Montero v Renshaw Homes Pty Ltd (Building and Property) [2025] VCAT 194
Key takeaways
- Experts must have a clear understanding of their instructions, including which documents to review and what specific aspects of the property to assess.
- Ambiguous instructions can limit the expert's ability to provide a comprehensive opinion and weaken their evidence.
- Experts should explicitly outline and justify the methodologies they use for identifying defects and determining rectification costs.
Background
This case concerns alleged construction defects in a new single-story house in northwest Melbourne. The homeowners are suing the builder. They bought the house from a company related to the builders.
The main issues in the proceedings were (a) whether the identified problems are defects, to which the Tribunal said yes, including incomplete work; and (b) how much compensation is owed. The homeowners claimed around $260,000, while the builder suggested less than $25,000.
Expert evidence
A significant portion of the five-day hearing before the Tribunal related to the competing expert evidence. In considering the issue of how much money should be awarded to the homeowners to fix the building defects and incomplete work, the Tribunal described the differences between the parties' experts' assessment of the cost of rectification as "extraordinary"(at [11]). The builder's experts, Mr JB and Mr HO, claimed to have applied a practical, builder's approach, while the homeowners' experts, Mr AK and Mr GD, were accused of using an "insurer's perspective" that exaggerated the issues, repair methods, and associated costs (at [3]).
However, in assessing the extent of the rectification works required it the experts had not assessed the same list of issues, leading to confusion and evidence being at "cross-purposes" (at [13]). As a result there was confusion in the numbering system for observations resulting in "gaps" and mismatched item numbers between the experts' findings.
The Tribunal noted that the builder has to prove that the homeowners' rectification costs are excessive. However, the builder's first expert report by Mr JB was "somewhat problematic" as Mr JB's report stated he was only asked to review the initial reports and quotes to identify defects and provide rectification costs, but did not include all relevant documents. The costings in his first report also included overheads and profit but lacked detail on labour and materials- as a result, the Tribunal considered his report "not particularly strong or thorough" (at [16]-[21]).
Mr HO, the builder's second expert, was instructed to respond to Mr JB and Mr GD but not Mr AK. He did not provide his own costings but commented on others'. His instructions focused on Mr GD's recommendations and costings.
The homeowners' expert, Mr AK, indicated his report had been based on certain documents, including the report referred to by the builder's expert, but had not considered the quote or sale contract. Despite not having all the relevant documents, he was instructed to identify defects, propose fixes, and estimate costs for them.
Mr GD, the homeowners' structural engineer, had extensive experience in estimating and insurance work. He reviewed various documents, including Mr AK's report, and was asked to assess if the building met design plans and to suggest and cost rectification works.
Mr AK and Mr GD then, during the hearing, submitted updated reports, leading to arguments about whether these were genuine updates or unfair surprise tactics. In his updated report, Mr AK significantly increased his rectification costs between his initial $193,647.33 to $243,970.37 in the later reports, including substantial increases in areas like doors/windows and the master bedroom.. Due to the significant changes in the costs claimed, the Tribunal allowed Mr JB to provide expert testimony on those new costings, even though he had not covered them in his report, despite the homeowners' objections (at [31]).
Tribunal's determination
In assessing the respective reports overall, the Tribunal found that the written reports from Mr AK and Mr GD were "literally more detailed" compared to the reports of Mr JB and Mr HO (at [215]). However, the Tribunal took note that Mr GD claimed costs reflected the "marketplace", suggesting his pricing is competitive, which it interpreted as Mr GD "saying that he is an expert in having his own opinion". Given the lack of clarity about his "marketplace" reference, the Tribunal found his costing evidence difficult to accept without strong corroborative evidence (at [358]). Ultimately, the homeowners were awarded $151,378.07.
Read the full decision here.
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