Ivankovic v Construction Occupations Registrar
[2023] ACAT 45
•24 August 2023
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
IVANKOVIC v CONSTRUCTION OCCUPATIONS REGISTRAR & ANOR [2023] ACAT 45
AT 86/2022
Catchwords: ADMINISTRATIVE REVIEW – application for review – Construction Occupations (Licensing) Act 2004 (COLA) – section 38 of the COLA – review of rectification orders issued by the Construction Occupations Registrar – orders setting out the rectification works relating to seven identified defects alleged to have been detected at a residential apartment building – owners corporation added as second respondent – section 38 of the COLA – decision affirmed
List of Legislation: Construction Occupations (Licensing) Act 2004 ss 35, 36, 38, 47
Residential Tenancies Act 1997
Unit Titles Management Act 2011
Subordinate
Legislation Cited: National Construction Code 2015
List of Cases: B&T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and Anor [2013] ACTSC 219
Jolley v Construction Occupations Registrar & Anor [2022] ACAT 47
Tribunal:Senior Member D Mulligan
Senior Member A Wilson
Date of Orders: 24 August 2023
Date of Reasons for Decision: 24 August 2023
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 86/2022
BETWEEN:
IVAN IVANKOVIC
Applicant
AND:
CONSTRUCTION OCCUPATIONS REGISTRAR
First Respondent
OWNERS CORPORATION – UNITS PLAN 4191, ABN 80 190 595 792
Second Respondent
TRIBUNAL:Senior Member D Mulligan
Senior Member A Wilson
DATE:24 August 2023
ORDER
The Tribunal orders that:
1.The decision under review is confirmed.
………………………………..
Senior Member D Mulligan
For and on behalf of the Tribunal
REASONS FOR DECISION
1.In the reasons below, a reference to ‘ACAT’ or ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally, whereas ‘Tribunal’ refers to the members who heard the application.
2.On 12 August 2022, the Construction Occupations Registrar (the registrar or the first respondent) issued a rectification order[1] which is annexed to this decision (the order) pursuant to section 38 of the Construction Occupations (Licencing) Act 2004 (the COLA) to the applicant, Mr Ivan Ivankovic (the builder).
[1] Exhibit R1, T Docs, page 49
3.The order set out rectification works relating to seven identified defects alleged to have been detected at a residential apartment building located at Harrison, ACT (the building).
4.The location of the building can also be described as Units Plan 4191 or Block 2 Section 95 Harrison.
5.A rectification order could be made by the registrar because the certificate of occupancy for the property was issued on 27 January 2016, and the order was made on 12 August 2022 and was therefore within the ten-year limitation period for making such an order.[2]
[2] COLA section 35(5)-(6)
6.The seven defects identified in the order were:
(a)Defect 1 – Failed balcony waterproofing;
(b)Defect 2 – Gutters with missing sumps and overflows, and incorrect falls;
(c)Defect 3 – Fire safety non-compliance in respect of smoke doors;
(d)Defect 4 – Obstruction of stairwell handrails;
(e)Defect 5 – Water ingress causing staining and paint bubbling from slab joints;
(f)Defect 6 – Water ingress through cracked concrete in basement; and
(g)Defect 7 – Sunken pathways and walkways.
7.On 12 October 2022, the builder filed an application for a review of a decision at ACAT and sought an order setting aside the rectification order.
8.On 23 March 2023, the owners corporation of Units Plan 4191 (the owners) applied to be joined as a party to these proceedings.
9.In an earlier proceeding dated 29 March 2023, the tribunal made an order joining the owners as the second respondent, and the matter went to a hearing on 12 April 2023.
10.During the hearing, it became apparent that a number of matters had fallen away from the initial application for review. The matters still in issue are:
(a)whether there is a power within the COLA that allows the registrar to make the orders;[3]
(b)whether the lessee should have the right to choose the appropriate expert to carry out the functions;[4]
(c)whether the order should stand given that under the COLA, the builder cannot compel the owners corporation, the individual owners of the units or any tenants to allow the builder onto their property to allow the rectification works to take place;
(d)whether the consequential costs[5] can be made under section 38;
(e)whether the registrar was correct in proceeding with a rectification order under section 38 of the COLA or whether the builder should be able to complete the works pursuant to an undertaking, without admissions, pursuant to section 47B of the COLA.
[3] Orders 11(c), (f), and (g)
[4] Order 11(c)
[5] Found in orders 11(f) and (g)
11.The principal matters in dispute relate to three requirements set out in paragraph 11 of the order, namely conditions 11(c), (f) and (g).
12.The registrar’s power to make rectification orders come from section 38 of COLA, which provides:
38 Rectification orders
(1) The registrar may make an order (a rectification order) in relation to an entity requiring the entity—
(a)to take stated action to rectify work done as part of a construction service; or
(b)to demolish a building or part of a building where a construction service has been provided and provide the construction service under this Act or an operational Act; or
(c)to start or finish stated work in relation to which a construction service has been, is being or was proposed to be provided.
Example—stated action
rectified work must comply with a stated performance requirement of the Building Code of Australia
(2) The rectification order may also require the entity to give the registrar written information about a thing required to be done under the order.
Examples
1.a structural engineer’s report about whether rectified work complies with relevant structural standards
2.certification from a building certifier that finished work complies with this Act
3.However, a rectification order need not state how a thing required to be done under the order is to be done.
Example
A rectification order requires an entity to rectify a building so that it complies with a stated performance requirement of the building code. The rectification order need not include details of how the work is to be undertaken or how the building may need to be redesigned or altered to comply with the requirement.
(4) Subsection (5) applies if—
(a)the order requires the entity to do a thing; and
(b)the entity—
(i)is not licensed, authorised or qualified to do the thing; or
(ii)if a licence, authorisation or qualification is not required to do the thing—does not have appropriate experience and skill to do the thing.
(5) The entity must arrange, and pay for, the thing to be done by someone who—
(a)is licensed, authorised or qualified to do the thing; or
(b)if a licence, authorisation or qualification is not required to do the thing—has appropriate experience and skill to do the thing.
Examples
1A rectification order requires Freddie to take stated action to rectify work he has done. The action includes having to provide written information about whether the rectified work complies with relevant structural standards. Freddie is not a structural engineer so he must arrange, and pay for, a structural engineer to prepare a report about the rectified work.
2A rectification order requires Jo to finish building a dwelling. Jo is no longer a licensed builder, and she is not able to get a new licence. Jo must arrange, and pay for, a licensed builder to finish building the dwelling.
3Alex is a licensed plumber who did non-compliant work on a building that caused extensive water leakage. A rectification order requires him to fix the damage caused by the leakage, including replacing render on the building’s exterior, replacing wall linings and insulation in the wall cavity, and repainting walls and replacing carpet in the interior. None of this work requires a licence or other authorisation under ACT law. Alex is able to paint the interior walls to an acceptable standard, but he has never done any of the other kind of work. He must arrange, and pay for, people with appropriate experience and skill to do the rest of the work.
(6) The rectification order must state a period within which what is required to be done must be done.
(7) The stated period for a rectification order other than an emergency rectification order must not be less than 1 month after the day the rectification order is given to the entity.
Note Details of the rectification order must be included in the register (see s 108).
(8) A copy of the rectification order must be given to the land owner.
13.The three orders with which the applicant takes issue are orders 11(c), (f) and (g) which state:
11. In complying with the order, the builder must:
…c. pay all costs associated with compliance with the order. Including but not limited to the cost of finalising the program of works documentation, materials, plant, labour, a building surveyor, and surveying processes. This includes the costs of a private certifier, engineering or specialist advice nominated by the lessee. It also includes any other sign off, approval, or certifications (including as required by a building surveyor);
…
f. during the completion of works required by this order, if works required by the order prevent access to any car parking spaces allocated to residents of the premises, the builder must immediately provide and pay for an equivalent number of car spaces in a secured car park or car parks in Harrison and if no such car parks are available, in the nearest suburb to Harrison where parks are available until access to the car parking spaces within the building is restored.
g. if works required by the order prevent access to the premises or render the premises unable to be occupied, the builder must immediately, and for the duration of those works or until access to any such unit is restored;
i.provide and pay for equivalent furnished residential accommodation to the residents of the premises in the same or neighbouring suburb of the premises;
ii.provide and pay for, so far as is reasonably necessary to prevent loss and damage, the removal and return of furnishings and possessions within such a unit to a commercial storage provider; and
iii.provide and pay for the storage of such furnishings and possessions with a commercial storage provider.
Is there a power within the COLA which allows the registrar to make the three orders?
14.Mr Webster, on behalf of the applicant, advanced two arguments as to why it would be inappropriate for orders 11(c), (f) and (g) to stand. Firstly, there is no power within COLA which allows the registrar to make the orders. In this regard, Mr Webster submitted:
The applicant's position with respect to those subsections of – of paragraph 11 is that the power does not exist within the Act to allow the registrar, or an appropriate delegate of the registrar, to make those orders because they are outside the terms. They are certainly outside the express terms of the Act. I don't – I don't think that there can be any sensible argument on that basis.
The real question becomes then whether they are covered by what might broadly be termed the case law as regarding ancillary orders, which there is a very long line of authority in Australia at the various highest levels going back to at least, I think it was 1925, the Carbines v Powell case, and the decision of Isaacs J in that matter, which cannot seriously be in dispute as to the basis on which ancillary orders can be made which are outside the express scope of any legislation, and I will come to that in – in more detail in due course. So that, in a sense, is – is the short-term reason why we are here
15.Looking at order 11(c), we do not accept that it should be viewed as containing “ancillary orders” as each of the things being ordered seem to fall squarely within section 38 of the COLA. The matters specified in 11(c) are that the builder should pay all costs associated with the compliance of the order including:
(a)finalising the program of works documentation;
(b)materials, plant and labour;
(c)the costs of a building surveyor and the costs of the surveying process;
(d)the costs of a private certifier, engineering or specialist advice nominated by the lessee; and
(e)other sign off, approval, or certifications (including as required by a building surveyor).
16.There likely should not be any cost to the builder associated with the functions set out in paragraph 15(a) above[6] as one would imagine that a competent builder should be capable of developing that documentation. If not, then hiring a person capable of doing do that job would fit within sections 38(4) and (5) of the COLA.
[6] Costs associated with the program of work documentation
17.When considering the costs outlined in paragraph 15(b) above,[7] it is helpful to have regard to the way the tribunal characterised the nature of a rectification order in Jolley v Construction Occupations Registrar & Anor (Jolley):[8]
115. Regarding the presumption against penalty issue, I do not accept that a rectification order should be characterised as a penalty. It is an order to ‘make good’ defective works. To make good will likely entail a cost, but that money is payable to whomever provides materials or performs work to rectify the defects. The money is not a penalty paid to the Registrar, to general revenue or to anyone else: it is payable in return for goods and services provided.
116. I accept that in some situations the costs that may be incurred to comply with the order may be very significant, but that does not change the character of the cost. A significant cost is no more than a statement about the extent of the rectification works needed to be done.
[7] Materials, plant and labour
[8] [2022] ACAT 47 at [115]-[116]
18.It seems to us, having regard to the tribunal’s comments in Jolley that the costs associated with materials, plant and labour should clearly be paid by the builder.
19.We take the view the registrar acted appropriately in making the orders in paragraphs 15(c) and (d) above, relating to certifying, engaging expert engineers, signoffs etc., are necessary prerequisites for the builder and registrar to be satisfied that the works being undertaken, meet all safety and building standards and that the works have been completed to an acceptable standard. Consequently, if the builder cannot complete those tasks himself, he should be required to pay suitably qualified people to perform those functions pursuant to section 38(4)(a) and (b) of the COLA.
20.In coming to that conclusion, we take comfort from the first example given after section 38(5) as follows:
A rectification order requires Freddie to take stated action to rectify work he has done. The action includes having to provide written information about whether the rectified work complies with relevant structural standards. Freddie is not a structural engineer so he must arrange, and pay for, a structural engineer to prepare a report about the rectified work.
21.We see the builder’s obligations in paragraphs 15(c) and (d) as analogous to the situation of Freddie in the example.
22.We also note that to some extent, Mr Webster agreed that some of those costs were in fact reasonable:[9]
[9] Transcript of proceedings, 12 April 2023, page 28, line 29
SENIOR MEMBER MULLIGAN: All right. So within the scope of the works that has been proposed the – if we go over to the next page, 4, 5, 6 and 7 et cetera, which sets out the particular works that need to be done, are there any of them that require, in an ordinary course of building, a surveyor or a compliance officer to give a formal tick of approval?
MR WEBSTER: In some circumstances, yes.
SENIOR MEMBER MULLIGAN: All right. So would – would that cost in those circumstances be reasonable?
MR WEBSTER: Yes.
SENIOR MEMBER MULLIGAN: All right, and if we keep going. This includes the cost of a private certifier. That might be appropriate in some instances.
MR WEBSTER: Well, the – the concern, senior member, are the words 'nominated by the lessee'.
SENIOR MEMBER MULLIGAN: Okay. So that's the sticking point with (c) then, is it?
MR WEBSTER: Yes.
Should the lessee have the right to choose the appropriate expert to carry out the functions set out in order 11(c)?
23.Mr Webster also took issue with the terms of order 11(c) which gives the lessee the right to choose the appropriate expert to carry out the functions set out in order 11(c). We see no substantial advantage or disadvantage in allowing the lessee to choose the experts and none were advanced by Mr Webster during the hearing or in his written submission. For that reason, we do not propose to interfere with the terms of order 11(c).
Whether the order should stand given that under the COLA the builder cannot compel the owners corporation, the individual owners of the units or any tenants to allow the builder onto their property to allow the rectification works to take place?
24.Mr Webster’s second argument is that the COLA cannot compel the owners corporation, the individual owners of the units or any tenants to allow the builder onto their property to allow the rectification works to take place. In this regard, Mr Webster submitted:
There is a second reason, and it is also the basis of the concern that the applicant has with the rectification orders, and that is that the rectification orders themselves do not, and cannot under the terms of the Act, extend to requiring the owners’ corporation, or the unit owners, or the occupants of the units if, in fact, those units are not occupied by the owners themselves, but are occupied perhaps under – under a lease, to allow the applicant and/or his agents to enter on to those premises and to effect the repairs and, in fact, as can be seen from the material…[10]
[10] Transcript of proceedings, 12 April 2023, page 12
25.Mr Webster is correct in saying that there is no power in the COLA that can be used to compel affected parties to allow building or rectification works to take place. If the owners corporation, the owners of the units or their tenants do not want works done to their property, then the builder is released from the obligation to carry out the works.
26.That is unless the owners corporation or the owners of the units or the tenants can be compelled to have the builder conduct the works under another power.
27.An example of such power exists in the Residential Tenancies Act 1997. Under that Act, the owner of a unit could likely obtain an order from ACAT for repairs to be undertaken contrary to a tenant’s wish.
28.Similar powers may exist to require the owners corporation and/or the owners to allow repairs. Those powers may be located in the various foundational documents associated with the building, such as the Unit Titles Management Act 2011 or a resolution made by the owners corporation under that Act.
29.We do not see the potential of some people to object to having repair works done on their property as providing the builder with a means of avoiding the needs of the balance of owners and the owners corporation who do want the repairs done.
30.In summary, we believe that the registrar was right to make order 11(c) and we affirm it.
Whether the consequential costs found in orders 11(f) and (g) can be made under section 38?
31.The registrar’s orders 11(f) and (g) are different in their character and ambit. They do not directly relate to the building, rectification or certification processes. Instead, they seek to ensure that the residents of the building are compensated if they, their household effects, and/or their vehicles need to be moved or stored during the course of the works. The terms of those orders impose their costs on the builder.
32.There is nothing in the COLA that expressly deals with these sorts of consequential costs and section 38 does not provide any example that is analogous to the potential compensation set out in orders 11(f) and (g).
33.Mr Webster objects to these consequential forms of potential compensation and calls them “overreach”.
34.Surprisingly, neither party was able to point to a case where a court or tribunal had directly dealt with the issue as to whether the consequential costs, like those set out in orders 11(f) and (g), have been determined.
35.Mr Larkings did refer us to comments made by Burns J when he was considering the COLA:[11]
I am perfectly satisfied that the registrar has the power, pursuant to s38(1)(a) of the COLA to make ancillary orders, such as paying for the cost of relocation of persons or property affected by the rectification order, so as to give efficacy to the rectification order itself.
[11] B & T Constructions (ACT) Pty Ltd V Construction Occupations Registrar [2013] ACTSC 219 at [59]
36.I note those observations were obiter dicta, but they necessarily reflect the fact that, to some extent, His Honour turned his mind to the issue and believed that the registrar had a power to make these types of consequential orders.
37.Mr Larkings essentially submitted that Burns J’s statement is the correct statement of the law.
38.Mr Webster’s objection to the costs set out in orders 11(f) and (g) were not absolute. He could see circumstances where it would be appropriate for the builder to pay an affected party. In this regard, he submitted:[12]
So there's not – there's not a blanket disagreement with the terms, but rather, an attempt to achieve a practical and realistic outcome rather than to have some sort of blanket liability imposed on the builder in circumstances where, in my submission, that might be entirely unjustified to do so.
obviously if the car park access was to be restricted for a month so that nobody could get in or out, that would be an entirely different matter and one would accept then, but I mean that's consistent with the terms of what has been offered within the undertaking anyway. If it turns out that the only thing that can be done in access to the car park is restrict access for the month, then obviously because there is agreement that is offered within the undertaking on that point, that if there is no other solution but to do that, then that would be the case.
It's – it's not a blanket disagreement with the terms of – of paragraph 11. It's a qualified agreement based on a realistic approach to a practical rectification of the work, and if one goes back and has a look at the submissions of the joined party, that's what it appears they want done. They – it appears from those submissions that they are looking to have the work done and that is what my client, the applicant, is – is willing to do on some reasonable terms, rather than being imposed with these blanket forms of liability.
[12] Transcript of proceedings, 12 April 2023, page 34, line 10
39.We note that Mr Webster’s real objection to orders 11(f) and (g) is that those costs should be constrained. He did not dispute that the builder should be liable to pay the costs referenced in orders 11(f) and (g) if the owners, their tenants, their property, or their vehicles should need to be relocated.
40.We agree with Mr Larkings and take the view that the type of consequential costs set out in orders 11(f) and (g) fall within the types of costs for which a builder will be liable under a rectification order.
41.In our view, the means of constraining the potential costs that may arise under orders 11(f) and (g) is for the builder to undertake the works in a timely and efficient manner rather than shifting the costs of any relocation to any owner or tenant affected by the rectification works.
42.For those reasons, we affirm orders 11(f) and (g) of the rectification order.
Whether the registrar was correct in proceeding with a rectification order under section 38 of the COLA or whether the builder should be able to complete the works pursuant to an undertaking, without admissions, pursuant to section 47B of the COLA
43.The final matter in the issue raised by Mr Webster is whether the registrar was correct in proceeding with a rectification order under section 38 of the COLA or whether the builder should be able to complete the works pursuant to an undertaking, without admissions pursuant to section 47B of the COLA.
44.On 12 August 2022, Mr Rick Muir, Deputy Construction Occupations Registrar, wrote to the builder’s solicitor and advised him that:[13]
As I previously intimated, the decision to issue rectification orders in lieu of undertakings is provided for under the legislation and ensures greater regulatory certainty.
[13] Respondent’s submissions dated 21 March 2023 at [23]
45.We accept Mr Muir’s assessment.
46.We also note that it would have been impractical for there to be an undertaking when there was no agreement as to the scope of the orders that would be in an undertaking.
47.For those reasons, we affirm the decision of the registrar to proceed by way of a rectification order.
………………………………..
Senior Member D Mulligan
For and on behalf of the Tribunal
Date(s) of hearing: 12 April 2023 Solicitor for the Applicant: Mr B Webster, Just Dispute Resolution Solicitor for the First Respondent: Ms S Kivela, ACT Government Solicitor Counsel for the First Respondent: Mr J Larkings, Blackburn Chambers Counsel for the Second Respondent: Ms B Anderson, Greenway Chambers
ANNEXURE 1 – Rectification Order
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