JM Kelly (Project Builders) Pty Ltd v Queensland Building Services Authority
[2010] QCAT 568
•12 November 2010
| CITATION: | JM Kelly (Project Builders) Pty Ltd v Queensland Building Services Authority [2010] QCAT 568 |
| PARTIES: | JM Kelly (Project Builders) Pty Ltd |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | QR086-06 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | 15 March 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr Scott Gregory |
| DELIVERED ON: | 12 November 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: |
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| CATCHWORDS : | Review of direction to rectify; where category 1 defect involves water penetration; builder contends it followed plans prepared by architect; whether discretion not to direct rectification ought be exercised in favour of the applicant; R v His Honour Judge Miller and the Builders Registration Board of Queensland, ex parte Graham Evans & Co (Qld) Pty Ltd (1987) 2 Qd R 446 followed. |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | JM Kelly (Project Builders) Pty Ltd represented by Andrew Sinclair-Ford, solicitor |
| RESPONDENT: | Queensland Building Services Authority represented by Brent Turnbull, solicitor of HWL Ebsworth Lawyers |
REASONS FOR DECISION
“The Pinnacles” is a community titles development at 42 Canberra Terrace, Caloundra. Following receipt of a formal complaint from the body corporate Queensland Building Services Authority (“the Authority”) issued a Direction to Rectify and/or Complete (“the Direction”) to J M Kelly (Project Builders) Pty Ltd (“the Builder”) on 26 June 2006. The Direction was issued under the provisions of section 72 the Queensland Building Services Act 1991.
The Direction referred to 26 items of work and required completion of those items of work within 28 days of 26 June 2006. The Direction was issued after 12 months of correspondence and discussions between the Authority and the Builder. On 25 July 2006 the Builder served on the Authority an application before the Commercial and Consumer Tribunal to review the direction.
Consequent upon Queensland Civil and Administrative Tribunal (“QCAT”) assuming the jurisdiction of the Commercial and Consumer Tribunal the review application came on for hearing before QCAT at on 15 March 2010.
By the time of the hearing the parties had resolved all but three of the issues in dispute.
As set out in the Direction these were as follows:
“You are required to undertake rectification work necessary to address the issues listed below within the Time Period for Completion:
...
11. During rain water runs into the basement car park from the vicinity of the of roller door and under the fire escape door.
12. Water flows into and across the pumps and axillary(sic) power room floor.
...
14. Water penetrates the concrete ceiling above the car parks.”
I will deal with each of these items, referred to as “defects” in the various reports, in turn.
Defect 11
In his statements and evidence to QCAT the Builder's project manager (Mr Scott) agreed that the Builder had attempted to rectify this alleged defect by cutting a drain in the slab in front of the fire door. Mr Scott's evidence was that the drain was cut to the maximum permissible depth and that cutting into the slab any closer to the door would negate the fire rating of the door. Mr Scott reported that he attended the site and made an inspection of this alleged defect on 10 February 2010 that he found the drain pipe into which the drain had been cut into the slab flows was blocked by debris which would severely reduce the effectiveness of this rectification. Mr. Scott asserted that if clearing of this drain and outflow pipe was included as a routine maintenance item then the likelihood of influx of water would be greatly reduced. He asserted that it was incumbent upon the body corporate to undertake this clearing of the drain and outflow pipe as part of its routine maintenance obligations in relation to common property. Mr Scott in his report of 9 March 2010 advised that on 4 March 2010 he made a further inspection of this alleged defect during a period of persistent and heavy rain. Mr Scott's evidence was that there was at the time of that inspection, no water passing the drain and entering the building, although he observed that there was a small amount of water coming under the door threshold as a result of the rain hitting the door and running down the face of it.
Mr Ross Blumel (“Mr Blumel”), the Authority's inspector made a further inspection to ascertain the status of the defects on the 17 February 2010. During that inspection Mr Blumel took a photograph and a video, which were placed in evidence, showing water entry under the door and in consequence gave, as his expert opinion, that this item had not been satisfactorily rectified. Mr Scott in his report of 4 January 2008 argued that the water entry was the direct result of the developer’s architect’s design which he asserted not to be the responsibility of the Builder.
At the hearing it was pointed out on behalf of the Authority and accepted on behalf of the Builder that section 72 of the Queensland Building Services Authority Act 1991 does place responsibility on a builder if the result of the a builder’s following its client’s design is that the building work is defective or incomplete. This has been the case, at least since the decision of the Full Court in R v His Honour Judge Miller and the Builder’s Registration Board of Queensland, ex parte Graham Evans & Co. (Qld) Pty Ltd [1987] 2 Qd R 446. The fact that there was a defect in design may constitute circumstances to be borne in mind in deciding whether or not to issue a direction to rectify.
In other respects the evidence at the hearing confirmed that of the respective expert reports.
Defect 12
10. This defect relates to water penetration into the pump and auxiliary power room of the property. Mr Blumel concluded in his reports to the Authority and to QCAT that this item is a category 1 defect as it allows water penetration (which adversely affects the health and safety of occupants and the functional use of the building) into the building. Mr Blumel reported that water enters through the ceiling and walls of the pump room.
11. Mr Scott in his reports pointed to the architectural drawing for this room showing a spoon drain required to be constructed to remove water entering through the walls. Mr Scott argued that the Builder constructed a spoon drain in accordance with the drawings and that the only reason a spoon drain would be required is if the walls of that area of the basement were never intended to be waterproof. Mr Scott went on to advise that he had caused further works to be undertaken to rectify this alleged defect, by applying additional topping to further adjust the levels to prevent ponding in the south east corner of the room and by drilling an additional exit hole in the wall to assist with the removal of, what Mr Scott described as, "the minimal amount of water ponding." Mr Scott reported to QCAT that when he re-inspected the site on 4 March 2010, during a period of persistent and heavy rain, he found that there was little water in the pump room.
12. The Builder placed in evidence a photograph taken by Mr Scott, which shows that the area by the door to be completely dry and that a small amount of shallow water to be located by the equipment. Mr Scott reported that he had caused further rectification works to be undertaken to eliminate that small amount of water.
13. Mr Blumel referred in evidence to his re-inspection of 17 February 2010 and in his report arising from that re-inspection acknowledged that the Builder had attempted to rectify the defect by installing a pipe in the eastern wall and a catchment in the vicinity of the eastern wall of the pump room. Mr Blumel's evidence, supported by photographs and a video recording was that as at 17 February 2010 there was still a significant amount of water entering the pump room and the pipe and catchment are not sufficient to remove the water penetrating from the eastern wall and do nothing to remove the water entering through the other walls and ceiling of the pump and that, accordingly, this defect had not been remedied.
14. Mr Scott argued in his report that the video recording placed into evidence by Mr Blumel does not show any evidence of water entering through the pump room ceiling and states that he has never witnessed water penetrating through the ceiling in the pump room. In conclusion, Mr Scott asserted that the walls were designed to allow water to penetrate and that this is evident from the architectural drawing requiring the installation of a spoon drain to the internal walls.
15. As pointed out previously, defective design does not excuse defective building. It seems unlikely that any person turning their mind to the design or construction of a room which was to include electrical equipment would design or construct it in such a way as to allow water to penetrate through the walls, or indeed the ceiling.
Defect 14
16. Mr Blumel reported to QCAT and to the Authority that water penetrated the concrete ceiling above nine of the car parks Mr Blumel placed before QCAT photographs showing the attempts at rectification by the Builder by sealing some of the cracks, further cracks in the slab and the damage resulting from the water penetration through the cracks. Mr Blumel argued that the builder when confronted by an obviously defective design should have raised the issue in writing with the architect requesting a variation to the design. Following his inspection of 17 February 2010, Mr Blumel reported that there were still areas where the water leaks through the ceiling onto car park spaces. Mr Blumel placed in evidence photographs taken in the course of the inspection of 17 February 2010 of the water damage in the basement car park area and a video recording showing the penetration of water through the concrete ceiling of the basement and into the car park area. In his report of 26 February 2010 Mr Blumel also referred to the water damage to the fire exit door in the car park caused by water dripping through the ceiling.
17. The Builder asserted, through Mr Scott, that the water penetration in question is the direct result of the developer’s architect's design which is not the responsibility of the Builder. Mr Scott explained that, without admitting responsibility and in good faith the builder, had filled the leaking cracks which had removed the leaks but that the cracks are so numerous that it is impractical to treat all the cracks and asserted that the architect's design does not allow any practical solution. Mr Scott contends in his report for January 2008 that the architect designed and documented a floor slab which is not waterproof and naturally develops shrinkage cracks. The question for QCAT is whether a builder who constructs a floor slab above a car park which is not waterproof and which its experience tells it, or should tell it will naturally develop shrinkage cracks through which water will find its way onto the motorcars and other vehicles in the car park is performing defective work.
The Law
18. The law in the circumstances is relatively settled. In Notley, B.L. v Queensland Building Services Authority and Harvey, G.J. & S.A. Member Lohrisch set it out as follows:
16. In Gary Norwood Homes Pty Ltd –v- Queensland Building Services Authority (unreported, District Court Brisbane, 20/6/97) Forno QC DCJ made a number of comments regarding section 72 of the QBSA Act and relevantly – (a) A Direction to Rectify should be confirmed by the Tribunal on review where both objectively it can be said there exists defective or incomplete building work and the circumstances are such as to give rise to the exercise of a discretion to require rectification, which discretion is properly exercised in accordance with accepted principles; (b) The definition of "defective" in section 4 of the Act is a very broad and not exhaustive definition. Building work that provides to be ultimately unsatisfactory may have been satisfactory at the time the work was done. (c) The determination of the question of whether objectively there is defective building work involves, as much as possible, as examination of the whole of the circumstances; (d) The existence of defective building work enlivens discretion in the Authority or the Tribunal as the case may be. Review by the Tribunal is akin to an appeal in the nature of a rehearing and the Tribunal’s powers and duties are similar to those described by Moffat P in Turnball –v- New South Wales Medical Board [1976] 2NSWLR281 quoted in the judgement of Andrews ACJ (as he then was) in R –v- McGuire and Hamlon Homes ex parte, Builders Registration Board [1986] 1QdR61. (e) Fault in a builder is clearly a relevant (although not necessary) matter to be taken into account in determining whether or not, in the exercise of discretion, a rectification ought to be confirmed.
17. The definition of "defective" was considered by Member Lohrisch in Collyer –v- Queensland Building Services Authority [1998] QBT71 at p6-7 where he said:
"defective", in its expanded statutory meaning to include unsatisfactory is, in my view, sufficient to include the circumstances where there has been a failure to comply with contractual requirements, as clearly such conduct is not good enough to fulfil the conditions of the contract and amounts to a failure to meet requirements and a ground for complaint or criticism in terms of the ordinary meaning of the term "defective".
18. The Authority submits a direction need only express in broad terms the defect that should be addressed (Zacharyga –v- Queensland Building Services Authority [unreported] QBT, 17/2/1993 followed in Chalk –v- Queensland Building Services Authority). The Queensland Building Services Authority has no authority to direct the manner and method of rectification (per Derrington J in R –v- McGuireand Hamlon Homes [1986] 1QdR 61 at 73).
19. The relevant provisions of the QBSA Act provide –
72 Power to require rectification of building work
(1) If the Authority is of the opinion that building work is defective or incomplete, the authority may direct the person who carried out the building work to rectify the building work within the period stated in the direction. (2) In deciding whether to give a direction under subsection (1), the authority may take into consideration all the circumstances it considers are reasonably relevant, and in particular, is not limited to a consideration of the terms of, including the terms of any warranties included in, the contract for carrying out the building work. (3) The period stated in the direction must be at least 28 days unless the authority is satisfied that, if the direction is not required to be complied with within a shorter period – (a) a substantial loss will be incurred by, or a significant hazard will be caused to the health or safety of, a person because of the defective building work; or (b) the defective building work will cause a significant hazard to public safety or the environment generally.
(4) Subject to subsection (3), the period stated in the direction must be a period the authority considers to be appropriate in the circumstances. (8) A direction cannot be given under this section more than 6 years and 3 months after the building work to which the direction relates was completed or left in an incomplete state unless the tribunal is satisfied, on application by the authority, that there is in the circumstances of a particular case sufficient reason for extending the time for giving a direction and extends the time accordingly.
(10) A person who fails to rectify building work as required by a direction under this section is guilty of an offence.
Maximum penalty – 80 penalty units.
(14) The authority is not required to give a direction under this section to a person who carried out building work for the rectification of the building work if the authority is satisfied that, in the circumstances, it would be unfair to the person to give the direction.
Example for subsection (14) –
The authority might decide not to give a direction for the rectification of building work because of the amount payable but unpaid under the contract for carrying out the building work.
(15) A direction given under this section need not be complied with if – (a) a proceeding for a review of the authority’s decision is started in the tribunal; and (b) the tribunal orders a stay of the decision.”
19. This is not a case in which the Builder has walked away from the job and accepted no responsibility. The vast majority of the defects identified in the direction have been remedied.
20. The Builder has submitted that even if it is found that the remaining items constitute defects, the Authority and QCAT ought to exercise the discretion given by the legislation in favour of the Builder. This submission is largely based on the Builder's contention that it has built what it was contracted to build in accordance with plans and specifications prepared by the developer’s architects. The Authority has pointed out in its submissions that no copy of any contract or agreement between the Builder and the developer is in evidence.
21. The Authority has also referred to its policy in relation to the rectification of building work which characterises defects and adversely affecting the health or safety of persons residing in or occupying the building or allowing water penetration into a building as Category 1 Defective Building Work, which a person who carries out should be required to rectify unless in all the circumstances rectification is an unreasonable remedy.
22. In Don Mackay Pty Ltd v QBSA [2009] QCCTB 259 Member Lohrisch endorsed and approved the earlier remarks of Member Spender in Feoderoff v QBSA [ 2005 and] CCT QO35 at 23 , in which she said:
“A direction to rectify in a legal sense is not given solely for the benefit of the homeowner, but rather to ensure proper standards in the industry”
23. This summation reflects the law and applies particularly in relation to building work done on what is the common property of a community title scheme. Buyers of lots in a new community title scheme are entitled to expect the common property of the scheme to be free of defects.
24. A body corporate is obliged by regulation to maintain common property in good condition (see for example Section 159 of the Body Corporate and Community Management (Standard Module) Regulation 19980). If common property is not in good condition the body corporate must put it in good condition. It will be rare that a builder will be, or should be, relieved of its obligation to remedy defective building work where that defective building work is to common property and the body corporate would be obliged to undertake the rectification if the builder failed to do so.
25. In these circumstances I consider that the Authority was correct in identifying the works described in items 11, 12 and 14 of the Direction as defective and that the Authority properly exercise the discretion conferred on it by section 72 of the Queensland Building Services Authority Act 1991. Thus I confirm the Authority's decision under review.
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