Duke Building Pty Ltd v Queensland Building and Construction Commission & Ors [2015] QCAT 397

CITATION: Duke Building Pty Ltd v Queensland Building and Construction Commission & Ors [2015] QCAT 397 PARTIES: Duke Building Pty Ltd (Applicant) v Queensland Building and Construction Commission (First Respondent) Randall and Sharna Wright (Second Respondents) APPLICATION NUMBER: GAR187-14 MATTER TYPE: General administrative review matters HEARING DATE: 31 August 2015 HEARD AT: Brisbane DECISION OF: Member Hughes DELIVERED ON: 6 October 2015 DELIVERED AT: Brisbane ORDERS MADE: 1. The Decision of the Queensland Building and Construction Commission to issue Direction to Rectify No. 40067 dated 9 May 2014 is set aside. CATCHWORDS: DIRECTION TO RECTIFY – DELAY - whether fair – where home owners did not properly check whether builder licensed – where home owners entered agreement without written conditions – where home owners proceeded with plans that were not certified or approved by Council - where home owners aware of importance of certification and approval – where home owners failed to act in own interests and as reasonable consumer by delaying approved plans for over two years – where Commission did not advise owners to obtain approved plans when home owners made first complaint in 2011 – where substantial delay meant home owners failed to mitigate and deprived builder of opportunity to -- 1 of 7 -- 2 rectify in timely manner – where giving Direction To Rectify after prolonged delay contrary to interests of building industry and consumers as a whole - where blameworthiness of home owners outweighed disadvantage from items to rectify Queensland Building and Construction Commission Act 1991, ss 3, 72 Queensland Civil and Administrative Tribunal Act, s 20 Brisbane South Regional Health Authority v. Taylor (1996) 186 CLR 541 Dixon Projects Pty Ltd v. Queensland Building Services Authority [2009] QCCTB 2 Duke Building Pty Ltd v. Queensland Building Services Authority, 02/09/13, unreported Duke Building Pty Ltd v. Queensland Building and Construction Commission [2014] QCAT 190 Fontain v. Queensland Building Services Authority [2004] QCCTB 163 Gary Norwood Homes Pty Ltd v. Queensland Building Services Authority [1997] QBT 193 Glen Williams Pty Ltd v. Queensland Building Services Authority [2012] QCAT 127 Ireland v. Queensland Building Services Authority [1999] QBT 180 Taouk v. Queensland Building Services Authority [2013] QCAT 508 APPEARANCES: APPLICANT: Mrs Vivienne Hughes, Director appeared for Duke Building Pty Ltd FIRST RESPONDENT: SECOND RESPONDENTS: Mr Michael Stretton of Holding Redlich, Solicitors appeared for the Queensland Building and Construction Commission Mr Randall Wright and Mrs Sharna Wright appeared in person -- 2 of 7 -- 3 REASONS FOR DECISION What is this application about? [1] Issuing a ‘Direction To Rectify’ to a builder after a delay caused by Home Owners raises issues of fairness. The Queensland Building and Construction Commission issued a Direction to Duke Building Pty Ltd almost three years after Duke stopped work. [2] The delay was because the home owners, Mr Randall Wright and Mrs Sharna Wright did not make their complaint until they day after they had obtained certified plans, some two years and five months after Duke stopped work. [3] Duke has therefore applied to the Tribunal to set aside the Direction. What is the background to the application? [4] Renovating a home without certified plans, essential conditions in the agreement and properly checking the builder is fraught with risk. Unfortunately for Mr and Mrs Wright, this is what they did when they engaged Duke to renovate their home in February 2011 for $145,500.00. [5] Duke stopped work in June 2011 because of a payment dispute and before completion.1 Mr and Mrs Wright then made a complaint to the Commission in December 2011 about the work. The Commission issued a ‘Direction To Rectify’ that was set aside by the Tribunal, because Mr and Mrs Wright’s delay in producing certified plans deprived Duke of an opportunity to comply timeously.2 [6] Mr and Mrs Wright had not obtained certified plans until November 2013. However, the very next day they made a further complaint to the Commission - over two years since Duke stopped work. Based on this complaint, the Commission gave Duke another ‘Direction To Rectify’ on 9 May 2014.3 [7] The issue for me to decide is whether giving this further Direction is fair. Is the ‘Direction To Rectify’ fair? What does the Tribunal consider? [8] A ‘Direction To Rectify’ may not be given if, in the circumstances, it would be unfair.4 The Commission – and the Tribunal5 - may consider all 1 In Duke Building Pty Ltd v. Queensland Building Services Authority, 02/09/13, unreported, the Tribunal determined that because Duke was unlicensed, it had no right to suspend works for non-payment. 2 Duke Building Pty Ltd v. Queensland Building and Construction Commission [2014] QCAT 190. 3 Direction To Rectify No. 40067 dated 9 May 2014. 4 Queensland Building and Construction Commission Act 1991 (Qld) s 72(5). -- 3 of 7 -- 4 circumstances that are reasonably relevant to decide whether to give a Direction, and is not limited to the terms of the contract.6 [9] The discretion to issue a Direction is seamless and involves weighing up factors, both for and against, its exercise.7 The Tribunal must consider the competing interests of the parties: blameworthiness of the home owners and the cause of the defective building work are relevant.8 What is the ‘blameworthiness’ of the home owners? [10] The relevant circumstances suggest culpability or at least an acceptance of risk by the home owners in not properly checking whether their builder was licensed,9 entering into an agreement without written conditions (apart from an overview of work and payments), proceeding with plans that were not certified or approved by Council, and not obtaining certified plans and making their current complaint to the Commission until a substantial delay of some two years and five months after the builder stopped work. [11] Although plans were approved by the time the Commission gave the Direction, the delay between Duke stopping work, and Mr and Mrs Wright obtaining approval and making the current complaint is still two years and five months. A home owner should not delay their application for a Direction if the delay would result in the Direction being unfair or unreasonable in the circumstances.10 [12] All but one of the items in the Direction are ‘Category 1’. For these items, it means that it may be unfair or unreasonable to give a Direction if the delay exceeds 3 months after the defective work became apparent.11 For the ‘Category 2’ item, it may be unfair or unreasonable if the delay exceeds six months after the work was left incomplete or seven months, if the home owner notified the builder within six months after the work was left incomplete.12 [13] Mr and Mrs Wright lived in the house for a period of two years and five months before obtaining certification and approval of the plans on 21 November 2013. They complained to the Commission about the items in the Direction the next day on 22 November 2013. This suggests that although Mr and Mrs Wright did not delay once they obtained approval, the items were apparent well before then and the delay between work 5 The Tribunal’s role is to produce the correct and preferable decision by way of a fresh hearing on the merits: Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 20. 6 Queensland Building and Construction Commission Act 1991 (Qld) s 72(3). 7 Ireland v. Queensland Building Services Authority [1999] QBT 180 at 29. 8 Dixon Projects Pty Ltd v. Queensland Building Services Authority [2009] QCCTB 2. 9 A search was done on the Builder Licence Number but not Duke. No enquiries were made about why the name revealed by the search did not match the name of the Builder in the contract. 10 QBCC Rectification Of Building Work Policy. 11 QBCC Rectification Of Building Work Policy. 12 QBCC Rectification Of Building Work Policy. -- 4 of 7 -- 5 ceasing and Mr and Mrs Wright complaining to the Commission was because they did not obtain certification earlier. [14] Mr and Mrs Wright say they were not aware they needed to obtain certification until the Commission advised them in September 2013. However, it is reasonable to expect that the Commission should have advised them of this when they made their initial complaint on 16 December 2011. [15] Moreover, Mrs Wright knew the importance of getting approvals for the building work during negotiations in early 2011, because Mrs Wright’s business partner had been through an ordeal with builders who had performed defective work.13 Their financier had also warned them to obtain approvals to protect their asset and loan.14 [16] Therefore, despite knowing the importance of getting approvals, Mr and Mrs Wright instructed Duke to proceed without certification and approval,15 because they wanted the work done quickly and were even willing to pay an extra $3,000.00 for ‘as built’ approval (after completion) to ensure this.16 [17] Mr and Mrs Wright claim that the builder advised them to defer approval until completion to save time. However, it was Mr and Mrs Wright who sought advice on how to expedite the building process. Regardless of whether the builder advised them of how to proceed without certification of approval, it was at their behest and for their benefit. [18] The entire transaction is characterised by ‘cutting corners’ beyond that of a reasonable consumer. Mr and Mrs Wright entered an agreement for over $100,000.00 primarily without written terms and conditions. Mr and Mrs Wright claim to have paid $8,000.00 in cash, but had no receipt to show for it. Mr and Mrs Wright did not properly check whether Duke was licensed. Mr and Mrs Wright did not specify in their agreement who would be responsible for certifying plans and who is responsible for obtaining and paying for them. Although they had been informed of at least some degree of risk, Mr and Mrs Wright chose to proceed with plans that were not certified or approved. Instead, Mr and Mrs Wright chose to seek approval after completion to save time. [19] Instructing a builder to proceed without plans that were certified or approved, means Mr and Mrs Wright accepted or at least understood the risk that the works might not comply with appropriate standards. Moreover, while Mr and Mrs Wright may have had personal reasons for proceeding with plans that were not certified or approved, it does not justify a lengthy delay of over two years between their first complaint to the Commission and actually obtaining certification to make a further complaint, resulting in another Direction to the builder. 13 Statement of Sharna Wright dated 25 July 2013 at paragraph 15. 14 Statement of Sharna Wright dated 25 July 2013 at paragraph 19. 15 Statement of Sharna Wright dated 25 July 2013 at paragraph 20. 16 Statement of Sharna Wright dated 25 July 2013 at paragraph 14. -- 5 of 7 -- 6 [20] Plans can be certified any time. The delay in issuing the Direction can only be due to Mr and Mrs Wright failing to act in their own interests by obtaining certification at a time when a reasonable consumer would have, or by the Commission’s failure to advise Mr and Mrs Wright of the need to obtain certification when they made their first complaint, in December 2011. [21] The evidence therefore suggests that Mr and Mrs Wright delayed complaining to the Commission about the items forming the current Direction not because they were not aware of the defects,17 but because they had not had the plans certified. I am satisfied that Mr and Mrs Wright should reasonably have been aware of the need to obtain certification certainly by the time they made their first complaint to the Commission in December 2011. [22] Despite this, they did not obtain certification until November 2013. Their further complaint was made the day after they finally obtained certification. It is therefore reasonable to infer the delay arose because of their failure to certify until November 2013 – well outside the prescribed periods for when it is fair for the Commission to issue a Direction.18 [23] An important premise of regulatory time limits is that people should be entitled to move on with their lives without an ongoing and indefinite threat of complaints or legal action.19 The delay in obtaining certification has deprived Duke the opportunity to address the issues in a timely way. [24] Awaiting the outcome of other Tribunal proceedings also does not explain the delay in certification. Regardless of whether Duke or Mr and Mrs Wright were contractually responsible to obtain certification and approval, or the outcome of the review of the previous Direction, Mr and Mrs Wright have a duty to mitigate their loss and obtain certification and approval of their plans in a timely manner to ensure any Direction is issued in a timely manner, so the Builder can comply in a timely manner. They did not and have therefore not acted reasonably. [25] The Commission submitted that consumer protection is the primary purpose of the Act and Parliament’s intent is to clearly lay responsibility for defective building works with the builder.20 However, a Direction is not given solely to benefit the individual home owner, but to discharge the Commission’s statutory responsibilities to ensure proper industry standards21 and achieve a reasonable balance between the interests of builders and consumers.22 17 Paragraph [10]. 18 Paragraph [12]. 19 Review of the Limitation Of Actions Act 1974 (Qld), Report No. 53, Queensland Law Reform Commission September 1998, p 6. 20 Glen Williams Pty Ltd v. Queensland Building Services Authority [2012] QCAT 127 at [16]. 21 Taouk v. Queensland Building Services Authority [2013] QCAT 508 at [39]. 22 Queensland Building and Construction Commission Act 1991, s 3(a)(ii). -- 6 of 7 -- 7 [26] Giving a Direction after a prolonged delay for which the builder is not responsible is contrary to the interests of the industry and consumers as a whole. This is because it means the burden of insuring against and responding to ongoing and indefinite complaints is inevitably passed on to other builders and home owners through higher insurance premiums and increased building costs.23 [27] While the belated acquisition of certified and approved plans means the Direction is valid, it does not mean it is fair. Does this blameworthiness outweigh the cause of the defects? [28] In circumstances where Duke did not comply with the Code, the Commission considered that it was not unfair to give the Direction. Certainly as builder, Duke was responsible to ensure the building work complied with the Building Code of Australia.24 However, fault or no fault will not necessarily be the decisive factor on whether to issue a Direction.25 [29] Mrs Vivienne Hughes for Duke considered the cost to fix the items would be minimal, while the Commission was unable to quantify the cost to fix the items. In these circumstances, I consider any disadvantage to Mr and Mrs Wright from the items to rectify is not sufficient to outweigh the countervailing factors against warranting a Direction in this case. [30] It is therefore not ‘fair’ to give Duke the Direction. What is the ‘correct and preferable’ decision? [31] Because it is not fair to give Duke the Direction, the ‘correct and preferable’ decision is that the Decision of the Queensland Building and Construction Commission to issue Direction To Rectify No. 40067 dated 9 May 2014 is set aside. 23 Review of the Limitation Of Actions Act 1974 (Qld), Report No. 53, Queensland Law Reform Commission September 1998, p 8, citing Brisbane South Regional Health Authority v. Taylor (1996) 186 CLR 541 per McHugh J at 553. 24 Fontain v. Queensland Building Services Authority [2004] QCCTB 163. 25 Glen Williams Pty Ltd v. Queensland Building Services Authority [2012] QCAT 127 at [16[, citing Gary Norwood Homes Pty Ltd v. Queensland Building Services Authority [1997] QBT 193. -- 7 of 7 --