Bellini v Meldan (Vic) Pty Ltd [2021] VCAT 833 (Copy)
Background
Meldan (Vic) Pty Ltd (builder) entered into a contract in 2011 which outlined the construction of a domestic building.
ARKI Building Surveyors Pty Ltd, the building surveyor issued an occupancy permit for the property on 24 August 2012.
On 11 February 2013, Bellini (Owners) entered into a contract to purchase the property.
The purchase was settled on 7 May 2013, and by virtue of being the successive owners of the property, they are entitled to the benefit of the warranties implied into the contract by s.8 of the Domestic Building Contracts Act (1995) (DBC).
The defects alleged included the following; that there was an absence of a termite management system; the old railway sleepers installed in the ground as a feature were unsuitable for a termite prone area; the boundary fence was constructed of inappropriate materials; the shower faucets leaked due to the absence of sealant to waterproof the joints and allow for movement; the step down to the light courtyard was constructed against what was documented in breach of Australian standard AS4654.2 2009; the builder had installed the windows with external architraves with a failure to flash1 the windows and the door; the weep holes in the southern boundary were not 75mm above the finished pavement; the external weatherboards were not painted properly; and, the pipe for gas supply was exposed to the elements and at risk of deterioration over time as a result. Additionally, the owners sought damages for the cost of alternate accommodation and furniture storage whilst the repairs were undertaken.
Relevant Law
Section 8(a) of the DBC specifies the implied warranty that the builders work “will be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract.” Furthermore, s. 8(d) states that the work “will be carried out with reasonable care and skill”. Within the proceedings, the VCAT held that some of the alleged defects were reasonable in accordance with the implied warranties set out in section 8. The VCAT made an emphasis on the breach of s.8(c) which states that the work will “comply with, all laws and legal requirements” and where the work was found to be a breach of s.8(c) they held that it was not apportionable.
History of Proceedings
VCAT rejected the builders appeal to apportion liability between it and ARKI building surveyors in May 2021, due to the breach of warranty being apportionable related to the failure by a builder to take reasonable care.
The hearing between the owners and the builder took place on 29 July 2021. In accordance with the decision of the Court of Appeal in the matter of ‘Lacrosse’2, the VCAT held that the only warranty that could give rise to an apportionable claim was a breach of the warranty relating to a failure by a builder to take reasonable care.3 The owners were entitled to an order for the foregoing rectification costs, plus an additional $5,000.00 for alternate accommodation whilst the work is completed. Of the alleged defects the VCAT held that the ‘confirmed defects’ were the inclusion of a termite management system, the re-construction of the boundary fence, the step to the light courtyard, the protection of the gas pipe, the requirement for the weep holes to be re-laid at a lower level, and the re-painting of the external weatherboards. They also held that they would allow the cost for alternate accommodation. The total costs amounted to $80,676.00.
Decision
The owners submitted the claim that Meldan failed to ensure that the works were carried out with reasonable care and skill, not that the Meldan itself had failed to carry out the work in such a manner, the VCAT determined that the claim was not apportionable. Consequently, to the extent in which Meldan was in breach of the warranties, its liability for such breach was solely under contract. Thus, the VCAT held that the damages which flowed from such breach were not apportionable.
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