Delahunty & Anor v Queensland Building Services Authority [2013] QCAT 639

CITATION: Delahunty & Anor v Queensland Building Services Authority [2013] QCAT 639 PARTIES: Mr Edmund Delahunty and Mrs Kathleen Josephine Delahunty (Applicant) v Queensland Building Services Authority (Respondent) APPLICATION NUMBER: GAR297–12 MATTER TYPE: General administrative review matters HEARING DATE: 23 August 2013 HEARD AT: Townsville DECISION OF: Member Pennell DELIVERED ON: 29 November 2013 DELIVERED AT: Townsville ORDERS MADE: 1. The decision made by the Respondent dated 1 August 2012 is confirmed. 2. The application is dismissed. CATCHWORDS: Consequential damage arising from building work – building work – direction to rectify consequential damage – competing interests of the parties Queensland Building Services Authority Act 1991, s 3, s 72(1), s 72(2), s 72(14), s 86(1) and Schedule 2 Queensland Civil and Administrative Tribunal Act 2009 ss 20, s 24 Gary Norwood Homes Pty Ltd v QBSA (unreported, Dist Crt, Bris, 20 June 1997) Forno QC DCJ Stephenson v QBSA [2005] QCCTB 059 Kehl v QBSA [2011] QCAT 54 Sheldon v Queensland Building Services Authority (unreported, Qld Building Tribunal 14.11.94) -- 1 of 8 -- 2 APPEARANCES and REPRESENTATION (if any): APPLICANT: Byrne Business Lawyers, Townsville RESPONDENT: Mr E.T. Bird, QBSA Legal Services Branch REASONS FOR DECISION: [1] The Applicant owns a house in Pallarenda, a suburb in Townsville. In November 2011 the Applicant engaged a Builder1 to install a new roof to their house. A contract was entered into and the work commenced on or about 28 November 2011. [2] On 8 December 2011 the Queensland Building Services Authority (“the Authority”) wrote to the Builder confirming that an appropriate insurance premium had been paid by the Builder for the building work at the Applicant’s house. The work was described by the Authority as “1 X ALTERATION & / OR ADDITION & / OR REPAIRS”.2 This description seems to fall within the definition of building work as provided for by the Queensland Building Services Authority Act 19913 (“the Act”). [3] On the evening of 14 December 2011 during a heavy thunderstorm, a large amount of water entered the roof area of the Applicant's house causing substantial damage to the interior of the dwelling. It appears that the roof, or least some portion of the roof, was missing from the dwelling and the Builder had not taken steps to properly waterproof the premises. [4] On 8 February 2012 the Authority received a complaint4 from the Applicant outlining a number of defects to the building work carried out on their house. The property was inspected by the Authority on 2 April 2012. The Applicant and the Builder were present during that inspection. [5] In its initial inspection report,5 the Authority identified a number of defects in the work carried out by the Builder. Notably there were Category 1 defects, such as the house not being covered after work was completed for the day and the glass wool insulation was wet from the rain. [6] On 9 July 2012 the Authority issued the Builder a Direction to Rectify and/or Complete6 (“the first Direction”). The direction related to 12 defects in the building work and the Builder was directed to rectify – 1. The subsequent damage to the building elements in the residence because the roof was left open during a rain event. 2. The sagging roof insulation. 3. Cracked ceiling sheeting in the carport. 4. Installation of old fascia boards. 5. Metal roofing sheeting including barge cappings, flushings and gutters. 6. Gable end sheeting. 1 Tony & Jason’s Carpentry, Concreting Constructions, Townsville. 2 See BSA’s confirmation of insurance contained in the Authority’s Exhibit “SOR-9”. 3 See Schedule 2. 4 See document “SOR-4” of the Authority’s material. 5 See document “SOR-29” – Initial Inspection Report dated 06/07/2012 of the Authority’s material. 6 See document “SOR-30” of the Authority’s material. -- 2 of 8 -- 3 7. Barge boards. 8. Moulding to gable and soffit areas. 9. Timber pine mouldings to the soffits. 10. Truss tie downs. 11. Cut water pipes in the roof space. 12. Cracked concrete slab at the front of the residence. [6] On 26 July 2012 the Builder, through its legal representatives, wrote to the Authority arguing that items 1, 2 and 12 were “subsequent damage” rather than “defective” or “incomplete” building work.7 The Authority later advised the Builder that those items had been removed from the original Direction. The Authority also advised the Applicant of their decision.8 [7] On 1 August 2012 the Authority made the decision to issue the Builder with an amended Direction to Rectify and/or Compete9 (“the second Direction”). The second Direction did not include items 1, 2 and 12. On 27 August 2012 the Applicant lodged an application to review the Authority’s decision. THE POSITION OF THE PARTIES [8] The common ground between the parties is that the Builder removed the roof. The roof was left uncovered. The thunderstorm struck the area and substantial amount of rain fell on the house. [9] Because the roof was uncovered, the interior of the house was damaged by the rain. None of these issues are in dispute. The Builder also caused damage to the internal plumbing and the electrical wiring of the house. These issues are not in dispute either. The Applicant [10] The Applicant argued that the objectives of the Act are to achieve a reasonable balance between the interests of building contractors and consumers and this standard could not be reached when a building contractor is not required to rectify consequential damage. [11] The Applicant further argued that the Builder failed to act with due care and skill, and failed to do the work to the building that was fit for purpose for which it was required. Schedule 2 of the Act determines that building work is the renovation, alteration, extension, improvement or repair of a building, and any site work, including construction of retaining services. The failure to cover the roof amounted to defective work, which is defined in the Act as including faulty and unsatisfactory work. [12] The Applicant relied upon an expert report from Abscan Building Consultants.10 The report attributes blame for the defects to the Builder and concluded that the re-roofing and subsequent damage to the house was defective building work. This report confirmed the conclusions reached in the Authority’s inspection report. 7 See document marked “SOR-31” in the Authority’s material. 8 See a series of letters contained in the documents “SOR-32” to “SOR-35” of the Authority’s material. 9 See document “SOR-38” of the Authority’s material. 10 See Tribunal Exhibit 9. -- 3 of 8 -- 4 [13] The Applicant also contends that the Authority acted with undue haste in accepting the Builder’s submissions and repealing the first direction. [14] The Applicant asked the Tribunal to place a broad interpretation on the wording and definitions of the Act so as not to reward the Builder for the lack of care and common sense by not covering up the roof. The Applicant also said that it would not be unfair to the Builder if the Authority was issue the Direction to rectify all of the identified defects, including the consequential damage. The Authority [15] In the Authority’s Statement of Reasons for the Decision11 it outlined some of the provisions of section 72 of the Act. Those provisions related to –  the Authority is to take into account all the circumstances it considers are reasonably relevant;12 and  the Authority was not required to give a direction under this section if the authority was satisfied that, in the circumstances, it would be unfair to give a direction.13 [16] The Authority contends that pursuant to section 72(1) of the Act, it has the power to direct a person who carried out building work to rectify that work if it is defective or incomplete. In reaching its decision, the Authority identified that with regard to the Applicant’s complaint, it was not able to give a direction to the Builder because the damage was deemed “consequential damage” and not “defective building work”. [17] The Authority’s argued that their decision to repeal the first Direction and issue the second Direction was correctly made. So far as the consequential damage issue, the Authority relied upon the decisions of Stephenson v QBSA [2005] QCCTB 059 (“Stephenson”) and Kehl v QBSA [2011] QCAT 54 (“Kehl”) where both of those matters say that consequential damage ordinarily does not fall within the meaning of “building work”. [18] In relying upon Kehl, the Authority argued that the Tribunal cannot direct a Builder to make good any such consequential damage and the Tribunal was constrained by the legislative framework which established the criteria by which the Authority may give directions.14 [19] The Authority further argued that having regard to the provisions of section 72 of the Act, the Authority simply does not have the power to issue a direction to the Builder for the rectification of consequential damage caused to the premises. THE ACT [20] The objects of the Act are to regulate the building industry, to ensure the maintenance of proper standards in the industry; and to achieve a reasonable balance between the interests of building contractors and consumers. The objects also include the provision of remedies for 11 See paragraphs 15 – 17. 12 QBSA Act, section 72(2). 13 QBSA Act, section 72(14). 14 See paragraphs [9] and [12]. -- 4 of 8 -- 5 defective building work; and to provide support, education and advice for consumers, and those who undertake building work.15 [21] The Authority’s power to require rectification of building work can be enforced if the Authority is of the opinion that building work is defective or incomplete. If that is determined, then the Authority may direct the Builder to rectify the building work within the period stated in the direction.16 [22] In deciding whether to give the direction, the Authority has the discretion to consider all the circumstances it determines to be reasonably relevant. It is not limited to a consideration of the terms of, including the terms of any warranties included in the contract for the carrying out the building work.17 [23] Notably, the Act provides that the Authority is not required to give a direction to the Builder for the rectification of the building work if the Authority is satisfied that, in the circumstances, it would be unfair to the person to give the direction.18 [24] The Authority is empowered to order rectification work where building work is objectively defective, which includes work that is faulty or unsatisfactory, even though the work was performed in strict conformity with the building contract and design plans. Even if the building work is defective or incomplete, within the meaning of the section, that does not impose any liability upon the Builder. It merely enlivens the discretion of the Authority to order the Builder to remedy the work.19 [25] In deciding whether the giving of a direction to the Builder is unfair, particular regard would have to be taken of whether it is permissible within the provisions of section 72 of the Act to give that direction and whether the affected area falls within the area or scope of the definition of building work. TRIBUNAL’S POWERS [26] The Tribunal, in exercising its jurisdiction under the Queensland Civil and Administrative Tribunal Act 2009 (“the QCAT Act”) to review a decision made by the Authority, the Tribunal has all the functions of the decision maker and must hear and decide the matter by way of a fresh hearing on the merits. Having regard to its role, the Tribunal is effectively required to stand in the shoes of the Authority to consider the review.20 [27] The Applicant21 applied to the Tribunal for a review of the Authority’s decision. In exercising the discretion provided to it under the QCAT Act, the Tribunal was required to hear and decide the review by way of a fresh 15 QBSA Act, section 3. 16 QBSA Act, section 72(1). 17 QBSA Act, section 72(2). 18 QBSA Act, section 72(14). 19 Sheldon v Queensland Building Services Authority (unreported, Queensland Building Tribunal 14.11.94). 20 See QBSA Act, s. 86(1). Discretion for the Tribunal to review a decision. 21 Being a person affected by a reviewable decision made by the Authority. -- 5 of 8 -- 6 hearing. The purpose of the review was to produce the correct and preferable decision.22 [28] In carrying out its functions to produce the correct and preferable decision, the Tribunal has the discretion to 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.23 QUESTIONS FOR THE TRIBUNAL [29] In determining this application, the Tribunal is not deciding whether there has been a breach of contract such that the Applicant did not receive what they contracted for. Furthermore, the Tribunal is not deciding if there has been negligence such that a breach of duty or care had caused loss or damage, and it is not deciding if there has been a breach of a statutory warranty to perform work with reasonable care and skill. [30] What the Tribunal has to decide is whether the Authority can direct the Builder to rectify or repair consequential damage caused to the house. [31] In reviewing the Authority’s decision, the Tribunal has to consider: (a) What was the “building work” carried out by the Builder? (b) Can the Authority issue a direction to the Builder to repair consequential damage caused by the Builder? What was the “building work”? [32] A definition for building work is contained within Schedule 2 of the Act. Relevant to this application are the words “renovation, alteration and improvement” of that definition. Those words appear to describe the building work carried out on the premises. [33] The evidence presented to the Tribunal was that the existing roof of the house was to be replaced by a new roof. The contract between the Applicant and the Builder related to the roof. Annexure 2 of Item 1 of the contract confirms this.24 [34] The Tribunal is satisfied that the building work was the removal of the existing roof and the replacing it with a new one. Can the Authority issue a direction to the Builder to repair consequential damage caused by the Builder? [35] The Authority’s Defects Policy provides that – “…a person who carries out Category 1 or 2 defective building work should be required to rectify that building work, unless in the circumstances rectification is unfair or unreasonable.” [36] The policy goes on to define defective building work in a way which explains the meaning of “faulty or unsatisfactory” and provides a description of what is Category 1 or Category 2 defects. 22 QCAT Act – s. 20. 23 QCAT Act s 24(1). 24 See the Builder’s quote contained in document “SOR-9” of the Authority’s material at p.243. -- 6 of 8 -- 7 [37] The Tribunal is satisfied that because of the Builder’s actions, damage was caused to the interior of the house. However, that is not the issue to be decided. What has to be determined is whether the legislation allows the Authority to issue a direction to the builder to rectify consequential damage. [38] In issuing its first direction to the Builder, the Authority reached the view that the Builder should rectify the consequential damage. This view was changed after the Builder disputed the validity of that first direction. [39] The power of the Authority to require rectification of building work is a discretion which must be exercised in accordance with the objects of the Act and the public, including clients of Builders, and responsible Builders are entitled to expect that the Authority will issue directions to rectify strictly in accordance with, and with an adequate understanding of the requirements of the Act.25 [40] As indicated, the tribunal must consider the competing interests of the parties involved in their relative positions. From the evidence presented to the Tribunal from both parties, it is clear that applicants are blameless and innocent for all the consequential damage caused to their premises. The tribunal is satisfied that the cause of the consequential damage lies with the Builder. The causation of the consequential damage to the premises was appalling behaviour by the Builder. [41] However, what remains then is the construction of the legislation; in particular the construction of section 72 of the Act. The Tribunal is not satisfied that an avenue exists by which the Authority can direct the Builder to rectify damage consequently caused during the carrying out of building work. [42] There seems to be a line of authorities26 which have previously considered the issue of consequential damage. In Stephenson v QBSA,27 Member Moon commented – [54] .... for completeness I should say that I was concerned about whether or not given the wording of section 72 of the Act, the Authority in any event has any power to direct a person to rectify consequential damage which arises as a result of established defective building work. [55] Clearly this matter does not in any way affect a homeowner’s entitlement to seek damages or other appropriate orders at law or perhaps pursuant to other legislation in the event of such an occurrence. The question is however, whether or not the Act confers such a power on the Authority under section 72. Conclusion [43] The Tribunal finds that – (1) The Authority correctly exercised its discretion under section 72 of the Act when issuing the second Direction to the Builder. 25 Gary Norwood Homes Pty Ltd v QBSA (unreported, Dist Crt, Bris, 20 June 1997) Forno QC DCJ. 26 Stephenson v QBSA [2005] QCCTB 059 and Kehl v QBSA [2011] QCAT 54. 27 [2005] QCCTB 059. -- 7 of 8 -- 8 (2) The Authority correctly exercised its discretion not to direct the Builder to repair consequential damage. (3) Pursuant to section 24 of the QCAT Act, the Tribunal confirms the decision under review. (4) The Applicant’s application is dismissed. ORDERS [44] The Tribunal orders – (1) The decision made by the Respondent dated 1 August 2012 is confirmed. (2) The application is dismissed. -- 8 of 8 --