McNab Constructions Australia Pty Ltd v Queensland Building Services Authority

[2011] HCATrans 204

[2011] HCATrans 204

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B6 of 2011

B e t w e e n -

McNAB CONSTRUCTIONS AUSTRALIA PTY LTD

Applicant

and

QUEENSLAND BUILDING SERVICES AUTHORITY

Respondent

Application for special leave to appeal

HAYNE J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO BRISBANE

ON FRIDAY, 12 AUGUST 2011, AT 10.47 AM

Copyright in the High Court of Australia

MR D.B. FRASER, QC:   If it please the Court, I appear for the applicant with MR B.E. CODD.  (instructed by Lenz Moreton)

MR J.K. BOND, SC:   If the Court pleases, I appear with MS M.H. HINDMAN for the respondent.  (instructed by HWL Ebsworth Lawyers)

HAYNE J:   Yes, Mr Fraser.

MR FRASER:   Your Honours, this application involves an important question of statutory construction in Queensland which concerns the power of the respondents to direct rectification of building work in Queensland.  The issue which this application throws up potentially affects all participants in the building industry, including owners of land who contract with licensed builders to have building work carried out with a view to profiting thereby.  We can demonstrate, we respectfully submit, the importance of the issues involved by going directly to the critical section of the Act, which is section 72.  Your Honour, we have included a number of versions of the Act in the applicant’s material, and I believe your Honours have the applicant’s material.

Can I ask you please to go to tab 3 at page 211, and your Honour will see section 72(1), which starts about point 8 of the page.  I would ask the Court to read subsections (1) and (2) on that page, then turning over the page, subsection (5)(a), (c) and (d), subsection (5A), (7), (8), (10), (11) and (14).  It is a lengthy section and I am sure your Honours have looked at this before the oral submissions have commenced.  The first point we want to make is that none of these sections have been changed despite an amendment to the Act since the relevant building work was completed.  Accordingly, it is our submissions that the reasoning of the Court of Appeal, that is the majority of the Court of Appeal, will continue to bind those who are participating in the building industry in Queensland, notwithstanding the amendments to the Act.  There is a definition of the expression “Building Act” which your Honours will find behind the same tab at page 257.

In particular, we ask the Court to look at (a) and (fa) of that definition.  If your Honours turn the page, your Honours will find a definition of the expression “carry out building work” which is the critical phrase with which this application is concerned, but this definition is expressed to be only for a different part – that is, Part 4A – and I will take the Court to that shortly.  There is at page 260 a definition of the expression “contract administration”.  Again, that is a definition which is referable to a particular circumstance, that is, “building work designed by a person”, and it concerns the earlier definition of “building work” on page 257, that is:

contract administration carried out by a person in relation to construction of a building designed by the person -

Can I please then ask you to go to section 67A, which is the definition of “carrying out building work” and your Honours will find that at page 190, again behind tab 3.  Your Honours will see that the definition of “carry out building work” in relation to this part – and can I just pause there to mention that this was a building contract, or at least the building work was conducted through contracts which are other than domestic building contracts.  Your Honours will appreciate what occurred here was that the principal contracted directly with various trade contractors to have work done and engaged the services of my client, the applicant, in relation to a role which was described in the Court of Appeal as being equivalent to that of the superintendent discussed in detail in an earlier case.  For present purposes, the definition “carry out building work” is important because, as appears there, it means – and there were three separate descriptions:

(a)carry out building personally; or

(b) directly or indirectly, cause building work to be carried out; or

(c)provide advisory, administrative, management or supervisory services for carrying out building work.

I ask the Court to note that those elements are defined disjunctively by the conventional use of the expression “or”.  Your Honour, Part 4A, just to assist the Court, involves the regulation of how contracts are entered into and given effect to in particular circumstances.  May I then ask the Court to return to section 72 at page 213.  In this case the subsection upon which the appeal below turned and with which this application is concerned is subsection (11) and it is expressed in terms quite differently, of course, to the definition of carrying out building work.  For the purposes of those two subsections (5)(c) and (d), and then (a) – and your Honours can read that – and (b), which are joined by the expression “and”.

Your Honour, that is able to be directly contrasted to the approach of the use of the disjunctive word “or”.  As well, one can see that the expression “whether” is introduced into this provision, which is not a word which is found elsewhere.  In the event, the majority of the court below have effectively, in our submission, construed section 11 as though the word “whether” was to mean “where” and the word “and”, where it appears at the end of (2) was to be read as “or”.  So the result is that each of those particular elements is to be regarded as empowering a direction to be made to a person in categories (c) and (d) of subsection (5).

I said earlier to your Honours that it was important because one of the things that happens is that a person who directly or indirectly causes building work to be carried out, for example, by an owner of land contracting with a builder, who does so with a view to profiting from having carried out that building work; perhaps that person has cut off a parcel of land from a larger block – that person is then amenable to a direction to rectify the work, according to the way in which the majority decision approaches the matter.  In addition, it is our submission that this approach means that any person who for profit or reward provides advisory services, administration services, management services or supervisory services for the work, which is a reference back to the “building work” which the authority considers is defective, is also amenable to a direction to rectify.

Now, that is, with respect, a quite extraordinary result, but the question for this Court is whether that is what the use of the expressions in subsection (11) mandates.  As to that, we have detailed our submission in the application book.  May we reprise that by mentioning, as is conventional, the ordinary meaning of “and” is conjunctive, but, by the process of reasoning which is exposed in the decision below, it has been read as operating disjunctively in this case, and can I give your Honours the references.  That is in the appeal book at page 37, line 30 and at page 39, line 52.

The result is that the expression “and” is given a meaning which is directly opposed to its ordinary meaning and in that respect one then looks to see whether there is any textural reason which emerges from the rest of the Act which supports that approach.  There is none, indeed, the provision that I have taken the Court to earlier in section 67A rather suggests that where the legislature intended that when one was considering carrying on building work that there would be three separate elements which might constitute that in a disjunctive fashion.  They have approached it in the conventional manner.

However, there is nothing which is pointed to either in the context of the Act as a whole or in any particular provision which supports the approach that was taken by the Court of Appeal.  The respondent does not point to any history or relevant background which supports the approach and the way in which the result is arrived at, with respect, is that the majority’s reasons, and if I can take the Court to the application book at page 40, line 25, your Honours will see that there is reference to a “wider construction” being adopted and the reasoning process which leads to that is that there is a different purpose, that this is legislation in this respect which although almost identical words are used in the context of licensing, this particular section is addressing the question of rectification which is designed to provide a remedy and accordingly a different approach should be taken to it.

Your Honour, in our submission, that where the issue before the Court concerned the question of the determination of the circumstances which were necessary in order to direct rectification against a particular category of persons, it was necessary to determine the meaning of the words – what the meaning of the words used required.  Subsection (11), in our submission, as we have developed in the applicant’s outline, defines the circumstances in which a person identified in subsections (5)(c) and (d) may be directed and in the case where the defective work has not in fact been carried out personally a direction may only be given to a person who is taken to have carried out the work. If your Honours go back to page 213 of the applicant’s material in subsection (11) one can see that the plain meaning of the words there will be two requirements:

For the purposes of subsection (5)(c) and (d) –

(a)a person carries out building work, whether the person –

(i)carries it out personally; or

(ii)directly or indirectly causes it to be carried out; and -

(b)a person is taken to carry out building work –

that is, even though they have they have not done so, they will be taken to have done so if they provide advisory services, et cetera, for the defective building work.  That approach, in our submission, gives a perfectly sensible construction to the section.  It is a construction which is consistent with almost the same expressions in section 42.  It is a result which does not lead to harsh or absurd results, in fact it entails that where a person has caused work to be done and has exercised some control, some activity involved for the work in its carrying out, which will affect the manner in which it is carried out, that person may be amenable to a direction.

Your Honour, we have made the submission that it leads to absurd and harsh results, can we mention some illustrations?    A bank that advances funds administering a contract, in relation to progress claims for work which was carried out, will provide administration services for the work, an accountant who keeps a record of invoices incurred for a building project which is done on a do and charge basis will also provide administration services, and of course engineers who provide designs will also fall within the web.  Your Honour, those illustrations will catch persons who, on any rational basis, would not be seen to have exercised any control over the quality of the work and have not caused it to be performed.

So in terms of the chain of causation, they stand to one side; they are providing services which may be described as being in relation to the work or indeed for the work, but because they have not caused the work, it is our submission that it would lead to an absurd result to put them in a position where they are amenable to a direction to rectify the defective work of others.  It really, with respect, strikes at the whole sense of a provision of this kind.  Granted that a remedy is intended to be provided, at the same time however, when the width of section 72(5)(c) and (d) considered, if that is expanded in the way which has been adopted by the majority in the Court of Appeal by reference to subsection (11), it leads to the most extraordinary consequences.  The definition of the person identified is a sensible one, as we have submitted, if one adopts our approach.  It also explains why different approaches to the concept of carrying out building work appear.  Quite simply, if one looks at section 72(5)(d):

a person who, for profit or reward, carried out the building work -

if one simply adopts, as was done by the majority below, subsection (11)(a)(ii), any person who:

directly or indirectly causes it to be carried out –

Does your Honour wish me to – I have one more point to make.

HAYNE J:   Yes, go on; it is the yellow light, not the red light.

MR FRASER:   I am sorry, your Honour, I was disconcerted by the loud buzzing sound.  Your Honour, we have made the submission that the decision is at odds with the longstanding view which has operated in Queensland that engineers and other professionals who provide for remuneration services for building work cannot be the subject of a direction to rectify work.  One can see immediately that if that position is changed the whole landscape in Queensland will be altered; that is, builders who are the subject of a direction to rectify will come before the Tribunal and ask for those persons on whose designs they have relied to be joined and to be made amenable to the subject of directions to rectify.

One can see, for example, that if a defect emerges in a building project that is carried out by an owner of land who does it with a view to profit that the subsequent purchaser will make a complaint to the authority and say, there is defective building work, the person who contracted with the registered builder, who has sadly now gone out of business and has no money to rectify, should be the subject of a direction to rectify because that is the only way in which the rectification work will be carried out, and so on.

So what it will do, if this position is maintained, is it will encourage the authority, the respondent, to look for parties with deep pockets but without reference to the responsibility for the carrying out of the defective work, because that is the consequence.  There is simply no responsibility required in these circumstances to make the person amenable to a direction.  Part of the response of the majority below in that respect was to look at subsection (14) and to say, well, it is a matter of discretion, both under subsection (2) and subsection (14), because – your Honours will see that on page 215 of the bundle:

The authority is not required to give a direction under this section to a person who carried out building work . . . if the authority is satisfied that, in the circumstances, it would be unfair.

Justice Chesterman below observed it was not to the point to consider how the authority might respond, the issue was the jurisdiction of the authority to give the direction in the first place, and that is how legislation is designed to operate – an established basis for the exercise of the statutory jurisdiction is laid out and then that jurisdiction is to be exercised.  In our submission, reliance upon that is a basis for giving a wide construction was misplaced.  Your Honours, the next matter that we wish to mention is a matter which involves the Sperway point.  I will leave that to reply, unless your Honours wish to hear from me at this moment.

HAYNE J:   Well, if you would state the further point?  What is the further point you wish to make?

MR FRASER:   Your Honour, the point is it was said against us below that the fact that the legislation was amended after the building work was completed, but before the tribunal made all of its directions, meant that the Tribunal’s authority to issue directions could be based upon the Act as amended and it was said that this was a consequence of the decision of this Court in the case which I have described as founding the Sperway point.  That, in our respectful submission, involves a misunderstanding of what is involved in considering the law to be applied at a rehearing.

The point simply is that if the law has been retrospectively changed, on a rehearing that is the law which will be applied.  If it has not been retrospectively changed, then the court will apply the law as it stood as it affected the rights and liabilities of the parties.  The fact that there is a rehearing after an Act has been amended does not have the consequence of the court conducting the rehearing is at liberty to proceed on the basis of the Act as amended.  That is the Sperway point.

HAYNE J:   Thank you, Mr Fraser.  We will not trouble you, Mr Bond.

An appeal to this Court would enjoy insufficient prospects of success to warrant a grant of special leave to appeal.  Special leave is refused with costs.

The Court will adjourn to reconstitute.

AT 11.10 AM THE MATTER WAS CONCLUDED