Budge v JMK Building Pty Ltd [2018] QCAT 174

CITATION: Budge v JMK Building Pty Ltd [2018] QCAT 174 PARTIES: David Budge and Christine Budge (Applicants) v JMK Building Pty Ltd (Respondent) APPLICATION NUMBER: BDL201-16 MATTER TYPE: Building matters HEARING DATE: 19 and 20 September 2017 HEARD AT: Cairns DECISION OF: Member Howe DELIVERED ON: 26 February 2018 DELIVERED AT: Brisbane ORDERS MADE: 1. The respondent pay to the applicants the sum of $7,900.00 within 7 days of the date hereof. 2. The parties file and serve submissions as to costs within 14 days of the date of this order and each file and serve any submissions in reply within 14 days thereafter. CATCHWORDS: CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – where owners alleged defective building work – where cladding sheets not joined as required by architectural plans – where alternate method of fixing confirmed by manufacturer – where alternate method proved inadequate – where further method of fixing recommended by manufacturer – where owners refused to permit – where owners required fixing in accordance with contract plans – whether costs of fixing by replacing all sheets and refixing in accordance with original plans unreasonable in the circumstance -- 1 of 21 -- 2 CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – where floorboards showing cupping effect – where moisture content apparently not an issue – whether secret nailing contributed to cupping – where secret nailing probable cause CONTRACTS – BUILDING ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – solatium – where cladding primarily to achieve trouble free maintenance – where aesthetic considerations secondary – where significantly cheaper method of fixing reasonable – where replacement of cladding and re-fixing pursuant to strict terms of contract unreasonable remedy in the circumstances –where an estimate of costs of rectification necessary in absence of evidence Domestic Building Contracts Act 2000 (Qld), s 45(2) Archibald v Powlett [2017] VSCA 259 Baltic Shipping Company v Dillon [1993] HCA 4 Bellgrove v Eldridge (1954) 90 CLR 613 Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982)149 CLR 337 Coshott and Anor v Fewings Joinery Pty Ltd [1996] NSWCA 122 Radford v De Froberville [1978] 1 All ER 33 Ruxledge Electronics and Construction Ltd v Forsyth [1995] 3 All ER 268 Silastone Trading Pty Ltd v Body Corporate for Q1 [2017] QCAT 349 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 Tamawood Ltd v Paans & Anor [2004] QDC 427 Tamburini v SFN Constructions Pty Ltd [2011] NSWCTTT 26 Turner Corporation Pty Ltd v Austotel Pty Ltd (1994) 13 BCL 378 -- 2 of 21 -- 3 APPEARANCES: APPLICANT: Mr and Mrs Budge represented themselves RESPONDENT: Mr D McKinstry, Solicitor of Williams, Graham Carman, represented the respondent REASONS FOR DECISION [1] Mr and Mrs Budge contracted with the respondent builder to build them a home at Oak Beach near Port Douglas in North Queensland. The price was $376,869 and work started immediately the contract was signed on 13 January 2015. [2] The work finished on or about 19 August 2015. The owners had concerns about the work. The significant issues were the timber floor and cracking of the silicone used at some of the joins of the exterior cladding sheets. [3] Some work to fix these problems was agreed and some carried out but the owners were not satisfied. They complained to the Queensland Building and Construction Commission (QBCC) and they finally brought the subject proceedings in the tribunal. The Terms of the Contract [4] The contract was a Master Builders contract. A copy of the schedule and appendices to the contract, architectural style drawings, the builder’s quote and some extracted pages of the general conditions of the Master Builder’s contract were tendered in evidence of the terms of the contract. Unfortunately, neither party supplied a full copy of the general conditions of contract. This was so despite an obvious issue prior to hearing about the owners’ alleged refusal to allow the builder entry to rectify defects. The general conditions of contract would usually be relevant in determining any such issue. [5] In the schedule to the contract at item 3, the description of works is “New residential dwelling with 3 bedrooms and 2 bathrooms as per plans supplied by owner dated 14.10.14.” [6] Those plans carry a notation at various places1 concerning the cladding to be used in fairly clear terms as follows: “Weathertex Weathergroove Smooth Cladding joined on stud CW proprietary Trimtec aluminium flashings and corner stops to framed exterior walls ….” The plans also state that under no circumstances were there to be any substitutions of specified items without the consent and approval of Vandyke Designs.2 1 Ex 1, Appendix 1, Drawings 4, 7, 8 and 12. 2 Ibid, Drawing 2. -- 3 of 21 -- 4 [7] In so far as the flooring is concerned however the plans lack specificity. All that is said is “T & G internal floors generally”.3 [8] Both parties referred to the builder’s quotation as part of the terms of the contract.4 Neither party took issue that the quotation is not specifically referred to in the contract. [9] The parties seem to be in consensus that the quotation correctly sets out the agreed schedule of finishes as at date of contract. The contract was signed on the same day the quotation was given. The contract price is as per the quoted cost. The quotation does not conflict with the terms of the contract given it appears there is no actual independent schedule of finishes or specifications howsoever called. I conclude the quotation is admissible to assist in the interpretation of the contract between the parties in respect of agreed products and finishes to be utilised in the construction.5 [10] The builder quoted for supply of “Internal: 80 x 19 tongue and groove standard grade spotted gum.” [11] I might note the quotation also states the quotation is “…in accordance with the stamped engineered plans and schedule of finishes supplied to me by from designed by (sic) Chris Vandyke.”6 There was no such schedule of finishes tendered at hearing nor any reference made throughout the hearing to any specific schedule of finishes supplied to the builder. The Cladding [12] The external cladding was a Weathertex product. The product installation guide provides for joining between sheets (1200mm wide) by means of a proprietary “Weathergroove Joiner”.7 [13] As stated by the architectural plans the cladding was to be “Weathertex Weathergroove smooth cladding joined on stud C/W proprietary Trimtek aluminium flashings and corner stops to framed external walls.” I take C/W to mean “connect with”. [14] The builder did not use any proprietary joiners. Instead the join between sheets was filled with a paintable silicone. That was not an approved 3 Ibid, Drawings 4, 5, 6 and 7. 4 The builder’s statement of evidence Ex 4 at [43] referred to “The building quote/contract was for the supply and lay of standard grade flooring (Appendix 16).” Appendix 16 to that statement of evidence is an extract from the builder’s quotation referring to “Internal: 80 x 19 tongue and groove standard grade spotted gum”. The owners; statement of evidence Ex 1 at [6] relies on the terms of the quotation in respect of the builder’s obligations in respect of installation of the cladding. 5 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337. 6 Ex 1, Appendix 20. 7 Ex 1, Appendix 4, 4. -- 4 of 21 -- 5 method of joining sheets by the manufacturer nor the method specified in the architectural plans. [15] By July 2016, it became clear that the silicone joins were not working properly and splitting and had to be remedied. The house had been built on class P soil type meaning a problem site, though that is not necessarily an unusual classification. The builder submitted structural movement had probably contributed to separation of the cladding at some joins but I conclude if the proprietary joiners had been used there would probably not have been any discernible problem. [16] According to the owners, some of the cracks between sheets were large and the blue material underneath (sarking) could be seen. According to the owners, the significant problem was not aesthetics but seeing the blue waterproofing material under the joins showing through.8 [17] It is not clear on the evidence how many joins failed in this way. Mr Sargent, a QBCC building inspector, investigated a complaint about the cladding by the owners. He attended on 12 January 2016, which he said was within the 6-month defects liability period under the contract. [18] He said he found no structural problem of water entry at that time so no notice to remedy defective building work could be given. There was obvious cracking to the silicone seals between sheets however, which he described as settlement cracking, so he advised the builder to seek advice from the manufacturer. [19] The builder did that and the manufacturer, Weathertex, recommended retrospective fitting of 10mm aluminium cover strips to the preformed vertical grooved rebate where sheets met using a high quality flexible paintable polyurethane sealant. [20] The parties agreed to do that and documented that course of action by writing dated 29 July 2016 signed by both parties. This was nearly one year after practical completion on 19 August 2015. Documenting the agreed course of rectification was suggested by the building inspector to ensure the parties were “on the same page”9 which was an entirely sensible suggestion on his part. [21] In the 29 July document, the issue being resolved was described as an aesthetic one. I note in that document the parties also agreed that the builder would add timber beading to the window surrounds and the door frames of the dwelling. [22] The builder started to retrofit the aluminium cover strips but this almost immediately proved less than satisfactory. According to the building inspector, Mr Sargent, who came out again for another inspection following the fitting of the aluminium strips, some were satisfactory but perhaps a 8 Transcript (T)1-23 Line (L)28. 9 T1-106 L1. -- 5 of 21 -- 6 quarter were not.10 He told the builder to fix those that were not. Mr Sargent said the issue for him at the time was twofold, damage to the sheets being caused in retrofitting the aluminium strips and the unacceptable finish. [23] Again at Mr Sargent’s suggestion the builder went back to the manufacturer for another solution and Weathertex suggested using 42mm x 12mm vertical timber beading over the edges. The manufacturer approved that as an acceptable solution on 10 August 2016.11 The builder in turn proposed that solution to the owners. The owners rejected that proposal however apparently by email dated 15 August 2016 to the building inspector Mr Sargent.12 No copy of that email was tendered in evidence. [24] Mr Sargent in turn wrote to the owners confirming the owners’ email rejecting the timber beading solution and also advising the builder that the owners refused him further access to the site “to rectify outstanding defective items.” Mr Sargent then advised both owners and builder that the QBCC would no longer be involved in the matter because the builder had been denied reasonable access to undertake necessary rectification work. The Timber Beading Solution [25] The owners’ original brief to the building designers was “… to produce a building that would be easy to maintain while being of a high quality.”13 [26] Mr Reason the building designer for the project said at hearing that he thought the owners rejected the timber beading solution because it was different to the original cladding specification. He said introduction of the timber beading would add a third dimension to the cladding and he thought perhaps that was why the owners rejected the proposal.14 But he also said the aesthetics in using timber beading was entirely subjective.15 He said he was involved at that time with another project at Port Douglas where Weathertex cladding using timber beading cover strips were being used by choice rather than proprietary joiners.16 Indeed they were being added at 300mm spaces, not only each 1200mm where sheets joined. [27] Whilst the agreement of 29 July 2016 refers to an aesthetic issue, the timber beading solution had not been raised at that stage and that agreement was only concerned with cracks in the original silicone caulking. [28] Mrs Budge also said the owners wanted the original contract adhered to “if the external cladding is to perform as originally specified and not incur significant costs to the plaintiffs in the future.”17 It is not clear what 10 T1-99 L25. 11 Ex 4, Appendix 11. 12 Ex 1, Appendix 10. 13 Ex 1, [3]. 14 T1-127 L34. 15 T1-128 L1. 16 T1-124 L32-37. 17 Ibid, [10]. -- 6 of 21 -- 7 significant costs are referred to but I conclude she was saying the owners did not want a problem arising some time in the future with maintaining the cladding: It is apparent that any remedial repair will not work and that the external cladding needs to be installed as per JMK’s quotation, Master Builders contract, manufacturers and architect installation instructions if it is to perform as is reasonably expected. This would require removal of the cladding and the installation of new cladding on stud as per architectural drawings and manufacturer’s instructions with the required pvc joiners, and finished with the required paint to complete the cladding to a satisfactory standard.18 [29] In cross-examination, Mrs Budge seemed to identify water ingress as her major issue.19 She subsequently added the owners wanted the Weathertex smooth look rather than timber beading at every join, but that appeared to be only a secondary complaint to that of water entry.20 In the owners’ initial application, the owners stated the reasons for seeking replacement of the cladding was “the issue of integrity in a high cyclone area and validity of manufacturers warranty.” There is no mention of the timber beading solution being unacceptable because of appearance in any of the many statements of evidence filed by the owners. Further, I note in the agreement of 29 July 2016 that the owners agreed to have timber trim (beading) added to the windows and the door frames, and the builder’s proposal about adding timber beading to cover the joins of the cladding would have matched that.21 [30] Nowhere in their material nor at the hearing have the owners challenged the timber beading solution as proposed by the builder and approved by the manufacturer as being unworkable. Rather they simply “declined” that proposed solution.22 [31] Mr Wakefield said in his evidence he had spoken to the Weathertex representative who told him Weathertex could provide a solution to make the cladding “compliant”, following which the cladding would stay under warranty.23 [32] But despite that, the owners say that the only realistic solution to the external cladding is its removal and replacement with new cladding 18 Ex 1, [19]-[20]. 19 T1-29 L34. 20 T1-30 L6. 21 Ex 4, Appendix 11. 22 Ex 3. 23 T1-118 L36. See also Ex 2 Appendix 6 at [6] where the warranty conditions refer to modifications requested and carried out as instructed by Weathertex. -- 7 of 21 -- 8 “installed as per original contract, architectural drawings and manufacturers installation guide”.24 The evidence does not support that proposition. [33] Mr Reason the building designer considered the timber beading solution would remedy the problem he saw there.25 [34] Mr Sargent thought there was no water penetration problem even without the beading because the sarking or sisalation or whatever waterproofing had been used under the cladding would prevent water penetration. Mr Sargent said the manufacturer accepted the timber bead solution and therefore so did he. [35] The owners’ expert, Mr Wonnacott, was principally concerned with potential water entry at the sheet joins in using the 10mm aluminium strips. He did not deal with the timber beading solution at all. [36] Mr McIntosh, another builder who gave evidence for the owners, conceded that if the manufacturer proposed a method of rectification of the cladding joins that method would be an appropriate remedy.26 He said he had not been aware of the proposal to retrofit the 42mm timber beading as a solution to the cladding joins. [37] The owners also called a joint sealer, Mr Iverson, to give evidence. Mr Iverson made it clear he was a joint sealer, not a builder. In his statement of evidence27 he said he had inspected the cladding, evidently a few months before hearing, and he saw water penetration behind cracked silicone seals. He said there was water damage occurring. Strangely enough, he made no mention of the fitted 10mm aluminium strips between sheets. He recommended removing the cladding and re-sheeting the entire external area “using the correct method.”28 He does not make clear what the correct method is. [38] He had not been aware of the proposal to fit timber beading over the joins either. When the beading proposal was put to him at hearing, he did not agree that a timber bead “to make it look pretty”29 would remedy the problem. The proposal to fit the timber beading is for more than aesthetic purposes however. Mr Iverson’s focus was on achieving a waterproof join by using silicone and his worry was moisture behind the sheets preventing a silicone seal. It was not put to him that Mr Middleton proposed to fix the beading by nailing it between sheets directly onto studs.30 [39] Mr McIntosh also based his view about replacement of all sheets being necessary on his observation that some sheets moved at joins and 24 Ex 2, [12]. 25 T1-125 L39. 26 T1-64 L2. 27 Ex 3. 28 Ibid. 29 T1-69 L40. 30 T1-87 L24. -- 8 of 21 -- 9 therefore he suspected some sheets were not joined on stud. Mr Middleton said all the sheets were joined on stud. He was very clear about that31 and that was also Mr Sargent’s view.32 I prefer Mr Sargent’s evidence on this point and where his evidence conflicts with others. I found him to be clear and impartial in his evidence, well aware of all the cladding issues and proposals about fixing them and generally seemed to me to be knowledgeable in building matters. I conclude the sheets are joined on stud and therefore there is no cause on that basis to require all the sheets to be removed and replaced. [40] I conclude the proposal to fit timber beading over the joins by nailing to the studs and adding a flexible sealant to the timber beading would resolve any issue about water penetration at the sheet joins into the future. That solution would not result in the owners incurring any notable maintenance or other costs with respect to the cladding in the future. I accept Mr Wakefield’s evidence that the cladding would enjoy any Weathertex warranty otherwise accorded appropriately fixed cladding. Costs of Rectification of the Cladding [41] The contractor failed to adhere to the building designer’s direction to use proprietary Weathertex joiners with the cladding. In doing so he breached the warranty imposed by s 45(2) of the Domestic Building Contracts Act 2000 (Qld) (which applied to this contract entered into on 13 January 2013) to carry out the work in accordance with the plans. [42] What remedy do the owners have in consequence of that breach of warranty? The accepted statement of general principle in building cases about rectification work is that made by the High Court in Bellgrove v Eldridge:33 The measure of the damages recoverable by the building owner for the breach of a building contract is, it is submitted, the difference between the contract price of the work or building contracted for and the cost of making the work or building conform to the contract, with the addition, in most cases, of the amount of profits or earnings lost by the breach. [43] The High Court also said however that that statement of principle was qualified by the requirement that not only must the work to be undertaken be necessary to produce conformity to the contract but also it must be a reasonable course to adopt.34 The example given in Bellgrove about that was a building contract calling for erection of a house with cement rendered walls of second-hand bricks and the builder uses new bricks instead. In 31 T87 L27, L35. 32 T104 L36. 33 (1954) 90 CLR 613, the High Court adopting the statement of principle about damages in building cases as stated in Hudson on Building Contracts. 34 Ibid, 618. -- 9 of 21 -- 10 that situation, the owner would not be entitled to the cost of demolishing the walls and re-erecting them using second-hand bricks. [44] The High Court went on to say in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd35 that the example of unreasonableness given in Bellgrove indicated that the test of “unreasonableness” is only to be satisfied by fairly exceptional circumstances. The Court also said there may be other factors besides financial considerations to be considered in determining what is reasonable rectification work. Factors such as aesthetic expectations may also be an important feature of the transaction.36 In that regard the High Court adopted with approval the words of Oliver J in Radford v De Froberville:37 If he contracts for the supply of that which he thinks serves his interests – be they commercial, aesthetic or merely eccentric – then if that which is contracted for is not supplied by the other contracting party I do not see why, in principle, he should not be compensated by being provided with the cost of supplying it through someone else or in a different way, subject to the proviso, of course, that he is seeking compensation for a genuine loss and not merely using a technical breach to secure an uncovenanted profit.38 [45] How do these principles and matters for consideration apply to the matter at hand? [46] I have concluded the fixing of timber beads would rectify any issues about water entry at the edges of the sheets. The owners reject that proposed method of rectification but not any reasonable basis that this method would not work. The cost of replacement and resheeting using proprietary joiners is $42,810.86 based on Mr McIntosh’s quotation. [47] According to Mr Middleton, the cost of the timber beading material will be around $300 but there is no estimate about cost of labour. It is clear however that Mr Middleton submits the all up costs of the timber beading fix will be very modest in comparison to Mr McIntosh’s proposed costs. [48] As stated, I am unable to attribute any significant aesthetic concerns to the owners’ rejection of the timber beading solution. [49] I conclude it is unreasonable to make the builder pay for the removal and replacement of all the cladding using proprietary Weathertex joiners at a cost of $42,810.86 in such circumstances. The use of timber beading as suggested by the builder and approved by the manufacturer39 is a reasonable course of rectification in the circumstances and the costs sought 35 (2009) 236 CLR 272; [2009] HCA 8. 36 Ibid, [16]. 37 [1977] 1 WLR 1262, 1270; [1978] 1 All ER 33, 42. 38 Op.cit 618. 39 Ex 4, Appendix 11. -- 10 of 21 -- 11 by the owners is unreasonable in the circumstances. The builder should be responsible for the cost of the timber beading solution. Cost of Timber Beading Remedy [50] The builder suggests a cost of $300 to add the timber trim. That is only the cost of the material however.40 He gives no estimate of cost of labour or contractor’s margin. Neither do the owners. I must do the best I can however to assess such cost. The costs must be the estimated cost of the exercise to the owners engaging an independent contractor to perform the work. [51] The work must entail the labour involved in fixing and sealing the timber beading around the entire perimeter. There will be some painting required to match the cladding. I estimate that $1,500 for labour and $300 for materials would be a reasonable sum in the circumstances. That totals $1,800. Solatium [52] The builder’s solicitor suggested the owners would be entitled to an award for solatium rather than damages for breach of contract, that is an award of money to assuage disappointment. In Tamburini v SFN Constructions Pty Ltd,41 this type of award was described as possibly available where the owner’s “loss cannot be fully or adequately compensated by an order for damages under the usual heads.” [53] I addressed the issue of solatium in the not dissimilar matter to the matter at hand of Silastone Trading Pty Ltd v Body Corporate for Q1.42 [54] Awards of solatium rely for their authority on the House of Lords decision of Ruxledge Electronics and Construction Ltd v Forsyth.43 There an award was made for an owner who had contracted with a builder for a pool of a particular depth but when built proved to be 9 inches less than designed. The owner was awarded general damages of £2,500 for loss of amenity. There was no diminution in the value of the property due to the breach of contract. The cost of demolishing and rebuilding the pool was £21,569. The only defect with the pool was the depth. [55] The award was confirmed by the House of Lords but on a number of bases. Lord Jauncey and Lord Mustill confirmed the award because it had not been challenged by the appellant builder. Lord Lloyd said swimming pools were not necessities but for fun. They were a pleasurable amenity. He found the loss of that amenity may sound in damages. Both the judge at first instance and Lord Lloyd based the award on English holiday cases, where the object of the contract was to afford pleasure. In those cases where a 40 T2-13 L12. 41 [2011] NSWCTTT 26. 42 [2017] QCAT 349 43 [1995] 3 All ER 268. -- 11 of 21 -- 12 tour operator failed to provide what the contract called for the plaintiff could recover damages for disappointment. Similarly, it was reasoned the contract for the pool was for the provision of a pleasurable amenity and the owner’s pleasure was not as great as it would have been if the swimming pool had been 9 inches deeper.44 [56] Ruxledge was relied on by the New South Wales Court of Appeal in Coshott and Anor v Fewings Joinery Pty Ltd45 where the owner engaged a builder to build a home and stipulated that the construction be to a very high standard. A number of joinery items were found to be defective including defective window sills. The owner wanted all window structures replaced, not just the sills, at a cost of $25,687.99. The judge at first instance allowed $3,205 for replacement of sills and also awarded “solatium” of $5,000 as compensation for the inconvenience the plaintiffs would suffer from the rectification work and for their disappointment in not getting the exact high quality result for which they had bargained. The builder said there was no basis for making such an award. The Court of Appeal upheld the judge’s decision to give such award relying on Ruxley. [57] In Tamawood Ltd v Paans & Anor,46 McGill DCJ said (citing Coshott): If there has been no loss of value, then damages for loss of amenity can be awarded on the basis of the decision in Ruxley Electronics and Construction Pty Ltd … a decision which has been followed in Australia.47 [58] However, in Archibald v Powlett,48 the Victorian Court of Appeal in discussing damages for distress and disappointment in breach of contract cases reminded us that: The general rule is that damages for anxiety, disappointment and distress are not recoverable in an action for breach of contract. The principal exceptions to that rule are where the contract is one whose object is to provide enjoyment, relaxation or freedom from molestation, and where the damages proceed from physical inconvenience caused by the breach. It is the latter exception upon which the respondent relied. The respondent pointed to several cases in which damages for anxiety, distress and disappointment have been awarded following breach of a building contract giving rise to physical discomfort or inconvenience. However, all of these cases involved physical imposition upon the plaintiff, whether by virtue of having to live with offensive odours or a leaking roof, or in unsanitary or dirty conditions, or being obliged to vacate the defective premises.49 44 At 289. 45 [1996] NSWCA 122. 46 [2004] QDC 427. 47 Ibid, [60]. 48 [2017] VSCA 259. 49 Ibid, [62]-[63]. -- 12 of 21 -- 13 [59] The Victorian Court of Appeal cited Baltic Shipping Company v Dillon50 where Mason CJ said:51 On the other hand, as a matter of ordinary experience, it is evident that, while the innocent party to a contract will generally be disappointed if the defendant does not perform the contract, the innocent party's disappointment and distress are seldom so significant as to attract an award of damages on that score. For that reason, if for no other, it is preferable to adopt the rule that damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom from molestation. In cases falling within the last-mentioned category, the damages flow directly from the breach of contract, the promise being to provide enjoyment, relaxation or freedom from molestation. [60] Ruxley, where the pool was for pleasure and the loss of pleasure swimming in a shallower pool was recognised as a loss of amenity, is within the exceptions to the rule against damages for disappointment or distress stated in Baltic Shipping. But similarly the limitations on such awards as stated in Baltic Shipping should not be overlooked. [61] In the matter at hand, I have determined that the principal issue about the cladding for the owners was utility of purpose. I conclude the rectification of the cladding by fixing and sealing timber beads to sheet joins and requiring the builder to pay for that exercise will adequately compensate the owners for the builder’s breach of contract. I cannot find any loss of amenity to the owners in respect of aesthetics that should sound in an additional award for solatium. The Floor [62] The owners also complain about the timber floor. They complain that the floorboards show cupping. [63] Mr Wonnacott, the owners’ builder, inspected the house on 21 August 2015 and gave a report of even date. He did not say much about the floor other than there were gaps in the floor in many locations, which was unacceptable. There was no mention of cupping problems at that stage. [64] The owners complained about the floor to the builder and the parties agreed that the floor should be allowed to settle for 12 months and then the builder would arrange at the builder’s cost for the floor to be sanded again and given a re-coat. The owners agreed. The builder confirmed that proposal in a letter to the owners dated 6 September 2015.52 50 (1993) 176 CLR 344; [1994] HCA 4. 51 Ibid, [44]. 52 Ex 2, Appendix 2. -- 13 of 21 -- 14 [65] The floor was not noted as a defective item of work in the owners’ statement of defects completed on 7 September 2015 but that was because the matter had been addressed in the agreement of the day before.53 [66] That remedial work was never done however because in November 2015, the owners complained to the QBCC about defects, in particular the cladding. The floor was not an item of complaint to the QBCC. [67] Because of the complaint to the QBCC, the builder withdrew its offer to pay for sanding and re-coating after 12 months. [68] Mr Wonnacott returned for another inspection on 29 July 2016 and reported cupping in the floor giving a ripple effect in sunlight. He suggested the ripple effect was exacerbated because the boards were laid perpendicular to the external source of light. He also commented that the boards had been installed on top of particle board which was not unusual but not appropriate, in his opinion, in the damp far North Queensland environment. This was because particle board absorbed moisture readily. Further, the air conditioner drained moisture from inside the house to under the raised floor which was not ideal. [69] He admitted however that he also found gapping occurring between some boards which would indicate drying and shrinking of floorboards. He could not explain the dichotomy. [70] Mr Wonnacott further reported about the problem on 3 May 2017. He commented there that the floor had been fixed using secret nailing rather than face nailing through the top of the boards. He said it was not recommended to use secret nailing of boards greater than 86mm in width. [71] At hearing, Mr Wonnacott agreed particle board was used fairly commonly in floors but he suggested it is not common in low set house(s) “which has the elements going underneath it. The reason that it was stipulated as hardwood flooring only in the drawings was for that reason.”54 [72] He also admitted he did not know the cause of the cupping given the statement from the timber merchant supplying the boards that the boards supplied had an acceptable moisture content. The boards were supplied by Rankine Timber and Truss and Mr Wakefield, a salesman from that company who gave evidence, said the timber was tested for appropriate moisture content before leaving the timber yard. [73] Mr Wonnacott thought the cause of the cupping could be lack of care storing the timber on site and causing moisture absorption or the use of inadequate expansion joints. He said if the timber was supplied at an acceptable moisture level and it is now cupped then between delivery and installation something has happened. 53 Ex 1, Appendix 6. 54 T1-57 L15. -- 14 of 21 -- 15 [74] Mr Wakefield also said however that the boards were again checked for moisture content immediately before they were laid by specific request. They were within the required moisture content range at that time as well.55 There does not appear to have been any lack of care on the part of the builder between supply and fixing. [75] Mr Wonnacott agreed that whether it was appropriate for particle board to be used as an underlay was up to the certifier for the project. Mr Reason, who was not the certifier but was the building designer, saw no problem using the particle board as an underlay for the spotted gum floorboards.56 [76] Mr Wakefield’s evidence was also that he was asked to attend the site on 1 September 2015 to discuss a cupping issue and he thought the problem was because of the sun shining through large doors and windows. He advised Mrs Budge to hang curtains to minimise the sunlight effect. [77] Mr Wakefield said he attended the house sometime before June 2017 and tested the moisture content of the particle board laid as a subfloor under the spotted gum flooring. The particle board moisture content was only 6% to 7% which was a low moisture reading, and according to him as was expected of the product. [78] He said he last saw inside the house in about September 2016 which was about a year after the floor had been laid. He saw some cupping in sections close to the glass windows but the floor was fine further away from the windows where there was no direct sunlight.57 [79] Mr Wonnacott’s evidence however was that the cupping was extensive and was throughout the house.58 He did not agree that the sun might be an issue. It had been involved in many other builds and the windows letting sun in had not caused cupping. [80] Mr Wakefield said timber floors reach an equilibrium after a time, after some years, and in his opinion all that would be needed here would be a light sand and recoat and the floor would be in very good condition. He did not believe the floor needed removal and replacement. Additionally he did not think there was a problem using 130mm spotted gum floorboards. He himself had such in his own home. Nor did he see any issue about using secret nailing with wide boards. Secret nailing was the preferred method today he said. He had sold a lot of floors and he had not heard of problems. [81] Mr Wonnacott suggested most builders in Cairns would not use 90mm boards, they would use something smaller to reduce the cupping effect. So too did Mr McIntosh. Mr McIntosh said he had visited the house on 5 April 2017 and he observed significant cupping of the flooring. He also states in his report of 7 July 2017 that secret nailing is not recommended for boards 55 Ex 4, Appendix 25. 56 T1-126 L9, L20. 57 T1-114 L1. 58 T1-55 L10. -- 15 of 21 -- 16 wider than 86mm in the tropical north. He recommended face nailing the existing flooring and sealing the underside of the chipboard to “help prevent further movement”.59 His estimate of the cost of that exercise was $18,603.56. [82] In cross-examination, Mr McIntosh agreed that if the floor had been lightly sanded to remove imperfections and a single coat of product applied to the floor would present “much better” than when he had inspected it. [83] Mr Middleton does not concede that the floor is defective. He said at hearing that he inspected the floor after the “second last mediation” and it had settled to the point of being satisfactory. I am not sure what or when the second last mediation referred to occurred, but according to Mr Middleton, what he saw on that inspection, together with the advice from Mr Sargent that he would not be allowed back on site to remedy defects, prompted him to cancel the arrangement with the owners to have the floor lightly sanded and recoated as agreed. However, Mr Middleton gave a different reason for cancelling it in his statement of evidence of 7 August 2017.60 There he said it was because of the ongoing unrealistic expectations of the owners as well as the costs that he had already incurred.61 [84] He also referred to a statement in a letter from Mr Sargent to the effect that the floor was performing satisfactorily in support of his contention. Mr Sargent however said at hearing that he was referring to complaints by the owners about screws protruding under the floor. He did not go into the house. He thought the matter of the floor finish had been resolved between the parties with the agreement of 6 September 2015. [85] I conclude the floor is defective because it shows cupping of boards. The cupping is visible in the photograph in Mr Wonnacott’s report of 29 July 2016, though as Mr Wonnacott suggested the visual ripple effect of the cupping is exacerbated by the direction of the boards laid perpendicular to the primary light source. According to Mr Wonnacott and Mr McIntosh, the cupping is now significant. [86] However, I am unable to accept Mr Wonnacott’s suggestion that the particle board underlay has contributed to cupping by constituting a moisture absorbing layer. Mr Wonnacott identified the dichotomy of some boards gapping and others cupping in one of his early reports. That, together with Mr Wakefield’s evidence about the low moisture content of the particle board at 6% to 7% shortly before June 2017, which he said was a low moisture reading “as expected of the product”, leads me to conclude the particle board underlay is not the cause of the cupping. 59 Ex 2, Appendix 17. 60 Ex 5. 61 Ibid, [5]. -- 16 of 21 -- 17 [87] Mr McIntosh said he had visited the house on 5 April 2017 and observed significant cupping but he also agreed when it was put to him that if the floor was lightly sanded and recoated with product the floor would present “much better” than when he had inspected it. I take that to mean that such remedial work would leave the floor smooth, polished and no cupping. [88] Mr Wakefield is not a builder. He has sold timber products for many years however and I conclude in respect of the attributes of such organic product he is well able to give credible evidence about it and problems associated with its use in construction. He said that timber reaches an “equilibrium”. I take that to mean in the context of timber flooring that the timber will reach a point where it neither gains nor loses moisture and thereby achieves stability. He said that may take years. He gave the example of his own floor. That was also similarly 130mm spotted gum. He said there was a place in his floor which expanded and rose a little and there was some cupping but then it stopped and there was no issue there any more. [89] Here the floor was laid some 2 ½ years ago. I conclude that the floor will most probably have stabilised now given that passage of time. [90] As to the use of secret nailing, both Mr Wonnacott and Mr McIntosh suggested the problem with the floor might be attributable to the width of the boards combined with fixing by secret nailing. Both said secret nailing through the hidden edges of the boards was not recommended for boards wider than 86mm in tropical North Queensland. Neither pointed to authorities in support of that assertion. [91] Mr Wakefield said he had not had complaints about secret nailing of wide boards such as used here. He said secret nailing was currently the preferred method of fixing but he did not distinguish between narrow and wide boards. [92] Mr Middleton attached a publication62 to his statement of evidence from an organisation called Timber Queensland. The publication deals with recommended practices in laying timber strip floors over timber joists and structural subfloors such as particle board. The document is referred to as a technical data sheet. It is very detailed but no formal basis is laid for acceptance of the information contained within the document. Having said that, s 28(3)(b) and 28(3)(c) of the QCAT Act provides the Tribunal is not bound by the rules of evidence, or any practices or procedures applying to courts of record, other than to the extent the tribunal adopts the rules, practices or procedures; and may inform itself in any way it considers appropriate. That is subject to the rider that the rules of natural justice are applied. [93] The Timber Queensland Publication was attached as an appendix to Mr Middleton’s statement of evidence and had the owners disagreed with the 62 Ex 4, Appendix 28. -- 17 of 21 -- 18 observations made in it they have had ample opportunity to present their own views and evidence. [94] The Timber Queensland publication does not suggest secret nailing is inappropriate in boards wider than 86mm. It does say top (face) nailing is a more robust fixing method than secret nailing. It states that for boards up to 135mm wide secret fixing of boards requires one staple or cleat at the appropriate spacing and for top nailing two nails per board. In humid localities (such as far North Queensland) it says consideration should be given to board moisture contents, providing for expansion, board size, the species and fixing method. It states: In some locations top (face) nailing may be the preferred option or a full bed of adhesive used. Overlay flooring can be more reactive to changes in environmental conditions that may be induced not only by conditions beneath the floor but also by sun exposure through large windows above the floor. Some manufacturers do not recommend that their 130 x 19mm or wider boards be secretly fixed and other manufacturers have specific fixing recommendations providing for the secret fixing of wider flooring that should be strictly adhered to.63 [95] It is unclear who the “manufacturer” is that is referred to but Mr Wakefield from Rankine Timbers, timber merchants had no objection to using secret nailing of the subject floor comprising 130mm boards. Given the boards have been fixed by secret nailing it is impossible to say whether the appropriate number and spacing of fixings have been employed and whether adhesive to the underlay appropriately applied, if at all. What is clear is that secret nailing is potentially problematic where wide floorboards are laid and some care and thought is called for in its laying. [96] I conclude the most likely cause of cupping of the floorboards in the matter at hand was the inadequacy of the secret nailing of the wide floorboards or the adhesive under or both. That inadequacy I conclude is most likely attributable to the builder failing to use appropriate care and skil. Possibly exposure of parts of the floor to direct sunlight, which was entirely beyond the control of the builder, also played a factor, but I determine no significant factor compared to the inadequacy of the secret nailing. [97] There was a suggestion by Mr Wonnacott that the problem could be attributed to lack of expansion joints, however their lack is fairly easily identified by measurement and had there been an issue with inadequate spacing of expansion joints one might have anticipated it would have been identified with some precision by both Mr Wonnacott and Mr McIntosh, which it was not. [98] I accept Mr Middler’s evidence that he changed the flooring from 80mm wide boards to 130mm at the request of the owners. The responsibility for appropriate fixing of such wide boards however remained with the 63 Ibid, 5. -- 18 of 21 -- 19 contractor. There is no evidence the builder warned the owners of potential problems with use of wide boards nor of issues about secret nailing as opposed to face nailing. I conclude the builder did not know of the potential difficulties with using secret nailing of wide floorboards. [99] As stated, I do not find the problem has been contributed to by high moisture levels in either the particle board substrate or the floorboards themselves. Given that I have also concluded that the flooring has most probably stabilised and reached a point of “equilibrium” in the words of Mr Wakefield, I determine if the boards were now sanded and product applied the cupping will be removed and the floor will achieve an acceptable final finish. I might comment that because the boards lie perpendicular to entry of direct sunlight, slight imperfections with the floor may well continue to be highlighted post rectification, but that will not be the fault of the builder. Cost of Rectification of the Floor [100] The builder agreed with the owners that the floor needed to be sanded and recoated with product in the agreement of 6 September 2015. There is a quotation for recoating the floor, which refers to an area of 140 sq m.64 [101] Mr McIntosh agreed that if the floor was lightly sanded and recoated with product the floor would present “much better” despite his description of the cupping as significant in his report and quote of 7 July 2017. [102] I have concluded the subfloor particle board is not a source of moisture and the floorboards have now, after 2 ½ years, most probably stabilised. Given that, I am not convinced that face nailing is necessary in addition to sanding and recoating the floor with appropriate product. [103] The builder suggests the cost of sanding and recoating would be $1,200. I feel that is very much on the low side. [104] Mr McIntosh’s quote was much more extensive but it did cover sanding and coating as a discrete item of charge. His quote for that was $7,650. I note the builder’s original quote was for interior “woodwork” to have 3 coats, a sealer coat and two top coats. I regard that as fairly standard treatment. I conclude the reasonable cost of sanding the existing secret nailed floor and applying 3 further coats would be somewhere in between the two estimates given. I consider 3 coats will be necessary because the sanding to remove the cupping will take the floor back to bare timber. [105] Mr McIntosh’s quote was based on sanding and coating timber floorboards after face nailing the boards. After that all nail holes would have to be filled. Given face nailing is not required those costs would not be incurred. I do not accept that there would be any need for touch up painting with the skills of floor sanders and their modern equipment and certainly not $1,500 worth 64 Ex 2, Appendix 9. -- 19 of 21 -- 20 as suggested in his quote. I feel his quotation is on the generous side of the equation. [106] In the circumstances, I allow $4,500 for sanding and recoating the floorboards throughout the house. [107] The owners also claim for the costs of accommodation away from the home whilst rectification work is carried out. The addition of timber beading to the cladding will not require the owners to leave the home. The sanding and recoating of the entire timber floor will. The owners claim 10 days at $500 per day at a nearby luxury resort saying it is close to their children’s bus stop. I consider that unreasonable. The children attend school in Cairns. There is no good reason the accommodation could not be in Cairns. I allow 6 days apartment accommodation at $200 per night, which totals $1,200. Furniture must be removed before sanding and after the final coat drying and hardening needs to occur before re-habitation. I allow $400 cost of labour to remove furniture and return it after the work is done. [108] There is a large covered verandah at the property. I am not convinced that would not be adequate to store the furniture in the home during the floor work. The cost for hire of a container is therefore unnecessary and is not allowed. Comment [109] It is not to any point that the builder offered to pay for a sanding and recoating 12 months after September 2015. Nor should the cost of the work now be limited to the sum the builder maintains he would have paid then if he had had it done. He did not do it. It is also not to any point that the builder says he was refused access to rectify defective or incomplete work. [110] I accept the evidence of the owners that they were referring to the cladding rectification work only when they told Mr Sargent they would not let the builder return. The sanding work was to be done by a third party and the evidence was not that the builder was not able to perform the sanding work because of denial of access but cancelled by the builder because the owners had “unrealistic expectations” and also because of the costs that the builder had already been put to.65 [111] The builder submits there is a general principle in Australian law that a building owner is not entitled to recover the costs of rectification or completion where it denies the building contractor an opportunity to rectify or complete. I cannot accept that such a broad proposition is correct. It has been held that the builder’s contractual rights to return to remedy defects or complete work during any defect liability period is a right under the contract. Where that contractual right to return to rectify is breached 65 Ex 5, [5]. -- 20 of 21 -- 21 the owner will in turn be in breach of the contract and cannot claim general damages for the builder’s original breach.66 [112] There are other cases where such breach of the right to rectify during the defects liability period results in the builder being required to pay no more than the cost of the rectification would have been to him (rather than the costs of a third party contractor engaged by the owner) had he been permitted to return. [113] But the defect liability period, which I assume was 6 months (neither party tendered a full copy of the general conditions of contract),67 was finished before the builder was refused access. After expiry of the defects liability period there was no right in the builder to return to complete or rectify defects. [114] There was no consideration for the owners’ agreements about cladding and sanding of July 2016 and September 2016 respectively and no contractual relations were created by those documents independently of the original contract. In respect of both issues, these concerned defects arising out of the builder’s performance of the building contract. The defects liability period had ended by around February 2016. I conclude that was how the builder saw the issues too, or he would not have agreed to perform the additional work set out in the documents, rather than, as submitted, that it was a concession of good will on his part. Conclusion [115] The builder is responsible for the costs of rectification of the cladding in the sum of $1,800, floor sanding and coating with product in the amount of $4,500, accommodation of $1,200 and labour costs of $400 with respect to removal of furniture for the floor work. [116] The parties should be given an opportunity to make submissions on costs. 66 Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302, [73] following Turner Corporation Pty Ltd v Austotel Pty Ltd (1994) 13 BCL 378. 67 Generally, Master Builder contracts allow 6 months for the defects liability period commencing on the date of practical completion and finishing 6 months after that date -- 21 of 21 --