Mannix v Queensland Building Services Authority (QBSA)
[2013] QCAT 406
| CITATION: | Mannix v Queensland Building Services Authority (QBSA) [2013] QCAT 406 |
| PARTIES: | Mr Steven Mannix and Mrs Rebecca Mannix (Applicants) |
| v | |
| Queensland Building Services Authority (QBSA) (Respondent) |
| APPLICATION NUMBER: | GAR078-12 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 6-7 June 2013 |
| HEARD AT: | Mackay |
| DECISION OF: | Graham Quinlivan, Member |
| DELIVERED ON: | 2 August 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The decision of the Authority dated 30 November 2011 is confirmed. |
| CATCHWORDS: | Costs - apology - damages |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Steven Mannix and Mrs Rebecca Mannix |
| RESPONDENT: | Mr Brendan Cole, Solicitor, Queensland Building Services Authority. |
REASONS FOR DECISION
During 2008/2009, Mr and Mrs Mannix had a house built for their family at 13 Kew Court, Glenella, Queensland.
Since that time Mr and Mrs Mannix have had a number of disputes regarding the construction, firstly with the builder and subsequently with the Queensland Building Services Authority.
On 30 November 2011, the QBSA wrote to Mr and Mrs Mannix regarding their insurance entitlement under the BSA Home Warranty Insurance Policy. The QBSA advised them that they may be eligible for insurance assistance and that the reasonable cost of rectification would be determined by calling quotes from licensed contractors. A copy of a proposed Scope of Works was included with the letter.
On 3 January 2012 Mr and Mrs Mannix filed an application for a review of the QBSA’s decision on the Scope of Works requirements made on 30 November 2011 and the findings of the building certifier’s investigations for 13 Kew Ct, Glenella made on 20 December 2011.
When conducting a review, the Tribunal has the power to confirm or amend the decision, set aside the decision and substitute (its own decision); or set aside the decision and return the matter for reconsideration (with directions) to the Authority.
In reviewing the Authority’s decision, the Tribunal effectively stands in the shoes of the Authority, exercising the same powers under the Building Act 1975 to produce the correct and preferable decision[1].
[1] Queensland Civil and Administrative Tribunal Act 2009 s 20(1).
The Tribunal must hear and decide the review by way of a fresh hearing on the merits. That means that the Tribunal can consider material that was not before the Authority at the time it made its decision.[2]
[2] The standard of proof to be applied by the Tribunal is the civil standard on the balance
of probabilities as set out in the decision of Briginshaw v Briginshaw & Anor ((1938) 60
CLR 336) and applied in earlier decisions of this Tribunal.
Mr and Mrs Mannix’s case
Mr and Mrs Mannix sought to the following matters to included in the Scope of Works as the Tribunal’s correct and preferable decision in this review:
· That mould, which is a result of the defective works, be addressed and removed since it has resulted in serious health issues for the occupants and their children.
· That the Authority:
o be directed to complete all directions given in the QCAT Decision 7 March 2011 for case number BD304-09 in accordance with the approved Development Application Decision notice No. 20081374 to which the building was to be built.
o confirm that the building has been certified correctly and legally and all rectification works will not effect this certification.
o modify their Scope of Works to include all missing items that they have failed to address or include as outlined in the QCAT Decision 7 March for case number BD304-09.
o conduct all physical investigations when a complaint has been raised that questions that the as constructed building does not conform to the approved development application decision notice and solely rely on the response from the individual(s) being investigated.
At the hearing on 7 June 2013, Mr and Mrs Mannix submitted that they additionally sought the following orders, declarations or directions:
i) That after QCAT Case No. BD304-09, the builder had the right to properly terminate the Building Contract but chose not to.
ii) That by letter dated 6 December 2011, Mr and Mrs Mannix properly terminated the building contract, in accordance with the contract conditions and at law.
iii) That Mr and Mrs Mannix are entitled to claim under any/all three parts of the QBSA’s Insurance Policy and they are therefore entitled to a total claim of $400,000 being the maximum amount payable.
iv) That the Authority’s proposed Scope of Works should further include the following:
·Rectification/removal of the mould infestation within the dwelling and verify that the dwelling is returned to a level fit for human habitation,
·Rectification of the defective/incomplete internal piers,
·Installation of vapour barrier between brickwork and slab, including complete replacement of the Damp proof coarse, and
·That all works should be legally certified in a manner that provides complete certification of the building as it is built with the rectification works to conform to the requirement of the Building Regulation 2006.
v) That the Tribunal direct the Authority to release the insurance monies of $400,000 to Mr and Mrs Mannix, in order for them to repair the building to the extended Scope of Works or demolish and rebuild, determined on which is the most cost effective.
The Authority’s case
In response, the Authority seeks that the Tribunal confirm its decision about the Scope of Works to be undertaken under the statutory insurance scheme.
Did Mr and Mrs Mannix properly terminate the contract by their letter dated 6 December 2011?
On 6 December 2011 Mr and Mrs Mannix through their legal advisors wrote to the QBSA and argued that
”… our client has properly terminated the contract with the builder… The QCAT decision, which effectively found that our client had not properly terminated the contract, does not impact on our client’s right to terminate the contract. At best, the builder may have had an opportunity to terminate the contract by treating our client ‘in proper’ purported termination as a repudiation, accepting that repudiation and terminating the contract. The builder did not do that. Accordingly, the contract has remained on foot until our correspondence (attached) which properly terminated the contract”.
Further Mr and Mrs Mannix argue that the builder was in breach of his contractual obligations on many items brought to his attention well in excess of the requirements to terminate the contract lawfully. They quote the statement by Member Allen in QCAT case number. BD304-09 that
While it is clear that the Builder was in breach of the contract the termination was wrongful as it was done without allowing the Builder the opportunity to remedy its breach.
Mr and Mrs Mannix do not refer to the Member’s comments leading up to this quote which state:
“Mr and Mrs Mannix could at this point have elected to issue a notice under clause 28 requiring the Builder to remedy its breach of the contract and if the Builder had not rectified the breach or commenced to within 10 days Mr and Mrs Mannix could have ended the contract. By ending the contract under clause 28 Mr and Mrs Mannix would then have been entitled to go into possession of the house. Until the contract comes to an end the Builder has under clause 10 of the contract exclusive possession of the site to carry out the works and the owner may only have access to the works under the Builder’s supervision. Mr and Mrs Mannix as outlined above on the advice of their solicitor did not follow this course and terminated the contract without giving the Builder an opportunity to remedy its breach.”
Mr and Mrs Mannix further contend that if it is decided that the decision of the Tribunal stands then the contract remained on foot because various authorities “assert a rule against automatic termination”[3]. They claim that where termination has not been properly executed, the only alternative is that the contract (and its obligations) survive and continue.
[3]JW Carter and DJ Harland, Contract Law in Australia (2002), LexisNexis Butterworths, 4th ed. at 683; Peter Turnbull & Co Pty Ltd v Mundus Training Co (Australasia) Pty Ltd (1954) 90 CLR 235; Bowes v Chaleyer (1923) 32 CLR 159; United Australia Ltd v Barclays Bank [1941] AC 1 at 30; Automatic Fire Sprinklers Pty Ltd v Wayne Tank and Pump Cp Ltd [1980] AC 827; Khoury v Government Insurance Office of NSW (1983) 165 CLR 622 at 633-4.
Consequently Mr and Mrs Mannix reason that after the Tribunal’s decision, the builder had the right to properly terminate the building contract in accordance with the contract but chose not to. As a result Mr and Mrs Mannix’s letter of 6 December 2011 properly terminated the Contract in accordance with its conditions and at law.
Mr and Mrs Mannix submit that therefore there can be no question that the termination precondition in the BSA Insurance policy conditions (Part 1 – Non Completion) has been satisfied.
The issue of whether the contract was terminated has already been determined by the Tribunal in its Appeal Jurisdiction in appeal matter Mannix v Chris Neale Constructions Pty Ltd [2011] QCATA 222. The Tribunal at paragraphs 19-21 stated that:
“Mr and Mrs Mannix have referred to numerous breaches of contract as evidence of the builder’s intention to repudiate the contract. Those breaches may be evidence of the builder’s view of the need to comply strictly with the terms of the contract, but I do not regard them as being evidence of the builder’s intention to repudiate or renounce the contract. Indeed, the builder’s email of 6 May 2009 refers specifically to the terms of the contract and is evidence of its intention to be bound by the contract.
In contrast, by advising that they intended to take possession of the house before the final payment, Mr and Mrs Mannix evidenced an intention not to be bound by the contract. The builder put this proposition to SR Wallace & Wallace in an email sent late on 6 May 2009. There is an email string debating this point which finished on the afternoon of 7 May 2009 with SR Wallace & Wallace finally advising the builder that Mr and Mrs Mannix will be entering into possession and pursuing defective and incomplete works and unauthorised variations with the QBSA.The evidence does not support the submission that Mr and Mrs Mannix accepted the builder’s repudiation of the contract. The learned Member was correct in his finding that Mr and Mrs Mannix terminated the contract.”
This Tribunal is bound by the decision of the QCAT Appeal Tribunal as this had been decided and cannot be revisited.
Under what parts of the QBSA’s Insurance Policy are Mr and Mrs Mannix entitled to claim and what is their maximum entitlement and is this claim appropriate?
The Policy Conditions of the QBSA’s Insurance Policy is a statutory instrument that is subordinate legislation[4]. The relevant insurance policy is edition 7.
[4] Statutory Instruments Act 1992 ss 7, 9.
Clause 1.2 of the Conditions provides that the Authority is liable for loss under this part when the contract is for a fixed price and the insured has properly terminated the contract with the contractor. The term “properly” means lawfully under the contract or otherwise at law upon the contractor’s default.
The Tribunal has found that Mr and Mrs Mannix did not properly terminate the contract, which means Mr and Mrs Mannix cannot claim under this provision.
Clause 2.1 of the Conditions allows the Authority (subject to the terms of the policy) to pay the cost of rectifying defects in the residential construction work that is primary building work, other than for defects from subsidence or settlement referred to in Part 3 of the Conditions. The Authority is willing to do this up to a maximum of $200,000.
Clause 3.1 of the Conditions allows the Authority (subject to the terms of the policy) to pay for the cost of remedying subsidence or settlement damage to the residential construction work that is primary building work. “Subsidence” or “settlement” means movements in the foundations of the residential construction work that adversely affects the structural adequacy or serviceability, performance or functional use of that work[5].
[5] Clause 3.1(b).
Clause 4.3(b) of Part 4 of the Conditions states that the maximum amount payable by the Authority in relation to a single detached dwelling that includes any or all of the following components:
i)Loss resulting from defective work that becomes apparent after practical completion;
ii)Subsidence or settlement that becomes apparent after practical completion;
will be the replacement value of the residential construction work or $200,000 whichever is less.
“Practical completion” is defined as meaning when the works are complete in accordance with the contract and all relevant statutory requirements and inspections have been satisfactorily completed or the works are occupied which ever is first.
Clause 4.6 states that the maximum amount that QBSA will be liable to the insured for where the contractor has failed to complete the contract is $200,000.
Clause 4.7(a) removes any doubt by dictating that the maximum amount payable regardless of whether a claim is made under Part 1, 2 or 3 or any or all of them is $400,000.
In the Tribunal’s decision in matter no. BDL304-09, it found that Mr and Mrs Mannix took possession on or about 7 May 2009 and at that time defects existed.
Mr and Mannix submit that a meeting was held on 23 November 2011 between their legal representatives and the Authority to address issues with the draft Scope of Works and the certification of the building. A dispute then arose regarding the finalising of the Scope of Works and moisture tests that were proposed by Mr and Mrs Mannix in relation to the slab and the potential for claims to be allowed under both the non-complete and defective construction conditions of the insurance policy.
Mr and Mrs Mannix accused the Authority of acting in bad faith with respect to the Authority’s refusal to comply with an alleged agreement reached at the meeting on 23 November 2011. Mr and Mrs Mannix argue that rectification of the foundations/slab could be addressed by any/all three parts of the Authority’s insurance policy. They claim that there are missing components of the construction and that what has been constructed is defective because it does not meet the Authority’s subsidence policy and the performance requirements of the Engineer’s design and Australian Standard 2870.
Mr and Mrs Mannix continue to contend that the Authority’s insurance policy does not state when a contract must be properly terminated, only that it must be lawfully terminated under the contract. They continue to claim that they have met that condition.
Mr and Mrs Mannix submit that the complete cost of getting the building to habitable standard will be well in excess of $400,000. They propose that the full amount of $400,000 be provided by the Authority for the demolition and reconstruction of the dwelling given the builder’s several conflicting statements, the incomplete/defective construction, the Engineer’s design and the Authority’s policy on subsidence.
In particular Mr and Mrs Mannix claim that the Scope of Works should also include:
·Rectification/removal of the mould infestation within the dwelling and verify that the dwelling is returned to a level fit for human habitation;
·Rectification of the defective/incomplete internal piers;
·Installation of vapour barrier between brickwork and slab, including complete replacement of the Damp proof coarse(sic), and
·That all works should be legally certified in a manner that provides complete certification of the building as it is built with the rectification works to conform to the requirement of the Building Regulation 2006.
The Authority submits that the provisions of their insurance policy limit any claim by Mr and Mrs Mannix to an amount of $200,000 based on the provisions of clause 4.3 of the Policy Conditions. The Authority says that it has obtained indicative quotes showing that the cost to undertake the work already identified in the Scope of Works is between $299,594.55 and $327,071.38.
The Authority argues that even if there were defects in the residential construction work not covered by the Scope of Works and it was reasonable and necessary to rectify those defects, there is no reason to enlarge the Scope of Works to include other work because the maximum amount that Mr and Mrs Mannix might be entitled to will be exhausted doing the work already identified in the Scope of Works.
The outcome:
The reality for Mr and Mrs Mannix is that in spite of their ongoing battle to retrieve some “justice” from their situation, the solution will not be found in an insurance claim against the Authority as none of their claims under the policy completely satisfies them. The three heads under which they can potentially claim are uncompleted work, defective work or subsidence or settlement.
Uncompleted work
This issue is determined by whether Mr and Mrs Mannix properly terminated their contract with the builder. This was determined by the Tribunal on 7 March 2011 in matter no BD304-09 and confirmed on appeal to QCAT’s Appeal Tribunal on 22 August 2011 in matter number APL105-11.
The previous Tribunals found the termination was wrongful because Mr and Mrs Mannix did not give the Builder an opportunity to remedy the breach. This Tribunal is bound by the previous findings of fact of the original and Appeal Tribunal.
The net effect of those decisions is that Mr and Mrs Mannix are precluded from a claim under Part 1 of the Policy Conditions because Mr and Mrs Mannix did not properly terminate the contract with the builder.
Defective work, subsidence or settlement
Under Parts 2 & 3 of the Policy Conditions, Mr and Mrs Mannix are limited by clause 4.3(b) to a total amount of $200,000 for claims for loss resulting from defective work that becomes apparent after practical completion and claims for subsidence or settlement after practical completion. Practical occurred when Mr and Mrs Mannix occupied the works around 7 May 2011.
There is no dispute between the parties that the amount required to rectify the problem greatly exceeds $200,000 but that amount is the limit of their entitlement to claim under the provisions of the insurance policy.
I accept the Authority’s submission that even if there are further defects in the residential construction work currently not covered by the Scope of Works the maximum amount that Mr and Mrs Mannix might be entitled to will be exhausted doing the work already identified in the Scope of Works and there is no point in enlarging the Scope of Works further.
For the reasons given, the Tribunal has determined that the decision of the Authority dated 30 November 2011 is confirmed
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