Brown v Smith [2023] QCAT 341

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Brown v Smith [2023] QCAT 341 PARTIES: EMMA BROWN (applicant) v KEVIN SMITH (respondent) APPLICATION NO/S: BDL 292-21 MATTER TYPE: Building matters DELIVERED ON: 4 September 2023 HEARING DATE: 21 April 2023 HEARD AT: Cairns DECISION OF: Member Taylor ORDERS: The applicant’s claim is dismissed. CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES – MEASURE OF - where a prospective home owner engaged a building inspector to carry out and report on a pre-purchase inspection of a house – where the inspector failed to identify substantial and significant defects in the floor frame of the house – where the prospective home owner purchased the house purportedly reliant on the inspector’s report – where the home owner subsequently discovered the substantial and significant defects in the house – where the home owner seeks damages against the inspector for the cost of rectifying the defects in the house Queensland Building and Construction Commission Act 1991 (Qld), s 75, s 77, sch 2 APPEARANCES & REPRESENTATION: Applicant: Self-represented Respondent: Self-represented -- 1 of 9 -- 2 REASONS FOR DECISION Overview [1] The applicant is a homeowner. The respondent is a now retired building inspector who had previously conducted a business of performing and reporting on inspections of completed houses. [2] The applicant had contracted the respondent to do such an inspection and report on it in satisfaction of a condition of the purchase contract for the house. He conducted an inspection and provided a report, such which did not identify any defect in the floor frame of the house, and moreover reported there were no defects in the floor frame. The applicant asserts she relied on his report in deciding to purchase the house, although as I will discuss in these reasons there was an absence of clarity in that regard given the applicant entered into two contracts for the said purchase, the first contract not proceeding to settlement. [3] Subsequent to purchasing the house and occupying it, the applicant discovered what can readily be described as significant defects in the floor frame of the house requiring substantial rectification, such which is said to encompass substantial consequential construction work within the house. [4] The applicant seeks damages from the respondent. The applicant’s application lacks clarity, and is confused and confusing in this regard, not only in terms of the quantum claimed, but in terms of the cause of action on which she relies. I discuss this later in these reasons. [5] The respondent defends the claim in its entirety. Whilst he accepts the fact that he did not inspect the underfloor space, he says this is because it was inaccessible, but accepts that there is no qualification given in his report to that effect. In terms of the issue of it being inaccessible, there was no evidence before me to support that. [6] On the evidence before me, his report expressly stated that access was not restricted to the sub-floor space, that he did conduct the inspection of the subfloor space, and critically that the floor was defect free. Thus, notwithstanding his assertions in the hearing of inaccessibility, I was able to readily conclude that the defendant failed to conduct the inspection he was contracted to perform and in turn failed to have identified the defect in the floor frame construction and bring this to the applicant’s attention. Accordingly he was in breach of his contractual obligation to the applicant. [7] It is this breach, which the applicant in turn asserts caused her to suffer damage. However, notwithstanding the applicant’s assertion that she relied on the respondent’s report to enter into the contract and ultimately settle on the purchase of the house, on her own documentary and oral evidence this was not substantiated. As will be discussed later in these reasons, the contract of purchase for which the applicant contracted the respondent to provide his report for did not proceed to settlement, and whilst she entered into a second contract for the purchase of the house, that second contract was not subject to her obtaining a satisfactory building inspection report, nor did she obtain a further or updated report from the respondent for that purpose. Thus, all that exists is the applicant’s unsubstantiated assertion that she relied on the report obtained for the purposes of the first contract to proceed with and settle on the second contract. -- 2 of 9 -- 3 [8] For this reason alone she fails in her action in this Tribunal. However, even if she could have succeeded on that bare assertion, she would otherwise fail in the absence of sufficient evidence to support her claim for the quantum of the damage claimed, be it either the cost or remediation or the loss she said she suffered by paying too higher price for the house. [9] Accordingly, the outcome of this proceeding is that her claim is dismissed. Background [10] On or about 28 June 2020, the applicant entered into a contract to purchase a house at Newell, a small residential area north of Port Douglas in Far North Queensland. It is reported that the house was around 50 years of age. That contract was subject to a building and a pest inspection report satisfactory to the applicant. It was also subject to the applicant obtaining finance. (the First Purchase Contract) [11] It is common ground that on or about 10 July 2020, the parties entered into a contract under which the respondent, as an inspector of completed buildings, would inspect and report on the house as the requisite building inspection report for the purposes of the First Purchase Contract. There was no written contract document to that effect.1 [12] The respondent inspected the house and provided a report, undated but recording the date of the inspection as being 10 July 2020.2 As is relevant to this proceeding, that report expressly stated: (a) The areas inspected including the ‘interior building’ and the ‘sub floor’; (b) The timber floors were free of movement such as spring and bounce; (c) The bearers and joists to the timber floor in the subfloor space were free of sag, cracks, and decay; (d) The inspector had unrestricted access to all areas; (e) The only areas not inspected was the roof space due to the absence of manhole access; (f) Overall, the property was structurally sound with some minor issues to address; and (g) In conclusion, the house was in “reasonably good condition for its age.” [13] Ultimately, the applicant did not proceed to settlement of the First Purchase Contract, informing me in the hearing that on that occasion she was not able to obtain finance approval. [14] On or about 15 September 2020 the applicant entered into a second contract to purchase the house.3 On this occasion it was not made subject to a building or pest 1 Such is as confirmed by the respondent in his ‘Response’ document to this Tribunal dated 25 January 2022, which became Ex 7 in this proceeding. 2 Ex 1 Annexure 1 3 Ex 6. -- 3 of 9 -- 4 inspection, however it was made subject to finance approval.(the Second Purchase Contract) [15] Ultimately on this occasion the applicant received finance approval and settled on the purchase of the house. As I understand the applicant’s case, shortly thereafter she became aware of the substantial defect in the floor joists and bearers which have been generally described in the following manner:4 Damage, distortion, warping, twisting, water penetration, dampness, material deterioration, safety hazard, structural. Bearers have shrunk, Joists have shrunk, Bearers are deflecting, Joists are deflecting, There is evidence of timber pest activity. Floor will continue to have excessive bounce. … [16] She also asserted that there was a column placed under a bearer but was not bearing on any footing and thus of no structural use, for which remedial work was performed at a cost to her.5 [17] What then followed was the applicant’s complaint to the Queensland Building and Construction Commission, an investigation by a Commission Inspector, and a subsequent report being issued dated 15 April 2021 wherein the following ‘determination’ was expressed:6 It is the Commission’s view that the inspection and subsequent report failed to identify the major defects to the timber elements within the sub-floor frame of the dwelling. Even in the event there was some storage of goods within the sub-floor area, the nature and location of the major defect adjacent to the external wall of the dwelling was easily noticeable when viewed from outside the dwelling. It is the Commission’s view that the major defect of the damage to the timber floor elements should have been identified and reported in the pre-purchase report. [18] It is seemingly on this basis, and from what I understood of the applicant’s case a refusal by the respondent to compensate her for the costs of remedial work, that she commenced this proceeding in this Tribunal. In pressing her claim before me in the hearing, she sought to explain and justify her claim on the basis that had she known about the substantial defect in the floor frame before she either entered into the Second Purchase Contract, she would not have done so or alternatively would have negotiated a lower purchase price. The Issues [19] There are a number of issues arising in the manner in which the applicant has presented her case in this Tribunal. [20] Firstly, she does not identify in any way the cause of action upon which she relies, and was unable to do so in the hearing. Whilst a self-represented lay person is not expected to express a claim to the detail expected of a legally trained person, a person 4 See the ‘Inspection Report’ from Carroll Building Inspections which is at Ex 1 Annexure 7. See Ex 8. 5 See Ex 4 and Ex 1 Annexure 5. 6 See Ex 1 Annexure 3. -- 4 of 9 -- 5 who embarks on litigation is still expected to be able to identify with some clarity the legal premise for their claim. [21] That being said, as the evidence and submissions unfolded I was left with the impression that the applicant was pursuing what she asserted was a breach of contract by the respondent having failed to perform the inspection as he was contracted to perform. I will return to this point later in these reasons and briefly discuss an alternative cause of action that was open to her. [22] Secondly, there is confusion in the claim she is actually pressing. In the original version of her application filed 11 November 2021 she stated in Part B of the application document that she sought payment of $5,000 as payment of an amount owing, plus costs of an unstated amount. In Part 3 thereof she expressed her claim as being “compensation for costs involved in replacing faulty subfloor joist and bearers in bathroom, front room, and costs already incurred.” Attached to that application document is a quote dated 21 August 2021, from whom is said to be a builder, being for remedial works described thereon as costing $33,000. That material is thus of itself inconsistent. [23] In her amended application filed in this Tribunal on 3 August 2022, she had recast those parts of her application. In Part B of the amended application document she states that the relief sought is $6,000 for payment of an amount owing, plus $5,000 costs, although in Part C therein in answer to Q2 she states “I am wanting to claim the full amount of compensation for repairs found …”. On that occasion she did not provide a copy of a builder’s quote. However shortly thereafter under cover of a ‘letter’ to this Tribunal dated 24 November 2021 in response to procedural directions given by the Tribunal on 20 October 2021 she provided another quote from the same builder, on this occasion dated 3 August 2022, for the same work but costing $44,000. Once again there is inconsistency in her filed material [24] By the time of the hearing before me, the applicant initially said the claim was for compensation in the sum of $45,000, but in her closing submissions said it was $48,172 but without pressing any claim for costs. [25] Thirdly, there was also the issue of the extent to which she asserted she relied on the respondent’s report for the purposes of the Second Purchase Contract. It was a bare assertion devoid of any evidence to support it. [26] Finally, there was the issue of her evidence of the damages alleged to have been suffered. [27] As to the alleged costs of remedial work, she did no more than provide various quotes for work asserted as being the required remedial work, and invoices for remedial work she asserted had already been performed, all said to be as a consequence of the defect in the floor framing. However she did not present any independent evidence from the persons providing those quotes or invoices, or an expert, to substantiate the asserted nature, extent, and cost of the remedial work said to be required and/or performed. [28] As to her assertion that had she known about the defect in the floor frame, she would either not have purchased the house or she would have negotiated a lower purchase price, such was a bare assertion devoid of any evidence to support it. -- 5 of 9 -- 6 [29] All that being said, the three issues as I saw them to be on the material before me were: (a) Did the respondent fail to have properly performed his inspection and reporting on the condition of the building for the purposes of the applicant proceeding with purchasing the house?; (b) If the answer to that question is yes, did the applicant suffer a loss as a consequence?; (c) If the answer to that is yes, what is the quantum of damages (if any) the respondent should pay to the applicant?. This Tribunal’s Jurisdiction [30] The work in question is the carrying out of a completed building inspection. That is ‘building work’, is ‘reviewable commercial work’, and in turn gives rise to a ‘minor commercial building dispute’, as those terms are defined in Schedule 2 of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act). [31] It is also ‘tribunal work’ as that term is used in s 75 of that Act. Given that the proceeding is a ‘building dispute’ as that term is also defined in Schedule 2 of the QBCC Act, this Tribunal is given jurisdiction under s 77 of that Act to hear and decide it. The Evidence & Submissions [32] Each party’s evidence was limited solely to themselves. Neither called any other person as a witness nor sought to tender statements given by other persons without calling them as witness. They each relied on documents provided to the Tribunal at various times prior to the hearing as their evidence in chief,7 and each undertook a short cross-examination of the other. [33] Generally, that evidence was somewhat convoluted and the parties often strayed into irrelevancy. In my opinion it is not necessary for me to set out in any detail here what that evidence was. To the extent the evidence was relevant to the decision I was being asked to make, it is as I have identified it in the various paragraphs of the ‘Background’ section to these reasons, plus a video that was taken of the sub-floor space and the floor framing in question which clearly shows substantial degradation of the timber,8 and a photograph of an allegedly defectively constructed underfloor post said to be supporting a bearer.9 [34] In terms of closing submissions, the effective essence of them were as follows: (a) For the respondent: (i) He was unable to inspect the underfloor space because rubbish was there and accordingly could not have seen the defect in the floor frame; (ii) He should not be liable for damages. 7 For the applicant, it was Ex’s 1 to 6. For the respondent, it was Ex’s 7 to 10. 8 Ex 3. 9 Ex 4. -- 6 of 9 -- 7 (b) For the applicant: (i) She relied on the content of the respondent’s report in deciding to purchase the house; (ii) Has she known about the defect in the floor frame, she would have obtained a discount in the purchase price, and if she could not have obtained the discount she would not have purchased the house; (iii) Her claim is for $48,172 being the aggregate of: A. $4,172 which she has spent in remedial work already;10 and B. $44,000 which has been quoted to her for the remainder of the necessary remedial work.11 Discussion on the Evidence and Submissions The need for discussion on the relevant legal principles [35] There is no substantive legal issue arising in this proceeding that required me to descend into a discussion on the law with reference to precedent caselaw or statute. It turns entirely on the evidence and the submissions made and the findings that can be made on that evidence Findings of fact [36] Despite the respondent’s assertions to the contrary, it is entirely unclear on the evidence before this Tribunal as to whether he could, or he could not have, inspected the subfloor space and observed the defect in the floor framing. However, I do not accept as a fact his assertion that he could not have inspected it. This is because, by reference to his own report of the inspection, he states he was not restricted in conducting the inspection of that space, states that he did inspect it, and moreover states that the bearers and joists were defect free.12 Thus, the inference that is drawn from his own report is that he did perform, or at the very least could have performed, the inspection, and that he did not observe any defect in the floor frame. [37] But it does not follow that there was no such defect. The evidence is overwhelmingly to the contrary. I particularly note the video recording which clearly shows a substantially degraded timber floor frame,13 as well as the report provided by Carroll Building Inspections,14 both of which were tendered by the applicant without objection by the respondent, and together which are sufficient to show that the defect in the floor frame would have been present and visible on 10 July 2020 when the respondent conducted his inspection. [38] On the basis of this information alone, I found as a fact that: 10 Ex 1 Annexure 5. 11 Ex 1 Annexure 8. 12 My emphasis by way of underlining. 13 Ex 3. 14 Ex 1 Annexure 7. -- 7 of 9 -- 8 (a) at the time of the respondent’s inspection of the house, the floor framing was substantially defective such which would require significant remedial work; (b) the respondent performed the requisite inspection but failed to identify and report on the existence of the defective work, and moreover falsely reported he had inspected the subfloor and identified that the floor frame was not defective. An absence of sufficient evidence for the applicant [39] That then leads to the question of the extent to which the applicant asserts she relied on the report to purchase the house, and so in turn suffered a loss because of the respondent’s failure to have performed the inspection, and reported on it, correctly. [40] Whilst I readily accept as a fact by way of inference in the absence of any evidence to the contrary that the applicant had received the respondent’s report for the purposes of the First Purchase Contract, and was intent to rely on it so as to proceed to settlement on that contract had she obtained finance, I am unable to find as a fact that she relied on the respondent’s report for the purposes of either firstly entering into the Second Purchase Contract or then secondly proceeding to settlement. This is because: (a) the applicant’s assertion in that regard is bare, devoid of anything to support it; and (b) moreover, the Second Purchase Contract was expressed as not being subject to a satisfactory building inspection report being obtained. [41] Whilst the latter may have been so because the applicant had already received what she considered to be a favourable building inspection report on the first occasion she attempted to purchase the house, her evidence is entirely devoid of anything to indicate there was any reliance on the second occasion, nor from which an inference to that effect could be drawn. To accept that to be so and find it as a fact would be mere supposition on my behalf. [42] For this reason alone the applicant must fail in this proceeding. [43] However even if I am wrong about that, there is also the absence of any supported evidence in terms of the damages alleged to have been suffered. [44] Firstly, there is simply no evidence to support her submission that she would have obtained a discount on the purchase price, or even what that discount would have been, had she known about the defect in the house before entering into the Second Purchase Contract. Nor is there any evidence as to her not entering into the contract if she could not have obtained a satisfactory discount from the seller. [45] Secondly, there is an entire absence of evidence, such which could only have come from an independent expert, that the remedial work now said to either have been performed or required to be performed is actually required to remedy, or as a direct consequence of, the defect in the floor frame. Moreover, and critically, is the absence of evidence showing that the nature, extent, and cost of that remedial work is something that could have been readily foreseen by the applicant and the respondent, at the time the contract between them was entered into, in the event the respondent had failed to properly perform and report on the inspection. [46] Thirdly, as to the invoices and quotes tendered as evidence of the alleged remedial work required, they are of no probative value. They are not supported by any evidence -- 8 of 9 -- 9 from the persons who gave the quotes or undertook the work to establish what work was actually done and why it was/is relative to the defect in the floor frame. [47] For these reasons, the applicant’s case fails for want of evidence. An alternative cause of action [48] For completeness I should make one more observation, returning to an issue I raised earlier in terms of the applicant’s case and the cause of action therein. [49] Whilst she presented her case seemingly on the basis of a breach of contract, it was readily open for her to have done so further or alternatively in tort for negligence. I have not descended into a consideration of that alternative case because, notwithstanding that had I done so I would have readily found the respondent to have been negligent in failing to have conducted the inspection to the standard expected of a professional person in his capacity and having provided what was in effect a false report, in my opinion it would not give rise to any different outcome. Whilst the alternative would have provided a different premise for the calculation of damages, damages for a breach of contract being calculated to put the applicant in the position she would have been in had the contract been performed as intended, whereas damages in tort being calculated to return her to the position she would have been in had the tort not occurred, her case would have similarly failed in the absence of evidence as to her reliance on the report, as well as being entirely absent the requisite material to establish a quantum of damages on either calculation. [50] Finally, there remains the issue of the applicant’s apparent claim for costs. Given she has failed in pressing her primary claim in its entirety, to the extent she was also pressing a claim for costs such similarly must fail. Conclusion [51] The outcome of this proceeding is that the applicant, regrettably, must fail. [52] On the evidence and arguments before me I am in no doubt that the respondent failed to have properly performed his role as an inspector providing pre-purchase inspection reports, and accordingly in my opinion he should be held accountable for same. But given the manner in which the applicant has presented her case in this Tribunal, this particular proceeding is not one in which that accounting can be realised for the applicant. The outcome may have been different had she been able to establish, with supporting evidence, that she did rely on his report for the purposes of the Second Purchase Contract and ultimately purchasing the house, and that the nature, extent, and asserted cost of that rectification was able to have been contemplated at the time of entry into the contract for the pre-purchase inspection, and that it was supported by independent evidence in all those respects. But in the absence of that evidence, there is simply no basis I can reach a finding in favour of the applicant. That is the cause of the applicant’s failure in this proceeding to obtain relief from this Tribunal, not the respondent’s successful defence of her claim. [53] For all the reasons I have discussed herein, the outcome of this proceeding is that the applicant’s claim is dismissed. My decision reflects that. -- 9 of 9 --