-compliant. They relied on clause 4 of the Terms of Settlement which stated:
… The respondent agrees to … ensure all recommended rectification works comply with all relevant Australian Standards, regulation and requirements.
60.	Mr Sherrard was asked to give his opinion of what his concerns were. He said: 
Well, it's hard to say if anything was done, but the issue is that the rainhead is an incorrect rainhead.  It's noncompliant.  It's not allowed by the VBA plumbing division.
61.	Further, he said:
What I was saying is that the rainhead was noncompliant because it's not an approved rainhead by the VBA fund [sic] division.  Those two examples show – you might recall, show that the one on p7 is not acceptable.  That's the one that's been installed with the rock.  The one on p8 is the only rainhead that is allowed to be used since 2017. 
… Well, the issue is that the repair work was done in 2022, which means it must…If you're doing building work, you have to comply to the standards that are there now…
62.	When asked to be more specific about which particular standards he was referencing, he said it was a VBA information sheet published in 2017. 
63.	Mr Sherrard was then shown a photograph which indicated a hole had been cut into the rain head. He conceded that the photograph showed that, but then referred to a different photograph and said that at least 50% of the hole is blocked from excessive amounts of silicon and the tray from the box gutter is partially blocked off by some sort of flashing. 
64.	There was some confusion about which photograph referred to the rain head in question, and Mr Sherrard and Mr Harrison spent some time clarifying what they were both looking at. Mr Harrison’s evidence was that the dark flashing was not blocking the sole of the box gutter, the outlet overhang is 100 mm, there is no obstruction, and the work he had done complied with the current legal requirements. 
Conclusion
65.	I am satisfied that the respondent has complied with its obligations under the Terms of Settlement in respect  items 3 and 4. There was no real dispute that the first obligation, to cut an overflow hole, had been completed. The next obligation, to seal the rain head to the box gutter, was also completed. I accept Mr Harrison’s evidence that the sealant and/or flashing did not obstruct the gutter. He was the person who carried out the work, he was able to interpret the photographs, and he has provided a compliance certificate for that particular item. On the other hand, Mr Sherrard’s opinion was given based on photographic images. He obviously had no firsthand knowledge or recollection of what work had been done by Mr Harrison, as he was facing his opinion on photographs.
66.	In respect of the third part of the respondent’s obligation, namely to comply with, “all relevant Australian Standards, regulation and requirements”, I do not accept that the respondent has failed to do so. Much was made of whether the relevant standard should be that applicable to the year the house was built, 2015, or the year the rectification work was carried out, 2022. I do not need to decide this question, because Mr Harrison’s evidence was that he had in fact carried out his work in accordance with the regulations and standards required in 2022. 
67.	It was difficult to identify which particular regulations or standards Mr Sherrard alleged had not been complied with. Nevertheless, every example he gave of non-compliant work, was answered by Mr Harrison and Mr Harrison’s photographs. I prefer Mr Harrison’s evidence, for the reasons stated above. 
5. 		The fixing of the pressure flashing to the south facing wall 
68.	The respondent was required to add further fixings to the pressure flashing. Mr Khalil identified that fixings should be installed every 100 mm. Instead, the fixings had been installed approximately every 330 mm. 
69.	The respondent conceded this item has not been rectified. Mr Erpolat offered to carry it out in his affidavit and during the hearing, the respondent’s Counsel confirmed this item had not been rectified (but that other items relating to flashings had been). 
70.	I am satisfied that the respondent has not complied with the Terms of Settlement in respect of item 5. 
6. 		The fixing of the capping to the south facing wall above the porch
71.	In his First and Second Reports, Mr Khalil identified that the capping to the south facing wall directly on top of the porch area entry is inadequate, with fixings at approximately every 1000 mm, when the requirements are they should be fixed every 500 mm.
72.	Mr Harrison’s evidence was that as part of his rectification works, he had added 500 mm spaced fixings. Mr Sherrard for the applicants agreed that Mr Harrison had added the extra fixings.
73.	However, the applicants contended that this item was nevertheless outstanding. They relied on Mr Sherrard’s complaint that the parapet flashing had been installed incorrectly, in that the flashing did not have the required fall of a minimum of 3° to divert water back onto the roof covering. Mr Sherrard said the top edge of the parapet flashings was observed to be ponding with water.
74.	The applicant’s contention was that even though the fall of the flashing was not identified in the First or Second Reports, and so was not an express item required under the Terms of Settlement, the respondent was nevertheless liable to alter the fall of the flashing as part of making the works complied with the required Australian standard.
Conclusion
75.	I am satisfied that the respondent has complied with its obligations under the Terms of Settlement. This was to install further fixings, as explicitly referred to in the First and Second Khalil Reports. There was no requirement to alter the fall of the flashings as part of item 6. 
76.	I do not accept that altering the fall is necessary to comply with the Terms. The obligation at clause 4 of the Terms to, “ensure all recommended rectification works comply with all relevant Australian Standards, regulation and requirements”, applies to the rectification works required under the Terms. This would include works which are a necessary part of the rectification works.
77.	However, this does not place an obligation on the respondent to carry out unrelated works. Altering the fall of the flashing is quite a different issue to adding further fixings. The respondent is not in breach of its obligations under the Terms of Settlement to complete item 6.
78.	Having said that, I note that item 8 in the Terms required the respondent to alter the fall of the capping to the south facing wall above the exterior sliding door of the living area. The applicants’ concerns about fall in that area have therefore been addressed below.
7. 		The flashing joins to the south and north facing wall 
79.	In his First and Second Reports, Mr Khalil identified that the flashing joins to the south and north-facing wall are not adequate. Fixings should not exceed 40 mm and silicon sealed with neutral cure silicon. Instead, the respondent had installed fixings approximately every 70 mm in breach of SA HB 39:2015.
80.	Mr Harrison’s evidence was that he installed more fixings. While he could not remember exactly where, he knows he did this work because he had recorded it in his handwritten note and it was part of his compliance certificate. 
81.	Mr Sherrard's complaint was that even if the extra fixings had been installed, there were multiple other issues which indicated a non-compliance with the provisions of AS 3500 and SA HB 39:2015. In particular:
i.	the baffle flashing installed to the roof/walls has in areas a negative gradient and is holding water;
ii.	the flashings to the walls are not fixed into/against a flush surface;
iii.	there are areas where the flashing is separating due to inadequate fixing;
iv.	the silicon sealant has been misused as an adhesive;
v.	the sealant has not been applied in a sandwiched seal of approximately 20 mm in width;
vi.	the fixing of the flashing does not ensure durable seal is maintained;
vii.	the silicon finish to the flashing/wall has a concave finish and holds water;
viii.	the seal is not protected from any excessive movement due to contraction or expansion; and
ix.	there is water ingress into the building. 
82.	As with the previous item, the respondent’s position is that it has completed its obligation under the Terms of Settlement by installing the extra fixings. Mr Harrison’s evidence was that he added 40 mm spaced rivets. This was not disputed.
Conclusion 
83.	I am satisfied that the respondent has complied with its obligations under the Terms in regard to item 7. As with the previous item, the respondent was obliged to carry out a limited scope of work. The other issues identified by Mr Sherrard go beyond what the Terms of Settlement require.
84.	Further, although the applicants complain that there was ongoing water ingress into the building, Mr Sherrard notes that he was unable to determine the points of entry of the water. There is no evidence that the alleged non-compliance of the flashing joins to the south and north facing wall is the source of this water entry.
8. 		The installation of the capping to the south facing wall above the			sliding door
85.	Mr Khalil identified that the capping installation to the south facing wall above the exterior sliding door of the living area was not adequate. He said it failed to comply with the NCC 2015 Part 2.2.2 in that the capping had a negative fall towards the house and there is a large area on the capping in which a dip has formed in the centre. He concluded it likely that water was accumulating in the dip and then overflowing into the open joins of the flashing, resulting in water ingress into the home.
86.	Mr Khalil recommended that the existing capping and pressure flashing should be removed, and a new capping new pressure flashing installed.  Mr Harrison’s evidence was that he replaced the brick flashing with a fall away from the building and he produced two photographs to demonstrate that. 
87.	The applicants acknowledged that Mr Harrison had carried out rectification work, however they said that a leak has continued from the back of the house. Mr Sherrard agreed with Mr Khalil that the baffle flashing originally installed to the roof/walls had in areas a negative gradient. He said that in his opinion, Mr Harrison’s rectification work had not rectified the gradient issue. He said further, there were a number of other alleged non-compliances with the provisions of AS 3500 and SA HB 39:2015. These were the same as set out in respect of item 7 above (at paragraph 81). He also added, that because the wall cladding was EPS, the method of fixing the flashing to the wall was incorrect.
88.	Mr Harrison gave evidence about the method he had used to rebuild the capping and flashing. After hearing that evidence, Mr Sherrard agreed that the method of rectification was acceptable.  However, Mr Sherrard said that notwithstanding the rectification, the ledge capping was still holding water. He demonstrated this with a photograph.
89.	Mr Harrison conceded that he had not taken any measurements or done any water tests to ensure the correct fall of the ledge and the flashing which covers it. He also conceded that water may be ponding on the surface of the flashing, as the photographs showed brown spots where water had sat. However, he said that even if water was ponding, it would not enter the house because there is a 70 or 80 mm flashing up stand on the back wall.
90.	Mr Misuraca suggested to Mr Harrison that where the water is sitting over a join in the flashing, the seal or caulk which was originally applied to make the join watertight would break down over time and allow water in. Mr Harrison agreed that the join is dependent on being properly caulked but did not agree that this was not a permitted way of constructing the join.
91.	Mr Sherrard then suggested that the sealed joins and the flashing up stand referred to by Mr Harrison would not provide protection if there was windblown water. He noted that as a general principle, water entry is often windblown, but he had made no specific observation at this property. 
Conclusion
92.	Mr Harrison has rebuilt the brick capping and pressure flashing above the exterior sliding door of the living area. Neither he nor Mr Sherrard took measurements to establish that the correct fall had been achieved. I am satisfied based on the photographs that there is some water still ponding on the horizontal ledge. However, based on those photographs, there is no evidence that the water is ponding any more than a few millimetres deep, and only in small spots. The up stand of the flashing running vertically up the wall from the ledge is 70 or 80 mm high. Accordingly, I do not accept that pooled water can be entering the house in that manner. 
93.	I accept the applicants’ contention that there is a risk of water entering where there are joins in the horizontal flashing, if these are not properly caulked or sealed. However, there is no evidence from the photographs that there are any such joins. The photographs in Mr Sherrard’s report seem to indicate that the new flashing is one continuous piece, with only one join at a mitred corner. I also note that the applicants’ concern was not raised by Mr Sherrard. 
94.	As the respondent’s obligation under the Terms of Settlement was to rebuild the capping so that it had a positive fall away from the house and to remove any areas of dips where water could accumulate, I am satisfied from the photographs that this work has been done. If there are areas where the fall is not positive, there is no evidence that these are over any joins. Accordingly, I am not satisfied that the applicants have established that the works carried out by Mr Harrison do not comply with the Terms of Settlement in regards to item 8.
95.	In respect of Mr Sherrard’s concerns about windblown water entry, at best they are supposition. There is no evidence of any water being blown by wind and entering the house through or around this flashing. Accordingly, while his concerns may be legitimately held, at best they are just theoretical.
9. 		The incomplete flashing join to the north facing side of the house
96.	In the First and Second Khalil reports, Mr Khalil noted that an inspection of the lower roof to the north facing side of the house, on top of the front porch area, found an incomplete flashing join which would allow water to enter the home, especially wind driven rain. This is a breach of HB 39 2015 clause 8.2 fastening. The respondent was required to rectify this item under the Terms of Settlement.  Mr Khalil recommended the scope of works was to remove the roof tiles to expose the defective flashing, install adequate flashing, seal cork as required, reinstall roof tiles.
97.	Mr Harrison’s written notes taken at the time indicated that he had flashed and sealed the hole in the join where there was the potential to draw water inside. During his evidence in the hearing, it was put to him that the usual method should have been to drill the rivets, take them out, clean them, clean the surfaces of the flashing adequately, re-silicon with the sandwich and re-rivet. He was asked if this method had been followed but said he was not sure of the exact method used by his workers.
98.	Mr Sherrard showed Mr Harrison a photograph which indicated that a large amount of silicon had been put into the seal and Mr Sherrard suggested that this indicated the join had not been repaired but instead had just been filled with silicon.
99.	However despite the witnesses’ best efforts, no one was able to marry up the photographs with this item. Mr Khalil provided photographs in his Second Report which showed a hole in the flashing and with sisalation paper visible. Mr Sherrard’s photographs 1, 2, 3 and 8 and photographs 3 may or may not have been the same area as Mr Khalil’s photographs. As an example of these identification difficulties, Mr Sherrard suggested that we could start with photograph 2, but then look at an area further to the right that is not shown in the photograph, that would show the butting polystyrene cladding wall where the flashing over the tile goes back under the cement sheet cladding and if we then move to the other end of that cladding, you would see a gap. 
100.	Mr Sherrard also made the same comments about this flashing as he did about items 7 and 8 (see paragraphs 81 and 87). He and Mr Harrison also had an extensive discussion about the use of soaker flashings and whether these would have been visible. None of these discussions were relevant to the issue in dispute; namely, had the respondent rectified the incomplete flashing join in the lower roof on the north facing side of the house, on top of the front porch area?
Conclusion
101.	Mr Sherrard agreed with the scope of work recommended by Mr Khalil to rectify the incomplete flashing join. There was no definite evidence given that this scope had not been carried out. Mr Harrison’s contemporaneous notes indicated that it had been, but he was unable to say firsthand the precise method used by his workers. Mr Sherrard assumed that because excessive silicon was visible, the scope had not been followed. However, Mr Sherrard was not able to show me any photographs taken in the area in question to support his claim that there was excessive silicon, or that I should conclude from this that the rivets had not been removed, the flashing cleaned, the join re-sandwiched and re-riveted.
102.	Accordingly, I am not satisfied that the applicants have established that the respondent has failed to comply with the Terms of Settlement in respect of item 9.
10. 	Roof tiles and flashing encroaching the gutter
103.	Mr Khalil had identified that on the north facing side of the house, on top of the front porch area, the roof tile and flashing on the lower roof encroach the gutter so that they almost cover the eave gutter. The respondent agreed to rectify this item in the Terms of Settlement.
104.	Mr Harrison’s contemporaneous notes indicate that he cut the soaker back to better fit the tile and he provided a photograph to demonstrate this. He also confirmed this work was done in his oral evidence.
105.	Mr Sherrard agreed that the soaker had been cut back, but his complaint was that there were broken tiles in other areas.
106.	I am satisfied that the respondent has complied with item 10 of the Terms of Settlement.
11 - 13. Other items
Evidence of water staining to the internal ground floor ceiling
Gaps in the architraves of the south facing sliding doors 
Gaps in timber floorboards facing the south facing sliding door
107.	The applicants initially alleged that the respondent was required to rectify three further items under the Terms of Settlement. These were noted in the First and Second Khalil reports as follows:
i.	Evidence of water staining to the internal ground floor ceiling;
ii.	Gaps in the architraves of the south facing sliding doors; and
iii.	Gaps in timber floorboards facing the south facing sliding door.
108.	Mr Khalil had recommended that the stained area of the ceiling should be sanded and painted, but that the gaps in the architraves and the floorboards were not classified as defects within the tolerances allowed by the Guide to Standards and Tolerances published by the Victorian Building Authority (clauses 10.01 and 14.03).
109.	The respondent conceded it had not carried out these items, but disputed any obligation to do so.
110.	No evidence was given about these three items at the hearing. Accordingly, I make no findings about items 11 -13. 
Conclusion, Orders and costs
111.	In respect of the question: “Has the respondent complied with the Terms of Settlement,” I find that the answer is no, for the above reasons.
112.	The respondent (on its own admission), has not completed item 5 (the fixing of the pressure flashing to the south facing wall). 
113.	I have found that it has not completed items 1 and 2. The failure to install an extra outlet and downpipe for item 1 is a breach of the requirement in the Terms to make the rectification works complaint. Further, while I have described the failure to rebuild the gutters as a technical breach, it is nevertheless a breach of the Terms.
114.	Accordingly, the next issue to be determined is: “What are the parties’ remedies under the Terms?”
115.	I set out clause 7(c) of the terms above. That states that the parties agreed that the applicants’ remedy is to obtain an order requiring the respondent to comply with the Terms. 
116.	I also note the applicants’ recent advice that they intend to sell the home. 
117.	I will invite the parties to file submissions as to what orders they each propose. 
118.	If a party suggests that the respondent should be ordered to rebuild the gutters (items 1 and 2), they should address the reasonableness of an order for unnecessary works, and/or whether some other form of compensation could be considered. 
119.	In respect of legal costs, I propose to order that each party is to bear their own costs to date, having regard to the following factors:
a.	section 109(1) of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act); 
b.	the applicants were self represented; 
c.	the findings that the respondent has breached the Terms of Settlement; and
d.	the respondent’s brief oral submissions made in closing at the hearing that it could not identify any particular factor in s 109(3) of the VCAT Act to make it fair to order costs.
120.	However, there is liberty to apply if a party wishes to make an application for costs.

HER HONOUR JUDGE S KIRTON
VICE PRESIDENT