A north Queensland couple who engaged an inexperienced builder to construct their $2.1 mil luxury home with views from the mountains to the Coral Sea, would come to “rue their decision” after a series of construction and design errors produced a vastly substandard residence.

home building disputeCairns surgeon, Gamal Mousa and his wife Margaret, engaged Mark Vukobratich to erect their home on a stunning parcel of land at The Peak that overlooked city and the Pacific Ocean to the east.

With no architect or quantity surveyor requested or offered, Vukobratich produced plans for the geotechnically complex site that did not descend into detailed drawings and omitted engineering input.

The builder’s enthusiasm to “go into this upper niche market” added to Dr Mousa’s constant misgivings that the builder lacked experience in high-end residential construction and that he should widen his search to find someone better suited.

Because though others in the family were eager to get started, he suppressed his instinctive scepticism. “I did not want to be seen to be the one blocking it,” he said.

The home building contract was signed in April 2014.

An unexpected problem with soil stability near the east facing slope where the ground floor, deck and pool area were to be stepped down, prompted a design change within days of the first sod having been turned.

The builder notified the home “needed to be constructed 1.5 m closer to the street than planned” and delivered the first of many contract variations – this one for $82k – to accommodate the issue.

Obstruction of the panoramic views and “alignment issues between the first and second level”, led Dr Mousa to quickly regret that he hadn’t placed greater trust in his gut feeling that his project was very much a “guinea pig” for the achievement of Mr Vukobratich’s business ambitions.

The company’s “seemingly chaotic financial affairs” were also of grave concern.

An attempt to forge Margaret’s signature on a variation request also sparked alarm.

At a September 2015 meeting to clarify variation claims and explain the slow progress of construction, it quickly became “apparent the company’s personnel could not reconcile its own financial records”.

Both parties then quickly appointed solicitors which led to the Mousas eventually terminating the contract on the grounds of the contractor’s alleged repudiation.

The claim came before the Supreme Court in Cairns over seven days in October 2018.

The client sued for the rectification cost by reason of the builder’s breach of statutory warranties under the Domestic Building Contract Act.

They produced evidence from civil and structural engineer George Thirkell; quantity surveyor Scott Pearson; and John Palmer, an expert in construction waterproofing.

Justice Jim Henry accepted Pearson’s $900k rectification costing for the serious defects relating to water seepage, defective retaining walls, defective tanking, defective roofing, swimming pool construction faults and the absence of control joints and steel reinforcing in many of the paved areas.

The Mousas also sued for their loss connected with the builder’s repudiation of its obligation to deliver the finished product, costed by Pearson at $1.15 mil inclusive of  a 6% escalation allowance and a 15% contingency sum.

Justice Henry had no hesitation in concluding that because of the serious defects – “well beyond superficial and readily remedied flaws which might occur in an otherwise competent construction process” – the company had “manifested an intention to perform the works in a manner substantially inconsistent” with its contract obligations.

On those grounds the court allowed repudiation damages as claimed but granted the builder of credit of the $575k still to be paid by the client under the building contract.

The damages awarded totaled $900k for rectification for defective construction performed and a net $570k towards the cost of completion of the residence.

The Mousas’ claim against Vukobratich personally – as distinct from their claim against his company – was however dismissed by the court.

“The unfortunate reality for the Mousas is that they were well able to take steps to protect themselves financially from disappointed expectations. Despite being aware of the apparent inexperience of the company they made a considered choice to contract with it.”

On that basis there was no duty, so ruled the court, for which Vukobratich was personally liable to them.

The builder’s observation as things began to unravel that “from now on any jobs over $1 million we are going to get a QS and an architect” was – although in hindsight – a prophetic response to the dire situation in which he had foundt himself.

Mousa & Anor v Vukobratich Enterprises Pty Ltd & Anor [2019] QSC 49 Henry J, 11 March 2019


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