VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP11/2020	
CATCHWORDS	
Domestic building works – cause of water leaks – damages - s. 117(2) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic).	

APPLICANTS	Dragana Marjanovic, Marjan Marjanovic	
RESPONDENT	Normcas Investments Pty Ltd (ACN: 005 788 090)	
WHERE HELD	Melbourne	
BEFORE	Member N Feeney	
HEARING TYPE	Hearing	
DATE OF HEARING	9 December 2020	
DATE OF ORDER	9 December 2020	
DATE OF REASONS	19 February 2021	
CITATION	Marjanovic v Normcas Investments Pty Ltd (Building and Property) [2021] VCAT 116	

APPEARANCES:		
For Applicants:	In person	
For Respondent:	Mr P Robinson, representative	

Reasons
1	I heard and determined this proceeding on 9 December 2020 when I made an order and gave oral reasons for the decision. On 11 January 2020 the son of the directors of the respondent wrote to the Tribunal requesting, amongst other matters, that “VCAT provide the respondent with further information in particular each item included in the settlement”. I have taken that request as a request for written reasons for the decision.
The Hearing
2	The applicants gave evidence and relied upon expert reports from Mr John Grant dated 10 January 2020 and 22 July 2020 and from Mr Jason Curtis dated 18 September 2020. Mr Curtis and Mr Grant were not called to give evidence and the applicants relied upon their written reports.
3	Mr Paul Robinson, the son of the directors of the respondent, gave evidence for the respondent and relied upon an expert report that he had prepared dated 27 November 2020. Mr Robinson gave evidence that he is a registered commercial builder.
4	At the hearing I considered all the material before me, including the expert reports and evidence given by the applicants and Mr Robinson for the respondent.
5	At the conclusion of the hearing on 9 December 2020 I gave my decision with reasons orally and made the following final orders:
For the reasons given orally at the hearing:
1.	The respondent must pay to the applicants, damages in the sum of $57,947.
2.	The respondent must, in addition, reimburse the applicants the filing fee and hearing paid by the applicants of $850.20.
Note: the total amount to be paid by the respondent to the applicants under these orders is $58,797.20.
6	Although the time within which to seek written reasons expired on 23 December 2020, being 14 days after giving the oral reasons as provided for in s. 117(2) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act) I nonetheless provide these reasons.
7	These written reasons reflect the material before me and the evidence given at the hearing which formed the basis of my finding of facts for the reasons given orally at the hearing, with some editing for clarification and context. The content of some documents and the evidence given which formed the basis of my reasoning but were only briefly referred to in my oral decision, are in some instances expanded upon in order to provide context for these written reasons together with the background.
Background
8	The applicants made an application to the Tribunal seeking orders against the respondent for rectification of defects and repair of damage to their home in Templestowe caused by water leaks. The respondent was the builder of the home.
9	The applicants sought damages in the sum of $75,000 for the cost of the rectification and repair works as estimated by their experts, provision for safety equipment, rubbish/ debris removal, the cost of obtaining the expert reports, the costs of fees paid to the Tribunal and printing and postage costs.
10	The respondent agreed that there were water leaks into the home, but disputed the cause of the leaks and disputed the cost of rectifying the defects and damage.
Reasons given orally
11	The applicants have endured water leaks in their home for many years and that this has been the cause of significant concern for them.
12	One director of the respondent who is a registered building practitioner, suffered a stroke a few years ago which may have hindered the respondent in being able to ascertain the cause of the water leaks and to rectify the defects and damage.
13	The respondent is not able to undertake any rectification work due to the ill health of its registered building practitioner and the applicants are seeking the costs to pay another contractor to undertake any rectification work that is required and some other costs.
Jurisdiction
14	As this is a dispute or claim arising between the applicants who are building owners and the respondent who is a builder, in relation to a domestic building contract or the carrying out of domestic building work, being the construction of a home, this is a domestic building dispute as defined by section 54 of the Domestic Building Contracts Act 1995 (Vic.) (DBC Act) and the Tribunal has jurisdiction under section 53 of the DBC Act to make any order it considers fair to resolve the dispute.
15	The jurisdiction to make any order that the Tribunal considers fair “does not absolve the Tribunal of the obligation to determine the matters before it according to established legal principles”.
Building contract 
16	The former owners of the property on which the home is situated and the respondent entered into a contract in about 2015 for the construction of the home.
17	Before the construction of the home was completed the applicants purchased the property from the former owners.
18	The home was completed in about July or August 2016.
Applicable contractual terms
19	As the respondent was to perform work under the contract, within the meaning of domestic building work as defined in the DBC Act, being the construction of a home, the former owners were entitled to the benefit of the implied warranties regarding the work set out in section 8 of the DBC Act, including relevantly:
a.	that the work will be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract, and
b.	that the work will be carried out in accordance with, and will comply with, all laws and legal requirements including, without limiting the generality of this warranty, the Building Act 1993 and the regulations made under that Act.
20	As the owners for the time being of the property, the applicants are entitled to the benefit of those warranties and may take action for a breach of the warranties as if they were a party to the contract in accordance with section 9 of the DBC Act.
Claimed defective works 
21	The applicants allege there are defects with the balcony waterproofing, the EPS wall and the junction of the balcony tiling, a feature window and a box gutter which is allowing water to enter the home and they also allege there are defects to the parapet flashings. 
22	The applicants rely upon expert reports they have obtained from Mr Curtis and Mr Grant which detail these alleged defects.
23	Mr Robinson has inspected the home and provided a report about his opinion of the alleged defects. In Mr Robinson’s report he admits the balcony has failed and there are some roofing defects, but he denies the feature window or the box gutter is leaking and denies the other alleged defects. 
Balcony 
24	The applicants claim the balcony is leaking into the home and causing damage to the entrance hallway ceiling and wall, ground floor powder room toilet door jamb and the stair well wall at the mid-floor break to the top of the stairwell. 
25	I accept Mr Curtis’ opinion that the balcony does not prevent water penetrating the building which is in breach of the National Construction Code Series 2016, Building Code of Australia, Volume 2, P2.2.2 Weatherproofing (BCA V2:2016, P2.2.2) which requires the prevention of the penetration of water; the omission of a waterproofing upturn to the external door opening does not comply with Australian Standard AS 4654.2:2012 Waterproofing membranes for external use – Design and Installation; and the extensive efflorescence to the balcony tiling is a defect in accordance with Victorian Building Authority Guide to Standards and Tolerances. 
26	Both Mr Grant and Mr Robinson agree with this opinion. Mr Robinson says that the efflorescence indicates the failure of the waterproof membrane between the mortar screeding and the tiled surface of the balcony.
27	I also accept Mr Curtis’ opinion that the weatherproofing of the EPS cladding does not comply with typical manufacturer’s installation guides in that there is no control joint, base block or channel or provision to allow water to egress from the polystyrene wall at the juncture to the balcony floor tiles and that water marks have started to come through the rendered wall surface in multiple cracks.  
28	Mr Robinson did not provide an opinion about this issue.
29	I find that the failure of the balcony to prevent water penetrating the home, the omission of a waterproofing upturn to the external door opening, the extensive efflorescence to the balcony tiling and the lack of control joints, base blocks or channels or provisions to allow water to egress from the polystyrene wall at the juncture to the balcony floor tiles is defective work of the respondent. 
Feature window
30	The applicants claim the feature window is leaking into the home and causing damage to the ceiling at the bottom of the stairwell and the timber flooring. 
31	Mr Curtis says that the feature window does not prevent water penetrating the building which is in breach of BCA V2:2016, P2.2.2 Weatherproofing which requires the prevention of the penetration of water and that there is extensive damage to the ceiling at the bottom of the stairwell below the feature window and damage to the timber flooring. 
32	Mr Grant agrees that water is penetrating the window and says that the window is not flashed correctly. 
33	Mr Robinson does not agree that water is penetrating the window and says when he inspected there was no evidence that the window leaked and no evidence of bulging to the timber flooring. 
34	In his report Mr Curtis has photographs of the areas of water damage to the ceiling and the damage and bulging to the timber flooring in the entrance and hallway which he says are due to the leaking from the feature window. He is an independent witness and not related to any of the parties and he has prepared a report that complies with the relevant Tribunal practice note. His report includes statements that he has made all enquiries which he believes are desirable and appropriate, no matters of significance have to his knowledge been withheld and that he has a paramount duty to the Tribunal and an overriding duty to assist the Tribunal. 
35	I prefer and accept the opinion Mr Curtis and Mr Grant that the feature window does not prevent water entry into the home and that the water is penetrating the window. I accept that this water entry has caused damage to the ceiling below and to the timber flooring.
36	I find that the failure of the feature window to prevent water penetrating the home is defective work of the respondent.
Box gutter
37	The applicants claim that the box gutter is leaking into the home and causing damage to the entrance ceiling adjacent to the front door.
38	I accept the opinion of Mr Curtis that the box gutter located above the water damage to the ceiling discharges through the ceiling void without the use of a sump which does not comply with the Standards Australia Handbook 39:1997 Installation code for metal roof and wall cladding (SAA HB:29:1997) 5.33 Outlets which says all outlets should discharge through a sump or a rainhead. 
39	Mr Robinson agrees that the box gutter discharge outlets are without sumps and this is not compliant with plumbing regulations but says in his opinion this is not the main cause of water damage to the front entrance of the home as it is his opinion that the balcony is the main source of the water entering the home.
40	However even if the lack of the sump for the box guttering is not the main cause of the water damage, I accept that the failure to discharge the box gutter into a sump is defective work of the respondent. 
Parapet flashings and cappings
41	The applicants claim that there are defects in the parapet flashings and cappings.
42	I accept the opinion of Mr Curtis that the parapet flashings and cappings have been fixed at 1 metre intervals and do not comply with SAA HB:29:1997 8.7. All other flashing and cappings 5.33 Outlets which requires fixing at intervals not exceeding 500mm. Mr Curtis does not state whether the non-compliance is a cause or the water ingress.
43	Mr Robinson agrees that the parapet capping fixings are too far apart and also says the apron flashings do not appropriately fall away from the building but says in his opinion this is not the main cause of water entry to the home as it is his opinion that the balcony is the main source of the water entering the home.
44	However even if this non-compliance is not the main cause of water damage, I still accept that the non-compliance is defective work of the respondent.
Conclusion about defects
45	For the above reasons, I find that in performing work under the contract, the respondent has breached the implied warranties created by section 8(a) of the DBC Act that the work would be carried out in a proper and workmanlike manner and section 8(c) of the DBC Act that the work will be carried out in accordance with all building laws in relation to: the leaks into the home from the balcony; the lack of waterproofing upturn; extensive efflorescence on the balcony tiles; the weatherproofing of the EPS cladding; the leaks through the feature window; the box gutter failing to discharge into a sump; and the non-compliance with the fixing of the parapet flashings and cappings.
Damages 
46	The loss that may be claimed for the breach of the implied warranties is the loss that the respondent may fairly and reasonably have considered would arise from the usual course of things or may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of such a breach.
47	I find that the respondent would have fairly and reasonably considered that if it breached the warranties by reason of the defects I have found, the probable result of such a breach is that the applicants would suffer loss being the cost to get advice about the cause of the water entry, the cost to rectify the defects and cost to repair damage caused by the defects.
Amount of damages
48	Mr Curtis has provided detailed costings of his estimate of the cost to rectify the defects and the damage caused by the defects, and has provided hourly rates and times for his estimate of labour costs and separately estimated the material costs. Mr Curtis has also separately detailed his estimate for preliminaries, and allowances for contingencies, margins and GST.
49	The estimates provided by Mr Grant are lump sum ranges for each defect but no details of how the range is calculated is provided.
50	Mr Robinson has only provided an overall estimate to rectify all defects and declined to give an explanation about how the amount is calculated.
51	Mr Robinson did not give any evidence about the rates or costs detailed in the estimates of Mr Curtis.
52	Therefore, the amounts estimated in each of the reports are not easily comparable.
53	The mere difficulty in estimating damages does not relieve me from the responsibility of estimating them as best it can. The “assessment of damages ... does sometimes, of necessity involve what is guess work rather than estimation” and where precise evidence is not available to the Tribunal, I must do the best I can.
54	In assessing the amount of the damages, I have preferred the costings provided by Mr Curtis as they are more detailed, provide hourly rates for labour and separate amounts for the cost of materials.
Balcony
55	The applicants gave evidence about a quote they obtained two years ago for $34,663 to rectify the balcony but that quote has not been provided.
56	Mr Curtis has estimated the cost of rectifying the balcony and an area of the EPS cladding is $30,884.00.
57	Mr Grant has estimated a range of $35,000 to $45,000 to rectify the balcony.
58	Mr Robinson has estimated the cost to rectify all the defects causing water entry and damage from the water entry, that he says comes primarily from the balcony, as $20,658.
59	I accept the estimate provide by Mr Curtis of $30,884 as being reasonable for the cost to rectify the water ingress caused by the balcony and EPS cladding. This is the lowest of the estimates provided by the applicants and their experts. Whilst it is higher than the amount Mr Robinson has estimated, Mr Robinson did not advise how his amount is calculated and, when queried, he did not want to provide any breakdown for his calculation of this amount. I therefore prefer the estimate of Mr Curtis for which there are details of items of labour and material required and rates.
Feature window
60	Mr Curtis has estimated the cost of rectifying the feature window and the associated damage included water damaged plaster, the powder room door and architraves and the timber flooring is $21,824.
61	Mr Grant has estimated the cost of rectifying the leak through this window or the external cladding as $5,735 to $9,020 and has provided separate estimates ranges to repair damage caused to the passageway and powder room of $2,915 to $3,680, and to repair the damage caused to the timber floor of $1,200 to $1,800. 
62	Mr Robinson did not provide an estimate to rectify this defect but said that in his view the costing for the rectifying water leaks through the feature window were excessive. When asked in what way they were excessive, his response was that the works are not required because he does not accept the window leaks and therefore the costs detailed were excessive.
63	I accept the estimate provided by Mr Curtis of $21,824 as being the reasonable cost to rectify the leaking feature window and the associated damage caused by water ingress. I note it is higher than the amount estimated by Mr Grant, but I prefer the estimate of Mr Curtis for which there are details of items of labour and material required and rates.
Box gutter
64	Mr Curtis has estimated the cost of rectifying the box gutter is $3,868.
65	No other estimates have been provided.
66	I accept the estimate provided by Mr Curtis of $3,868 is the reasonable cost to rectify the box gutter.
Parapet flashings
67	Mr Curtis has estimated the cost of rectifying the parapet flashings is $1,021.
68	No other estimates have been provided.
69	I accept the estimate provided by Mr Curtis of $1,021 is the reasonable cost to rectify the parapet flashings.
Contingency
70	The applicants said that they might also incur further costs for unknown defects which might be discovered during the rectification works, the cost of safety equipment, rubbish removal, mould removal and for alternative accommodation if they have to vacate their home while the works are being undertaken.
71	The estimates provided by Mr Curtis which I have accepted are reasonable, already include an allowance of 10% for contingencies, provide for rubbish removal, for the supply and install of fall protection where required and for the window leaks provide significant allowances for removal, disposal and new supply and installation of compressed sheeting to the underside of the balcony which should eliminate any mould issues.
72	As the amount of any further costs are not known and might not be incurred, I do not accept that it would be fair and reasonable to make any further allowance for those costs.
Cost of Report
73	I accept the cost incurred by the applicants to obtain the initial report about the water leaks in the amount of $350 is reasonable, on the basis that the applicants incurred this cost as a result of the defective works to ascertain what needed to be done to rectify the water leaks.
74	I am satisfied that this is a cost that the respondent would have fairly and reasonably considered that if it breached the warranties that the applicants would suffer as the probable result of such a breach. 
Conclusion as to amount of damages
75	I find that the reasonable cost to rectify the defects causing the water entry and the associated damage is $57,597 calculated as follows:
Balcony waterproofing	$30,884	
Feature window	$21,824	
Box gutter	$3,868	
Parapet flashings 	$1,021	
Total	$57,597	
76	I find that reasonable cost to get advice about the cause of the water entry is $350. 
77	The applicants are entitled to damages in respect of the rectification of defective work, associated damage and obtaining advice about how the defects should be rectified, assessed in the sum of $57,947.
Reimbursement of filing fee
78	As this is a proceeding under the DBC Act and the applicants have been substantially successful in their claim, they are entitled under section 115C of the VCAT Act to an order that they be reimbursed by the respondent, the filing fee they paid, in the sum of $487.30 and today’s hearing fee they paid, in the sum of $362.90.
Costs
79	The applicants have sought to recover costs they have incurred in relation to the proceeding.
80	These costs are $800 and $495 for the reports from Mr Grant; $816.75 for the inspection by Mr Curtis; $3,044.25 for the report from Mr Curtis; and $55.20 and $91.08 for printing.
81	These costs were incurred by the applicants in relation to the proceeding and are not a cost that the respondent would have fairly and reasonably considered that if it breached the warranties that the applicants would suffer as the probable result of such a breach. 
82	The power to award costs (which include disbursements) incurred in relation to the proceedings is contained in section 109 of the VCAT Act.
83	Under s109(1) of the VCAT Act each party bears their own costs of the proceeding unless the Tribunal is satisfied it is fair to exercise its discretion under s109(2) and make an order for costs. 
84	In determining whether it is fair to award costs, the Tribunal must have regard to the matters referred to in section 109(3) of the VCAT Act and any other matter the Tribunal considers relevant.
85	I am not satisfied that it would be fair to depart from s109(1) and make an order for costs.
86	The respondent has not conducted the proceeding in a way that unnecessarily disadvantaged the applicants such that would warrant an award of costs.
87	Whilst the applicants have been successful in their claim, that is not itself sufficient to warrant an award for costs. The respondent’s defence was arguable even if not successful and I do not find that the relative claims made by the parties had such a substantial disparity as to warrant an award of costs.
88	The proceeding was not overly complex and was based primarily on written evidence and reports prepared by experts who were not called to give evidence.

N Feeney 
Member