Heureka Investments Pty Ltd t/as Altec the Spacemakers v Queensland Building and Construction Commission - [2024] QCAT 318

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Heureka Investments Pty Ltd t/as Altec the Spacemakers v Queensland Building and Construction Commission [2024] QCAT 318

PARTIES:

HEUREKA INVESTMENTS PTY LTD T/AS ALTEC THE SPACEMAKERS

(applicant)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

APPLICATION NO/S:

GAR492-20

MATTER TYPE:

General administrative review matters

DELIVERED ON:

2 August 2024

HEARING DATE:

15 April 2024

HEARD AT:

Brisbane

DECISION OF:

Member Bertelsen

ORDERS:

1. The review application is dismissed.

2. The Queensland Building and Construction Commission’s decision of 18 November 2020 is affirmed.

CATCHWORDS:

PROFESSIONS AND TRADES – BUILDERS – STATUTORY POWER TO REQUIRE RECTIFICATION OF DEFECTIVE BUILDING WORK – QBCC policy on rectification referencing Australian Standards, QBCC Standards and Tolerances Guide and manufacturer’s installation guide – whether decision to require rectification fair and reasonable – whether consequential damage consequent on direction to rectify.

Queensland Building and Construction Commission Act 1991 (Qld), s 71H, s 72, s 86.

Queensland Building and Construction Commission Standards and Tolerance Guide
National Construction Code Volume 2 section 3.9.1.2

Australian Standard 1684.1-1999 Residential timber-frames construction section 5.5.2.2

APPEARANCES & REPRESENTATION:

Applicant:

Kenneth Ross Pickard General Manager

Respondent:

Lucas Davey Principal Lawyer

Adela Padurean Principal Review Officer

REASONS FOR DECISION

Heureka Investments Pty Ltd trading as Altec the Spacemakers (‘Heureka’) has applied to the Tribunal for review of the decision of the Queensland Building and Construction Commission (‘QBCC’, ‘the Commission’) made 23 June 2020 and subsequently confirmed on internal review on 18 November 2020 to issue a direction to rectify in respect of three items of defective building work at 15 Grandview Place Oxley (‘the site’).

Background and Evidence

A contract for roof and deck works was entered into between homeowners Mark and Robyn Harrison (‘the homeowners’) and Heureka in August 2018. Building works were carried out with completion in November 2019. After completion eleven complaints about defective building work, incorrect materials, damage, and the like were made to the QBCC by the homeowners. On 11 June 2020 QBCC inspector Mr Ratcliffe inspected the site. Three complaint items, numbers one, six, and ten were identified as building work requiring rectification.
Complaint item one concerned incorrect timber used for joists forming supports for the timber deck and no damp proof flashing installed over joists. QBCC found that the LVL floor joists that were located to the patio structure had not been installed as per the manufacturer’s installation guide by non-installation of the impervious membrane to the top edge thereby resulting in an unsatisfactory finish.
Complaint item six concerned the finish of cut timber decking planks on stairs being uneven. QBCC found that the decking boards located to the fence edge of the patio stairs had not been installed in a straight and uniform manner as per the QBCC Standards and Tolerances guide and therefore did not meet a reasonable standard of finish expected of a competent holder of a contractor’s licence of the relevant class resulting in an unsatisfactory finish.
Complaint item ten concerned the rear gutter leaking. QBCC found that the guttering located to the rear of the upper deck roof had been installed in a manner that allowed water to escape resulting in an unsatisfactory finish.
On 11 June 2020 Mr Ratcliffe, QBCC Building Inspector, inspected the site works. On 23 June 2020 Heureka was given a direction to rectify and/or complete work in respect of complaint items one, six, and ten. It attached a defective work list that, apart from stating that Heureka must ensure that defective or incomplete work was rectified, also stated that all areas disturbed as a result of rectification work were to be made good. After being granted some extensions Heureka was given to 28 August 2020 to comply with the direction to rectify and/or complete work. On 26 August 2020 Heureka notified QBCC of compliance.
On 24 September 2020 Mr Ratcliffe reinspected the site and confirmed that the three items had been satisfactorily completed. Present at inspection apart from Mr Ratcliffe were Kenneth Hutchison and Karina Dean of Heureka, Mr and Mrs Harrison as owners and an owners’ representative, Adam Giddens. Both Mr Hutchison and Ms Dean in statements placed before the Tribunal stated that during the reinspection Mr Ratcliffe had advised them that the items in the direction to rectify were rectified and that there was no need to do anything further. Additionally, with respect to item ten a water hose was run on the roof for about ten minutes with no water leak being detected.
On 25 September 2020 Mr Ratcliffe compiled a report including his onsite visual observations the day before. On 1 October 2020 Heureka received a “Work not fixed or completed notice” dated 28 September 2020 stating the three items in question had not been completed satisfactorily. In its internal review decision of 18 November 2020, the Commission found that building work pertaining to direction items one, two and three undertaken by Heureka as required by the (original) decision was not of a satisfactory standard. In a statement filed in the Tribunal on 10 April 2024 Mr Ratcliffe summarised his observations. With respect to item one (complaint item one) he said the LVL floor joist and bearers had been removed and replaced, the decking boards had been removed and replaced, the stair risers had been constructed with a deviation of greater than ten millimetres resulting in the staircase having an uneven rise, decking screws were missing and/or installed less than twelve millimetres from the end of the respective decking boards causing some decking boards to split[1] and finally the reinstalled spa hatch hinge was above the decking surface creating a protrusion from between the decking boards.
[1]Australian Standard 1684.1-1999 Residential timber frames construction section 5.5.2.2.
In the deinstallation process necessary to install the impervious membrane and the reinstallation process that necessarily followed there had been a failure to reinstall correctly. The result was firstly uneven stair riser deviation of approximately forty millimetres, well above the ten-millimetre limit under the National Construction Code.[2] Decking screws were required to be installed with two fixings no less than twelve millimetres from the end of the decking boards. There were however inadequate fixings or fixings less than twelve millimetres from decking board ends. There was the protruding hinge. Mr Ratcliffe said this consequent damage was not observed during his initial inspection on 11 June 2020. It was only after Heureka’s rectification work that the damage was identified.
[2]National Construction Code Volume 2 section 3.9.1.2.
With respect to item two (complaint item six) Mr Ratcliffe said the decking boards to the fence edge of the patio stairs had been removed and replaced. The risers to the same stairs were out of alignment and not level from between ten millimetres to twenty-five millimetres. That constituted consequential damage. In Mr Ratcliffe’s view the rectification process required the trimming or cutting of all decking boards (which were also the goings and the risers of the staircase) from the relevant area to ensure the decking boards were straight and uniform and the reinstallation of the decking boards and other building elements that had been disturbed. However, Heureka failed to ensure that the decking boards and staircase risers were uniform and straight resulting in areas of the staircase in which risers overhung decking boards. Images depicting the overhanging risers by ten to twenty-five millimetres were produced.[3] The QBCC Standards and Tolerance Guide provided for a deviation of no more than four millimetres over a two-metre length.[4] In Mr Ratcliffe’s view the decking boards and risers not being uniform and straight with risers overhanging the decking boards was the result of Heureka’s rectification work. That constituted consequent damage.
[3]Depicted in images contained on page 106 of the Hearing Book.
[4]Queensland Building and Construction Commission Standards and Tolerance Guide.
With respect to item three (complaint item ten) Mr Ratcliffe observed at the inspection that the roofing system had been raised at the front right hand side post and that the raised post had been removed and reinstalled out of level. He said the rectification process addressing item one resulted in the removal of the raised post and its reinstallation after. In reinstalling the raised post Heureka failed to ensure that the post was level. That constituted consequent damage. The same post was not observed as being out of level during the initial inspection on 11 June 2020. It was only after Heureka’s rectification work that it was identified as out of level. The out of level post was defective building work not meeting a reasonable standard of construction or finish expected of a competent contractor and therefore constituted consequent damage.
A concurrent part of item three was the roof system leak/guttering. Mr Ratcliffe was of the view that whilst the hose on the roof water test did not reveal any leak, photos provided by Mr Harrison taken on 10 September 2020, 25 October 2020 and 21 March 2021 depicted water on the deck leaked from the gutter when it rained, resulting in an unsatisfactory finish.
In finality, Mr Ratcliffe did not consider the consequent damage in relation to items one, two and three to be new complaint items but rather the result of Heureka’s chosen rectification process.
In his statement placed before the Tribunal Mr Pickard, on Heureka’s behalf, said that during the reinspection of 24 September 2020 Mr Ratcliffe had confirmed the three direction to rectify items had been satisfactorily completed. He referred to the reinspection report which he said raised new and separate issues not part of the original direction to rectify. He said these new items could not form the basis for QBCC to determine that the direction to rectify had not been satisfactorily completed and ought properly to have formed part of a new direction to rectify thereby giving Heureka an opportunity to attend to rectification of those items.
Mr Pickard said item one (complaint item one) had been rectified satisfactorily as stated in the reinspection report. New items/issues which should have formed part of a new direction to rectify included fixings on the decking boards having been placed incorrectly, splitting occurring at the ends of sections of the decking, sections of the decking having been installed in a manner that did not meet a reasonable standard of finish, stair risers not being constructed as per the National Construction Code and the hinge to the spa hatch raised above the decking surface being a health and safety issue. He said these items had been discussed briefly and generally at reinspection but that the first time they had been raised in writing was in the work not fixed or completed notice. Heureka had not been given the opportunity to rectify these items. He considered that unfair.
Mr Pickard said item two (complaint item six) had been rectified as stated in the reinspection report. He said the issue about risers being installed out of alignment should have formed part of a new direction to rectify thereby providing an opportunity to rectify. Though discussed briefly and generally at reinspection it was only raised for the first time in writing in the work not fixed or completed notice. He considered that unfair.
Mr Pickard said item three (complaint item ten) had been rectified as stated in the reinspection report. As for the owners providing photographic evidence of the roof system still leaking, the hose placed on the roof and left running was evidence of the roof system not leaking. Additionally, the photos (provided by Mr Harrison) did not show that water came from the roof. The evidence was insufficient and ought not to be relied upon. He said the roof system being raised at the front right-hand post was a comment rather than an allegation of defective work. The issue about the raised post being installed out of level was a new complaint item and not part of the original direction to rectify. Though discussed briefly and generally at reinspection they were only raised for the first time in writing in the work not fixed or completed notice. Nor had Heureka been given the opportunity to rectify these items.
Mr Pickard sought orders that the QBCC’s direction to rectify be set aside and substituted by a decision to the effect that the direction to rectify had satisfactorily been complied with.

At Hearing

Mr Pickard stated that Heureka’s approach to items one and two was to undertake an extensive 90% rebuild of the structural work (deck and stairs). Such work was undertaken in good faith to resolve the position for the Harrisons and to comply with the direction to rectify. Heureka understood the three direction to rectify items had been seen to be rectified. It was aware of further issues but expected those if required might be the subject of a further direction to rectify. Mr Pickard said that was not what emerged. The notice (work not fixed or completed notice) was issued giving Heureka no chance to fix or rectify. Heureka had never received any such notice before.
In the context of such a significant rebuild any further issues should have been considered as a direction to rectify on the basis that the original direction to rectify had been complied with. Rather the Commission unilaterally issued the work not completed notice without due regard to or consideration of options available. Additionally, some issues raised in the Commission’s decision notice and statement of reasons such as split boards, spa hatch hinge and poor finish were outside the terms of the contract. For such a significant and extensive rebuild the outstanding issues were minor in the context of the overall build and could have been easily attended to. But there was never any opportunity.
Mr Davey submitted the scope of what was directed by the Commission included rectification to a satisfactory standard of defective work and the making good of any and all areas disturbed during the rectification process. The direction to rectify items had not been complied with to a satisfactory standard because Heureka caused consequent damage while carrying out rectification work. Heureka had opportunity to satisfactorily rectify the directed defective work in order to comply with the direction to rectify which also required Heureka to make good all areas disturbed during the rectification process.
Mr Davey contended there was no evidence to establish the proposition that consequent damage ought to be the subject of new complaint items and a further direction to rectify. The Commission relied on Mr Ratcliffe’s opinion that consequent damage had occurred due to Heureka’s chosen rectification process. Mr Davey stated it would contradict the purpose of a direction to rectify if contractors could satisfy a direction to rectify without making good the areas that were disturbed as part of a rectification process (that is consequent damage). Simply giving contractors a further direction to rectify consequent damage would have the effect of giving contractors endless opportunities to rectify their own unsatisfactory building work that was produced in the process of satisfying a direction to rectify and cause delay of homeowner remedies for defective building work such as access to the home warranty scheme.
With respect to item one the Commission did not dispute that item one was satisfied to a satisfactory standard. But it was the consequent damage, the deviation in the stair risers, the fixings missed or incorrectly installed and the protruding spa hatch hinge that was the defective work.
Similarly with respect to item two the Commission did not dispute compliance. It was the fallout per force of the rectification. The risers in the staircase, post rectification, were not uniform with reinstalled perpendicular decking boards thus constituting defective building work.
With respect to item three the Commission did not dispute water testing at time of reinspection did not show signs of water escaping from the guttering system. Rather the Commission relied on Mr Harrison’s evidence that the guttering continued to leak as well as Mr Ratcliffe’s opinion that rain events could never be replicated with a domestic garden hose. As far as the raised post was concerned reliance was placed on Mr Ratcliffe’s observations that prior to rectification work in connection with item one the raised post was not out of level but after rectification it was.

Conclusions

At hearing neither party called any witnesses each relying on material and statements filed. Due to late filing of material by the Commission Heureka was afforded time to reply with closing submissions finally due on the 10 May 2024. It was not disputed the work involved was original rectification work and work described in the work not fixed or completed notice (as described in the reinspection report) was building work. All rectification works had generally been completed within time frames stipulated by the QBCC. Nor was it disputed that the works the subject of the original direction to rectify items one and two had been complied with.
The dispute here is about areas disturbed (damaged) because of rectification work being carried out/completed. The defective work list accompanying the direction to rectify of 23 June 2020 is clear. At point four it states, “All areas disturbed as a result of rectification works are made good”. Section 72 of the Queensland Building and Construction Commission Act 1991 (‘QBCC Act’) empowers the Commission to require remediation of consequential damage. Section 71H of the QBCC Act defines consequential damage as damage:
(a)Caused by, or as a consequence of, carrying out building work at a building site (the relevant site), regardless of any intention, negligence or recklessness of the person carrying out the work; and
(b)To a residential property at the relevant site, containing the relevant site or adjacent to the relevant site.
The QBCC Act provisions make it abundantly clear that compliance with a direction to rectify is not to be read in isolation irrespective of resultant damage in the process but rather as rectification to bring about total compliance with the QBCC Act and associated legislation.
The consequential damage associated with items one and two were not so much disputed by Mr Pickard. He asserted those items could not form the basis for the Commission to determine that the direction to rectify had not been completed satisfactorily. He said they should properly have formed part of a new direction to rectify such as to give Heureka an opportunity to attend to rectification. But in terms of sections 71 and 72 of the QBCC Act that is simply not so. Additionally, such an interpretation of the QBCC Act would lead to ongoing directions to rectify over extended periods of time. The QBCC Act contains numerous time frames designed to bring matters, issues, and disputes to a prompt conclusion.
With respect to item three there was some conflicting evidence about whether the roof guttering leaked. The Tribunal accepts that while running a hose on a rooftop may indicate the roof is watertight it is not conclusive. Evidence of water on the deck because of rain, a more natural and ongoing occurrence, supported by photos of small puddles after rain, is better evidence for determining whether a leak does or does not exist. On balance it is more likely than not that the guttering leaks albeit a minor leak. As far as the raised post is concerned the Tribunal accepts Mr Ratcliffe’s observations that prior to rectification work in connection with item one the raised post was not out of level but after rectification it was, a clear case of consequent damage.

For clarity the Tribunal accepts Mr Radcliffe’s reports, observations, statements and findings in their entirety. Consequent damage has occurred because of original rectification work carried out. That consequent damage should have been attended to at the time of original rectification. That said the Tribunal is clearly of the view that there is no basis to change the Commission’s findings.

Orders

1.The Review Application is dismissed.
2.The Queensland Building and Construction Commission’s decision of 18 November 2020 is affirmed.