Brodun Construction and Love and Anor - [2008] WASAT 174

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: BUILDERS' REGISTRATION ACT 1939 (WA)

CITATION: BRODUN CONSTRUCTION and LOVE & ANOR [2008] WASAT 174

MEMBER: DR B DE VILLIERS (MEMBER)

HEARD: 24 JULY 2008

DELIVERED : 5 AUGUST 2008

FILE NO/S: CC 1434 of 2006

BETWEEN: BRODUN CONSTRUCTION
Applicant
AND
ROSS LOVE
First Respondent
JEROME BARLEY
Second Respondent

Catchwords:

Leave for review Does the Building Disputes Tribunal have the power to prescribe a remedy Discretion of the Building Disputes Tribunal Error in law Error in fact Did the Building Disputes Tribunal err in law or in fact by electing a specific methodology to effect a remedy

Legislation:

Builders Registration Act 1939 (WA), s 12A, s 41(1)
Building Code of Australia

Result:

Leave to review dismissed

Category: B

Representation:

Counsel:

Applicant:     Mr A MacPherson
First Respondent           :     Mr TM Retallack
Second Respondent      :     Self-represented

Solicitors:

Applicant:     Hotchkin Hanly
First Respondent           :     Maxim Litigation Consultants
Second Respondent      :     Self-represented

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

Gullan v Bacton Pty Ltd (1995) 15 SR (WA) 60
Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119
Wilson v Metaxas (1989) WAR 285

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The application questions the power of the Building Disputes Tribunal to elect the methodology to be used by a builder to remedy a defect.
The applicant accepts the order of the Building Disputes Tribunal to remedy, but it says the Building Disputes Tribunal erred in law and in fact by electing a specific way for the builder to comply with the order. According to the applicant, it is within the discretion of the builder what remedy it wants to employ to address a problem. The applicant therefore sought leave for the decision of the Building Disputes Tribunal to be reviewed.
The respondent opposed the application. According to the respondent, the Building Disputes Tribunal has the power to opt for a specific remedy. Although the Building Disputes Tribunal as a general practice would not specify a remedy, it does have the power to do so. The respondent further argues that all the evidence was before the Building Disputes Tribunal and that it made its finding on the basis thereof.
The Tribunal found that the Building Disputes Tribunal did not err in law by electing a specific methodology to remedy the problem. The Building Disputes Tribunal does have the power to prescribe a remedy, and although it may as a matter of practice not do so frequently, it does not diminish its right to elect a methodology. The Tribunal also found that the specific methodology chosen by the Building Disputes Tribunal was in evidence before it, and after having considered the option proposed by the builder, it accepted the evidence of the owner's expert witness. The Building Disputes Tribunal therefore did not err in fact.
The application for leave to review was therefore dismissed.

Issue

The applicant seeks leave to review a decision of the Building Disputes Tribunal (BDT) pursuant to s 41(1) of the Builders Registration Act 1939 (WA) (BR Act).
The applicant contends, in its amended application, that the BDT erred in law and erred in fact. According to the applicant, the BDT:
(a)erred in law by mandating a specific methodology that the applicant had to implement to comply with the order to remedy; and
(b)erred in fact by electing an inappropriate methodology.
The respondent contends that the BDT:
(a)did not err in law since there is no statutory or other legal bar against it specifying a particular remedy; and
(b)did not err in fact since the evidence on which it based its decision was before the BDT.

Orders sought

The applicant filed an amendment at the hearing to its original application which was lodged on 24 July 2008.
The applicant sought leave for the decision of the BDT handed down on 28 July 2006 to be reviewed on grounds that the BDT erred in law in mandating the methodology to be employed by the applicant in complying with the order to remedy, and, alternatively, the BDT erred in fact in electing the methodology it did.

Background

The matter had a long run before reaching the stage of hearing. In fact, it was one of the longest unresolved matters before the Tribunal. The reason for the ongoing delays and adjournments was to enable the parties the maximum time to come to a settlement through negotiations.
The application was lodged on 11 September 2006 and the first directions hearing took place on 16 November 2006. At that directions hearing, the matter was adjourned for mediation at the request of the parties. The mediation was not successful and the matter was adjourned back on 4 April 2007 for programming orders for a hearing.
Since the mediation was terminated, the Tribunal had several directions hearings. The matter was adjourned each time on grounds of the submissions made by the parties that their private negotiations were progressing well. At the directions hearing on 19 June 2008, the Tribunal listed the matter for hearing on 24 July 2008.
The Tribunal explained to the parties that the application will be progressed in two phases. The first step is aimed solely at the question whether leave to review the decision should be granted. If leave is granted, the parties will be invited to make further submissions and call evidence regarding the merit of the matter. If leave is refused, the matter is concluded. It is only when leave is granted that additional evidence and information may be submitted to the Tribunal, since such a hearing will be de novo.
The Tribunal received the following documents from the parties to assist it in its decision:
•BDT reasons for decision dated 28 July 2006;
•applicant statement of issues, fact and contentions dated 8 December 2006;
•second respondent's response dated 21 December 2006;
•witness statement of Owen William Brook dated 3 July 2008;
•a bundle of documents dated 3 July 2008 accompanying Mr Brook's statement;
•supplementary witness statement of Owen William Brook dated 10 July 2008;
•applicant's outline of submissions dated 14 July 2008;
•an expert report by Mr Peter Airey dated 14 July 2008; and
•first respondent's outline of submissions dated 23 July 2008.
During the hearing, all three parties made submissions. The applicant also called Mr Brook and Mr Airey to give evidence. Although the Tribunal would in the normal course of events not allow fresh evidence to be called at the application for leave to review stage, the Tribunal admitted this evidence on grounds that the applicant assured the Tribunal that the evidence was of relevance to its contention that a substantial injustice had occurred and that the BDT erred in fact.
The Tribunal took all of the submissions and evidence into account before making its decision.

Grounds for review

Mr Andrew MacPherson, for the applicant, contended that leave for review should be granted on the following grounds:
(a)The BDT erred in law and erred in fact by making the orders it had.
(b)The BDT erred in law since it appears from the BDT reasons for decision that it has, in [22], "dictated the type and methodology of remedial works". It is "undesirable" for the BDT to "dictate to the builder how the remedial work should be carried out. The means of remedying the problem identified should be left to the builder".
(c)The BDT erred in fact by prescribing a methodology that is not the most appropriate, given the specific nature of the problem that is being experienced. The plans and drawings that formed part of the contract did not provide for waterproofing within the external wall cavities. No methodology for the waterproofing is therefore prescribed and it is inappropriate for the BDT to choose what it sees as the appropriate solution. The preferred and more appropriate remedy is the option set out in the expert report of Mr Airey.
Mr Tim Retallack, on behalf of the first respondent, and Mr Jerome Barley, in his personal capacity, opposed the application for leave to review for the following reasons:
(a)The BDT did not err in law or in fact in its reasoning. It was correct in finding that remedial work had to be done and in specifying what type of work should be done by the applicant.
(b)The BDT did not err in law since, although it may be unusual for the BDT to prescribe a specific remedy, it is not statutory or otherwise barred from doing so.
(c)The BDT did not err in fact since the preferred methodology was dealt with in detail by the BDT, and its decision should be accepted. The BDT heard evidence from both expert witnesses, Mr Airey and Mr van der Meer, and on the basis thereof, prescribed a specific remedy. The evidence of Mr van der Meer was consistent with the requirements of the Building Code of Australia and the BDT acted within its powers to order what can be described as "specific performance."

Principles for successful review

As explained to the parties during the directions hearing, the Tribunal has a broad discretion whether or not to grant leave to review, but the following principles guide the decision of the Tribunal. These principles are set out in Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119 and follows previous Supreme Court decision in Wilson v Metaxas (1989) WAR 285 at 294.
Leave can therefore not be granted on the mere basis that an applicant is not satisfied with the decision of the BDT or that this Tribunal may have come to a different conclusion. It is a higher test as indicated in the following principles.
The principles are that:
(a)it must be shown that the decision of the BDT in respect of which review is sought is wrong or at least attended with sufficient doubt to justify the grant of leave;
(b)substantial injustice would be done if the decision is unreversed. What constitutes substantial injustice depends on the circumstances of each case; or
(c)is there a significant question of law to be considered.
The Tribunal is mindful that the intent and purpose of the legislation may be frustrated if ordinary principles of appeal are applied, and that the Tribunal must therefore be slow to grant leave unless in cases where there is no discernable basis for the decision or where the rules of natural justice have been breached.

Consideration

The applicant, in its original application, sought leave to review the decision of the BDT that the absence of waterproofing constituted faulty and unsatisfactory workmanship. In its amended application, the applicant accepted the decision of the BDT to remedy due to unsatisfactory workmanship, but challenged whether a specific method of fixing the problem could or should have been prescribed by the BDT.
According to Mr MacPherson, the discretion to choose a specific remedy to address a shortcoming and thereby comply with the order to remedy is, and must remain, that of the builder. It is, according to him, not lawful or appropriate for the BDT to elect a remedy that it deems most appropriate.
Mr MacPherson contends that it is "undesirable for the BDT to dictate to the builder how that remedial work should be carried out". He referred the Tribunal to the matter of Gullan v Bacton Pty Ltd (1995) 15 SR (WA) 60 (Gullan) in support of his argument.
There was some debate between Mr MacPherson and Mr Retallack as to the question whether the BDT actually prescribed a work method. Although Mr Retallack contended in his written submissions that the BDT "has not prescribed a work method", he acknowledged during the hearing that the builder was not at liberty to choose a remedy, and that the proposal submitted by Mr Airey was, in accordance with the decision of the BDT, not acceptable. He admitted that the wording of the BDT in [22] of its reason for decision, read with Order 1, left the builder no other choice but to install flashing and membrane to the internal cavities of the wall in accordance with the Building Code of Australia (Code).
Mr MacPherson contended that the content of [22] made it clear that the BDT had opted for a specific remedy.
For the sake of convenience, the Tribunal will quote in full [22] of the BDT's reasons for decision:
The Tribunal accepts the evidence of Mr van der Meer and notes that Mr Airey was present while Mr van der Meer gave his evidence to the Tribunal and neither Mr Airey [n]or the builder challenged Mr van der Meer on his view that the lack of flashing and waterproofing of the walls was such that the building work had not been undertaken in a proper and workmanlike manner. The Tribunal finds that the absence of appropriate waterproofing of the sliding doors to both units and to the masonry walls constitutes faulty and unsatisfactory workmanship and the Tribunal orders that the builder remedy that defect by installation of flashing to the internal cavities in accordance with the requirements of the Code together with the application of a membrane to continue through the cavity and flashed properly inside the walls. (Tribunal emphasis)
The BDT did not reflect the "order" made in [22] in its final orders in [26]. The relevant part of the final orders reads as follows:
1.The builder is to waterproof the aluminium sliding door and cavity walls on the balconies of Units 24B and 24C with such work to be undertaken in conjunction with remedial work to repair the crack in the balcony slab to be undertaken by the owners.
The parties agreed that Order 1 in [26] should not be read in isolation of the "order" made as part of the BDT's reasoning in [22]. Had the BDT not used the word "orders" in [22], the final order in [26.1] might have been general enough to enable the builder to use its discretion as to what methodology had to be adopted to comply with the order to remedy. However, an argument can also be made that, even if there had been no reference to "order" in [22], if there was ambiguity about what Order 1 meant, it would be legitimate to have regard to the reasons for decision which reflect a conclusion that installation of flashing in accordance with the Code was required.
This reasoning of the Tribunal is confirmed by the responses given by Mr MacPherson and Mr Retallack during the hearing. Both agreed that the general nature of the wording of [26.1] is tempered by the "order" the BDT made in [22]. The two paragraphs should therefore be read together.
The wording of [22] and [26.1] leaves no doubt in the mind of both parties and in the mind of the Tribunal that the BDT opted for a specific methodology to remedy the problem.
The question then is whether the BDT exceeded its powers by electing a particular remedy.
As mentioned above, Mr MacPherson contended for the applicant that the BDT exceeded its powers.
Mr Retallack contended for the respondent that although it may be "undesirable" for the BDT to prescribe a specific method, it is not unlawful for it to do so. The BDT may decide, on the basis of evidence before it, to prescribe a specific remedy, and there is no statutory or other bar against it doing so. The Tribunal should, according to Mr Retallack, be slow to overturn the decision of a specialist tribunal unless it is clearly shown to have erred.
The power of the BDT to order a remedy to unsatisfactory building work is found in s 12A of the BR Act.
Order to remedy unsatisfactory building work
(1) Where on complaint being made to it by any person, including the Board, the Disputes Tribunal is satisfied that any building work has not been carried out in a proper and workmanlike manner by reason that the building work is faulty or unsatisfactory the Disputes Tribunal may by order in writing served on the person who carried out the building work order him to ‑
(a) remedy the faulty or unsatisfactory building work within such reasonable time as is specified in the order; or
(b) pay to the owner of the building such costs of remedying the building work that is faulty or unsatisfactory as the Disputes Tribunal considers reasonable in which case any costs so ordered by the Disputes Tribunal constitute a debt to the owner and are recoverable by him in a court of competent jurisdiction.
The BDT may order a builder to remedy, but does that include the power to specify a methodology for such remedial work?
The answer to the question in the view of the Tribunal is "yes". The Tribunal is satisfied that s 12A(1) of the BR Act does not restrict the discretion of the BDT when it orders the builder to remedy. The BDT is a specialist tribunal and was established for the very purpose of assisting with the speedy and effective resolution of disputes regarding the quality of work in the building industry. The ability of the BDT to order a "remedy" should not be read so restrictively that it is statutorily barred from specifying the remedy. Nothing in the statute justifies such a conservative construction. In fact, the power of the BDT to determine the costs that should be paid for remedial work pursuant to s 12A(1)(b) of the BR Act affirms the discretion of the BDT to consider alternative methods of remedying a shortcoming and to calculate what costs should be awarded.
In the matter of Gullan, the Building Disputes Committee (Committee) formulated a very general proposition, but it did not categorically state that a specific method may not be chosen. The Committee stated as follows:
The Committee takes the view generally that in a situation such as this, where a facet of the construction has been found to be unacceptable and an order to remedy is appropriate, it is undesirable for the Committee to dictate to the builder how the remedial work should be carried out, at least in the first instance. It is ordinarily sufficient and preferable to order that the builder take the necessary steps to remedy the problem, leaving the means of achieving that end to him. The circumstances here are somewhat out of the ordinary but the Committee remains of the view that the usual approach should be adhered to as far as possible. [at p61] (Tribunal emphasis)

The Tribunal agrees with the reasoning of Mr Retallack when it comes to a correct understanding of the position formulated by the Committee in the Gullan matter.
The Tribunal acknowledges that it may not be common for the BDT to prescribe a specific methodology to a builder to remedy a problem. The usual course of action is for the BDT to order that remedial work must be done, but for the specific method to be at the choosing of the builder. This is, however, a practice of the BDT but should not be interpreted as a legal constraint on its powers. The Committee, in stating its general practice above, clearly qualifies its analysis and leaves room for the BDT to order a specific remedy ‑ hence the use of the words such as "undesirable", "first instance", "ordinarily sufficient", "preferable" and "as far as possible".
It is unfortunate that the BDT did not in this matter explain in more detail why it elected to depart from its general practice of not specifying a certain remedy as summarised in the Gullan decision. The BDT could have used the decision as an educative opportunity to explain to the industry the reasons why it may, in some instances, prescribe a specific remedy. In the absence of an explanation, the decision may bring confusion rather than to clarify the thinking of the BDT.
These comments by the Tribunal do not mean the BDT acted outside of its powers, but merely that it may have been of assistance to the parties and the industry to better understand the BDT's approach to such matters.
In summary, the Tribunal cannot find any limitation in the BR Act against the BDT electing the methodology for the fixing of faulty and unsatisfactory workmanship. The Tribunal therefore rejects the contention of the applicant that the BDT erred in law. Leave for review should therefore be refused.

That brings the Tribunal to the second question, namely, whether the BDT erred in fact by electing the specific remedy it had.
The applicant called two witnesses to give evidence in support of its contention that the BDT erred in fact by prescribing this particular remedy.
Mr Owen William Brook, a director of the applicant, explained that all the work done, including the construction of the external walls, was in accordance with the plans and drawings provided to the applicant and the oral instructions from Mr Lindley. Mr Brook accepted that the decision of the BDT that remedial work had to be done since the waterproofing did not comply with the Code, but, according to him, the method prescribed by the BDT would be impractical and too costly. The method proposed by Mr Airey would be cheaper, and equally or more effective, to remedy the defect. Mr Brook confirmed that the option prescribed by the BDT was based on the expert report of Mr van der Meer which formed part of the proceedings before the BDT and the evidence Mr van der Meer gave during those proceedings. Mr van der Meer gave evidence during the proceedings before the BDT that the remedy, as contained in [22] of the reasons for decision of the BDT, should be pursued.
Mr Brook's estimate was that the BDT‑prescribed option would cost approximately $20,000 for the two units, while Mr Airey's proposal would amount to approximately $7,500 for the two units. He acknowledged that the remedy prescribed by the BDT was "possible", although it was not, in his view, the most appropriate or practical option.
Mr Peter Grant Airey was called as an expert witness to support the applicant's contention that a more appropriate remedy was available. Mr Airey confirmed that he had given evidence to the BDT and that the proposal before this Tribunal is the same as the proposal he put to the BDT. He queried the practicality of the option proposed by Mr van der Meer and subsequently endorsed by the BDT. He described the method prescribed by the BDT as "impractical" and he had doubt about the long term efficiency thereof. It would also "fail to be effective in addressing other near term threats posed by the presence of cracking". He regarded compliance with the BDT order as "impossible" without causing some damage to the membrane. His concern was that the membrane may tear, and that would again allow water ingress. Mr Airey recommended the injection of high viscosity polyurethane into the walls and the cracks to serve as a seal against the ingress of water.
This Tribunal cannot grant leave for a review on the mere basis that an applicant is not satisfied with the decision of the BDT; that experts may have different views as to the practicality of the BDT's order; or that the Tribunal may have come to a different conclusion if it had heard the matter. As explained to the parties, a higher threshold must be met.
The question is if the BDT erred in fact by coming to a specific conclusion and making the orders it had.
The Tribunal is not satisfied that the BDT had erred in fact as is contended by the applicant.
The Tribunal accepts that the experts may hold different views as to the most appropriate way to remedy the problem. But the BDT had the benefit of their evidence, and it made a finding on the basis of the evidence it heard. The Tribunal does not find any error in the reasoning of the BDT. Mr Airey and Mr Brook acknowledged that all of their evidence had been before the BDT and they had had opportunity at that forum to expand on any option they wanted to. The applicant also had the opportunity to challenge the expert report of Mr van der Meer. The applicant was therefore not denied natural justice in any way. In a nutshell, nothing presented to this Tribunal was new. It was all evidence that had been heard by the BDT.
The BDT found, and this is accepted by the applicant, that the waterproofing is not compliant with the Code. The Code prescribes a certain way of effecting waterproofing of a wall. Mr van der Meer, in essence, gave evidence to the BDT that the most appropriate way for the waterproofing to be done is by pursuing a remedy that is akin to the Code. Mr van der Meer did not only point out that the Code had not been complied with; he also recommended to the BDT the installation of flashing. Hence the order of the BDT that the applicant must remedy the defect "by the installation of flashing to the internal cavities in accordance with the Code …" Electing this method of addressing the problem was open to the BDT on the basis of the evidence given by Mr van der Meer.
The BDT pointed out in its reasons for decision that it preferred the evidence of Mr van der Meer to that of Mr Airey. Mr Airey and Mr Brook confirmed in evidence before this Tribunal that they had opportunity to hear and examine the evidence of Mr van der Meer before the BDT.
It appears, therefore, to the Tribunal as if the applicant is merely seeking to reargue its case that was lost before the BDT. That is, as pointed out above, not a ground for leave to review a decision of the BDT.
The Tribunal is therefore satisfied that the BDT had not erred in fact when it chose a specific remedy, since that remedy was available to the BDT on the basis of evidence before it.
The application for leave to review should therefore be dismissed on grounds that the BDT did not err in fact.

Conclusion

In conclusion, the Tribunal finds that:
(a)the BDT did not err in law by electing a specific method to remedy; and
(b)the BDT did not err in fact by opting for the remedy it did.

Order

1.The application for leave to review the decision of the Building Disputes Tribunal dated 28 July 2006 is dismissed.

I certify that this and the preceding [60] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
DR B DE VILLIERS, MEMBER