Body Corporate for Parkwood Villas v Queensland Building and Construction Commission [2015] QCAT 59

CITATION: Body Corporate for Parkwood Villas Community Titles Scheme 25893 v Queensland Building and Construction Commission [2015] QCAT 59 PARTIES: Body Corporate for Parkwood Villas Community Titles Scheme 25893 (Applicant) v Queensland Building and Construction Commission (Respondent) APPLICATION NUMBER: GAR337-12 MATTER TYPE: General administrative review matters HEARING DATES: 29 and 30 May 2014 HEARD AT: Townsville DECISION OF: Member Pennell DELIVERED ON: 20 February 2015 DELIVERED AT: Townsville DECISION MADE: 1. The decision made by the Respondent on 8 August 2012 not to issue a notice to rectify to Anlight Pty Ltd trading as Green Constructions is confirmed. 2. The Applicant’s Application is dismissed. CATCHWORDS: ADMINISTRATIVE REVIEW – principles applied in an application for a review of a decision to issue a direction to rectify – decision not to issue a direction to rectify defective building work – rectification of building work policy – whether decision not to issue a direction was reasonable – limitation of time for making a complaint Queensland Building and Construction Commission Act 1991 s 3, s 72(8), s 72(14), s 75(3), s 75(5), s 76, Schedule 2 Queensland Civil and Administrative Tribunal Act 2009 s 17(1), s 18(1), s 20, s 24(1), s 28, s 95 -- 1 of 18 -- 2 Kitchen Plus (Nerang) Pty Ltd v QBCC [2014] QCAT 084 Briginshaw v Briginshaw (1938) 60 CLR 336 Stephen Sadd v QBSA QR 058-06 Peter and Christine Stephenson v QBSA Q056- 04 Dixon Projects Pty Ltd v QBSA [2009] QCCTB 2 APPEARANCES and REPRESENTATIONS: APPLICANT: Mr A R Lonergan of Counsel instructed by OMB Solicitors RESPONDENT: Mr G I Thomson of Counsel instructed by the Respondent REASON FOR DECISION Introduction [1] Parkwood Villas (“the property”) is a residential housing complex comprising 124 residential Units in Kirwan, a suburb of Townsville. The property was constructed over three (3) stages. Stage 1, consisting of residential Units 1 to 22 was completed in or around July 1998. Stage 2, consisting of residential Units 34 to 60 were completed in or around December 2001. [2] Stage 3, also known as the Platinum Stage, was completed in or around January 2009 and consisted of Units 61 to 124. Anlight Pty Ltd trading as Green Constructions (“the Builder”) were engaged to construct Units 66 to 76 and Units 85 to 124. [3] The practical completion dates for the various residential Units within the Platinum Stage of the property were:–1 Residential Unit No. Practical completion date (on or about) Limitation time for direction 61 – 68 24/02/2006 24/05/2012 69 – 76 23/01/2007 23/04/2013 77 – 84 29/06/2006 29/09/2012 85 – 88 07/12/2007 07/03/2014 89 – 92 & 96 – 99 28/06/2007 28/09/2013 93 – 95 & 100 – 103 07/12/2007 07/03/2014 104 – 107 Unknown date in 2008 Unknown date in 2014 108 – 110 30/07/2008 30/10/2014 111 – 112 28/08/2008 28/11/2014 113 – 116 20/11/2008 20/02/2015 117 – 120 08/12/2008 08/03/2015 1 Exhibit 14 – Affidavit of Anthea Lenoy at paragraph 19. -- 2 of 18 -- 3 121 – 124 05/01/2009 05/04/2015 [4] The Applicant is the Body Corporate for Parkwood Villas (“the Applicant”). The Respondent is the Queensland Building and Construction Commission (“the Respondent”). [5] In early February 2011 severe tropical Cyclone Yasi (Category 5) crossed the coastline of Northern Queensland just north of Cardwell. Townsville was subjected to the effects of the cyclone and reports at the time indicated that winds compatible to a Category 3 cyclone battered the city. Shortly after the cyclone, the property was assessed for damage arising from the effects from the cyclonic winds. A number of items of works were identified as cyclone damage and the Applicant engaged contractors to carry out work to rectify that damage. [6] Ninja Roofing was one of the contractors engaged by the Applicant to inspect the tiled roofs and provide a quote for any damage that may need repairing. After inspecting the roof of the property, Ninja Roofing identified that repair work was required for several suspected broken roof tiles at Unit 18.2 [7] Ninja Roofing was a company known to the Applicant and had on an earlier occasion in October 2008 inspected the tiled roof and repaired some leaking problems.3 There is no certainty that this work related to the complaint, as there was no indication given in the Ninja Roofing’s tax invoice to identify which particular stage or residential Unit of the property that work related to. [8] Another contractor engaged by the Applicant was Gucci Plumbing. In May 2011 Gucci Plumbing was engaged to inspect and repair damage caused by Cyclone Yasi. Their tax invoice4 indicated that cyclonic winds had caused damage to the roofs and there were specific repairs that were needed. [9] On 14 September 2011, the Respondent received a complaint from the owner of Unit 94 in respect to the back patio leaking water and water leaking through the silicone join within the shower/bath. Within a short period time the builder rectified those defects. [10] On or about 30 November 2011, the Respondent received the complaint which is subject to these proceedings.5 The complaint related to Units 61 to 124 and there were 62 items that the Applicant said were defects. [11] On 11th – 13th February 2012 SERGON Building Consultants (“SERGON”) inspected the property. SERGON has since provided a report6 in relation to their inspection. 2 Exhibit 6(b) – Affidavit of Bruce Charles Grant at paragraphs 31 – 32 and Annexure “BG-10”. 3 Ibid at paragraph 30 and Annexure “BG-9”. 4 Ibid at paragraphs 31 – 32 and Annexure “BG-12”. 5 Exhibit 7 – “SOR-6”. -- 3 of 18 -- 4 [12] Acting on the Applicant’s complaint, on 21 June 2012 the Respondent inspected the property and generated an Initial Inspection Report7 addressing the Complaint Items and its response to those various items. [13] Subsequent to the complaint being made, the Applicant engaged ABSCAN Building Consultants (“ABSCAN”) to inspect the property and prepare a report. ABSCAN inspected the property in February, March and April 2013 and provided their report to the Applicant in July 2013.8 [14] In October 2013 LCJ Engineers Pty Ltd, a consulting engineering company was engaged by the Respondent to inspect the property. Various inspections were carried out between October and December 2013. Mr Kevin Cameron (“the decision maker”) from the QBCC was present during those various inspections.9 A report was later prepared by LCJ Engineers.10 [15] At a later time, the Applicant engaged UDP Consulting Engineers to inspect the property. That inspection was carried out in late April to early May 2014.11 What the Applicant seeks [16] The Applicant seeks a review of the Respondent’s decision pursuant to section 86(1)(e) of the Queensland Building and Construction Commission Act 1991 (“the QBCC Act”) and seeks to overturn the Respondent’s decision to refuse to issue a direction to rectify to the Builder under section 72 of the QBCC Act. [17] The Applicant wants the Tribunal to:-12 (a) allow its application in respect to all of the Complaint Items, except for Complaint Items 36, 46 and 50; (b) make a direction that the claim against the insurance fund be allowed; (c) make any further or other order as is necessary; and (d) make an order that the Respondent pay the Applicant’s costs. Respondent’s decision [18] On 8 August 2012 the Respondent made the decision not to issue the Builder with a notice to rectify defective building work. In making that decision, the applicant:- 6 Exhibit 12 – SERGON Report – “SOR-15”. 7 Exhibit 17 – “SOR-16”. 8 Exhibit 8 – ABSCAN Report. 9 Exhibit 16 – Affidavit of Kevin Cameron at paragraph 11. 10 Exhibit 15. 11 Exhibit 5 – Affidavit of Christian Luke Matheson. 12 Exhibit 4 – Annexure ‘B’. -- 4 of 18 -- 5 (a) Rejected Complaint Items 1 – 14 on the basis that the complaint was made out of time for insurance, and out of time for the Respondent to issue a notice to rectify to the Builder. (b) Rejected Complaint Items 15, 16, 19, 22, 23, 26, 27, 29, 30, 33, 34, 37, 39, 40, 41, 43, 44, 45, 47, 48, 51, 52, 55, 56 and 60 on the basis that they were not defective work undertaken by the Builder, but were a result of damage caused by Cyclone Yasi or works subsequently performed by persons other than the Builder. (c) Rejected Complaint Items 17, 19, 20, 24, 28, 31, 35, 38, 42, 45, 49, 53, 57 and determined that these items were not defective work undertaken by the Builder, but were the result of land around the building being very moist and having a fall back towards the building or a verge which allowed ponding of water. (d) Rejected Complaint Items 18, 21, 25, 32, 54, 58 and 62 on the basis that they were not defective work undertaken by the Builder and were considered to be minor scale rust to the base of the steel columns. The rust was considered common on buildings of the age of the property, particularly having regard to the high concentration of water usage on the lawns and surrounding gardens. (e) Rejected Complaint Item 36 on the basis that it was not building work and rejected Complaint Item 50 the basis that it was not defective building work undertaken by the builder. The rusted nails were considered minor scale discolouration which would not affect the serviceability, performance or functional use of the building. Both of these Complaint Items are no longer subject to these proceedings and not for determination by the Tribunal. [19] In addition to rejecting those Complaint Items on the above grounds, the Respondent informed the Applicant that it had rejected all of the Complaint Items on the basis that the complaint was made outside time limitation for the Respondent to issue a direction to the builder.13 Review Jurisdiction [20] A person affected by a reviewable decision of the QBCC may apply, as provided under the Queensland Civil and Administrative Tribunal Act 2009 (“the QCAT Act”), to the Tribunal for a review of that decision. The Tribunal must hear and decide the review by way of a fresh hearing on the merits of the application. The purpose of the review is to produce the correct and preferable decision. In carrying out its functions to produce the correct and preferable decision, the Tribunal may either confirm or amend the decision; or set aside the decision and substitute its own decision; or set aside the decision and return the matter for reconsideration to the decision maker for the decision, with the directions the Tribunal considers appropriate.14 13 Exhibit 4 - Annexure ‘A’. 14 QCAT Act Ch 2, Pt 1, Div 3, ss 17 – 24. -- 5 of 18 -- 6 [21] There are a number of principles to be applied in an application for review of a decision to issue a direction to rectify. In exercising its discretion pursuant to section 72 of the QBCC Act, the Tribunal stands in the position of the Respondent. The Tribunal must also consider the competing interests of the parties involved and factors, such as the blameworthiness of the owners and the cause of the defective building work. [22] In exercising its discretion, the Tribunal must give consideration to the circumstances mentioned in the Commission’s Policy and take into account all of the evidence, including the circumstances raised at the Tribunal hearing15. Finally, in determining this matter, for a decision to be made to issue a direction to rectify, the Tribunal must be satisfied that there was defective building work, and in all the circumstances, the question must be asked, is it reasonably necessary for the Tribunal to exercise its discretion to have the notice to rectify issued?16 The Legislation [23] The Applicant’s application originally fell under the now repealed Act, the Queensland Building Services Authority Act 1991 (“QBSA Act”). The QBSA Act has since been replaced by the QBCC Act. The objects of the QBCC Act are to regulate the building industry to ensure the maintenance of proper standards within the industry and to achieve a reasonable balance between the interests of building contractors and consumers. Remedies are provided in the QBCC Act for defective building work, along with a provision for the support, education and advice for those who undertake building work, as well as consumers.17 Evidence at the Hearing [24] The procedure for a proceeding is at the discretion of the Tribunal. The Tribunal is not bound by the rules of evidence;18 however the Tribunal must act fairly and according to the substantial merits of the case. [25] In observing the rules of natural justice, the Tribunal may inform itself in any way it considers appropriate and must also ensure, as far as practical, that all relevant material has been disclosed so that the Tribunal is able to reach a decision on the relevant facts. [26] Evidence in a hearing may be given orally or in writing; and if the Tribunal requires, must be given on oath or by affidavit19 and the Tribunal must allow a party a reasonable opportunity to call or give evidence; and examine, cross-examine and re-examine witnesses; and make submissions to the Tribunal. Both parties were given that opportunity. 15 Stephen Sadd v QBSA QR 058-06; Peter and Christine Stephenson v QBSA Q056-04 and Dixon Projects Pty Ltd v QBSA [2009] QCCTB 2 (8 January) at [26]. 16 Dixon Projects Pty Ltd v QBSA [2009] QCCTB 2 (8 January) at [27]. 17 QBCC Act s 3. 18 QCAT Act s 28. 19 Ibid s 95. -- 6 of 18 -- 7 Bruce Charles Grant [27] Mr Grant is the Caretaker for the property. He is also the Director of Grants Enterprises Pty Ltd, which has been retained by the Applicant as the service contractor for the property. He lives on-site with his wife, and is the owner of two Units within the property. He provided two affidavits, the first20 was sworn on 28 February 2013 and the second21 was sworn on 26 May 2014. [28] In his first affidavit he deposed that on 21 June 2012 he was present when the Respondent’s representative, Mr Kevin Cameron and the builder, Mr Kevin Green came to the property to carry out an inspection. [29] It is second affidavit; Mr Grant said that in March 2009 became aware of the water ingress issues within Units 65, 66 and 68. It was his recollection that the water ingress issue to those Units was addressed by the builder at that time. He went on to say that if he received a complaint from an owner or occupier with regard to an issue that needed rectification, or some other maintenance work being carried out on the building, he would contact the Builder. [30] He further deposed that most of the complaints relating to water ingress were issues about the roof or to pipes or vents. For issues related to the roof he would request a work order from the Applicant for Ninja Roofing to attend on-site to rectify the issue. With regards to any issues associated with pipes or vents, he would request that the Applicant arrange for a plumber to attend on-site. [31] To the best of his knowledge, the only people who had been up onto the roof of the building were building inspectors, engineers, Pay TV contractors as well as representatives from Ninja Roofing, the QBCC, ABSCAN Building Consultants and Green Constructions. [32] He is aware that Cyclone Yasi had an effect on the building which required the services of Ninja Roofing to carry out repair work to the roof of property.22 He also provided information that another company, Gucci Roofing, provided a quote to repair damage caused by Cyclone Yasi to the roofs of the property.23 [33] When cross-examined, Mr Grant said that the Platinum Stage took between six and eight years to construct.24 Mr Grant accepted that there had been water ingress problems with the Platinum Stage prior to 31 October 200825 and when complaints were made by owners or occupiers of water ingress, those complaints were brought to the attention of the Builder. 20 Exhibit 6(a). 21 Exhibit 6(b). 22 Exhibit 6(b) – Annexures “BG-7” – “BG-11”. 23 Ibid Annexure “BG-12”. 24 Transcript 29 May 2015 at page 1-37; lines 39 – 43. 25 Ibid at page 1-51; lines 23 – 27. -- 7 of 18 -- 8 [34] He became aware at least two months after Cyclone Yasi that there was a need to replace broken roof tiles, repoint bad cracks to ridge grout, reseal and refix leaded metal flashing where necessary and repair cyclone damage to the Platinum Stage.26 What prompted him to engage a building inspector for the roof was that he did not want to have a contractors dictate what was wrong, or what was not wrong with the roof. At the same time he was somewhat influenced by a long history of complaints about water ingress at the property. He also said that at various times over the years after the completion of the first group of Units 61 – 68 in the Platinum Stage, he asked the Applicant to engage a building inspector to go up on the roof and carry out an inspection. Those requests had been rebuffed by the Applicant.27 [35] Mr Grant confirmed that he was aware that on 5 April 2011 Ninja Roofing wrote to the Applicant about their inspection of the whole complex and indicated that they found broken roof tiles, roof tiles had been dislodged from valleys, lead and metal flashing had been lifted and sealant stressed and cracked and ridge pointing stressed and cracked. They also said that considering the cyclonic conditions recently experienced and the size of the complex, those issues or damage were quite minor but should be addressed.28 Expert evidence [36] Three experts gave evidence in this matter. They were Mr Christian Luke Matheson, Mr Stephen Bruce Malcolm and Mr Leslie Cecil Johnston. Mr Matheson [37] Mr Matheson is a structural engineer. He was engaged by the Applicant to carry out inspections of the property in April and May 2014. During the inspection he had access to 45 residential Units and was able to identify range of defects in a number of those Units.29 [38] Those defects included mould, swelling/blistering of paint, swelling of timber, timber which had started to rot, discolouration of internal walls, minor mould, hairline cracking of internal masonry walls in many of the Units and fine cracking and small separations were seen at corners of internal walls as well as cornices and skirting boards. [39] His evidence was that given the sort of damage that he observed, it would take one or two years for that damage to appear and considering that amount of time it was possible that the defects that he observed had been caused or contributed to by the effects of Cyclone Yasi.30 Joint Expert’s Report 26 Ibid at page 1-44; lines 34 – 39. 27 Ibid at page 1-47; lines 27 – 47. 28 Exhibit 7, Volume 2 at page 486. 29 Exhibit 5 at paragraphs 3 – 4. 30 Transcript 29 May 2015 at page 1-27; lines 26 – 40. -- 8 of 18 -- 9 [40] Mr Malcolm and Mr Johnston compiled a ‘Joint Expert’s Report’. In that report, both experts concluded that Complaint Items 3831 and 6132 were defects which should be rectified. [41] Complaint Item 38 refers to the external building elements of Units 100 – 103 and is reported to be cracking to the windowsills of Units 100 – 103, with the sealant to the wall flashing aging and cracking in places. There was also cracking to external concrete rendered block walls and the windowsills, along with defective sealant, or the sealant had not been installed to the windows adjacent to the external decorative wall panelling. There was also general cracking to the building elements which allowed water penetration into the building. [42] Complaint Item 61 refers to the external building elements of Units 121 – 124 and is reported to be cracking to the windowsills and walls of Units 122 and 123. The exterior window was not sealed to wall panelling of Units 122 and 123 and there was general cracking to the building elements in those areas allowing water penetration into the building. [43] The Respondent’s reply33 to those Complaint Items was that whilst there had been evidence of slight cracking to the exterior of the masonry walls; the parties agreed that no complaints had been made by the owners or occupiers about water ingress. [44] With regard to Complaint Items 2, 4, 5, 16, 17, 24, 32, 40, 52, 56 and 60, Mr Malcolm and Mr Johnston reached an agreement with regard to these items and their conclusion was that although some issues relating to flashing and roof tiles had been rectified, there was still a necessity for this to be rectified to the required standard. [45] In regard to Complaint Items 1 and 2, it was the joint opinion of Mr Malcolm and Mr Johnston that this Complaint Item was a defect as there probably had been penetration of the sarking (waterproof membrane), and the damaged sarking should be rectified. However, they could not agree on who was responsible for rectifying the defect.34 [46] Both Mr Malcolm and Mr Johnston agreed that the cracking to the concrete block walls did not constitute a major structural defect. Although they did agree on that point, Mr Malcolm said that it was a Category 1 defect because it allowed water penetration into the building, whereas Mr Johnston gave it lesser weight and said that the cracks were either caused by movement or shrinkage and the cracks could be repaired with flexible sealants and good quality paint. [47] Mr Malcolm and Mr Johnston did not agree on what impact Cyclone Yasi had, or could have had on the roof tiles to the property. Whilst Mr Malcolm’s opinion was that high cyclonic winds may have damaged many 31 Exhibit 8, ABSCAN Report at pages 145 – 151. 32 Ibid at pages 208 – 209. 33 Exhibit 17, “SOR-16” at pages 40 and 63. 34 Exhibit 9 (first page). -- 9 of 18 -- 10 of the ridge and barge capping, this was because they had not been fitted in compliance with the manufacturer’s specifications. Mr Johnston opined that the SERGON report35 on the Platinum Stage noted broken roof tiles consistent with cyclonic activity. [48] Whilst there is no agreement between them about Cyclone Yasi’s impact on the roof, it was considered by the Tribunal that other issues such as foot traffic by a range of contractors gaining access to the roof, including contractors installing the various Pay TV equipment could not be ruled out as a possible cause of damage to the roof tiles and ridge capping. Mr Malcolm conceded in the joint report this can occur. [49] Mr Johnston’s evidence was that all of the roofs appeared to be performing satisfactorily and the damage to the roofs appeared to have occurred from either Cyclone Yasi or errant tradespeople walking around the roofs. [50] He went on to say that the flashings need review and finishing in areas around the roof and wall junctions. With regards to the masonry buildings, he considered them to be performing adequately with slight cracks which could easily be repaired at the next programmed maintenance. Sean Robert Loveky [51] SERGON Building Consultants (“SERGON”) were engaged by the Applicant to inspect the property. Mr Loveky and other consultants from SERGON inspected the property on behalf of the property’s insurers to inter alia report on maintenance issues and defects, costings on all of the damage related to Cyclone Yasi, and address issues with pre-existing defects or maintenance issues. [52] During his inspection of the property, Mr Loveky observed broken roof tiles and ridge capping consistent with being dislodged by storm activity. He considered that the tiled roof covers to the property had sustained significant wind force during Cyclone Yasi.36 [53] When he inspected the lead apron flashing he found no cyclone damage and its installation was acceptable. The type of tiles installed were of a flat profile type and PVC joiner strips had been glued beneath the lead flashing as a means of preventing rainwater ingress underneath the flashing and then entering the roof space. When he lifted the lead flashing he found that there had were no soaker trays installed beneath the lead flashing pursuant to the CSR Monier Architectural Manual.37 [54] Mr Loveky went on to say that the PVC joiner strips were not fit for the purpose in which they were used. They are for joining cement fibre sheeting and not designed or constructed to be glued on a surface to 35 Exhibit 7, Volume 2 – “SOR-15”. 36 Transcript 30 May 2014 at page 1-45; lines 4 – 30. 37 Transcript 30 May 2014 at page 1-46; lines 9 – 27. -- 10 of 18 -- 11 prevent water penetration.38 The issue of the PVC joiner strips will be revisited later in these reasons. Mr Kevin Cameron [55] Mr Cameron is the decision maker. His reasons for not issuing a direction to the builder to rectify the defects was inter alia, because the Applicant’s complaint was not made within the time frame as prescribed by section 72(8) of the QBCC Act. Furthermore, during the site inspection the parties agreed that Complaint Items 1 to 14 were outside the time limit for issuing a direction to a builder as the works were completed more than six years and three months prior to the date of the inspection.39 [56] In regards to Complaint Items 15 to 62, Mr Cameron said that these items were not defective building work for which the Builder was responsible, because they were either:-40 (a) not defective; (b) not building work; (c) works performed by persons other than the builder; (d) possible damage caused by Cyclone Yasi; or (e) not matters that would affect the serviceability, performance or functional use of the building. [57] Mr Cameron was satisfied that it would have been unfair to the Builder to issue a direction to rectify for essentially two reasons. Firstly41 the alleged defects became apparent to the Applicant when they received the quotation from Ninja Roofing on 6 April 2011. After receiving the Ninja Roofing quotation, the Applicant delayed more than seven months before making the complaint.42 The Applicant had not notified the Respondent within three months of noticing any defective work of the property as required by the Rectification Policy. [58] The second reason was because the alleged defects were caused as a result of lack of owner maintenance in failing to rectify the damage caused by Cyclone Yasi.43 Issues considered [59] In reviewing the Respondent’s decision, the issues for the Tribunal to determine were:– (a) Was the work building work? 38 Ibid at page 1-47; lines 32 – 43. 39 Exhibit 16 – Affidavit of Kevin Cameron, paragraph 37(a). 40 Ibid at paragraph 37(b). 41 Exhibit 16 – Affidavit of Kevin Cameron, paragraph 37(c). 42 On or about 30th November 2011. 43 Exhibit 16 – Affidavit of Kevin Cameron, paragraph 37(d). -- 11 of 18 -- 12 (b) If so, was the work defective? (c) Was the Builder responsible for the defective building work? (d) Was the Respondent’s decision not to direct the Builder to rectify the building work reasonable in the circumstances? Was the work building work? [60] The Tribunal was required to examine whether or not the work carried out by the Builder was building work. Building work is defined in the QBCC Act.44 There is no dispute between the parties that the work complained about was the erection or construction of a building as defined in the QBCC Act. Was the work defective work? [61] The definitions for defective building Category 1 and defective building work Category 2 are defined in the Respondent’s Guideline Policy.45 Category 1 is defective building work (other than residential construction work according subsidence) that is faulty or unsatisfactory because it:– (a) adversely affects the structural performance of the building; (b) adversely affects the health or safety of persons residing in or occupying the building; (c) adversely affects the functional use of a building; and (d) allows water penetration into the building. [62] Category 2 defective building work means defective building work (other than Category 1 defective building work or residential construction work causing subsidence) that is faulty or unsatisfactory because it:– (a) does not meet a reasonable standard of construction or finish expected of a cognitive holder of a contractor’s licence of a relevant class; or (b) it has caused a settling in period defect in a new building. [63] In relation to building work, Schedule 2 of the QBCC Act defines the word defective to include “faulty and unsatisfactory”. In determining whether the work is defective, consideration must be given to any evidence which points to the defects arising out of the control of the Builder. The question of whether the building work was defective will be revisited later in these reasons. Was the Builder responsible for the defective work? [64] The Tribunal has to consider whether or not the Builder was responsible for the defective building work. In determining where the responsibility lies, the Tribunal is guided by section 75(5) of the QBCC Act. A person 44 QBCC Act Schedule 2 – Dictionary. 45 Exhibit 7, Volume 1, “SOR-1”. -- 12 of 18 -- 13 undertakes to carry out building work if the person enters into a contract to carry it out, or submits a tender or makes an offer to carry out building work. There is no dispute that there had been contractual arrangements between the Builder and the Applicant for the construction of the property. [65] The Tribunal is further guided by section 75(3) of the QBCC Act, which provides that a person carries out building work if the person carries it out personally, or directly or indirectly causes it to be carried out. [66] Evidence was provided by the Respondent of enquires it made with the Townsville City Council to obtain certificates of practical completion of the property and certificates of classification for the property. The Respondent also contacted the Builder seeking copies of the building contracts, which were apparently destroyed during Cyclone Yasi when the Builder’s storage shed flooded.46 The Tribunal is satisfied that the Builder carried out the building work. [67] A consideration for the Tribunal is whether a determination can be made that the Builder is responsible for the defective work. The onus of convincing the Tribunal of this falls with the Applicant. [68] The Applicant’s complaint related to 62 separate issues, of which many were the same complaint or of a similar nature. Those complaints can be categorised as – Description of complaint Complaint Item No. Roof tiles and/or capping tiles cracked or damaged, damage to gable. 1,2, 7, 8, 15, 16, 19, 22, 23, 26, 27, 29, 30, 33, 34, 37, 39, 40, 43, 44, 47, 51, 52, 55, 59, 60. Loose / damaged or defective roof flashing. 2, 3, 4, 5, 16, 17, 24, 32, 40, 52, 56, 60 Cracked external concrete rendered block walls and windowsills. Defective or no sealant applied to windowsills 3, 5, 9, 12, 13, 16, 17, 19, 20, 23, 24, 28, 31, 34, 35, 38, 41, 45, 48, 53, 57, 58 Rust to base of steel columns. 6,10, 14, 18, 21, 25, 32, 54, 58, 62 Subsidence to patio floor slabs. 32, 42 Subsidence to paving and garden bed retaining wall. 36 Defective painting. 42 Defect to wall of electrical meter box. 46 Rusted nail fixing to external decorative wall. 50 [69] Complaint Items 36, 46 and 50 were not pursued by the Applicant. 46 Exhibit 14 – Affidavit of Anthea Lenoy. -- 13 of 18 -- 14 [70] In discussing those various Complaint Items, three points come to mind. Firstly, which defect category do the items fall in? Secondly, what is the prescribed time limit for the giving of a direction to rectify; and thirdly, is the Builder responsible for the defect. [71] There were 26 Complaint Items that contained a reference to roof tiles and/or capping tiles which are cracked or damaged, as well as damage to the gable. The Tribunal’s view is that each of the parties have accepted that these complaints are to be classified to be Category 1 defects. The Applicant’s position is that these Complaint Items identify the substandard installation of the tiled roofing which allowed water penetration into the Units and relied of on the evidence of Mr Lubcke who believed that in the circumstances, the tiled roof was substandard. [72] The Applicant also relied upon the evidence of Mr Matheson who said that when he carried out the internal inspections of 45 Units, he observed mould, swelling and or blistering of paint, swelling of timber and discoloration of garage walls inside a number of those Units.47 [73] Mr Matheson’s inspection took place in April/May 2014, approximately three years after the initial problems were discovered with the roof by Ninja Roofing and Gucci Plumbing and the early indications were that cyclonic winds caused damage to the roofs. [74] In the period prior to Cyclone Yasi tradespeople had access to the roofs for the installation of Pay TV equipment. In the weeks and months following the cyclone there were an abundance of tradespeople on the roof inspecting and carrying out repairs. [75] There is a great deal of uncertainty as to whether those Complaint Items were defective, or it was a mere consequence of damage caused by a natural phenomenon or by human intervention outside the control of the Builder. The Tribunal is not satisfied that the Applicant is able to show that the Builder is responsible for those defects. [76] There were 13 Complaint Items relating to the loose or damaged or defective roof flashings. The Applicant exhibited a report from Gucci Plumbing48 indicating that cyclonic winds had caused damage to roofs, including damaging those items complained of. Having regard to the Gucci Plumbing report, the Applicant is not able to satisfy the Tribunal that the Builder was responsible for these defects. [77] In discussing the Complaint Items relating to the cracked external concrete rendered block walls and windowsills, and the defective sealant, or no sealant applied to windowsills, there were 22 Complaint Items which referred to this. The Tribunal is satisfied that these are Category 2 defects and that the Builder was responsible. 47 Exhibit 5 – Affidavit of Christian Luke Matheson at paragraphs 4(a) and (b). 48 Exhibit 6(b) – Affidavit of Bruce Charles Grant at paragraph 31 – 32 and Annexure “BG- 12”. -- 14 of 18 -- 15 [78] There were another 10 Complaint Items that referred to rust being evident at the base of steel columns. The Respondent contends that the rust is minor scale rust and not of any consequential risk to the property. The Applicant’s position differs somewhat from that of the Respondent. [79] The rust on the steel columns is above ground level. The Tribunal is satisfied that had sufficient preventative measures been taken during installation and painting of the columns, the rust should not have become evident regardless of what amount of watering the lawns and gardens received. The Tribunal is satisfied that at present the rust to the columns does adversely affect the serviceability, performance or functional use of the building. There is a real possibility that if left untreated the rust will over time adversely affect the building. The Tribunal is satisfied that these are Category 2 defects and that the Builder was responsible. [80] Two Complaint Items refer to subsidence to the patio floor slabs. Notwithstanding the Respondent’s findings that a high concentration of water usage on the lawns could be responsible, the Tribunal is satisfied that this is a Category 2 defect and that the Builder is responsible for that defect. [81] One Complaint Item referred to the defective painting on the metal doorframes and building elements. The Initial Inspection Report49 indicated that the metal door frames had not been etched primed before the completion of the final coat of paint. The report went on to say that the Builder commented that he was prepared to paint the works as it was not up to the standard usually adopted by him. The Tribunal is satisfied that this is a Category 2 defect and the Builder is responsible for that defect. Was the Respondent’s decision not to issue a direction to the Builder to rectify the defect reasonable? [82] Before determining if it was a reasonable decision not to give the Builder a direction, the Tribunal must first consider whether the defects complained of are actually defects, and if so, whether they are a Category 1 or Category 2 defects. The Tribunal is satisfied as to the Category of the various Complaint Items. [83] Section 72 of the QBCC Act provides a discretionary power for the Respondent to give a direction to rectify defective or incomplete work. For a Category 1 defect, a direction cannot be given more than 6 years and 3 months after the building work to which the direction relates was completed, unless the tribunal is satisfied on application by the Commission,50 that there is in the circumstances sufficient reason for extending the time for giving a direction.51 49 Exhibit 17. 50 QBCC Act Schedule 2 – Dictionary defines Commission as being the QBCC. 51 Ibid s 72(8). -- 15 of 18 -- 16 [84] For a Category 2 defect, the Applicant bears the onus notifying the Respondent of that defect no later than six months after the building work was completed, or within seven months if the owner notified the builder of the defect within six months after the building was completed. [85] With regards to the Applicant’s position that there had been water penetration into a number of the residential units, it was urged upon the Tribunal by the Respondent to accept the evidence of Mr Cameron that there had been no water penetration into the residential dwellings because the Respondent had not received any complaints from individual Unit owners of water ingress. [86] Earlier discussed was the evidence of Mr Loveky who commented on the discovery of PVC joiner strips. The SERGON report suggested that the Builder should have installed prefabricated sheet metal soaker trays beneath the lead apron flashings at sloping roof junctions of perimeter walls and roof tiles as the use of soaker trays had not been carried out adequately on the Platinum stage of the property. [87] Mr Loveky’s evidence was that he discovered that the PVC joiner strips had been utilised on the roof tiles and were glued beneath the lead flashing on the roof as a means utilised to prevent further rainwater ingress, but were not fit for the purpose for which they were used. 52 [88] Of the other experts, Mr Malcolm supported the position adopted in the SERGON report. He clarified this by saying that his inspection of the internal of the garages showed the existence of moulding, which would be expected if there had been ingress of water.53 [89] Mr Johnston adopted a different position. In his report,54 he said that the installation of the valley gutters and parapet/abutment flashings are considered to be a good local solution provided by Monier and their subcontractors. [90] In the months following Cyclone Yasi, a number of contractors had inspected the roof and repair works were undertaken by Gucci Plumbing and Ninja Roofing. In late November 2011 the Applicant lodged its complaint with the Respondent, and in February 2012 when SERGON Consulting inspected the roof the identification of the PVC joiner strips was made. [91] The PVC joiner strips did not form part of the Applicant’s original complaint, and consequently the Respondent did not have that early opportunity to consider this issue in the decision making process. The SERGON report was not available at the time of the complaint being made and the Applicant’s position is that it should not be disadvantaged by that. Although the Applicant may have been at some disadvantage, so too had 52 Transcript 30 May 2014 at page 1-47; lines 32 – 43. 53 Transcript 29 May 2014 at page 1-79; lines 5 – 19. 54 Exhibit 7, Volume 2 – LCJ Report, “CJ-2” at page 8. -- 16 of 18 -- 17 the Respondent and the Builder been disadvantaged by this issue being unknown to them at the time when it could have been included in the complaint. [92] Although the Applicant’s position is that the PVC joiner strips were not fit for purpose, the Tribunal’s view is that when the law requires the proof of any fact, the Tribunal must feel an actual persuasion of its occurrence or existence before it can be found, it cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality.55 Having regard to evidence, including the damage to the roof tiles, the passage of time and the effects of Cyclone Yasi, the Tribunal cannot be not satisfied on the balance of probabilities that the PVC joiner strips contributed to any issue associated with water ingress. Unfair to give direction [93] When contemplating the giving of a direction to rectify, the Respondent is required to have regard to the Rectification of Building Work Policy (“Rectification Policy”). When relating that Rectification Policy to this matter, it is expressed to be a guideline policy for the Builder who carried out either category 1, or category 2 defective building work, and he should be required to rectify that defective building work, except in circumstances where a direction for that rectification would be unfair. [94] A guideline policy within the Rectification Policy provides that an Applicant who wishes for the Respondent to issue a direction to rectify to the Builder should not delay in the making of that application, and if there were a delay in the issuing of the direction to the Builder, then it would be unfair in the circumstances. [95] The Rectification Policy specifies that it may be unfair if the delay in relation to category 2 defective building works exceeds six months after the building work was completed or left incomplete; or seven months, if the owner notified the contractor of the defect within six months after the building work was completed or left incomplete. [96] The Applicant says that it would not be unfair to issue the direction to rectify, despite the passing of approximately 10 months before the complaint was made. The unfairness discretion56 is one that must be considered in all of the circumstances that are known to the decision maker at the time the decision is being made.57 The need for proper deliberation regarding the potential for unfairness in any proposed direction to rectify must not be overshadowed by mere incantations about the need to safeguard industry standards. If that were permissible, then the discretion in section 72(14) of the QBCC Act would never have been included by the legislature.58 55 Briginshaw v Briginshaw (1938) 60 CLR 336 at 361 – 362. 56 QBCC Act s 72(14). 57 QBCC Act s 72(1). 58 Kitchen Plus (Nerang) Pty Ltd v QBCC [2014] QCAT 084. -- 17 of 18 -- 18 [97] Legislators and policy makers have put in place limitations of time and this was undertaken for a reason and ultimately there must be a distinction made as to what point a builder is no longer responsible for defects. ORDERS [98] Taking into account all of the circumstances of this matter, the Tribunal is satisfied that it would be unfair and unreasonable for a direction to rectify be issued to the Builder. The Tribunal is further satisfied that the correct and preferable decision is to confirm the Respondent’s decision dated 8 August 2012 to refuse to issue a direction to rectify in respect of the items that are the subject of this review. -- 18 of 18 --