Chew v Queensland Building Services Authority [2010] QCAT 501

CITATION: Chew v Queensland Building Services Authority [2010] QCAT 501 PARTIES: Ms Aida Chew v Queensland Building Services Authority APPLICATION NUMBER: QR111-08 MATTER TYPE: Occupational regulation matters HEARING DATE: 17 August 2010 HEARD AT: Brisbane DECISION OF: Mr Barry Cotterell DELIVERED ON: 13 October 2010 DELIVERED AT: Brisbane ORDERS MADE: The Building Services Authority’s decision not to direct rectification of building work is confirmed CATCHWORDS : Review proceedings - whether work defective or incomplete – whether BSA should issue a Notice to Rectify to the building contractor - Queensland Building Services Authority Act, sections 72 and 86(1); Queensland Civil and Administrative Tribunal Act section 24 APPEARANCES and REPRESENTATION (if any): APPLICANT : Ms Aida Chew was represented by Mr P Maddugodda RESPONDENT: Queensland Building Services Authority was represented by Ms C Farthing -- 1 of 11 -- QR111-08 / Page 2 of 11 REASONS FOR DECISION 1. This application seeks a review of the Authority’s decision of 22 April 2008 not to direct rectification of building work which the Authority is empowered to do by section 72 of the Queensland Building Services Authority Act (“QBSA Act”). The Applicant did not attend the Tribunal hearing but was represented by Mr Maddugodda and, to a lesser extent, by her expert Mr de Costa. Mr Maddugodda represented the Applicant throughout much of the period that the building work was carried out and afterwards. The BSA was represented by Ms Farthing, a legal officer and it called evidence from Mr Vosper, a Building Services Authority Inspector, Mr Robert Hughes, an Engineer and Mr Rod Mehrtens, the contractor. Background 2. The Applicant prior to purchasing this house obtained a building report from Queensland Independent Building Inspectors Pty Ltd dated 21 March 2007. As this report stated:- “The concrete is out of level from north west to south east across the front bedroom of approximately 35mm and is out of level from north to south across the family room of approximately 65mm. This is considered to be considerable and we recommend a further inspection to include a slab survey by a structural engineer.” 3. The Applicant then obtained a report from Mr de Costa, an Engineer. Mr De Costa subsequently prepared a pre and post underpinning structural assessment dated September 2007 where, in relation to the pre underpinning, he stated – “Subsequent to a site inspection by the structural engineer (Mr de Costa) the following recommendations were made – ƒ It was unlikely that substantial further settlement would occur considering the age of the house although it was possible to determine the degree of consolidation taking place by taking a soil sample it would be sufficient to monitor settlements for a period of 2 years before taking further action. ƒ If any visible signs of further distress such as cracking brickwork or interior walls would appear properly engineered remedial work needs to be carried out to restore the house to a stable condition. This work should be designed, supervised and certified by Registered Professional Engineer Qld (RPEQ)…. “ 4. No engineering report was prepared at this stage and these recommendations were made verbally on 15 March 2007 at site to the owner’s representative, presumably Mr Maddugodda. According to Mr Maddugodda, as part of the negotiations for the Applicant to purchase the property, the seller agreed to pay for some remedial work to be done on the house. This is apparently the reason why the Applicant proceeded with obtaining a quote for work at this time contrary to Mr de Costa’s recommendation to wait and observe if any “substantial further settlement would occur”. -- 2 of 11 -- QR111-08 / Page 3 of 11 5. According to Mr de Costa, Mr Maddugodda told him he obtained a cheap quote to do “the work” but this was some time after the work had been done as Mr de Costa was not further consulted until the work had been finished by the contractor. Despite Mr de Costa’s recommendation he was not commissioned by the Applicant to design, supervise or certify the work. 6. It became clear to the Tribunal at the hearing that at least Mr Maddugodda’s expectation of what was to be achieved by the work was significantly different from what he assisted the Applicant to contract with the contractor to do in accordance with the scope of work of the contract. 7. The Applicant entered into the contract with Merhtens Holdings Pty Ltd (“the contractor”) to perform underpinning work at 41 Taralga Road, Guranava. The contract consisted of quotation 100325 of 27 March 2007 and a minor works contract schedule signed by Mr Merhtens on 30 April 2007 and the Applicant on 15 May 2007. 8. The quotation set out the scope of works and provided as follows: “I’ve inspected the property at the above address to assess the subsidence and supply a quotation. ƒ Arrange for engineering design and inspections ƒ Remove and replace 1 concrete squares where (sic) under pinning is required (please note the concrete may not be the same colour and shape as the existing) ƒ Construct (3) concrete piers and headstocks in the following areas: to the south west subsided corner ƒ Support the footing to the pier while the intermediate piers are being constructed ƒ After the concrete peering has taken place, we will jack the footings and brickwork back to the appropriate level determined by Mehrtens underpinning of construction ƒ Cap the headstocks to the footing for permanent support ƒ Remove and dispose of all waste material and leave the area clean and tidy. 9. The amount quoted for this work was $10,062.25. 10. The Contract was subject to conditions and of relevance it stated under the heading jacking, “Jacking we require the house to be unoccupied and all valuables which are in the area of the underpinning to be removed (we take no responsibility for any damage caused during the jacking). Jacking the footings and brickwork back to the appropriate level is based on the footing being strong enough to be able to be jacked where when commencing jacking we concentrate on closing up brickworks. Levelling of the internal slab can only be assessed when we start jacking, in most cases the slab will follow brickwork; however we cannot guarantee the underpinning will correct the internal slab.” -- 3 of 11 -- QR111-08 / Page 4 of 11 11. According to Mr Mehrtens upon commencement of the works the contractor discovered that the area had been previously underpinned and a previous underpinning had not been founded on suitable substrate material. The previous underpinning consisted of a wall of concrete 2.4 metres long by 1.6 metres deep and 450mm wide sitting about 250mm above natural ground level. With Mr Maddugodda’s consent the method of rectifying the area was then varied to incorporate the previous underpinning works to be performed by the contractor under the contract. The site was inspected on 16 May 2007 by the contractor’s engineer Mr Graham Moulston of Graham Moulston & Associates, who advised the contractor on the design of the underpinning and subsequently certified the works as evidenced by the form 16 inspection certificate. 12. The contractor completed the works on 23 May 2007. The Tribunal accepts the above facts which were not disputed by Mr Maddugodda at the hearing. 13. Approximately 8 months later, on or about 31 January 2008, the BSA received a complaint from the Applicant in relation to the works carried out by the contractor. The complaint alleged: a) The works had been illegally performed without appropriate planning approval; and b) Cracked brickwork to the chimney resulting from the works performed by the contractor had caused a water leak to the internal facet of the fire place. 14. On 11 April 2008 Mr Vosper, a Building Inspector employed by the BSA, carried out an inspection of the property and determined that; a) Local authority planning approval was not warranted for the works b) The contractor had acknowledged and rectified the brickwork by re-pointing the brickwork c) The works performed by the contractor were not defective or negligent and d) The matter of achieving the appropriate level of jacking was a contractual issue that the authority did not have jurisdiction to adjudicate. 15. Following the building inspection, by letter of 22 April 2008, the BSA notified the Applicant of the outcome of the inspection (“the decision”). 16. On 19 May 2008 the Applicant filed a review application in the former Commercial and Consumer Tribunal, now the Queensland Civil and Administrative Tribunal, seeking to review the decision. On 7 August 2008 the BSA filed its statement of reasons for the decision. The statement of reasons had been prepared on the basis that the decision constituted a decision not to direct rectification to rectify to the contractor to rectify the revised works. On 15 September 2008 the Applicant filed material in the Tribunal and the Applicant’s material included a document titled the Structural Engineer’s Statement of Evidence, which is a report prepared by Mr de Costa. The BSA filed, as part of its material, an affidavit sworn by Mr Mehrtens, Managing Director of the contractor, dated 16 October 2008 and an affidavit by Mr Vosper dated 16 October 2008. -- 4 of 11 -- QR111-08 / Page 5 of 11 17. On 20 January 2010 the Authority engaged structural and geotechnical engineer, Mr Robert Hughes of Hughes Beal and Wright Consulting Engineers, to attend the property and inspect the works. On 21 January 2010 Mr Hughes and Mr de Costa attended an experts conclave at the Tribunal. At the experts conclave Mr Hughes and Mr de Costa agreed and disagreed on a number of facts which are outlined in the experts joint report. 18. On 21 June the Authority filed a statement from Mr Hughes which annexes his report dated 1 February 2010. On or about 2 July the Applicant filed a statement of Mr de Costa. 19. Of relevance from the joint report is the agreement that the two (2) engineers expressed as follows: “The installation and jacking from just 3 concrete blocks could never have restored the substantial tilt on the house floor to its original constructed level or even have lifted it significantly.” The Law 20. This is an application for review commenced pursuant to section 102 of the CCT Act in reliance on section 87 of the QBSA Act which provides as follows: “A person affected by a reviewable decision of the authority may apply, as provided under the QCAT Act, to the tribunal for a review of the decision.” 21. The Tribunal referred to in section 87 of the QBSA Act is now the Queensland Civil and Administrative Tribunal. Section 86(1) of the QBSA Act relevantly provides: (1) The tribunal may review the following decisions of the authority— … (e) a decision to direct or not to direct rectification or completion of tribunal work; 22. Pursuant to section 75 of the QBSA Act, “Tribunal work” “includes the renovation, alteration, extension, improvement or repair of a building”. This contemplates the underpinning work performed by the contractor at the property. This proceeding involves the decision of the Authority not to direct rectification of the works at the Applicant’s property. Relevantly the decision of 22 April 2008 states; “It seems resolution of the dispute relates to contractual issues. The BSA cannot be an adjudicator of the contractual issues in any dispute unfortunately in this instance the BSA is not able to provide you with any further assistance.” 23. Pursuant to section 24 of the QCAT Act the Tribunal may in a proceeding or a review of a reviewable decision: a) Confirm or amend the decision under review b) Set aside the decision under review and substitute his own decision or -- 5 of 11 -- QR111-08 / Page 6 of 11 c) Set aside the decision under review and return the matter for reconsideration to the decision maker for the decision with the directions the Tribunal considers appropriate. 24. The Tribunal stands in the shoes of the Authority and makes the decision as at the date of the hearing and has effect from when the reviewable decision takes or took effect. Relevantly section 24(2) of the QCAT Act provides as follows: (2) The tribunal’s decision under subsection (1)(a) or (b) for a reviewable decision— (a) is taken to be a decision of the decision-maker for the reviewable decision except for the tribunal’s review jurisdiction or an appeal under part 8; and (b) subject to any contrary order of the tribunal, has effect from when the reviewable decision takes or took effect. 25. The Authority’s power to require rectification work lies in section 72 of the QBSA Act and provides how to require rectification of building work: (1) If the authority is of the opinion that building work is defective or incomplete, the authority may direct the person who carried out the building work to rectify the building work within the period stated in the direction. (2) In deciding whether to give a direction under subsection (1), the authority 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, including the terms of any warranties included in, the contract for carrying out the building work. … 26. Relevantly the term “building work” is defined in schedule of the QBSA Act and underpinning is building work because it involves repair or rectification works to a building. The term “defective” is also defined in schedule 2 of the QBSA Act and provides as follows: “Defective in relation to building work includes faulty or unsatisfactory.” 27. The power of the Authority to require rectification of building work must be exercised in accordance with the objects of the QBSA Act which are set out in section 2 of the QBSA Act. 28. The relevant principles to be applied by the Tribunal in an application to review a decision to issue or not to issue a direction are well settled and are: a) The Tribunal in exercising its discretion pursuant to section 72 of the QBSA Act stands in the position of the Authority. b) The Tribunal must consider the competing interests of the parties involved in fact as such as blame worthiness of the owners and the cause of the defective building work irrelevant. c) In exercising its discretion the Tribunal must give consideration to the circumstances mentioned in the defects policy. -- 6 of 11 -- QR111-08 / Page 7 of 11 d) The Tribunal must take into account all of the evidence including the circumstances raised at the Tribunal hearing. 29. In proceeding such as this the Tribunal must consider 3 issues: a) Is the building work defective and or incomplete? b) Is the contractor responsible for the defective building work? c) Is the decision not to direct rectification reasonable in the circumstances? The alleged defects identified by the Applicant appear in the Applicant’s complaint, by way of summary the complaint identified the following: a) The works were performed by the contractor in a defective manner b) The works were not completed by the contractor c) Cracked brickwork to the chimney resulted from the revised works performed by the contractor had caused a water leak to the internal face of the fireplace. However this item of complaint has been previously rectified by the contractor and is not an issue in these proceedings. Was the building work defective? 30. According to the opinion of Mr Hughes with regard to defective building work, he gave evidence that the written contract between the owner and the contractor had been adhered, three (3) underpins were installed and some jacking took place. There is no defect as the result of the construction of the underpins or the jacking and, if there is no defect, there is nothing to rectify. 31. The Tribunal accepts the contractor’s evidence that it constructed piers below the existing underpinning of 700mm by 450mm containing y16 bars and sitting on the natural ground as referred to in the diagram by its engineer Mr Moulston and certified by him. 32. The scope of the contract provided that the contractor would lift the dwelling to a level determined appropriate by the contractor. The contract did not require the contractor to jack the footings to any particular level but rather required the contractor to determine the appropriate level. 33. The Tribunal accepts the evidence from the BSA witnesses that the contract has been adhered to because three (3) underpins were installed and some jacking took place. Neither the construction of the underpins nor the jacking is defective. 34. The Applicant, through Mr Maddugodda, alleges that the original defect was the inclination of the main slab of the entire dwelling and the contractor was engaged to remedy this defect in its entirety. This statement contemplates that the Applicant envisaged that the works undertaken by the contractor (that is three (3) underpins) would restore the dwelling back to its original level. Both Mr de Costa and Mr Hughes agreed that, “the installation and jacking from just three (3) concrete blocks could never have restored the substantial tilt in the house floor to its original constructed level or even have lifted it significantly”. -- 7 of 11 -- QR111-08 / Page 8 of 11 35. The Tribunal accepts that: a) Upon completion of the contract the slab was not restored to a level position and b) The work undertaken by the contractor does not satisfy the Applicant’s expectations. 36. The Tribunal accepts that the work which the Applicant contracted with the contractor to perform was of a much more limited nature and related to the installation of three (3) piers in the south west corner of the house. The Tribunal rejects the Applicant’s allegation that the works undertaken by the contractor pursuant to the contract are defective because the house was not restored to a level position. The Tribunal accepts the BSA’s submission that the question of achieving the appropriate level of jacking is a contractual issue and the Tribunal also accepts that the BSA does not have jurisdiction to intervene in contractual disputes. Cracking of the concrete slab 37. There are a number of minor cracks in the concrete slab on the verandah. The Applicant asserts that these cracks are “very likely due to attempted jacking” and this amounts to defective work. 38. The Tribunal accepts the BSA’s submission based on the evidence of Mr Hughes that these minor cracks are probably the result of concrete shrinking and that there is no evidence that the cracks were caused by the works undertaken by the contractor. Was the building work incomplete? 39. The term completed must be read in the context of the phrase in which appears the words should be given its ordinary meaning of finished. The QBSA Act and the defects policy fix a point in time by reference to which the building work was either finished or left in an incomplete state. Mr Hughes gave the opinion that it is his view that the work is complete as the written contract dated 15 May 2007 has been complied with and there is no mention in the contract that the intention was to jack the building back to its original constructed level. It is further stated by Mr Hughes that if the contract had required the building to be jacked back to its original constructed level the work would be incomplete but that it was never remotely possible for this to be done from just three (3) underpins. Both experts accept that this was never possible as stated above. Mr de Costa’s opinion on the incomplete building work was as follows: “The work is incomplete because of the fact that the slab did not lift at all and as it is clear from the report by the contractor dated 1 August 2007 which states: “Our piers went under this concrete and jacking was carried out raising the brickwork to the original level.” -- 8 of 11 -- QR111-08 / Page 9 of 11 That the contractor very well understood the owner’s expectation (as he was telling the owner that he had completed the expected work) disproves that the agreed primary intention of the two (2) parties was to lift the slab.” 40. This “report” dated 1 August 2007, according to Mr Mehrtens, was an internal document generated by one of his workers and he was puzzled as to how the Applicant came to be in possession of it. It is clearly not addressed to anyone and is not signed by anyone. The Tribunal’s interpretation of this report differed from that of the Applicant’s. 41. Based on the evidence of what occurred, the Tribunal finds that the piers went under the concrete piers previously placed there by others in the void down to natural ground level. The slab and brickwork was maintained in the original level prior to the contractor commencing. The original level of the time the house was constructed is unknown and was not part of this work. 42. Continuing with Mr de Costa’s opinion: “The first item of the contract “engineering design” which was a vital part of the contract was not carried out. If this was commissioned to an engineer he would have ordered necessary investigation, performed proper calculations and the lifting must have been successful. In this regard the party to conduct engineering design led to all the subsequent problems and failures. As the main item was not completed the work is incomplete. If the engineering design was properly commissioned and slab did not lift, it is a negligent act of the engineer.” 43. Mr de Costa’s opinion in this quote is based on Mr de Costa’s lack of knowledge of what was done by the contractor in compliance with the directions of his engineer, Mr Graham Moulston. The Tribunal is satisfied on the basis of the evidence that the contractor did commission an engineer and act on the engineer’s design. This design was only committed to writing on 27 April 2008 and perhaps if this had occurred earlier, and been provided to the Applicant, some of the misunderstandings that have occurred could have been avoided. 44. Mr De Costa went on to say: “The second item of the contract “remove and replace concrete squares” was never performed thus work is incomplete. This statement implies provision of an internal pin which was replaced by the ineffective pin on the extreme corner which was easier to do.” 45. Mr Mehrtens gave evidence that removing and replacing the concrete squares were not necessary because the verandah footings and the house footings were joined. However the pin at the extreme corner was installed. 46. Mr de Costa’s last criticism is that: “The owner or the owner’s representative did not have any clue as to whether the building could have been lifted using just three (3) pins -- 9 of 11 -- QR111-08 / Page 10 of 11 (because they are not engineers). They relied entirely on the contract and to provide expertise in that regard.” 47. This lack of clarity by Mr Maddugodda as to what he wanted or expected from the work arose at least partly from the fact that the Applicant did not follow Mr de Costa’s advice to have the work designed and supervised by a registered engineer. Instead the Applicant purchased the property and sought through Mr Maddugodda a low priced contract to do work without clearly setting out what the Applicant wanted to achieve from that work. The contract price in the Applicant’s mind may well have been limited by what the seller was prepared to pay towards the work but this was not in evidence and is not relevant to the Tribunal’s decision. 48. On about 29 may 2007 the contractor issued a certificate of warranty which signed the completion of the works. Mr Graham Moulston, the contractor’s engineer, signed a form 16 certifying the works on completion on 24 May 2007 and on 27 April 2008 he issued a plan showing the piers as constructed. 49. The Tribunal finds that the building work was completed and therefore finished when the works subject to the contract were performed by the contractor and certified as such by Mr Moulston on 24 May 2007. Further the Tribunal finds that for the purposes of section 72 of the QBSA Act the building work is not incomplete. Is the builder responsible? 50. The contractor is responsible for the building work the subject of the contract. The scope of the work is determined by the contract although it is apparent the Applicant contemplated that the underpinning works would cure the subsidence in its entirety, the Tribunal finds this position is misconceived. 51. The contract never provided for such an extensive scope of work, it merely provided for the construction of three (3) piers to the south west subsiding corner of the dwelling. It would be unreasonable for the BSA to direct rectification of the subsidence in its entirety when this is clearly beyond the scope of the contract. 52. The Tribunal has found that the works are neither defective nor incomplete. Subsequently the Tribunal accepts that the BSA cannot direct the contract to rectify the work. 53. In the joint report Mr de Costa made remarks which the Tribunal needs to address as his comments are as follows: “De Costa’s opinion on irregularity of the contract is work procedure and QBSA’s subsequent enquiry which he thinks important The work was carried out in an illegal manner, a manner not expected from a license builder because his work involved modification of the foundation not merely the foundation of minor structural element. The contractor was aware of the fact that he should carry out engineering design but did not do it. He did not conduct credited soil investigations and submission for council approval. The QBSA (the Authority) should have appointed a -- 10 of 11 -- QR111-08 / Page 11 of 11 qualified person to the initial investigation, someone who understands engineering. Their obligation to the community as well as their own interest to investigate the matter so that the legality of the work could have been properly understood. Before even attempting to find defects legality of the work would have been checked more thoroughly by the Authority. As the foundation of the house is one of the most important structural elements there is no way that this work can be considered as covered by section 8 of the Building Regulation 2006 which applies to only minor structural components. The contract is designed to let the contractor avoid rectification of defective work because there are conditions written in fine letters stating that the contractor does not take responsibility for damages done during the underpinning process in one case strictly according to the contract whatever the defects found would become a “contractual issue” and therefore QBSA easily can avoid giving directions to the contractor to rectify interpreting the issue as contractual. However under section 72(2) of the QBSA Act the Authority’s empowered to consider all relevant circumstances not only the terms stated in the contract.” 54. These comments by Mr de Costa are more those expected from an advocate than from an expert bound by the experts obligations to the Tribunal. It came out in the hearing that Mr de Costa had also reported Mr Moulston and Mr Mehrtens to the Board of Professional Engineers for what Mr de Costa wrongly thought happened in relation of the job. The Board cleared both Mr Moulston and Mr Mehrtens according to letters provided to the Tribunal. Mr de Costa’s comments are based on an inaccurate knowledge of what transpired and lack of understanding of the role of the BSA. Mr de Costa’s campaign against the BSA may have been responsible for the Applicant pursuing this application which has now been unsuccessful. 55. The Tribunal accepts the BSA’s submission that the decision of 22 April 2008 not to direct rectification of building work should be confirmed. The consequence of the Tribunal confirming the decision of 22 April 2008 is that no direction to rectify will issue to the contractor. -- 11 of 11 --