BGC CONSTRUCTION PTY LTD and CITY OF WANNEROO - [2006] WASAT 290

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: LOCAL GOVERNMENT (MISCELLANEOUS PROVISIONS) ACT 1960 (WA)

CITATION: BGC CONSTRUCTION PTY LTD and CITY OF WANNEROO [2006] WASAT 290

MEMBER: MR M SPILLANE (MEMBER)

HEARD: DETERMINED ON THE PAPERS

DELIVERED : 22 SEPTEMBER 2006

FILE NO/S: CC 3054 of 2005

BETWEEN: BGC CONSTRUCTION PTY LTD
Applicant
AND
CITY OF WANNEROO
Respondent

Catchwords:

Local Government - Section 401 notice - Building Code of Australia - Alternative solutions - Lack of evidence

Legislation:

Builders' Registration Act 1939 (WA) 12A
Home Building Contracts Act 1991 (WA)
Local Government (Miscellaneous Provisions) Act 1960, s 401

State Administrative Tribunal Act 2004, s 29(1), s 30, s 31, s 38, s 60(2)

Result:

Matter referred to the respondent pursuant to s 31 of the State Administrative Tribunal Act 2004 (WA)

Category: B

Representation:

Counsel:

Applicant: N/A
Respondent: N/A

Solicitors:

Applicant: Hotchkin Hanley
Respondent: McLeods

Case(s) referred to in decision(s):

2005 Re Griffiths; Ex parte Homestyle Pty Ltd [2005] WASCA 103

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

This matter arises out of a s 401 notice under the Local Government (Miscellaneous Provisions) Act 1960 (WA) issued in November 2002 by the respondent against the applicant in respect of a concrete slab which it was alleged had not been constructed in accordance with the approved plans.
The notice was initially appealed to the relevant Minister at the time, however the Minister's decision was then appealed to the Supreme Court who upheld that appeal and remitted the matter to this Tribunal.
Following a consideration of all the material before it, the Tribunal found that the parties had submitted insufficient and inadequate evidence to address the relevant issues. The Tribunal remitted the matter back to the respondent (the original decision‑maker) to reconsider its original decision, but with a caveat that if the respondent did not reconsider its decision within a specified time the Tribunal would finalise the matter based on the evidence before it.

Background information

This matter has a significant history dating back to 1998 and it is therefore important for the purpose of clarity to put these proceedings in context and outline the history to date.
On 17 November 1998, BGC Construction Pty Ltd (formerly known as Homestyle Pty Ltd) (applicant) and Mr Errol and Ms Rachel Felix entered into a building contract for the construction by the applicant of a single storey residential home at 35 Brookway Retreat, Landsdale.
The works the subject of the building contract reached practical completion on or about 2 July 1999.
On 23 May 2000, Mr and Ms Felix made a complaint to the Building Disputes Tribunal (BDT) alleging that the applicant had breached s 12A of the Builders' Registration Act 1939 (WA) by constructing the concrete slab in a faulty and unsatisfactory manner, in that it was alleged that the applicant did not comply with Australian Standards 2870/96 or AS 3610, and sought an order that the applicant remedy the slab.
On 27 May 2002, after hearing evidence from the applicant, Mr and Ms Felix and various expert structural engineering witnesses, the BDT found that the concrete slab had not been constructed by the applicant in accordance with the plans and specifications, in that it was substantially less than the 85 millimetres thickness specified in the building contract, and that it was not constructed in a proper and workmanlike manner.
However, the BDT concluded that the failures had no deleterious effect on the performance of the slab and did not result in any lack of suitability for its purpose. The BDT dismissed the claim that the concrete slab did not comply with the Australian Standards 2870/96 or AS 3610 on the basis that the standards did not apply. According to the BDT, AS 3610 relates to slab levels, not its structural soundness.
On 17 June 2002, Mr and Ms Felix lodged an appeal from the decision of BDT to the District Court.
On 27 November 2002, the respondent issued a s 401 notice (notice) under the Local Government (Miscellaneous Provisions) Act 1960 (WA) (Act) requiring the applicant to "rectify the works so as to remove the cause of the objection". The works were described in a schedule to the notice as "concrete floor slab is not in accordance with the approved plans".
On 24 December 2002, the applicant appealed against the issue of the notice by the respondent to the Minister for Local Government.
On 18 August 2003, the District Court, by consent, remitted Mr and Ms Felix's complaint to the BDT for an assessment of damages on the claim that the applicant failed to construct the slab in accordance with the contract plans, (under the Home Building Contracts Act 1991 (WA)).
On 25 August 2003, the Minister rejected the applicant's appeal against the issue of the notice by the respondent.
On 25 February 2004, the applicant filed a motion in the Supreme Court of Western Australia seeking a writ of certiorari to quash the Minister's decision to reject the applicant's appeal.
On 12 March 2004, His Honour Justice Miller made an order nisi for a writ of certiorari and on 12 June 2005 the Full Court of the Supreme Court of Western Australia made the order absolute, the effect of which was to quash the Minister's decision to reject the applicant's appeal from the issue of the notice by the respondent.
The matter was then remitted to this Tribunal, being the body having jurisdiction for reviews under s 401 of the Act and having taken over all such appeals from the Minister as and from 1 January 2005.
The grounds of appeal in effect remained the same from the applicant's notice of Appeal dated 24 December 2002 which stated:
"(i)as found by the Building Disputes Tribunal (the Tribunal), the concrete floor slab is fit for purpose and that the Tribunal accepted the evidence of Peter Airey and Gervaise Purich in this regard and found that the topping adhered to the underlying concrete slab, could be regarded as part of the concrete slab and performed the same role as the concrete."
Following a number of directions hearings before the Tribunal, the primary issue to be determined by the Tribunal was identified as being whether, in all circumstances, the performance requirements of the Building Code of Australia had been satisfied in respect of the slab.

Documents and submissions considered by the Tribunal

As would be expected in any matter that had been considered in a number of jurisdictions, the Tribunal was furnished with a significant amount of documentation, details of which are outlined below, all of which the Tribunal has considered and taken into account.
The owners of the property concerned, Mr and Ms Felix are significantly affected by this ongoing matter, but are not parties to the matter before the Tribunal. Mr Felix and his legal representative attended the early directions hearings in the matter and discussions took place as to whether Mr and Ms Felix should, or indeed wished to be joined as a party pursuant to s 38 of the State Administrative Tribunal Act 2004 (WA) (SAT Act). Mr and Ms Felix wished to ensure the Tribunal had all relevant documents before it, and were given permission to file, and filed an affidavit of Mr Errol Felix dated 1 February 2005 together with annexures. However, they did not wish to be, nor were they, formally joined as parties.
The other documents the Tribunal considered are:
1.Affidavit of Mr Errol Felix dated 1 February 2005 together with annexures.
2.The Minister for Housing and Works original file in the matter titled BUILDING‑APPEALS (decisions) – Minister – section 401 – City of Wanneroo – Homestyle Pty Ltd – 35 Brookway Retreat, Landsdale, File no 1619 of 02.
3.The applicant's Statement of Issues Facts And Contentions dated 7 December 2005.
4.Affidavit of Mr Shane Daniel Pentony dated 6 December 2005, in support of the application to set aside the notice together with annexures.
5.Affidavit of Mr Christopher John Marsh dated 6 December 2005 in support of the application to set aside the notice together with annexures.
6.Submission of respondent dated 13 December 2005.
It should be noted that none of these documents contained any new evidence or expert reports other than those previously before the BDT, the Minister and the Full Court. Counsel for the respondent also confirmed that it had been agreed between the applicant and the respondent that the Tribunal should determine the matter "on the papers" on the basis of the expert evidence already before the Tribunal and contained in the documents referred to above.
The matter was therefore adjourned to allow the Tribunal to consider the matters based on those documents pursuant to s 60(2) of the SAT Act.

Principal issue and consideration

Having considered all of the documents filed and the issues raised, it was clear to the Tribunal that Her Honour McClure JA, in the decision of the Full Court delivered on 3 June 2005 Re Griffiths; Ex parte Homestyle Pty Ltd [2005] WASCA 103 had in a very concise and clear manner outlined the issues to be addressed and helpfully suggested what needed to be attended to.
It should be noted that throughout her judgment where Tribunal is mentioned, Her Honour is referring to the Building Disputes Tribunal and not the State Administrative Tribunal. Her Honour made abundantly clear the differences in the scope, objects and purposes of the Builders' Registration Act1939 and the Local Government Miscellaneous Provisions Act1960 and stated at [25] of her judgment:
"the power of the local government under S401(1) of the Act is activated by a significantly wider range of matters than that of the Tribunal under s 12A of the Builders Registration Act. The Tribunal's powers are limited to a builder's failure to carry out buildings works in a proper and workmanlike manner (with or without it being faulty or unsatisfactory). A local government's discretion is enlivened by matters of safety, prejudice to the public interest and non‑compliance with the Act. Securing compliance with the Act would ordinarily be a very weighty consideration in the exercise of discretion and may itself justify the exercise of the power."
Her Honour also explained in some detail the issues that needed to be considered by a local government or indeed this Tribunal on review in deciding whether the Building Code of Australia had been complied with. Her Honour stated at [42]:
"The Building Code sets out performance requirements and building solutions adopted to secure compliance with the performance requirement. There are two categories of building solutions; the first is termed the 'deemed‑to‑satisfy provisions' and the second the 'alternative solutions'. The assessment methods applicable to alternative solutions includes expert judgment."
And later at [51] referring in particular to the evidence that had been put before the Full Court (and now before the Tribunal), Her Honour stated:
"It is apparent that the concrete slab constructed by Homestyle does not comply with the deemed‑to‑satisfy provisions of the Building Code. The remaining question is whether it complies with the alternative solution provisions for which expert judgment can be relied on. Expert judgment is defined in the Building Code to mean:
'The judgment of an expert who has the qualifications and experience to determine whether a Building Solution complies with the Performance Requirements.'
It is said that in practice, a departure from approved plans and specifications may be sanctioned if an expert can satisfy the local government that what has been done, or is proposed to be done by way of rectification, is an alternative solution, being one that complies with the performance requirements of the Building Code."
And at [54]
"Against that background it is necessary to assess Homestyle's contention that the statement in the briefing note concerning the doubt about the slab's ability to satisfy the alternative solution provisions of the building code is erroneous and irrelevant. In the context of, and with an understanding of the regulatory framework, it is abundantly clear that the question whether the alternative solution provisions of the Building Code are met is centrally relevant."
Keeping in mind the parties' request that this Tribunal determine the matter on the expert evidence originally before the BDT, s 29(1) of the SAT Act states:
"(1)The Tribunal has, when dealing with a matter in the exercise of its review jurisdiction, functions and discretions corresponding to those exercisable by the decision-maker in making the reviewable decision."
With that in mind, attention is particularly drawn to Her Honour's comments at [55], [56] and [57] where she states:
"Further, an understanding of the regulatory framework also reveals that the issue considered and determined by the Tribunal is significantly different than that facing the City in the exercise of its discretion under s 401(1) of the Act. The Tribunal did not make its assessment by reference to whether the Building Code or AS 2870/96 had been complied with or what flowed from a failure to so comply. The Tribunal referred to AS 2870 and the two aspects earlier referred to and said:
'Those two statements obviously impose different requirements. No submission was made about which applies in this case. Nor was any submission made that the Standard in question applies in this case whether by operation of the Building Code of Australia, the building licence or pursuant to the contract or any other means by which the Standard might govern what is required of this slab. …
We have not had the opportunity to consider the proper meaning to be given to the Standard nor its application to this case. If we considered this a crucial issue we would have asked for further submissions. We did not find that to be necessary.'
The Tribunal's consideration was confined to notions of suitability and fitness for the intended purpose which appear in other areas of the law. There is no indication in the reasons as to whether and, if so, how the yardstick adopted by the Tribunal relates to the performance requirements of the Building Code.
As the Tribunal did not consider the suitability or fitness of the slab for its intended purpose by reference to the regulatory regime in which the City is obliged to operate and which is relevant to the exercise of its power under s 401(1), it cannot be said that the issues relevantly overlapped or that the Tribunal's findings were of any persuasive force in the exercise of the City's discretion."
As is clear from Her Honour's earlier comments, and from the evidence before the BDT and now this Tribunal, the slab does not comply with the deemed‑to‑satisfy provisions of the Building Code and the remaining question is, therefore, whether it complies with the alternative solutions provisions. In that respect Her Honour stated at [60]:
"It is clear that the slab did not satisfy the deemed‑to‑satisfy provisions of the Building Code. Further, Wood and Grieve's comments concerning the topping, and the combined thickness of the slab and topping at locations 2 and 5, implies that the slab with the topping did not, or may not satisfy the alternative solution provisions of the Building Code. Further, it does not appear from the Tribunal's reasons that the opinions of Homestyle's experts were given or had been tested on the matter of concern to the City, which was whether the Building Code had, in effect, been complied with."
In order that there could be no possible confusion as to what was required to be addressed when the matter was remitted back to this Tribunal, Her Honour stated at [70] :
"In this case, Homestyle should have recognised from the terms of s 401 of the Act that a central issue in the appeal was likely to be whether the performance requirements of the Building Code had been satisfied on the basis of the alternative solution provisions. However, it is clear from the material supplied by Homestyle in the appeal that it had not understood the significance of that matter or the significance of the failure of the Tribunal to address the relevant issues in the correct regulatory framework for the City's purposes under s 401(1) of the Act."
This Tribunal, therefore, found itself in a position of having to consider the application for review on exactly the same evidence that had been before the BDT, the Minister and the Full Court with no new evidence having been filed by any of the parties that addressed the clear issues raised by Her Honour.
In the circumstances, the Tribunal called the matter back on by way of a directions hearing and referred the parties specifically to [70] of Her Honour's judgment. The Tribunal explained that it could not reach any decision as to whether what had been done was an acceptable alternative solution based on the papers before it, and rather than simply dismiss the application for review, which may well lead to further appeals and costs, the parties were given an opportunity to file further evidence on that crucial issue.
Following that directions hearing, an affidavit was filed with the Tribunal on behalf of the applicant, dated 11 May 2006, which annexed what was purported to be a further report from Structerre Consulting Group dated 4 May 2006.
That further report was less than one page in length and simply stated:
"It is the opinion of the under‑signed, that the topping which has been applied to the surface of the slab, which has been found by the Building Disputes Tribunal to have good adhesion, and from a strength performance point of view, could be regarded as part of the concrete slab and performing the same role as the concrete, is in fact the case, and that the slab and topping act as one. That is, the slab could be considered as being of 85mm thickness as the topping and originally poured slab are viewed in unison.
It is considered that the performance and the slab is, and will be, in compliance with the BCA."
The respondent filed nothing in reply but the respondent's solicitors did contact the Tribunal, by telephone, confirming that they had sighted the affidavit and had forwarded it to the respondent for its response, however, the respondent had no issues with the affidavit and would not be submitting a response.
The Structerre report fails to refer at all to whether it is an acceptable alternative solution and why none of the other evidence, particularly that referred to by Her Honour, McClure JA, which appeared to point the other way, was mentioned or dealt with.
Such a report is of little or no assistance to the Tribunal in coming to its determination in a serious issue which could have serious consequences for Mr and Ms Felix, the owners of the house. This is particularly disappointing in light of the fact that after the parties first filed their submissions and requested the Tribunal to deal with the matter on the papers, they were called back and requested to specifically address the issues raised by Her Honour.
A further matter that needs to be commented on is the position of the respondent with respect to the application for review.
The respondent saw fit to issue the notice in November 2002 and it must at that time at least have considered that the matter was serious enough to enliven its discretion to issue such a notice.
However, by letter dated 10 June 2003 to the Department of Housing and Works, in answering a number of questions put to it by the Department, the respondent stated:
"The building does not contravene the Building Code of Australia. The slab satisfies the performance requirements of the Building Code."
And later in the same letter:
"The City is in a position to support the appeal, having received two independent reports on the structural integrity of the floor slab. The Building Disputes Tribunal has considered the evidence of two engineers and is satisfied the floor slab is 'fit for purpose'."

The respondent has put no evidence before the Tribunal to that effect and in its submission to the Tribunal, dated 13 December 2005, stated:
"it [the City] does not wish to submit any additional expert evidence or have any additional expert evidence submitted to the Tribunal over and above that evidence which went to the Honourable Minister for Housing and Works in connection with a letter of appeal by solicitors for the Respondent dated 24 December 2002.
…it was not aware of contents of a letter from solicitors for the owners of the subject property to solicitors for the Applicant dated 29 January 2004 and exhibited as an annexure CJM 11, the affidavit of Christopher John Marsh, filed in this matter."
Given the contents of that letter, in the event that the appeal was dismissed, it could not be assumed that the Respondent would enforce the provisions of the notice against the applicant. If compensation was sought or being sought or obtained, the Respondent could unwittingly become embroiled in a process which was a preserve of the applicant."
It appears, therefore, that the respondent, having issued the notice dated 27 November 2002, has since lost heart for the fight, is not actively contesting the review, and is unlikely, in the event that this Tribunal dismissed the application for review and the notice was to stand, to enforce the provisions of the notice against the applicant. That is not a satisfactory state of affairs, particularly when a third party, namely Mr and Ms Felix, has a clear interest in having the matter finalised once and for all.
The Tribunal has no greater discretion in this matter than the respondent, the original decision‑maker. It can, however, only act on the evidence before it. The parties in this case have failed to produce evidence on the issues which would enable the Tribunal to make a decision from a position of knowledge. In the respondent's case, this is consistent with its attitude generally. The Tribunal would remind the respondent of its duty referred to earlier to use its best endeavours to assist the Tribunal in reaching its decision on review under s 30 of the SAT Act.
In all the circumstances, it is the Tribunal's view that this is an appropriate matter for reconsideration by the decision‑maker of its decision. Failing that, the Tribunal will be left in the inevitable but unsatisfactory position of reaching a decision itself on the basis of evidence which is clearly inadequate.

Orders

1.Pursuant to s 31 of the State Administrative Tribunal Act 2004 (WA), the respondent is invited to reconsider its decision to issue the s 401 notice dated 27 November 2002 and such invitation to reconsider remains open up to and including Friday 20 October 2006.
2.If by close of business on 20 October 2006 the respondent has not reconsidered its decision, the Tribunal will proceed to finalise and publish its decision in the matter and such decision will be based on the evidence currently before the Tribunal.

I certify that this and the preceding [48] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR M SPILLANE, MEMBER