This article is from the Australian Property Journal archive
IN a landmark decision, homebuilder Metricon has dramatically lost its appeal against a ruling that it must demolish and rebuild a defective slab heave house, a verdict that will affect thousands of homes built in Victoria and means construction professionals are liable for volatile soil movements.
In the case of Metricon Homes v Softley, Metricon appealed a Victorian Civil and Administrative Tribunal ruling in December 2014 that it must knockdown and rebuild the home of Shelley and Earl Softley in Melton due to cracks in the home.
Metricon said that it could repair the damaged home, however VCAT disagreed.
The Tribunal ordered Metricon to pay for the demolition and re-construction of the Softley’s house, removalists and rental accommodation.
Metricon appealed the decision to the Supreme Court of Victoria Court of Appeal and argued that VCAT erred in its decision.
The Court of Appeal Justices Warren, Tate and Robson rejected Metricon’s appeal.
In their ruling, the Judges said:
“In those circumstances, where the Tribunal had found that the repairs and rectification work to date had not led to the position where the Tribunal could conclude that damage would not occur in the future, I do not find it is incumbent on the Tribunal to spell out the physical forces at play and the relevant engineering principles at play that may explain why the damage was still occurring.
“All that the Tribunal was required to find, and in my view did find, was that in view of what had been happening since the house was built four years before, and in view of the deficiencies in the workmanship of the builder, there was a real risk that unacceptable damage may continue to occur in the future.
“The critical finding was that the Tribunal was not satisfied that the worst was over and that unacceptable damage (which had been continuing since the house was built four years previously and was due to the builder’s failure to observe its contract) would not continue to occur in the future. That was a finding of fact,”
The Court of Appeal decision has significant ramifications for the property industry with thousands of homes built in Victoria using the slab heave method.
One industry professional who did not wish to be named told Australian Property Journal that defective homes would hit builders hard.
“Builders are already working on a tight margin of 5% on each home – they would be lucky to get $20,000 a house,” they said.
“The Supreme Court of Appeal decision has a major impact on all residential developers; but even more so on listed residential developers,” a leading barrister told Australian Property Journal. “Listed developers and their investors are now vulnerable to a myriad of future heave-slab actions. It potentially will impact upon their bottom line as there are dozens of claims out there.”
Lawyers Slater and Gordon represented the Softleys and the firm has reportedly fielded over 200 enquiries from defective homeowners. Shelley Softley called on Metricon to finally face up to its responsibility.
“All we wanted was a dream home, but what we ended up with was a nightmare. We worked hard, saved up our money to build a beautiful home we could be proud of and live in comfortably. But within three months of moving in, our house began to crack and fall apart around us.
“We did not cause the problem and we should not have been forced to live with it for so long. It has been a long and exhausting six years, but we feel vindicated,” Softley said.
Slater and Gordon associate Robert Auricchio said the building industry had again been put on notice about slab heave – a problem that has affected hundreds of homeowners throughout Victoria and interstate.
“Earl and Shelley Softley’s house has suffered major structural faults due to footing and foundation movements following the use of a waffle slab during the construction of their house – a problem known as slab heave.
“It is time for the industry to review the extent of slab heave, to co-operate with homeowners to rectify the issue and to change design and construction practices to prevent a repeat of this disastrous problem,” he added.
“Consumers have faced an unsatisfactory situation and the economic viability of the building industry has been put at risk because of a failure by sections of the building industry to adhere to and enforce standards.
“Today’s decision sends a clear message to builders, engineers and building surveyors that they must take all precautionary measures against slab heave or pay the price,” he continued.
Meanwhile Auricchio said the proposed legislation currently before Parliament was an important step towards domestic building reform in Victoria.
“Slater and Gordon has been lobbying for change to the current framework for more than four years.
“The Building Legislation Amendment (Consumer Protection) Bill provides an opportunity for builders and homeowners to resolve matters without the need to commence legal proceedings in the first instance.” Auricchio said.
Australian Property Journal
