DUMBRECK and TANGENT NOMINEES PTY LTD - [2016] WASAT 138

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

ACT: BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)

CITATION: DUMBRECK and TANGENT NOMINEES PTY LTD [2016] WASAT 138

MEMBER: MS P LE MIERE (MEMBER)
MR J FISHER (SENIOR SESSIONAL MEMBER)

HEARD: 24 AND 25 OCTOBER 2016

DELIVERED : 14 NOVEMBER 2016

PUBLISHED : 29 NOVEMBER 2016

FILE NO/S: CC 1468 of 2015

BETWEEN: KIM ANDREW DUMBRECK
First Applicant
LINA LOH
Second Applicant
AND
TANGENT NOMINEES PTY LTD
Respondent

Catchwords:

Building Services Complaint Resolution and Administration Act 2011 (WA) - Meaning of compensation in s 36(1)(c) - Whether compensation includes compensation for stress, inconvenience and suffering in a building remedy order

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 5(1), s 5(2), s 11(1)(d), s 36(1), s 36(1)(c), s 38(1), s 41(2)(d), s 55(3), s 54
Building Services (Complaint Resolution and Administration) Bill 2010 (WA), cl 36
Civil Liability Act 2002 (WA), s 3A, s 6, s 7
Interpretation Act 1984 (WA), s 18, s 19

Result:

Application allowed in part otherwise dismissed

Summary of Tribunal's decision:

The applicants applied for a building remedy order pursuant to s 36(1)(a) and 36(1)(c) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act). The applicants obtained at the conclusion of the hearing, by consent, a building remedy order pursuant to s 36(1)(a) of the BSCRA Act that the respondent carry out specified remedial work.
The applicants' application pursuant to s 36(1)(c) is for compensation for stress, inconvenience and suffering associated with the physical attributes of the work not carried out in a proper and proficient manner or faulty or unsatisfactory building work.
It was necessary for the Tribunal to determine whether a building remedy pursuant to s 36(1)(c) of the BSCRA Act could include an order for compensation for what is more commonly described as general damages being a claim for stress, inconvenience and suffering.
Following the hearing, the Tribunal adjourned for a short period and then gave an oral decision.
The Tribunal found that having regard to the wording of the BSCRA Act and the intention of Parliament as expressed in the Explanatory Memorandum of the Building Services (Complaint Resolution and Administration) Bill 2010 (WA), s 36(1)(c) of the BSCRA Act does not provide or permit compensation for a claim for stress, inconvenience and suffering.
The Tribunal's reasons, taken from the transcript and edited in minor respect, were as follows.

Category: B

Representation:

Counsel:

First Applicant               :     Mr W Vogt
Second Applicant          :     Mr W Vogt
Respondent:     Mr S Lieberfreund

Solicitors:

First Applicant               :     Vogt Graham Lawyers
Second Applicant          :     Vogt Graham Lawyers
Respondent:     Morgan Alteruthemeyer Lawyers

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

KBE Contracting Pty Ltd and Mawer & Anor [2007] WASAT 210
Vernon & Anor v Ashmy Pty Ltd (Unreported, Western Australian District Court; D970022; 23 January 1997)

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

This proceeding concerns a complaint lodged with the Building Commission by Mr Kim Andrew Dumbreck and Ms Lina Loh (applicants) against Tangent Nominees Pty Ltd trading as Summit Homes (respondent) under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act) alleging a regulated building service had not been carried out in a proper and proficient manner or being faulty or unsatisfactory and breach of contract by the respondent. The Building Commission accepted the complaint under s 5(1) of the BSCRA Act, that is, as a complaint that the regulated building service was not carried out in a proper and proficient manner or was faulty or unsatisfactory(workmanship complaint) and declined to accept the complaint under s 5(2) (contract complaint). On 18 September 2015, the Building Commission referred the workmanship complaint to the Tribunal under s 11(1)(d) of the BSCRA Act.

History

On or about 28 February 2008, the applicants entered into an HBCA Lump Sum Building Contract with the respondent to build a single story dwelling at 88 Stafford Road, Kenwick (building contract).
The building contract (Exhibit 1, pages 2 to 105) included specifications for, among other things, external walls, internal thickenings, slab thickenings, slab step, garage wall, footstep and external footing to internal thickening detail. The site classification was M, the recommended sand pad was 800 millimeters, the recommended footing detail was M3 and the wind classification was M1.
Construction of the dwelling commenced on or about 3 September 2008 and was completed on or about 13 May 2009.
From about 12 May 2009 until December 2014, cracking occurred in the walls of the dwelling and the respondent at various times during this period attended the dwelling and carried out repairs. The details of the cracking and the history in respect of the attempted repairs are set out in detail in Mr Dumbreck's witness statement (Exhibit 1, pages 199 to 205).
Between January and February 2015 major cracking had reappeared.
On 8 April 2015, at the request of the respondent, Mr Sebastien Chira of Structerre Consulting Engineers attended the dwelling for the purpose of investigating and reporting on the cracking. At the conclusion of the inspection, Mr Chira advised Mr Dumbreck that further testing and inspection of the pad and foundations would be required to determine the cause of the cracking that was evident in the dwelling.
At that time the applicants determined to make their own inquiries to identify the cause of the significant and continuing cracking. Mr Abueva (a structural engineer) was engaged by them to carry out an inspection of the dwelling and to prepare a report as to his findings.
On 21 April 2015, Mr Abueva provided an expert report to the applicants' legal representative setting out his findings and made recommendations as to how to rectify the cause of the cracking (Exhibit 1 pages 114 to 186).

Contentions of the parties

The applicants allege construction of the dwelling was not carried out in a proper and proficient manner or was faulty or unsatisfactory in that the slab of the dwelling was not constructed properly such that it moved due to the drying of the clay subsoil and caused damage in the nature of cracking inside the dwelling.
The applicants sought orders from the Tribunal which included:
1)requiring the respondent to carry out rectification work to the slab and to the cracking in the dwelling caused by the movement of the slab;
2)the costs associated with employing Mr Abueva to supervise the rectification work;
3)alternate accommodation expenses and furniture removal and storage costs of the applicants' and their children during the time the rectification work was carried out; and
4)compensation for inconvenient stress and suffering experienced by the applicants' and their children for the physical attributes associated with the damage to the dwelling.
The respondent did not deny that the work was not carried out in a proper and proficient manner or was faulty or unsatisfactory and agreed it was liable to rectify the cause of the cracking, the cracks in the dwelling and the consequential damage that would occur to the applicants' dwelling as a result of the rectification work.
The respondent did not however until late in the hearing, agree that the appropriate method of rectifying the faulty or unsatisfactory work was the methodology proposed by the applicants.
Prior to the hearing the respondent consented to a building remedy order being made which required it to:
a)rectify the causes of the cracking to the applicants' property including doing all things necessary to carry out the necessary underpinning work (the work);
b)rectify the consequential damage that will occur to the applicants' property as a result of the work; and
c)pay for the reasonable alternative accommodation (rental) expenses for the applicants' and their children together with the reasonable furniture removal and storage costs if needed during the time it takes for the work to be carried out.
The respondent did not consent to an order in respect of the cost of appointing Mr Abueva to supervise the remedial work and denied it was liable to pay compensation to the applicants for inconvenience, stress and suffering.
Thus, before the Tribunal for determination at the commencement of the hearing were three issues. The main issue in dispute being the scope of the remedial work necessary.
During the course of or at the end of the hearing the parties agreed:
1)The scope of works necessary to properly rectify the problems with the slab as a result of faulty or unsatisfactory work in constructing the slab was that recommended by Mr Abeuva with the work on site to commence on 23 January 2018 and to be completed by 23 August 2018.
2)The applicants' accommodation expenses and removal and storage costs at $30,166.
The applicants did not press their claim for Mr Abreuva to supervise the rectification work and in particular the underpinning work but maintained their claim for compensation for inconvenience, stress and suffering.

Issues to be determined

1)Does s 36(1)(c) of the BSCRA Act allow for compensation to be awarded for stress and inconvenience such as claimed by the applicants?
2)If it does allow for such an order for compensation, does it extend to the children of the applicants?
3)If s 36(1)(c) of the BSCRA Act does allow for compensation for stress, inconvenience and suffering as alleged, are the amounts claimed by the applicants of $15,000 for each applicant and $5,000 for each of their children being a total of $45,000 an appropriate amount?

Legislative scheme

Section 5(1) of the BSCRA Act states:
Subject to the regulations, a person may make a complaint to the Building Commissioner about a regulated building service not being carried out in a proper and proficient manner or being faulty or unsatisfactory.
The respondent is a registered building service provider.
Section 36(1) of the BSCRA Act states:
(1)A building remedy order consists of one of the following
(a)an order that a person who carried out a regulated building service remedy the building service as specified in the order;
(b)an order that a person who carried out a regulated building service pay to an aggrieved person such costs of remedying the building service as the Building Commissioner or State Administrative Tribunal, as the case requires, considers reasonable and specifies in the order;
(c)an order that a person who carried out a regulated building service pay to an aggrieved person a sum of money specified in the order to compensate the aggrieved person for the failure to carry out the building service in a proper and proficient manner or for faulty or unsatisfactory building work.
Section 38(1) of the BSCRA Act states:
(1)If the Building Commissioner refers a building service complaint to the State Administrative Tribunal, the Tribunal may
(a)if the Tribunal is satisfied that the regulated building service that is the subject of the building service complaint has not been carried out in a proper and proficient manner or is faulty or unsatisfactory, deal with the building service complaint by making a building remedy order; or
(b)otherwise, decline to make a building remedy order.

Outline of the evidence

During the hearing the Tribunal received into evidence books of documents filed by the applicants and respondent (Exhibits 1 and 2). The Tribunal heard oral evidence from Mr Dumbreck, the first applicant, the applicants' structural engineering expert, Mr Abueva, and Mr Just, the respondent's structural engineering expert. The expert witnesses gave their evidence concurrently.
There was no dispute between the experts as to the extent or the cause of the cracking in the house. They concluded it was due to the deferential settlement of the footings in the reactive clay materials within the site due to moisture changes. Both found that this caused a 'doming heave of the slab'. Mr Abueva was also of the view that the slab could move such as to cause a dishing heave. Slab heave is the differential movements of the footing and slab caused by shrink/swell movements of the clay. This indicates the property had experienced movements up and down at different locations caused by uneven changes in ground moisture. This occurred because the slab was not prepared and constructed according to the structural plans, drawings and engineering details included in the building contract which set out what was required to ensure proper and satisfactory structural support to the property and therefore the work was not carried out in a proper and proficient manner, or was faulty or unsatisfactory.
The evidence of the experts related in almost its entirety to the cause of the cracking and the methodology of rectification which is no longer a matter for determination by the Tribunal.
The extent of the cracking was touched upon by the experts in their reports but was not a matter of disagreement between them.
The extent of the cracking is relevant to the Tribunal's consideration of the applicants' claim for compensation because of the effect the applicants say it had on them and their children over a period of over seven years.

Applicants' evidence

Both the applicants filed witness statements (Exhibit 1, pages 199 to 217).
Both applicants attested to the damage to the house, the number of times that the respondent sent workman to the property in attempt to remedy the situation and the distress and anxiety this caused. (Mr Dumbreck and Ms Loh's witness statements - Exhibit 1, pages 199 to 217).
They both also set out in their statements the sense of loss they have experienced in not being able to enjoy their new home and the fear and anxiety the cracking, caused by the movement of the slab, had created for them and their children.
The Tribunal recognises the entire experience has been stressful, upsetting and disappointing to them.

Applicants' claim for inconvenience, stress and suffering

The applicants in their written submissions make note that the principal purpose of the BSCRA Act is to provide a system for dealing with complaints about building services.
They say an interpretation of s 36(1) and s 38(1) of the BSCRA Act must have regard to that purpose so that the Tribunal is able to resolve the whole of the complaint. Further, they contend that the correct approach is to consider from that point what type of claims for compensation might arise under s 36(1)(c) of the BSCRA Act.
They submit that the text of s 36(1)(c):
a)is not limited to compensation for the costs associated with rectifying work not carried out in a proper or proficient manner or faulty or unsatisfactory work; and
b)is intended to be broad enough to include compensation for inconvenience, stress and suffering associated with the physical attributes of the work not carried out in a proper and proficient manner or faulty or unsatisfactory building work.
They say that it is open to the Tribunal, and within its jurisdiction, to award compensation for loss or damage arising from inconvenience and stress arising from the physical attributes of home building work not carried out in a proper and proficient manner or faulty or unsatisfactory work and that this meaning promotes the purpose of the legislation by avoiding litigation of home building related disputes in more than one jurisdiction.
This is in reference to the fact that s 54 of the BSCRA Act excludes concurrent proceedings on the matter to which a complaint relates but does not otherwise exclude the jurisdiction of the courts or arbitrators.
Should the Tribunal determine that s 36(1)(c) of the BSCRA Act allows for compensation to be paid for loss or damage arising from inconvenience, stress and suffering arising from the physical attributes of home building work not carried out in a proper and proficient manner or faulty or unsatisfactory work, the question arises as to how to assess whether damages or compensation is payable and how to assess the quantum of the damages payable.
The applicants assert that the principles applicable to the breach of contract cases should be applied by the Tribunal and that on a proper assessment it should be $15,000 for each of the applicants and $5,000 for each of their children.
Respondent's position
The respondent denies that s 36(1)(c) of the BSCRA Act allows for compensation to be paid for loss or damage arising from inconvenience, stress and suffering arising from the physical attributes of home building work not carried out in a proper and proficient manner or faulty or unsatisfactory work.
In the alternative, the respondent says that if s 36(1)(c) does include compensation for stress, inconvenience and suffering then, pursuant to s 6 of the Civil Liability Act 2002 (WA) (Civil Liability Act), s 7 of the Civil Liability Act applies which prohibits courts from awarding damages for nonpecuniary loss where the loss would be less than (currently) $20,500.
The issue of whether for the purpose of the Civil Liability Act the Tribunal is a court was not addressed by the respondent or applicants.
The applicants submitted that even if the Civil Liability Act applies the amount of damages awarded should be taken as the entire amount, that is, $45,000, not the individual amounts of $15,000 and $5,000.

Analysis

What type of claims for compensation are intended by the words of s 36(1)(c) of the BSCRA Act?

The District Court in Vernon & Anor v Ashmy Pty Ltd (Unreported, Western Australian District Court; D970022; 23 January 1997) (Vernon) an appeal from the former Building Disputes Committee confirmed a decision of the Building Disputes Committee that it did not have jurisdiction to award compensation for physical inconvenience and stress caused as a consequence of a breach of contract.
This Tribunal in KBE Contracting Pty Ltd and Mawer & Anor [2007] WASAT 210, expressed the view that Vernon was wrongly decided. It found that the Building Disputes Tribunal and this Tribunal do have jurisdiction to award compensation for emotional stress suffered as a consequent upon a finding of deceptive and misleading conduct.
Both of these cases relate to contractual claims and they are not of significant assistance to the Tribunal in interpreting what is meant by compensation in s 36(1)(c) which refers to a building remedy order for faulty or unsatisfactory workmanship.
The applicants contend and the Tribunal agrees that it should take into account when considering or interpreting any section of the BSCRA Act the principal purposes of the BSCRA Act. This approach is consistent with s 18 of the Interpretation Act 1984 (WA) (Interpretation Act):
Section 18 of the Interpretation Act states:
In the interpretation of a provision of a written law, a construction that would promote the purpose or object underlying the written law (whether that purpose or object is expressly stated in the written law or not) shall be preferred to a construction that would not promote that purpose or object.
The applicants submit that the introduction of the BSCRA Act refers to a system for dealing with complaints about building services and emphasises that it also includes a reference to 'related matters'. However, s 36(1)(c) of the BSCRA Act only refers to '…a person who carried out a regulated building service…' and does not include any reference to a 'related matter'. The Tribunal therefore does not consider the reference to any 'related matter' has any significance with respect to the interpretation of s 36(1)(c).
The Interpretation Act sets out those materials a court or tribunal may have regard to in assisting it in interpreting what a section of an act may mean.

Section 19 of the Interpretation Act states:
(1)Subject to subsection (3), in the interpretation of a provision of a written law, if any material not forming part of the written law is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material
(a)to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law; or
(b)to determine the meaning of the provision when
(i)the provision is ambiguous or obscure; or
(ii)the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law leads to a result that is manifestly absurd or is unreasonable.
(2)Without limiting the generality of subsection (1), the material that may be considered in accordance with that subsection in the interpretation of a provision of a written law includes
(a)all matters not forming part of the written law that are set out in the document containing the text of the written law as printed by the Government Printer; and
(b)any relevant report of a Royal Commission, Law Reform Commission, committee of inquiry or other similar body that was laid before either House of Parliament before the time when the provision was enacted; and
(c)any relevant report of a committee of Parliament or of either House of Parliament that was made to Parliament or that House of Parliament before the time when the provision was enacted; and
(d)any treaty or other international agreement that is referred to in the written law; and
(e)any explanatory memorandum relating to the Bill containing the provision, or any other relevant document, that was laid before, or furnished to the members of, either House of Parliament by a Minister before the time when the provision was enacted; and
(f)the speech made to a House of Parliament by a Minister on the occasion of the moving of a motion that the Bill containing the provision be read a second time in that House; and
(g)any document (whether or not a document to which a preceding paragraph applies) that is declared by the written law to be a relevant document for the purposes of this section; and
(h)any relevant material in any official record of proceedings in either House of Parliament[.]
The second reading speech of the Home Building Contracts Bill (see Hansard, Western Australia, Parliamentary Debates, Legislative Assembly, 9 May 1991, page 1646 (Hon Yvonne Henderson)) makes it clear that the purpose of the BSCRA Act was not to prevent actions for breach of a home building contract being taken in courts. The purpose of the BSCRA Act is to allow for complaints to be made to the Building Commission about a breach of contract and faulty workmanship thus dispensing with the previous system where only workmanship complaints could be made to the former Building Disputes Committee and all breach of contract actions having to be made to a court. It recognises that work may be in breach of contract but not faulty or faulty and in breach of contract or a mixture of both.
It is not necessary to read into s 36(1)(c) of the BSCRA Act that it is broad enough to include compensation for stress inconvenience and suffering to promote the purpose of the legislation in avoiding litigation of home building related disputes in more than one jurisdiction.
It is possible to take action for breach of contract and to make a claim for faulty workmanship within the jurisdiction. This is the main purpose of the BSCRA Act.
There is a distinction made in the BSCRA Act between orders that may be made for breach of contract that is a HBWC remedy order and those for workmanship complaints being a building remedy order.
The wording for the provisions of a HBWC remedy order are somewhat different to those in respect of a building remedy order. Understandably, a HBWC remedy order can only be obtained by an owner or a builder. There is no provision for anyone not privy to a contract to make a claim on the basis of breach of contract and obtain a HBWC remedy order. There is also a cap on the amount for a claim of breach of contract but not for faulty work.
It is clear that the BSCRA Act treats complaints and the resultant remedies for breach of contract differently from workmanship complaints.
In the Explanatory Memorandum of the Building Services (Complaint Resolution and Administration) Bill 2010 (WA) (BSCRA Bill) there is an explanation as to the purpose behind cl 36.
Building remedy orders can be made by the Building Commissioner (clause 37) or the SAT (clause 38).
36(1) allows abuilding remedy order to require the person who carried out the service to:
•remedy it within a reasonable specified time (36(1)(a)); or
•pay the cost of someone else remedying it (36(1)(b)); or
•pay compensation for the faulty service without it being remedied (36(1)(c)). This allows for a third party, such as a neighbour who has been adversely affected by the building work, to seek compensation for any consequential damage caused[.]
As it can be seen there is no reference in the Explanatory Memorandum to suggest that s 36(1)(c) of the BSCRA Act was intended to allow for what might be described as a general damages claim for personal injury such as stress and inconvenience of an 'aggrieved person'.
However, it is clear that a claim under s 36(1)(c) can be made by someone who was not privy to a contract with a person who carried out a regulated building service but who was nevertheless adversely affected by the regulated building service.
The BSCR Act does not display any intention to allow for a claim for inconvenience and stress arising from the physical attributes of home building work not carried out in a proper and proficient manner or was faulty or unsatisfactory work.
When one looks at the tenor of the BSCRA Act it is all about remedying faulty work either by the person who carried out the faulty or unsatisfactory regulated building service or by an order for monetary compensation to allow the owner to pay a third party to remedy the faulty or unsatisfactory work.
The remedying of the faulty work or the payment of a monetary compensation to an owner to allow the owner to pay a third party to remedy the faulty or unsatisfactory work necessarily includes any costs the owner might incur in moving and storing furniture or in finding alternate accommodation whist the remedial work is undertaken but only where it can be shown the remedial work cannot be done with the owners and/or their furniture remaining in the property. It is not a payment for inconvenience.
The fact that you can take proceedings in the Building Commission and in the civil courts is also an indication that the intent of the BSCRA Act is to enable parties to have their faulty building service rectified in a cost efficient way and still be able to take proceedings in a court for breach of contract to obtain any damages they consider they are due, if they wish.
It is further a recognition that building disputes involving faulty workmanship may need to be rectified with some degree of urgency whilst allowing matters for which damages can be awarded to a party to proceed in the normal manner in the courts.
It is also intended to be a relatively inexpensive process and that is one of the reasons that costs do not follow the event in Tribunal proceedings. Where there is a genuine dispute between the parties something more than just succeeding or substantially succeeding is called for to enliven the Tribunal's discretion to award costs.
Before the Tribunal is not a claim for breach of contract and therefore the Tribunal does not need to and does not make any findings as to whether a HBWC remedy order pursuant to s 41(2)(d) of the BSCRA Act, includes compensation for inconvenience, stress and suffering.
The Tribunal notes that reference is made in the applicants' closing submissions to s 55(3) of the BSCRA act which provides that the Tribunal may transfer a matter to a court with jurisdiction to determine the subject of a complaint. However as there is no application before the Tribunal for it to transfer this complaint to a court, the Tribunal makes no comment in respect of the submission.
The Tribunal finds, having considered the words of the BSCRA Act and the Explanatory Memorandum referred to previously, that s 36(1)(c) of the BSCRA Act does not include claims for compensation for inconvenience, stress and suffering.
Given the above findings, the Tribunal does not make any findings:
•as to whether the Civil Liability Act applies to proceedings in respect of the BSCRA Act and, in particular, if the Tribunal is a court for the purposes of s 7 of the Civil Liability Act as to whether;
•as to whether in the absence of any medical evidence, or other objective evidence there is sufficient evidence upon which the Tribunal could rely to make an order for compensation;
•as to whether any order for compensation could apply to the children of the applicants who are not parties to the contract;
•as to what in the circumstances, would be an appropriate sum to award as compensation.

Orders

The Tribunal by order dated 24 October 2016 allowed the application in part.
1.The application is otherwise dismissed.

I certify that this and the preceding [70] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS P LE MIERE, MEMBER