Tribunal Finds Builder Liable for Defects and Loss of Rent

A recent tribunal decision has highlighted the consequences of construction defects and non-compliance, resulting in significant damages against Katana Building Group Pty Ltd. The ruling, issued in December 2024, addressed claims arising from two residential units constructed in 2012. The defects spanned multiple aspects of the build, including inadequate waterproofing, brickwork weatherproofing, and subfloor ventilation, as well as incomplete landscaping and other works. The tribunal awarded over $100,000 to the owners, encompassing rectification costs and loss of rental income.

Defects Identified and Tribunal Findings

The tribunal found multiple breaches of the Domestic Building Contracts Act 1995 (VIC) and relevant Australian Standards. The identified defects included:

• Brickwork Weatherproofing: Missing cavity flashings and weepholes, violating AS 4773.2:2010. The tribunal awarded $1,000 for inserting weepholes but dismissed claims for more extensive work due to insufficient evidence of structural damage.
• Waterproofing: The tribunal reviewed claims of defective shower waterproofing and missing water stops under AS 3740:2010. It concluded that no rectification was necessary as no evidence of resultant damage had been demonstrated.
• Subfloor Ventilation: A lack of sufficient ventilation openings in the subfloor area was found to breach AS 3727:1993, with $1,948 awarded for corrective work.
• Landscaping and Incomplete Work: Several landscaping claims were dismissed due to a prior settlement between the builder and owners in September 2017. However, the tribunal awarded $5,000 for incomplete irrigation work, which remained the builder’s responsibility.

Financial Awards

The tribunal’s decision resulted in the following awards for Units 8 and 8A:

• Unit 8: $42,734.12, covering proven defects, builder’s margin, and GST.
• Unit 8A: $20,477.60, for similar issues, along with an additional $12,160.50 for incomplete landscaping obligations.
• Loss of Rent: The owners were awarded $48,664 to compensate for rental income lost between June 2012 and February 2022 due to the builder’s failures.

Missed Claims

Several claims were dismissed, such as the omission of 3D wall panels and a workbench, as the owners could not establish that these were included in the builder’s scope of works. Claims related to landscaping lighting and barbecue areas were also denied due to prior agreements absolving the builder of responsibility for those elements.