Damn It, Zammit! VCAT Pours Cold Water on Unreasonable Demolition Claims

A recent 2012 decision of VCAT has cast doubt on building defect claims that argue (based on expert evidence) that demolition and reconstruction is necessary, unless such conclusions are rested on unequivocal evidence.

It is a further warning that VCAT will only award damages for what is ‘necessary’ and ‘reasonable’, and that the decision maker will be sceptical of experts encouraging unrealistic expectations in Owners that extreme rectification methods will be compensated, unless clearly necessary.

In cases where there are two differing views between building experts as to the required rectification, and the magnitude of the building defect, it would be a fool’s game to assume that the Tribunal will always be consumer focussed and plump the Owner’s way in the decision.

In this case of Zammit v Home Construction & Design Pty Ltd [2012] VCAT 320 (22 March 2012), the VCAT Member found that it would be unreasonable to order that the house should be demolished and rebuilt. It was a situation where it was agreed by the experts that the steel reinforcing mesh was positioned too low in the concrete slab (ie a waffle pod raft concrete slab that did not require deep footings).

Instead, the Member held that the residential building was “clearly serviceable and merely requires repair of consequential damage caused by building movement”.

Consequently some criticism was then made by the Member in regard to the expert evidence given by the Owner’s engineering expert, advising that the Member was “troubled” by the recommendation by that consultant that the house should be demolished.

Essentially the consultant had acknowledged that despite the reinforcement being too low and the cracking in the slab that was evident, that the house slab was still structurally sound. Therefore the Tribunal professed some confusion as to why demolition and reconstruction would be needed (the most extreme measure of rectification) when only technical non compliance with AS 2870 was really alleged.

There was concern by the Member that the opinion of this expert may have instilled “fear and apprehension in the mind of the Owner as to the structural integrity of the building and may have encouraged the Owner to prosecute this claim in the way in which he has, rather than looking at alternative avenues for resolution.”

To make matters worse for the Owner, there was no alternative claim made other than the cost to demolish and rebuild the house, so the Tribunal considered there was no option (in the absence of an alternative claim) but to dismiss the proceeding against the Builder.

In this decision there was something of a comparison between the experts as to the effect of the steel reinforcement being placed too low, the nature and extent of any building movement and cracking in the slab, and what form of rectification was required.

Notably, even the Builder’s engineering expert agreed that the reinforcement had been placed too low in the slab, but based on the calculations he had made, he did not consider the structural integrity of the slab had been compromised by this. Further he did not consider the cracks in the slab extended through the entire slab, rather they demonstrated a ‘slump’ failure of no structural consequence. Effectively the slab had flexed and given that less movement had been noted from studies between November 2010 and February 2012 (compared with prior periods) he considered the slab had stabilised and was “returning to equilibrium”.

On the other hand, the Owner’s expert considered the differential movement was caused by the concrete slab being insufficiently stiff to resist soil movement. The steel reinforcing mesh was positioned too low and had further substantially decreased stiffness.

Reference was made to Section 5.3.2 of AS 2870 and he contended that cracks observed were consistent with the slab moving beyond or at least approaching its design parameters. He referred to these as “hinge cracks”, considered further movement was expected due to seasonal influences and that the only reasonable course was to demolish and rebuild the Works. Consequently on the basis of this expert evidence the Owner brought a claim of $327,800 plus incidental costs such as alternative accommodation and removal of fixtures/fittings.

• Some building movement was to be expected, though the degree of movement experienced is beyond what one might have envisaged as “normal”;
• He accepted the Builder’s expert evidence that the cracks in the slab are either shrinkage or slump cracks or gaps, rather than hinge cracks of a structural danger, and that the building movement
  has largely stabilised;
• Although as both experts accepted the steel reinforcement had been placed too low the slab was still within the design parameters of the applicable Standard (as argued by the Builder’s
  expert);
• As a result it would not be reasonable to have to demolish and rebuild the Works.

In reaching this conclusion the Member looked at the tests set out in the earlier cases such as Bellgrove and Tabcorp to the effect that not only must the rectification work be necessary to produce conformity with the end result the parties had bargained for, but it also must be a reasonable course to adopt.

This case is a salutary reminder that, depending on the circumstances of each individual dispute, the VCAT will not be prepared to rubber stamp claims where the measure of damages claimed is not based on what is necessary and reasonable. Further complainants in these matters should not paint themselves into a corner by not considering lesser or alternative options.

Builders can take heart to some extent that even though VCAT does sometimes have a reputation of being consumer orientated, it will still provide balance in its decision making and perhaps that reputation is undeserved.

For more advice on your rights and responsibilities in this area of law, or if you are perchance in a dispute yourself, do not hesitate to take prompt legal advice now.

Lovegrove & Cotton Lawyers to the Building Industry

For thirty years, Lovegrove & Cotton have represented builders, building surveyors and building practitioners in Melbourne, Canberra, Sydney and Queensland. Doyles Guide ranks Kim Lovegrove as one of the leading construction lawyers in Australia. Justin Cotton, likewise, is a leading Australian construction lawyer and widely respected in the building fraternity as evidenced by his recent elevation to Chairperson of the HIA Industrial Relations and Legal Services Committee, and member of the Regional Executive Council, for HIA Victorian Chapter. Lovegrove & Cotton can help practitioners resolve any type of building dispute and are preeminent in the area of building practitioner advocacy.

If you wish to engage the firm, feel free to contact us via our website or by emailing enquiries@lclawyers.com.au.