Dwyer Corporation Pty Ltd v Queensland Building and Construction Commission [2015] QCAT 63

CITATION: Dwyer Corporation Pty Ltd v Queensland Building and Construction Commission [2015] QCAT 63 PARTIES: Dwyer Corporation Pty Ltd (Applicant) v Queensland Building and Construction Commission (Respondent) APPLICATION NUMBER: GAR212-14 MATTER TYPE: General administrative review matters HEARING DATE: 6 February 2015 HEARD AT: Maroochydore DECISION OF: Member White DELIVERED ON: 23 February 2015 DELIVERED AT: Brisbane ORDERS MADE: 1. The Direction to Rectify and/Complete No 40121 be set aside. CATCHWORDS: Direction to rectify – whether applicant carried out building work – whether Direction to Rectify be set aside Queensland Civil and Administrative Tribunal Act 2009 ss 17, 18, 24, 24 (2), 83 Queensland Building and Construction Commission Act 1991 ss 72 75, 86(1), 86(1)(e) APPEARANCES: APPLICANT: Mr M Williams of Counsel RESPONDENT: Ms E Roberts, Solicitor -- 1 of 6 -- 2 REASONS FOR DECISION Background [1] Mr Dwyer and Mr Elsayed were directors of Greenwood 3 Pty Ltd a property development company which owned land at 3-5 Bradman Avenue, Maroochydore. In 2005, Greenwood 3 contracted Dwyer Corporation Pty Ltd (trading as Dwyer Quality Homes) to construct home units on the Maroochydore land which was completed in February 2006. Mr Dwyer was also the director of Dwyer Corporation. [2] Dwyer Corporation (Dwyer Quality Homes) was a licensed builder. Greenwood 3 never held a building licence. At the time of the construction, the role of Greenwood 3 in the building project was as the owner of the land and it funded the construction costs. [3] The contractual relationship between Dwyer Corporation and Greenwood 3 was informal as nothing was reduced to writing. Mr Dwyer as a director of both companies, supervised the construction and Mr Elsayed injected his funds into the project. Mr Elsayed was not actively involved in the construction. Mr Dwyer and Mr Elsayed were to receive a distribution of the profits when the project was completed. [4] In October 2007, the Park Beach Body Corporate which is the building which was constructed at 3-5 Bradman Avenue, through its body corporate manager, complained to Greenwood 3 about water leaks on the decks in the building. Mr Dwyer gave evidence that he decided that Greenwood 3 would engage sub-contractors to commence remedial work in February 2008. Mr Elsayed’s evidence was that Dwyer Quality Homes would carry out the remedial work. Further complaints were made in 2008. All remedial work was completed in October 2008. [5] On 19 March 2014, the Body Corporate lodged a complaint with the Queensland Building and Construction Commission (“QBCC”) in regard to defective building work associated with the remedial work carried out in 2008. On 22 May 2014, after an investigation by QBCC, the QBCC issued a Direction to Rectify and/or Complete Number 40104, to Greenwood 3. On 27 May 2014, the QBCC issued another Direction to Rectify and/or Complete Number 40121 to Dwyer Corporation. [6] The Directions issued to both companies was to rectify the following defective or incomplete building work: Unit 6 - Defects associated with the Building Work being rectification work completed on or about 20/04/08. The Defective Building Work relates to work performed to address the failed waterproofing membrane system and water ingress about the tiled Rooftop Deck in the location of Unit 6 including consequential damage to the plaster board ceiling linings and painted finishes in the location of the Main Bedroom (Unit 6). [7] On 23 June 2014, Dwyer Corporation filed an Application to Review the decision relating to the Direction to Rectify issued on 27 May 2014. It is -- 2 of 6 -- 3 that Application which is the subject of these proceedings. Dwyer Corporation seeks an order that the Direction to Rectify be set aside. The Law [8] Sections 17, 18, and 83 of the Queensland Civil and Administrative Tribunal Act 2009 (“QCAT Act”) and 86(1)(e) of the Queensland Building and Construction Commission Act 1991 (“QBCC Act”) provide for an Application for review of a decision to issue a Direction to Rectify. [9] Section 19 of the QCAT Act states that the Tribunal: (a) must decide the review in accordance with this Act and the enabling Act under which the reviewable decision being reviewed was made; and (b) may perform the functions conferred on the tribunal by this Act or the enabling Act under which the reviewable decision being reviewed was made; and (c) has all the functions of the decision-maker for the reviewable decision being reviewed. [10] Section 86(1) of the QBCC Act provides that the Tribunal may review a decision of the QBCC to direct or not to direct rectification or completion of Tribunal work. [11] Section 75 of the QBCC Act defines “tribunal Work” to include ‘the renovation, alteration, extension, improvement or repair of a building’. [12] Section 24 of the QCAT Act provides that the Tribunal may: (a) confirm or amend the decision; or (b) set aside the decision and substitute its own decision; or (c) set aside the decision and return the matter for reconsideration to the decision-maker for the decision, with the directions the tribunal considers appropriate. [13] Section 24(2) of the QCAT Act provides that the Tribunal stands in the shoes of the QBCC and remakes the decision as at the date of the hearing and the decision of the Tribunal has effect from when the reviewable decision takes or took effect. [14] This Application was heard as a hearing de novo, and was a determination on the merits of both parties case. Both parties submitted correctly that the standard of proof is on the balance of probabilities. Discussion [15] The parties relied on the statements of Mr Dwyer, Mr Elsayed, Mr Lowrie, and Unit Owners. These witnesses were made available for cross- examination. -- 3 of 6 -- 4 [16] Dwyer Corporation submit that as Greenwood 3 carried out the rectification work, and QBCC should not have issued a Direction to it. QBCC oppose the Application to Review. [17] Dwyer Corporation relies on the evidence of Mr Dwyer, a Director of Dwyer Corporation and Greenwood 3, who says he made the decision to have Greenwood 3 engage sub-contractors to carry out the rectification work in 2008. Dwyer Corporation exhibited sub-contractor receipts which on the face of it confirm that Greenwood 3 paid the sub-contractors to carry out the rectification work. Other than the receipts, there were no other documents which were relied upon to assist the Tribunal in reviewing the decision to issue the Direction. [18] Dwyer Corporation submits that the evidence of Mr Elsayed should not be given much weight. It was suggested through cross-examination of Mr Lowrie, that the second Direction which was issued to Greenwood 3 as a result of representations by Mr Elsayed. QBCC rejected this proposition. [19] Mr Elsayed gave evidence that he was not involved in the day to day running of Greenwood 3 and was not actively involved in the construction or carrying out the rectification work. Mr Elsayed also gave evidence that he did not know who actually carried out the work. He recalls a conversation or an email where Mr Dwyer informed him that Dwyer Quality Homes would engage sub-contractors to carry out the rectification work. This is denied by Mr Dwyer. Based on Mr Elsayed’s lack of knowledge, not only of the initial construction but also of the later rectification work, the Tribunal does not give much weight to Mr Elsayed’s evidence. [20] Dwyer Corporation further submits that the Tribunal should not place much weight on the evidence of the unit holders who may not have been aware of the arrangements to carry out the rectification work. Their evidence doesn’t assist the Tribunal as their evidence is hearsay and lacks the precision required to establish who engaged the sub-contractors to carry out the rectification work. [21] QBCC submit through the evidence of Mr Lowrie that some sub- contractors issued the invoices for the rectification work, to Dwyer Quality Homes. From a perusal of the receipts exhibited, there were three such invoices. The other invoices, numbering at least 60, were issued to Greenwood 3. It would be highly speculative to conclude that this constitutes sufficient evidence to prove on the balance of probabilities that Dwyer Quality Homes engaged sub-contractors to carry out the rectification work. [22] Although some of the invoices appeared to have been altered, I make no finding on whether any invoices were deliberately altered, as this was never challenged by the QBCC. [23] The QBCC also relied on the evidence that Dwyer Quality Homes was the original licensed builder and Greenwood 3 was not a licensed builder. Although it would be usual for the original builder to carry out subsequent -- 4 of 6 -- 5 rectification work, it doesn’t automatically follow. I accept that the rectification should have been carried out by a licensed builder. However, there was no evidence that the sub-contractors who carried out the work were not registered or licensed. If the building work was carried out by Greenwood 3 or if they engaged sub-contractors to carry out the building work, it may have contravened the licensing provisions of the QBCC Act. But it is a long bow to submit that just because Greenwood 3 was not licensed at the relevant time, then an inference should be drawn that it did not carry out the building work or engage sub-contractors. Any such inference is rejected. [24] Although the Tribunal is not reviewing the first Direction which was issued to Greenwood 3 on 22 May 2014, it is persuasive that QBCC at an early stage after a full investigation, issued the earlier Direction. Mr Lowrie under cross-examination explained that Mr Elsayed did not influence his decision to issue the second Direction. He conceded that Greenwood 3 paid the sub-contractors but that his ‘thought pattern’ was that Greenwood 3 was not a building company. He said, ‘they (referring to Greenwood 3) did it on behalf of Dwyer Quality Homes’. He also agreed that he did not know the ‘ins and outs of Greenwood 3 and Dwyer Quality Homes’. This was a reference to the internal corporate structure of the companies. I find that Mr Lowrie placed too much weight on Greenwood 3 not being a licensed builder when he issued the second Direction on Dwyer Corporation. No new evidence had been obtained by Mr Lowrie and best explanation is that he simply changed his mind. I do not make any finding that Mr Elsayed in any way pressured or persuaded Mr Lowrie to change his mind. However, I do place significant weight on the evidence that the QBCC had already issued the earlier Direction on Greenwood 3 after a full investigation of the complaints. [25] This case hinges on the acceptance of Mr Dwyer’s evidence. He gave evidence that he decided that Greenwood 3 would arrange for sub- contractors to carry out the rectification work. He didn’t provide any reason for making this decision. He said that he didn’t direct his mind to whether Greenwood 3 was a licensed builder or not. He said that he ‘just made the decision’. This is the only direct evidence as to the decision making process within both Dwyer Corporation and Greenwood 3. I find it extraordinary that there is nothing in writing, other than invoices, throughout the construction of the building and the decision to engage the sub-contractors. I also find it extremely unusual that Greenwood 3 would take on the responsibility to arrange the rectification work, as it was a development company, not a building company. It never held itself out to be the builder at any time. It may have contravened the QBCC Act. However, this is not an issue for the Tribunal to determine. I am also of the view that in a corporation governance sense, its conduct in this matter was extremely irresponsible, in not having any documentation and engaging in specialist building activities which it was not otherwise involved. I have some reservations in accepting Mr Dwyer’s explanation on how Greenwood 3 came to its decision to arrange the rectification work. I also note the QBCC did not challenge his evidence on this point. -- 5 of 6 -- 6 [26] However, the Tribunal must decide this case on the evidence presented and although I have some reservations, I intend to give Mr Dwyer the benefit of the doubt. I therefore reluctantly accept his evidence. [27] Accordingly, taking all of the evidence into account and the findings which I have made during the course of the decision, and on the balance of probabilities, I am persuaded to make the order sought by Dwyer Corporation. [28] I therefore order that the Direction to Rectify and/Complete No 40121 be set aside. -- 6 of 6 --