Body Corporate for Holland Park View Apartments v Queensland Building and Construction Commission [2019] QCAT 334

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Body Corporate for Holland Park View Apartments v Queensland Building and Construction Commission [2019] QCAT 334 PARTIES: BODY CORPORATE FOR HOLLAND PARK VIEW APARTMENTS (CTS 50032) (applicant) v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (respondent) APPLICATION NO/S: GAR200-18 MATTER TYPE: General administrative review matters DELIVERED ON: 4 November 2019 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Howe ORDERS: The decision of the Commission given on 24 May 2018 is confirmed CATCHWORDS: ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – general administrative review – direction to rectify – where a body corporate complained about defective work – where the Commission found building work was not defective and refused to direct rectification – where the work complied with statutory requirements – where the body corporate maintained the work did not comply with the contract – whether failure to comply with the contract amounted to defective building work Queensland Building and Construction Commission Act 1991 (Qld), s 11, s 72, Schedule 2 Statutory Instruments Act 1992 (Qld), s 7(3) R v Miller; ex parte Graham Evans and Co (Qld) Pty Ltd [1987] 2 Qd R 446 QBSA v O’Brien & Ors [2002] QDC 329 REPRESENTATION: Applicant: Self-represented by K Hua -- 1 of 7 -- 2 Respondent: Self-represented by S Tabaiwalu APPEARANCES: 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 [1] On 6 December 2017 the applicant body corporate made a complaint to the Queensland Building and Construction Commission (‘the Commission’) against the builder of its apartment complex in relation to water ingress in the block walls of the basement car park of the complex. [2] After investigation on 9 March 2018 the Commission determined not to issue a direction to rectify defective building work to the builder. [3] The body corporate sought internal review of that decision but the decision was confirmed on 24 May 2018 following internal review. [4] The body corporate filed an application in the tribunal to review the decision on 19 June 2018. [5] In the course of proceedings in the tribunal an expert conclave was held. The experts agreed that none of the issues (some issues discussed at conclave went beyond the single relevant complaint by the body corporate to the Commission concerning water penetration of the block walls of the basement car park) affected the structural performance of the building.1 [6] The experts agreed that the performance requirements regarding water penetration were provided for in the Building Code of Australia at FP1.4 which states a roof and external wall (including openings around windows and doors) must prevent the penetration of water that could cause unhealthy or dangerous conditions, or loss of amenity for occupants, and undue dampness or deterioration of building elements. By FP1.4(a), FP1.4 does not apply to a class 7 or 8 building where the particular case there is no necessity for compliance. [7] By A1.7 of the code a class 7 building includes a car park. The experts agreed that the car park in question fell within that umbrella exemption. [8] The experts agreed that the design documentation from both the architect and engineer specified that all external walls, with the exception of a piled wall on the Harold Street boundary of the complex, were to be fully waterproofed on the exterior face. [9] The experts concur that water penetration is occurring through the walls in the car park which indicates that no waterproofing membrane has been applied to the block work retaining walls (excluding Harold Street) or if applied it has failed to waterproof the walls. [10] Mr Aldrich the expert for the body corporate believes this amounts to defective building work because the waterproofing membrane shown in the design drawings are either failing or missing. Mr Van de Hoef for the Commission is of the opinion that 1 Experts’ joint report 18 April 2019 [5.1]. -- 2 of 7 -- 3 there is no defective building work because the construction is in accordance with the Building Code. The legislation The Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’) provides: 72 Power to require rectification of building work and remediation of consequential damage (1) This section applies if the Commission is of the opinion that— (a) building work is defective or incomplete; or (b) consequential damage has been caused by, or as a consequence of, carrying out building work. (2) The Commission may direct the person who carried out the building work to do the following within the period stated in the direction— (a) for building work that is defective or incomplete— rectify the building work; (b) for consequential damage—remedy the damage. (3) In deciding whether to give the direction, the Commission may take into consideration all the circumstances it considers are reasonably relevant and, in particular, is not limited to a consideration of the terms of the contract for carrying out the building work (including the terms of any warranties included in the contract). … (5) The Commission is not required to give the direction if the commission is satisfied that, in the circumstances, it would be unfair to the person to give the direction. [12] The body corporate submits that the design documentation clearly show that the basement walls (with the exception of one single wall) were required to be waterproofed. Given the water leaking through the walls either the waterproofing was carried out and it was defective or it was not carried out at all. In either case the body corporate says the walls are defective building work. [13] The body corporate says regardless of whether strict compliance with the building code has been achieved, the real question is whether the walls have been constructed to the waterproofing standard required by the approved design documents, that is, the contractual documents. On the evidence the body corporate says the answer is no. [14] The Commission does not challenge the claim that there is water penetration through the car park walls. The Commission says however that the water penetration in the circumstances does not amount to defective building work. The basement is a car park and therefore compliance with the building code section FP1.4 is not required. The water penetration does not affect the structural performance of the building. It doesn’t affect the functional use of the car park. It does not cause unhealthy or dangerous conditions or loss of amenity to occupants given it is a non-habitable area. -- 3 of 7 -- 4 Discussion [15] Insofar as relevant, s 72(1) provides that if the Commission is of the opinion that building work is defective or incomplete, s 72 applies. [16] Defective in relation to building work is defined in schedule 2 to the QBCC Act as including work that is faulty or unsatisfactory. In the current circumstances that broad definition is of little assistance. [17] By s 11 of the QBCC Act one of the functions of the Queensland Building and Construction Board is to decide amongst other things operational policies to be followed by the Commission. One of those policies that has been devised is the Rectification of Building Work Policy of 10 October 2014. The policy is a statutory instrument because it is a guideline of a public nature.2 The policy attempts to provide some guidance as to the ambit of defective building work means by giving examples of faulty or unsatisfactory building work. The examples are that the work does not comply with the Building Act 1975 (Qld), Building Code of Australia or an applicable Australian standard or involves the use of a manufactured product, and that product has been used, constructed or installed in a way that does not comply with the product manufacturer’s instructions. [18] The policy goes on to provide meanings for non-structural defective building work and structural defective building work, neither of which assists in the present circumstances. [19] Surprisingly there is little authority on the issue whether breaches by a builder of the contractual terms amounts to defective building work in circumstances where the construction otherwise complies with statutory and standard requirements. [20] It has been said in a number of cases that whether or not work is defective is to be ascertained objectively. The authority for that statement is R v Miller; ex parte Graham Evans and Co (Qld) Pty Ltd.3 There, the Builders Registration Board of Queensland (the predecessor to the Commission) directed a builder to rectify defective building work. There were two aspects to the direction to rectify, one concerning the failure to use material fit for the purpose of waterproofing and the other resulting from faulty design. Neither item was a responsibility of the builder. Derrington J (as he then was) said: It is therefore in conformity with the plain and ordinary meaning of the terms in subs.(3)(b) to find that they apply to the objective state of the finished work itself, but that if that position derives from the builder’s adherence to the contract then it is in the discretion of the Board, depending upon the circumstances, whether he should be ordered to remedy the work.4 [21] Immediately before that his Honour had said: That a builder’s work comes within the definition of building work that is faulty or unsatisfactory within the meaning of subs.(3) does not of itself impose any liability upon him but merely enlivens the discretion of the Board to order him 2 Statutory Instruments Act 1992 (Qld), s 7(3). 3 [1987] 2 Qd R 446. 4 Ibid 458. -- 4 of 7 -- 5 to remedy the work, for the use of the permissive “may” in the investment of the Board’s powers also vests such a discretion in the Board. … In some circumstances, there is obvious need for protection of the owner even though the builder may be able to point to a term of the contract justifying the defective result, while in others the builder may be perfectly justified in conforming with the specifications and should not be required to remedy the defect.5 [22] In QBSA v O’Brien & Ors,6 McGill DCJ commented on Miller as the lead authority in this area as follows: I was also referred to the decision in Wilson v Queensland Building Services Authority [2000] QBT 53, where reference was made to a series of decisions where it had been concluded that it was not appropriate to give a direction to a builder where the builder had neither contractual nor tortious liability to the owners in respect of the defective work in question. That approach was followed in that case also. Although it would be inappropriate to fetter the discretion by any such rule, it is clear from the decision in Miller that the fault of the builder is a relevant consideration, and I think it follows logically that whether the defective work amounts to a breach of any contractual obligation of the builder to the owner, or involves breach of a duty to take care owed to the owner, would be aspects of whether the builder was at fault. Nevertheless, it is not a matter which ought to be regarded as necessarily determinative of the discretionary decision to issue a notice.7 [23] The reference to consideration of the builder’s potential contractual or tortious liability as an aspect of fault must be understood in context however. In the decisions concerning the exercise of discretion to direct or not to direct rectification of defective building work the common scenario has uniformly been one where defective work is apparent or at least not disputed but the fairness in holding the builder responsible for rectification challenged. [24] It is significant that in Miller the legislation before the Full Court was in different terms to that of the current. In Miller the Builders’ Registration and Homeowners Protection Act 1979 (BRHP) provided in so far as relevant: 59. Remedy for unsatisfactory work. (1) Where the Board is of the opinion (after consideration of all the relevant circumstances) that building work performed by a person who is … (a) a registered builder; …is faulty or unsatisfactory the Board, in writing served on that person – (c) may order him to remedy the building work that is faulty or unsatisfactory; … within a reasonable time specified by the Board in its order. 5 ibid 6 [2002] QDC 329 7 [47] -- 5 of 7 -- 6 (3) For the purposes of this section, the expression “building work that is faulty or unsatisfactory” includes building work that has not been performed in accordance with all of the following provisions: (a) in a proper and workmanlike manner; (b) with materials of good quality that are fit for the purpose for which they are used; (c) in such a manner that the building concerned is fit for human habitation; (d) to the standard to be expected of a reasonably competent registered builder; (e) so as to comply with – (i) every relevant Act, regulation or by-law; or (ii) all relevant provisions of a contract entered into in relation to the performance of the building work concerned.8 (emphasis added) [25] Within the range of factors specified to be taken into account by the Board under s 59(3) in determining whether the building work was faulty or unsatisfactory was compliance with the terms of the contract. This provision is markedly different to the current s 72 of the QBCC Act. [26] Instead s 72 provides a staged progression in the decision making process whether or not to issue a direction to rectify or complete. [27] There is a threshold stage of the Commission forming an opinion as to whether or not the work complained about is defective. If the opinion is formed that it is, then the next stage, the second stage, is invoked, which is whether the direction should be given, and in that second stage, s 72(3) provides that all the circumstances considered relevant, which is not limited to but will include consideration of the terms of the contract, as too warranties included in the contract, may be taken into account. [28] Amongst the warranties will be those implied by Part 3 Division 2 and 3 of schedule 1B of the QBCC Act which includes s 23(2), that the building contractor will carry out the work in accordance with the plans and specifications of the contract. [29] In so far as the complaint to the Commission concerns defective building work, I conclude giving effect to the legislation requires consideration of the builder’s contractual compliance at the second rather than threshold stage of the process. [30] Accordingly the builder’s contractual compliance is not a factor for consideration in the Commission forming an opinion whether building work is defective. The comments by Derrington J in Miller remain apposite that that opinion should be based on the objective state of the finished work. That proposition has been cited with 8 [1987] 2 Qd R 446, 446. -- 6 of 7 -- 7 approval in many decisions in circumstances where the current form of legislation applies.9 [31] If that opinion is formed, then by s 72(2) the Commission is then required to exercise a discretion whether or not to direct the person who carried out the building work found defective to rectify it. It is at the stage of deciding whether or not to give that direction that the Commission may take into account such relevant circumstances as the terms of the contract for the purpose of deciding whether to give the direction. Conclusion [32] In the matter at hand there is no contest that the car park construction complies with the legislative requirements including the Building Code of Australia. Based on that, the Commission formed the opinion that the work complained about was not defective and therefore refused to issue a direction to rectify. The claim that the builder failed to comply with the contract does not fall for consideration. [33] A decision by the Commission not to give a direction to rectify is a reviewable decision in the tribunal.10 In the circumstances set out above it is appropriate to confirm the decision of the Commission. The building work complained about is not defective building work for the purpose of s 72 QBCC Act. [34] I should add, this matter only concerns a complaint about defective building work. It does not involve a complaint about incomplete building work. In so far as a complaint concerns incomplete work, the contract terms must obviously fall for consideration at the threshold stage of the Commission forming an opinion whether the work is incomplete. It is not necessary in resolving the application at hand to consider the boundaries that might apply to that process. [35] Finally I note the body corporate is not left without remedy. It is entitled to pursue the matter of failure to comply with the contract as a building dispute before the tribunal or subject to the monetary claim, before the appropriate court. 9 QBSA v O’Brien; Cantamessa v QBCC [2019] QCAT 268; CMG Homes Pty Ltd v QBCC [2019] QCAT 191; Goldfield Projects Pty Ltd v QBCC [2016] QCAT 361; QBCC v JM Kelly (Project Builders) Pty Ltd [2016] QCATA 10; Leo v QBSA [2012] QCAT 640. 10 QBCC Act, s 86(1)(e). -- 7 of 7 --