McMonagle v Queensland Building Services Authority
[2011] QCAT 410
•30 August 2011
| CITATION: | McMonagle v Queensland Building Services Authority [2011] QCAT 410 |
| PARTIES: | Mr Mark McMonagle |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | GAR020 -11 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 25 August 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Peta Stilgoe, Member |
| DELIVERED ON: | 30 August 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | The application is dismissed and the respondent’s decision of 22 December 2010 is confirmed. |
| CATCHWORDS: | BUILDERS’ STATUTORY INSURANCE – where owner entered into possession and paid final payment – where retaining wall not built and pool lining and filtration equipment not installed – where builder unable to complete – where owner paid builder final payment – where owner made claim on statutory insurance – where Authority refused claim on grounds of prepayment –whether Authority entitled to refuse claim – whether contract complete – meaning of “minor omission” in standard building contract Cordon v Lesdor [2010] NSWSC 1073 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr McMonagle in person |
| RESPONDENT: | Ms D Mahiepala, in-house legal officer of the Queensland Building Services Authority |
REASONS FOR DECISION
Mr and Mrs McMonagle received the keys to their new home on 23 April 2010. On that day, together with the builder, they completed an agreed defects list[1]. They paid the builder the final payment on 24 April 2010.
[1] SOR3.
There are 26 items on the defect list. The builder rectified 21 items. The builder’s licence was suspended on 24 May 2010. It did not rectify the remaining items on the list so Mr McMonagle submitted a claim against the statutory insurance policy for rectification of those items. The Authority has rejected the claim for two items: the pool lining and connection of the pump and filter; and the construction of the retaining wall to the southern boundary. It did so on the basis that:
a)These two items were not “minor omissions” within the meaning of the “practical completion stage” under the building contract.
b)Because the items were not minor omissions, the works were not complete and Mr McMonagle should not have paid the final payment.
c)Because Mr McMonagle did make the final payment, he prepaid the builder within the meaning of clause 1.6(b) of the insurance policy.
Mr McMonagle has applied for a review of that decision. The questions I am asked to determine are:
a)Whether the installation of the pool filter, installation of the pool lining or the construction of the retaining wall were “minor omissions” for the purpose of the definition of practical completion within the terms of the building contract.
b)Whether Mr McMonagle paid money to the builder before the money was due within the meaning of clause 1.6(b) of the insurance policy and, if so, to what extent.
Were the defects “minor omissions”?
The parties agree that “minor omissions” is not defined in the building contract. The Authority also assures me that, despite an extensive search, there is no case directly on point which will assist me.
“Practical completion stage” is defined as:
“…that stage of the works when the works are completed in accordance with the contract and all relevant statutory requirements apart from minor omissions or minor defects and the works are reasonably suitable for habitation.”
“Works” is defined as:
“…the whole of the works to be carried out by the builder under the Contract, description of which is contained in Schedule 3, and includes variation to the works.”
Mr McMonagle says that the disputed items are minor because the house was reasonably suitable for habitation and he and the builder agreed that they were minor when they compiled the defect list. The Authority says that the disputed items were not minor because the works had not been completed in accordance with the contract.
Although I understand the rationale behind his submission, I cannot agree with Mr McMonagle that because he and the builder labelled the disputed items as “minor” they must be minor.
Looking at the definition of “practical completion stage” as a whole, the Authority’s argument is somewhat circular. The definition contemplates that practical completion may be achieved even though the works are not completed in accordance with the contract because of minor omissions or defects. To argue that “minor omissions or defects” includes the failure to complete the works in accordance with the plans is simply self-defeating.
[10] The Authority referred me to the decision of Cordon v Lesdor[2] in support of its argument that “completion” means completion in accordance with the contract. That case involved a very different set of facts. Justice McDougall had been asked to interpret a joint venture deed between a developer and a builder concerning a commercial development. The parties had contemplated a building contract but none existed. The total cost of the works in issue was about $8M and this was fully funded through funds borrowed by the developer. Significantly, for His Honour, there was no retention fund available to the developer if the builder failed to complete the works in accordance with the contract.
[2] [2010] NSWSC 1073.
[11] Mr McMonagle’s position is very different. He had the protection of the defects liability period; he had agreed a list of defects with the builder and the builder agreed to attend to the defects. Mr McMonagle also had the protection of the statutory insurance. Consequently, I find His Honour’s reasons in Cordon v Lesdor of little assistance in determining this dispute.
[12] I am attracted by Mr McMonagle’s submission that the disputed items must be minor because the house is reasonably suitable for habitation. That approach accords with the tribunal’s general philosophy when determining disputes between owners and builders: that builders may not be required to rectify defects that do not affect the functioning of a house but the owner may be entitled to damages for breach of contract. The interpretation is also in line with the aspirations of the building industry that owners pay the contract price in full, gain possession of their homes and builders then have some time to “fix up” outstanding items.
[13] The problem with Mr McMonagle’s submission is that I can envisage situations where a house is reasonably suitable for habitation but the builder has omitted something from the works that cannot be construed as minor. What would Mr McMonagle have done, for example, if the pool had not been constructed at all? The house would have been suitable for habitation, Mr McMonagle told me that he was anxious to take possession because the delay in completion was causing them financial hardship but it could not be said that the absence of the entire pool could be considered a minor omission.
[14] I am, therefore, left with the dictionary meaning of “minor”: “lesser in size, extent or importance”.[3] It is a question of fact whether each of the disputed items is, in my opinion, minor.
[3] Macquarie Concise Dictionary.
[15] The Authority argues that the omission of the retaining wall is not “minor” because:
a)According to the plans, it was about 30 metres long and intended to run along the majority of the southern boundary of the land.
b)There was a significant cut of 1.5m at the southern boundary where the wall was to be constructed.
c)The estimated cost to construct the wall is $12,756.48 which is “not an insignificant amount of money.”
[16] The approved plans[4] do confirm that the proposed retaining wall of about 30 metres is required to contain both cut and fill on the site. While it may not be important for the initial liveability of the house, the retaining wall is essential for the long term integrity of the land and the neighbour’s land. For that reason, I do not consider the absence of the retaining wall to be a minor omission.
[4] SOR7, pages 148, 165, 177 and 182.
[17] Once I come to the conclusion that the contract was not complete, whether or not the absence of the pool lining and filtration equipment is a minor omission is irrelevant. If it is not a minor omission, it is another reason why Mr McMonagle should not have made the final payment. If it is a minor omission, its significance is overtaken by the fact that the omission of the retaining wall meant that the contract was not complete.
Did Mr McMonagle pay the builder money for the contracted works before they became due?
[18] The Authority says that Mr McMonagle prepaid the builder for the retaining wall when he paid $56,068.90 for the “Slab and Retaining” stage. Mr McMonagle says that:
a)The building contract does not define “Slab and Retaining”.
b)When that payment fell due, all of the retaining required at the time had been constructed.
c)The retaining wall on the southern boundary “was not even exposed” and could not have been constructed because the adjoining lot had not been cut until some time later.
[19] I don’t completely understand Mr McMonagle’s argument. The plans[5] show that the construction of the slab required the construction of cavity brick retaining walls. Those walls must have been in place when the builder called for payment of this stage. At the same time, the builder should have completed the cut and fill across the whole site and the need to retain the southern boundary should have been apparent. If, later, the adjoining owner conducted work on that land which required additional retaining works, that is a different matter which is outside the scope of this dispute. The documents before me indicate no reason why the builder failed to construct the retaining wall on the southern boundary as part of the Slab and Retaining stage. I accept the Authority’s submission that Mr McMonagle did prepay the builder for the retaining wall.
[5] SOR7, page 178.
[20] The obligation to pay the final payment only arises if the works are complete. Because I have determined that the failure to build the retaining wall was not a minor omission, it must follow that the works were not complete and Mr McMonagle was not obliged to pay the final payment. Mr McMonagle has prepaid the builder for the pool lining, filtration equipment and the retaining wall in making the final payment.
What is the extent of the prepayment?
[21] I understand the real question to be “by how much did Mr McMonagle prepay the builder?”
[22] The only evidence I have available is the quotes obtained by the Authority. I accept the lowest of these and find that Ms McMonagle prepaid the builder by $12,756.48 in relation to the retaining wall and $11,500 for the completion of the pool. There is a note that Mr McMonagle had the pool completed at a cost of $6,400 but I have no evidence of that. In any event, substituting that amount into the Authority’s calculations would simply balance the equation to the same result; that the Authority is not liable to Mr McMonagle for the cost of completing the works.
General matters and conclusion
[23] Mr McMonagle was critical of the affidavit of Mr Stick, saying he was not an independent expert and the parties had not briefed him with a list of questions to be answered.
[24] I agree with Mr McMonagle’s assessment and I am gratified that, unlike many parties who seek the tribunal’s assistance, he apparently has considered the requirements of Practice Direction 4 of 2009.
[25] Mr Stick’s affidavit has other problems in that he purports to give evidence about matters that really are questions of interpretation and much of his “evidence” is no more than a reiteration of the Authority’s submissions. I acknowledge the Authority’s concession that Mr Stick’s affidavit was offered only as a guide, given his long experience in the building industry. The tribunal appreciates affidavits that offer evidence about facts. It also appreciates thoughtful submissions. Documents that attempt to offer both evidence and submissions are not helpful. The Authority should consider refraining from offering similar affidavits of “guidance” in the future.
[26] The failure to construct the retaining wall on the southern boundary is not a minor omission within the meaning of the building contract. Mr McMonagle did prepay the builder for that work. Accordingly, because of clause 1.6(b) of the policy, he is not entitled to recover the cost of completing the contract from the statutory insurance policy. The application should be dismissed.
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