Burns & Anor v Pitcar Ceilings Pty Ltd & Anor [2022] QCAT 229

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Burns & Anor v Pitcar Ceilings Pty Ltd & Anor [2022] QCAT 229 PARTIES: THOMAS CHARLES BURNS (first applicant) AND ALEXANDER LESLIE BURNS (second applicant) V PITCAR CEILINGS PTY LTD (first respondent) AND JERRY PITAROY (second respondent) APPLICATION NO/S: BDL180-20 MATTER TYPE: Building matters DELIVERED ON: 29 June 2022 HEARD AT: Brisbane DECISION OF: Member Lember ORDERS: Within 28 days of the date of this order, Pitcar Ceilings Pty Ltd must pay Thomas Charles Burns and Alexander Leslie Burns the sum of $17,486.60, comprising: (a) $17,140.80 claim; and (b) $348.50 filing fee. The claim against Jerry Pitaroy is dismissed. CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – GENERALLY – where no formal contract for building work – where builder unlicensed – whether defective building work – where failure to rectify - whether homeowner entitled to damages for failure to rectify – where builder alleges inherent structural defects unrelated to building work caused damage -- 1 of 12 -- 2 Queensland Building and Construction Commission Act 1991 (Qld) s 68H, s 77, Schedule 1B, Schedule 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 23(3), s 32 Barbi v Brewer [2013] QCAT 348 Bryan v Maloney (1995) 182 CLR 609 Canavan v Sutton [2020] QCAT 374 Donoghue v Stevenson [1932] AC 562 Ghama v Crew & Anor [2020] QCAT 149 Hyder Consulting (Australia) Pty Ltd v Wilhelmsen Agency Pty Ltd [2001] NSWCA 313 Robinson v Harman (1848) 1 Ex 850 Stephenson, Peter Thomas & Christine Ann v Queensland Building Services Authority [2005] QCCTB 59 Wright and Anor v Duke Building Pty Ltd and Anor [2017] QCATA 35 APPEARANCES & REPRESENTATION: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). REASONS FOR DECISION What is this application about? The applicant homeowners engaged the first respondent builder (“Pitcar”) to install a plasterboard ceiling with a square setting, to supply and install plasterboard to existing timber framework walls and to repair a damaged wall at their home, pursuant to a quotation dated 19 April 2017.1 The second respondent, Mr Pitaroy is the sole director/secretary and major shareholder of Pitcar2 and undertook the plastering work on its behalf. No formal contract was entered into and neither respondent held the required license to carry out the works. Plastering works were carried out between 20 and 24 April 2017 for which the applicants paid Pitcar the sum of $4,845 (being the GST-exclusive sum quoted). Painters unrelated to the respondents then painted walls, ceilings, skirting and architraves between 27 and 30 April 2017. By an application for a domestic building dispute filed 29 July 2020,3 the applicants seek orders that the respondents pay them the sum of $17,140.80 as damages for defective building work comprising: (a) $10,285.00 for the cost replastering; 1 Annexure A to the Affidavit of Alexander Burns sworn 28 July 2020. 2 ASIC search dated 7 September 2019, comprised in Annexure G to Affidavit of Alexander Burns sworn 28 July 2020. 3 As amended throughout the proceedings, updated in Submissions filed 13 May 2021. -- 2 of 12 -- 3 (b) $4,620.00 for the cost of repainting; and (c) $2,235.80 to reimburse the costs of an independent building inspection report. The applicants have also paid a filing fee of $345.80 on the application. The respondents resist the application on the grounds that they were not responsible for defective building work and, in any event, if they were, they say that they did rectify it, and any remaining defects in the work are a consequence of inherent structural difficulties with the ceiling and unrelated to the works that the applicants specifically instructed Pitcar to do.4 The tribunal directed5 that a final decision in the dispute would proceed by way of an on-the-papers decision, upon the written evidence and submissions of the parties. That decision, and the reasons for it, follow. The material relied upon in making this decision comprises: (a) Application, Response and their accompanying attachments; (b) Affidavit of Alexander Burns sworn 28 July 2020; (c) Applicants’ evidence filed 10 February 2021; and (d) Applicants’ submissions filed 13 May 2021. Does the tribunal have jurisdiction to hear this application? Section 77 of the Queensland Building and Construction Commission Act 1991 (Qld) (“QBCC Act”) confers jurisdiction on the tribunal to hear “domestic building disputes”6 which include (among other things): (a) a claim or dispute arising between a building owner and a building contractor relating to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work; and (b) a claim or dispute in negligence, nuisance or trespass related to the performance of reviewable domestic work other than a claim for personal injuries.7 ‘Reviewable domestic work’ means ‘domestic building work’,8 which includes work comprising the renovation, alteration, extension, improvement, or repair of a home. It is clear from the material filed, and not disputed by either party, that the plastering work undertaken by Pitcar for the applicants was domestic building work, and that the claims relate to a contract for the performance of ‘reviewable domestic work’. Although the tribunal has jurisdiction to hear building disputes, section 77(2) qualifies that jurisdiction by first requiring an applicant to comply “with a process established by the commission to attempt to resolve the dispute”. 4 Response filed 30 October 2020. 5 Directions of Senior Member Brown made 8 December 2021. 6 QBCC Act, Schedule 2 (Definition of “building dispute”). 7 Ibid, Schedule 2 (Definition of “domestic building dispute”). 8 Ibid, Schedule 2 (“Definition of “reviewable domestic work”). -- 3 of 12 -- 4 On or about 3 January 2018 the applicants made a complaint to the Queensland Building and Construction Commission (“QBCC”). An inspection took place on 26 March 2018 leading to a report dated 30 April 20189 and a direction to rectify issued on 2 May 201810 (“DTR”) which required the following defective building work to be rectified by 30 July 2018: The installation of the plasterboard linings to the dwelling have not been completed in accordance with QBCC Standards and Tolerances Guide Section 9 Plastering, rendering and plasterboard, as the square set plasterboard has cracked and has become separated from the ceiling substrate in a number of locations. This has resulted in a visual defect and requires rectification by the contractor upon completion of associated rectification works (repair of roof leaks and installation of suitable insulation) by the owner. Rectification by the contractor is to include paint repairs to areas which have been affected by the cracking/separation and by previous attempts at repairs to the cracking. Between 18 and 25 October 2018 the applicants had asbestos removed, and the fascia, gutters and soffits replaced. On 1 November 2018 insulation was installed to the ceiling space and between 3 and 5 December 2018 roof restoration took place. Between 21 and 24 January 2019 the respondents’ nominated plasterers attended to rectify defects and their painters to paint but works ceased before the painting was completed. The reinspection took place on 15 February 2019 and a report issued the same day11 following which the QBCC determined that the plasterboard had been repaired to an acceptable standard however the painting work remained incomplete. The report mentions that the painting works are incomplete as the respondents did not return to the property after an altercation with the owners. On 26 February 2019 the QBCC wrote to the applicants12 and advised the applicants that the direction item had not been satisfactorily attended to within the specified timeframe. The QBCC, administering the Queensland Home Warranty Scheme (“the scheme”), then denied the applicants’ claim13 because the respondents were not licensed and did not hold out or represent or imply that they were licensed or that the works were covered by the scheme.14 This exhausted the QBCC’s dispute resolution process and pursuant to section 77(2), I am satisfied that the dispute is one over which the tribunal has jurisdiction. The applicants’ case The applicants say they first noticed defects in the work in July 2017 and made a complaint to the respondents in November 2017, following which the respondents revisited the site on three occasions to attempt rectification prior to the QBCC complaint. 9 Annexure B to the Affidavit of Alexander Burns sworn 28 July 2020. 10 Annexure C to the Affidavit of Alexander Burns sworn 28 July 2020 11 Annexure D to the Affidavit of Alexander Burns sworn 28 July 2020. 12 Annexure E to the Affidavit of Alexander Burns sworn 28 July 2020. 13 Letter to the applicants dated 1 March 2019, Annexure F to the Affidavit of Alexander Burns sworn 28 July 2020. 14 QBCC Act, sections 68H(1)(a)(i), 68H(1)(a)(ii), 68H(1)(b) and section 68H(1)(c). -- 4 of 12 -- 5 An initial inspection of the property was undertaken by Greg Matthews, QBCC inspector on 26 March 2018 with in respect of which a report dated 30 April 2018 was produced. Relevantly, the 30 April 2018 report observed as follows: (a) there were multiple locations where the square set plasterboard had cracked at or close to the position of the setting tape embedded in the plaster; (b) there were a number of locations where fixings had popped (pulled through the plasterboard ceiling), indicating separation between the substrate and the plasterboard; (c) there was evidence that repairs had been undertaken to the work, but the repairs had also cracked and in onsite discussions Mr Pitaroy stated he had returned a number of times in an effort to rectify the cracking however it persistently returned, and he was “unable to achieve a completed product suitable for painting”; (d) inspection within the ceiling space of the dwelling revealed that the roof was a tiled trussed roof, not sarked or insulated in the relevant areas, plasterboard was fixed directly to the underside of the trusses, there was no evidence of back blocking to any sheets, and the plasterboard was fixed tight against the roof trusses, although there is some evidence that separation has occurred; (e) a visual inspection of the exterior of the dwelling indicated there are no signs of movement related cracking however there were signs of current roof leaks particularly noticeable at the external soffit on the south-east side of the dwelling; (f) the cracking, popped nails, separation of sheets from the substrate and incomplete repairs are all considered to be non-structural defects according to the QBCC Standards and Tolerances Guide; (g) the installation of square set plasterboard to an existing dwelling with minimal roof space insulation will continue to be problematic due to the likelihood of thermal movement of the substrate and fluctuating moisture/humidity conditions in the cavity; (h) a suitably qualified and competent tradesperson should have assessed the likelihood of square set being problematic in the environment and informed the consumer of the same (and found there was no evidence to suggest that this was raised by the contractor prior to undertaking the works); and (i) as such, the rectification of defects is considered the responsibility of the contract although it is unreasonable to direct the contractor to rectify the defects until the underlying issues with moisture and temperature control addressed by the owner. Based on these findings, the DTR issued and the respondents returned to the site to undertake rectification works however when the applicants questioned the licensing and subcontracting arrangement between the respondents and their painter, there was an altercation following which the respondents did not return to site. A reinspection took place on 15 February 2019 and a report issued bearing the same date which observed that: -- 5 of 12 -- 6 (a) the plasterboard has been repaired to an acceptable standard, when observed from a normal viewing position; (b) the paint repairs to the plasterboard are not to an acceptable standard, with a visible variation of colour between old and new and patchiness at set joints; and (c) the painting work remains incomplete (as opposed to defective), representative of the state of the works when the contractor left site after the altercation. Following the QBCC’s refusal of the applicants’ claim under the scheme, the applicants engaged Morse Building Consultancy (“MBC”) to undertake a site inspection on 14 August 2019 and their report15 relevantly observed the following: (a) as the works were carried out in early 2017 the following standards are applicable: (i) Australian standard for plasterboard AES/NZS: – 2589 (Gypsum linings application and finishes); and (ii) Australian standard for painting AES/NZS: – 2311 (Guide to the painting of buildings); (b) there was evidence of historical water staining to the soffits not resultant from any recent events and in particular any events between when the applicants purchased the property in November 2016 and when the respondent undertook the ceiling works in April 2017; (c) there is no mention of any moisture or water staining to the internal areas detailed in the QBCC report and no comment suggesting that moisture or water played a role in the defect issues with the plasterboard ceiling; (d) the applicants followed the QBCC’s directive and had the soffits, fascia boards, guttering and down pipes removed and completely replaced, as well as roof restoration and painting of the concrete roof tiling system completed; (e) the installation of the taping to the perimeter walls along the cornice line of all rooms fails to comply with AES/NZS: – 2589 section 4.4.5(ii), (iv) and (v) because Pitcar failed to install the joint compound and taping to the square cornice line and sheet fixture in accordance with these requirements, concluding “the joint line is uneven and poorly installed and finished”; (f) the Boral plasterboard installation manual and AES/NZS: – 2589 require that back blocking be installed, and this was not done; (g) the defects with the ceiling resulted from Pitcar’s workmanship and failure to comply with manufacturer’s requirements and Australian standards; (h) an additional problem is the manufacturer’s requirements that ceiling battens or furring channels are recommended for square set finishes to minimise the risk of localised cracking and, therefore, that the manufacturer’s requirements in relation to ceiling support options were not met; (i) to undertake the work appropriately, the ceiling should have been removed and a metal furring channel system installed to reduce the issues with cracking in 15 Annexure E to the Affidavit of Alexander Burns sworn 28 July 2020. -- 6 of 12 -- 7 the instance of a furring channel system are recommended for square set finishes; and (j) the only way to fix the defective and non-compliant workmanship is to completely remove and replace all newly installed plasterboard ceiling sheeting and install new ceiling systems to comply with manufacturer’s requirements for a metal furring channel system to be installed to carry the plasterboard ceiling sheeting, as well as those set out under AES/NZS: – 2589, and, once done, the walls and ceiling can be repainted. The respondents’ case Mr Pitaroy says: (a) he has fifty years’ experience in plastering and has operated Pitcar for more than fifty years; (b) when inspecting the property to quote the works, Mr Pitaroy noticed: (i) water leak marks, asked the carpenters who were onsite if they were completing works to the roof to address the water leaks and was told the ceiling was ready for plaster lining; and (ii) that there were no battens installed by the carpenters. (c) the applicants, not the respondents, removed all existing plaster ceilings throughout the internal of the house in preparation for the work; (d) the applicants knew of potential issues (such as roof leaks, no insulation and sarking, and no battens installed) prior to contracting Pitaroy to carry out the ceiling installation and instructed the respondents to fix the plasterboard directly to the roof joists against the respondents’ advice that in doing so there is no room for expansion and contraction or allowance for any substrate movement, because “they wanted the work to be done quickly due to the fact that they wanted to move in as quickly as possible”; (e) the respondents priced the job and carried it out as per the applicants’ instructions; (f) Pitcar should not be “solely blamed” for defective work and the QBCC’s conclusion fails to properly factor in other underlying issues like the thermal movement of the substrate and fluctuating moisture/community conditions in the cavity arising from roof leaks, which is why the applicants were directed to undertake their own rectification works before the respondents attended to defects; and (g) back blocking was not done, however an appropriate alternate application (the timber stitching batten method) was used to comply with manufacturer’s requirements. The respondents tendered extracts from the CSR Gyprock Residential Installation Guide and the USG Boral Plasterboard Installation Guide, upon which handwritten notes had been made. This evidence is summarised as follows: (a) In the CSR Guide that the control of moisture within buildings and defective roofs, external claddings, flashings as well as condensation within a building -- 7 of 12 -- 8 will have an impact on the installation of Gyprock and insulation is recommended; (b) In the USG Boral Guide that: (i) Repeat or prolonged condensation may lead to nail popping, sagging ceiling linings, rotting, mould growth, joint and corner cracking. (ii) Roof spaces should be well ventilated to prevent condensation (especially in metal frame buildings and dark coloured roofs without sarking). (iii) There are two support options for ceiling linings: A. direct fixed, where sheets are fixed directly to structural ceiling members (Mr Pitaroy’s notes say “the owner chose this method as it was cheaper to install”); and B. furred or batten fixing, where sheets are fixed to secondary framing members, such as metal or timber battens or metal furring channels installed in the opposite direction to structural members (Mr Pitaroy’s notes say “Most preferred method for ceilings with square set finishing, however, the owner declined this method and the pricing quotation reflected the costs difference - consider the new quotes supplied by the owner”). C. Experience has shown that metal batons or furring channels will generally produce a superior ceiling and it is the recommended method for use under trust roofs subject to significant structural movements and for ceilings with square set finish (Mr Pitaroy’s emphasis added). (iv) A “1/3 Fixing Method” with a combination of adhesive and screw fixing, is preferred for ceiling linings applied to treated timber or to painted metal battens, and according to Mr Pitaroy’s notes “This method used by Pitcar ceilings to install plasterboard directly to ceiling joists which did not allow for flexibility/movement”. In Annexure I to the Response, the respondents tendered a picture of metal ceiling battens with the comment: This is what the owner should have put on the ceiling before the plaster board was installed but declined this because he wanted to save money. In conclusion the respondents say that:16 The applicant should not have carried out any ceiling installation until after the roof was restored and the insulation and sarking were installed in the roof cavity, and the battens installed on the roof joists which would have provided a more effective and positive outcome, however, the applicant declined this when discussed with him at the point of pricing his project. QBCC reports and Morse Building Consultancy both agreed that potential ceiling cracking and movement issues could have been brought about through 16 Paragraph C of the Response. -- 8 of 12 -- 9 roof leaks leading to moisture and humidity conditions via contraction and expansion in the roof cavity. Discussion and findings Who is the correct respondent? The applicants have pursued Mr Pitaroy and Pitcar but it appears on the evidence that at all material times Mr Pitaroy engaged with the applicants only in his capacity as director of Pitcar and not in his personal capacity. This is because: (a) Pitcar issued the quote; (b) Pitcar received the payment in accordance with the quote; and (c) Pitcar were the respondent in the QBCC investigation and complaint. The claim against Mr Pitaroy personally is dismissed on that basis. Is Pitcar responsible to the applicants? As the cost of the works exceeded $3,300, 17 a regulated contract was required to be written, dated and signed by the parties. The quote did not comply with these requirements and is, therefore, of no effect,18 however, it can still ground a claim for negligence.19 At common law a duty of care will generally arise when the defendant should have foreseen that their conduct could result in injury to the plaintiff.20 The relationship of a builder to a homeowner client is a category of relationship where a duty of care is owed because it is reasonably foreseeable that if care is not taken by the builder the client is likely to suffer loss and damage.21 By agreeing to perform and by performing the work, Pitcar owed the applicants a duty to take reasonable care in performing the work.22 The tribunal is satisfied that Pitcar breached its duty to the applicants to take reasonable care in performing the work in that: (a) Pitcar did not hold the required license to carry out the work; (b) Pitcar did not comply with statutory requirements to enter into a building contract for the work; (c) Pitcar installed square set plasterboard to an existing dwelling by fixing it directly to the roof joists knowing that: (i) in Mr Pitaroy’s own words “there is no room for expansion and contraction or allowance for any substrate movement, which may arise in the possible showing of cracks” and having, on his evidence, observed evidence of roof leaks, no insulation and sarking, and no battens installed when he attended the property to quote the job; and 17 QBCC Act, Schedule 1B (1) definition of “regulated amount”. 18 QBCC Act Schedule 1B ss 13, 14. 19 Barbi v Brewer [2013] QCAT 348, [10]; Ghama v Crew & Anor [2020] QCAT 149. 20 Donoghue v Stevenson [1932] AC 562. 21 Canavan v Sutton [2020] QCAT 374 at paragraph [44]. 22 Bryan v Maloney (1995) 182 CLR 609 at paragraph [14]. -- 9 of 12 -- 10 (ii) despite Mr Pitaroy’s extensive experience and his knowledge of the CSR Guide and the USB Boral Guide, again in his words: A. furred or batten fixing was the “most preferred method for ceilings with square set finishing”, but was not used by Pitcar; and B. the method used by Pitcar to install plasterboard directly to ceiling joists “did not allow for flexibility/movement”; (d) armed with this knowledge and this assessment – that the installation of square set plasterboard to a dwelling with minimal roof space insulation would be and continue to be problematic – Pitcar should not have proceeded with the installation in the way it did knowing that the work would not and could not in those circumstances meet manufacturer’s requirements or Australian Standards and it would neither be durable nor fit for purpose; (e) as Mr Pitaroy said in his own submissions “the applicant should not have carried out any ceiling installation until after the roof was restored and the insulation and sarking were installed in the roof cavity, and the battens installed on the roof joists which would have provided a more effective and positive outcome” – this necessarily means that Pitcar should not have carried out the ceiling installation work in the circumstances. The works, whilst rectified by Pitcar in February 2019 after the applicants’ preliminary works were done, remained defective in August 2019 and will continue to be problematic until they are properly redone to standards and manufacturer’s recommendations: the Morse Building and Report and the respondents’ own evidence supports this finding. Did the applicants accept risk or contribute to their loss? Although in the context of a review application on a direction to rectify: (a) the appeal tribunal in Wright and Anor v Duke Building Pty Ltd and Anor23 overturned a fist instance finding that homeowners had accepted or understood that there was a risk that building work might not comply with appropriate standards in proceeding to build with plans that were not certified or approved; and (b) the tribunal will consider the competing interests of the parties including the innocence or blamelessness of the owners, but where it can be said that the builder is in some way at fault because of the defective building works then the exercise of discretion to affirm a decision of the QBCC to give a direction to rectify is more likely to occur.24 Pitcar relies upon the cost difference between the quote it gave, and the quotes obtained by the applicants to do the work properly (tendered with this application) as evidence that the applicants instructed the respondent to proceed against respondent’s advice with the cheaper option. There is no merit in this argument as quotes for 23 [2017] QCATA 35. 24 Stephenson, Peter Thomas & Christine Ann v Queensland Building Services Authority [2005] QCCTB 59 at [40]. -- 10 of 12 -- 11 building work can and do vary markedly and the quote, on its face, make no reference to recommended or alternate options (at additional cost). There is simply no evidence that any discussion took place or recommendations were made regarding alternate methods for doing the work, that the method adopted by Pitcar was fraught with significant risk and that, knowing that, the applicants instructed Pitcar to proceed. A prudent builder, particularly one with Mr Pitaroy’s extensive experience – if he even agreed to do the work despite the risk - ought to have reduced an instruction in those circumstances to writing with the warnings attached. He did nothing of the sort. Further, I am not satisfied that inherent defects in the property caused the work to be defective, as the respondents submit. Rather, the works were defective because the Pitcar ignored patent characteristics of the property that suggested the work ought to have been done after preliminary measures were taken by the owner (insulating and the like) and, in any event, by adopting methods recommended and preferred by manufacturers for square set ceilings given the characteristics of the applicants’ property. Neither of these things happened. Assessment of damages The tribunal’s powers in a building dispute include, without limitation, the ability to order: (a) the payment of money from one party to another; (b) damages, and interest on the damages at the rate, and calculated in the way, prescribed under a regulation; (c) restitution; and (d) costs.25 The need to rectify defective building work is a reasonably foreseeable consequence of defective building work, therefore, the out-of-pocket costs of undertaking those rectification works is a reasonably foreseeable economic loss arising from such works. Damages for breach of contract are compensatory in nature, namely, they are not intended to punish the builder, but rather to put the homeowners in the same situation, as far as money can do so, as if they would have been if the builder had performed the contract.26 The applicants must engage another plasterer, and, after that, another painter to install a square set ceiling as similar as they can reasonably obtain to what they were to have obtained had Pitcar not performed its works defectively. I have considered whether the applicants’ claim should be reduced on “betterment” principles. On point, Sheldon JA said in Hyder Consulting (Australia) Pty Ltd v Wilhelmsen Agency Pty Ltd27 that: In my opinion, if a defendant negligently damages or destroys the plaintiff’s property and there is no evidence that the plaintiff had any reasonable choice 25 Section 77(3) of the QBCC Act. 26 Robinson v Harman (1848) 1 Ex 850. 27 [2001] NSWCA 313. -- 11 of 12 -- 12 other than to replace or repair what had been damaged or destroyed, the cost of replacing it or repair, provided it is not extravagant, is recoverable in damages. The applicants obtained several quotes for the plastering and the repainting and chose the near to least expensive of them. There is nothing to suggest that their claims are extravagant and, therefore, I allow them in the full amount. Costs Section 77(3)(h) of the QBCC Act empowers the tribunal to award costs in building disputes, displacing the usual position in tribunal proceedings that each party bear their own costs. I calculate those costs to comprise the cost of the building inspection report ($2,235.80) and the filing fee ($348.50) and award them to the applicants accordingly. -- 12 of 12 --