McNab Constructions Australia Pty Ltd v Queensland Building Services Authority
[2010] QCA 380
•23 December 2010
SUPREME COURT OF QUEENSLAND
CITATION:
McNab Constructions Australia P/L v Queensland Building Services Authority [2010] QCA 380
PARTIES:
McNAB CONSTRUCTIONS AUSTRALIA PTY LTD
ACN 102 840 906
(applicant/cross-respondent)
v
QUEENSLAND BUILDING SERVICES AUTHORITY
(respondent/cross-appellant)FILE NO/S:
Appeal No 4096 of 2010
DC No 2699 of 2009DIVISION:
Court of Appeal
PROCEEDING:
Miscellaneous Application – Civil
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
23 December 2010
DELIVERED AT:
Brisbane
HEARING DATE:
6 September 2010
JUDGES:
Margaret McMurdo P, Holmes and Chesterman JJA
Separate reasons for judgment of each member of the Court, Margaret McMurdo P and Holmes JJA concurring as to the orders made, Chesterman JA dissentingORDERS:
1. The application for leave to appeal and the application to cross-appeal are granted.
2. The appeal is dismissed and the cross-appeal allowed.
3. The orders of the District Court are set aside.
4. The matter is remitted to the Queensland Civil and Administrative Tribunal for hearing in accordance with these reasons.
5. The appellant is to pay the respondent cross-appellant's costs of the appeal and cross-appeal and of the District Court proceeding.
CATCHWORDS:
STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – GENERAL APPROACHES TO INTERPRETATION – TO GIVE OPERATION AND EFFECT TO THE ACT – where the applicant contracted with the principal to manage the construction of a residential apartment building – where the respondent issued 15 directions under s 72 of the Queensland Building Services Authority Act 1991 (Qld) to the applicant to rectify defects in the construction – where the Act was amended with effect from 21 December 2007 – where the first direction was made prior to the amendments and all other directions made after the amendments – where the Tribunal found against the applicant – where trial judge found the respondent lacked the power to issue the first direction but had the power to issue the subsequent directions – whether the applicant was a person who “carried out the building work” under s 72 before and after the amendments
Commercial and Consumer Tribunal Act 2003 (Qld), s 100(1), s 104
District Court of Queensland Act 1967 (Qld), s 118(3)
Queensland Building Services Authority Act 1991 (Qld), s 3(1)(i), s 3(a)(ii), s 3(b), s 3(c), s 30A, s 30B, s 42, s 42(1), s 42(2)(b), s 43B, s 43C, s 72, s 72(5)(f), s 72(10), s 72(11)(b), s 72(14), sch 2Baulderstone Hornibrook Pty Ltd v Beneficial Finance Corporation Limited (1999) ANZ ConvR 634; [1998] QCA 351, cited
Baulderstone Hornibrook Pty Ltd v Beneficial Finance Corporation Limited[1998] QCA 430, cited
Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616; [1976] HCA 62, cited
George Hudson Ltd v Australian Timber Workers’ Union (1923) 32 CLR 413; [1923] HCA 38, cited
Re a Solicitor’s Clerk [1957] 1 WLR 1219; [1957] 3 All ER 617, cited
Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd [2008] QSC 356, considered
R v His Honour Judge Given, ex parte Builders’ Registration Board of Queensland [1985] 2 Qd R 32, citedCOUNSEL:
D B Fraser QC, with B Codd, for the applicant/cross-respondent
J K Bond SC, with M H Hindman, for the respondent/cross-appellantSOLICITORS:
Lenz Moreton for the applicant/cross-respondent
HWL Ebsworth Lawyers for the respondent/cross-appellant
[1] McMURDO P: The applicant, McNab Constructions Australia Pty Ltd, a licensed builder,[1] carried out the construction management of the W4 apartments in Skyring Terrace, Teneriffe. Under the terms of its contract with the principal, Advanced Traders Pty Ltd, McNab Constructions was required to carry out and complete its construction services "free from any defect or omission".[2] Between 3 October 2007 and 15 January 2009, the respondent, the Queensland Building Services Authority (QBSA), issued 15 directions to McNab Constructions to rectify building work in respect of the construction of the apartments under s 72 Queensland Building Services Authority Act 1991 (Qld) (QBSA Act). The first direction was issued before amendments to s 72 and other provisions of the QBSA Act took effect on 21 December 2007.[3] The remaining 14 directions were issued after these amendments took effect. McNab Constructions filed review applications in the Commercial and Consumer Tribunal in respect of all 15 directions. The role of the Tribunal has now been subsumed by the Queensland Civil and Administrative Tribunal (QCAT) which commenced operation on 1 December 2009: see s 243 Queensland Civil and Administrative Tribunal Act 2009 (Qld).
[1]See statutory declaration of Michael McNab, 15 October 2008, ex MJM 1, AB 167-173.
[2]Contract, cl 2.1 annexure, pt D.
[3]The relevant amendments to the QBSA Act are set out in Chesterman JA's reasons [32]-[36].
[2] In determining a preliminary question of law, the Tribunal concluded that it was open to the QBSA prior to the 2007 amendments to the QBSA Act to direct McNab Constructions to rectify building work under s 72. This was because McNab Constructions was both before and after the 2007 amendments a "person who carried out the building work" under s 72.[4]
[4]McNab Constructions Australia Pty Ltd v Queensland Building Services Authority [2009] CCT QR 023-08, QR 024-08 and QR 197-07, Brisbane, 26 August 2009, Mr P Lohrisch.
[3] McNab Constructions sought leave to appeal to the District Court under s 100(1) Commercial and Consumer Tribunal Act 2003 (Qld) on a question of law. The District Court judge granted leave to appeal. His Honour concluded that, at the time of the first direction, McNab Constructions was not a "person who carried out the building work" under s 72. But his Honour found the effect of the 2007 amendments to the QBSA Act was that the remaining 14 directions could be lawfully given under s 72; in respect of them, McNab Constructions was "a person who carried out building work" under s 72. The judge made orders remitting the matter to the Tribunal for further hearing according to the law determined in that appeal. The judge also ordered that QBSA pay 25 per cent of McNab Constructions' costs of the appeal.[5] McNab Constructions has applied for leave to appeal and QBSA for leave to cross appeal from those orders under s 118(3) District Court of Queensland Act 1967 (Qld).
[5]McNab Constructions Australia Pty Ltd v Queensland Building Services Authority BD 2699 of 2009, 15 March 2010, Dorney QC DCJ, 24 March 2010 and 7 April 2010.
[4] I agree with my colleagues that this application raises a question of law of some importance, namely, the construction of s 72 QBSA Act. For that reason leave to appeal and cross appeal should be granted. In my opinion, the appeal can be disposed of on the first point raised in the cross appeal: McNab Constructions was, both before and after the 2007 amendments to the QBSA Act, "the person who carried out the building work" under s 72 QBSA Act. These are my reasons for reaching that conclusion.
The relevant provisions of QBSA Act before the 2007 amendments[6]
[6]It is common ground that the relevant reprint is Reprint No 8B.
[5] The objects of the QBSA Act are to regulate the building industry to ensure it maintains proper standards;[7] to achieve a reasonable balance between the interests of building contractors and consumers;[8] to provide remedies for defective building work;[9] and to provide support, education and advice both for those who undertake building work and for consumers.[10] Part 1 of the Act deals with preliminary matters; pt 2 with the QBSA; pt 3 with licensing of builders; pt 3A with excluded and permitted individuals and excluded companies; pt 3B with permanently excluded individuals; pt 3C with convicted company officers; pt 3D with banned individuals; pt 3E with disqualified individuals; pt 4A with building contracts other than domestic building contracts; pt 5 with the statutory insurance scheme; pt 6 with rectification of building work; pt 7 with the jurisdiction of the Queensland Building Tribunal; pt 9 with inspectors and pt 10 with miscellaneous provisions.
[7]QBSA Act, s 3(a)(i).
[8]Above, s 3(a)(ii).
[9]Above, s 3(b).
[10]Above, s 3(c).
[6] Section 42 is contained in pt 3 Licensing, div 7 Requirement to be licensed, and relevantly provides:
"42 Unlawful carrying out of building work
(1) A person must not carry out, or undertake to carry out, building work unless that person holds a contractor’s licence of the appropriate class under this Act.
(2) For the purposes of this section –
…
(b) a person is taken to carry out building work if that person provides advisory services, administration services, management services or supervisory services in relation to the building work;
… ."
[7] Section 72 is contained in pt 6 Rectification of building work, and relevantly provides:
"72 Power to require rectification of building work
(1) If the authority[11] 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.
…
(5) For subsection (1), the person who carried out the building work is taken to include—
…
(c) a building contractor by whom the building work was carried out; and
(d) a person who, for profit or reward, carried out the building work; …
(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.
(11) 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 if the person provides advisory services, administration services, management services or supervisory services for the work.
…
(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."[11]The authority is the QBSA.
[8] It is common ground that the definition of "building work" in sch 2 of the dictionary to the QBSA Act before the 2007 amendments[12] does not in its terms encompass the work done by McNab Constructions under its contract with the principal.[13]
The construction of s 72 QBSA Act before the 2007 amendments
[9] McNab Constructions contends that the meaning of the phrase "the person who carries out the building work" in s 72, despite the terms of s 72(5)(d) and s 72(11), is informed by the construction of s 42(2)(b) adopted in Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd.[14] It does not include the provision of services of the kind listed in s 72(11)(b) unless the provider of these services also personally carried out or caused to be carried out building work of the kind defined in the sch 2 dictionary to the QBSA Act before the 2007 amendments.
[12]Relevantly set out in [30] of Chesterman JA's reasons.
[13]Relevantly set out in [50]-[54] of Chesterman JA's reasons.
[14][2008] QSC 356.
QBSA contends that the construction of s 72 should not be informed by the construction of s 42(2)(b) and that the work undertaken by McNab Constructions under its contract with the principal came within the terms of s 72 as expanded by s 72(5)(d) and s 72(11).
In Puerto Galera, Chesterman J (as his Honour then was) sitting as a judge of the Trial Division of this Court, found that "building work" in s 42(2)(b) should be narrowly construed and only applied:
"to cases in which a person is erecting or designing a structure and in relation to that work provides advisory services, administration services, management services or supervisory services. The subsection does not apply to the provision of such services by someone who is not himself erecting or designing the structure (or causing it to be erected or designed)."[15]
[15]Above, [54].
Were that construction of "building work" to be applied to s 72(11), McNab Constructions would not be "a person who for profit or reward carried out the building work" under s 72(5)(d) or "the person who carried out the building work" under s 72(1) and QBSA could not give it directions under s 72. It is unnecessary to express a view in this case as to the correctness of the narrow construction of "building work" in s 42(2)(b) taken in Puerto Galera. That is because, despite the similarity in language in s 42(2)(b) and s 72(11), I do not consider that the construction of "building work" in s 42 informs the construction of "building work" in s 72. Section 72 has a very different purpose from s 42 which prohibits persons from carrying out certain building work without a licence. By contrast, s 72 ensures that those who have carried out building work which is defective or incomplete can, at the discretion of the QBSA (see s 72(2) and (14)), be required to rectify it. So much was recognised by Pincus JA, with whom Thomas JA agreed, in Baulderstone Hornibrook Pty Ltd v Beneficial Finance Corporation Limited.[16]
[16](1999) ANZ ConvR 634; [1998] QCA 351, [13].
In interpreting a provision of an Act, the interpretation that will best achieve the purpose of the Act is preferred: s 14A Acts Interpretation Act 1954 (Qld). As I have noted, the work McNab Constructions performed for the principal under their contract was not "building work" as defined in the sch 2 dictionary of the QBSA Act before the 2007 amendments. But that definition was specifically and unequivocally widened by the plain language of s 72(5)(c) and (d) and s 72(11). The terms of s 72 should be construed according to their ordinary meaning, at least where, as here, that construction appears sensible and entirely consistent with the objects of the QBSA Act,[17] the clearest statement of legislative intention and purpose. Despite the use of "and" at the end of s 72(11)(a), I consider s 72(11)(b) operates independently of s 72(11)(a). If a person comes within either s 72(11)(a) or s 72(11)(b), the person is carrying out building work for the purposes of s 72(5)(c) and (d). This is self-evident from the format of s 72(11). In my opinion, the work carried out by McNab Constructions under its contract with the principal was "building work" within the terms of s 72(5)(d) as explained in s 72(11) and therefore "building work" under s 72(1).
[17]See QBSA Act, s 3.
The construction of s 72 which I favour, although much broader than the construction of "building work" adopted in respect of the comparably worded s 42(2)(b) in Puerto Galera, does not result in an impossibly wide definition of "building work" in s 72. The broadened meaning of "building work" which I consider is required by the unambiguous terms of s 72(11) applies only for the purposes of s 72(5)(c) and (d). It is therefore necessary that it only applies to the QBSA's power under s 72 in respect of work carried out by building contractors (s 72(5)(c)) or for profit or reward (s 72(5)(d)). Further, under s 72(11)(b) the services there referred to must be "for the work". This phrase requires that there is some real and substantial connection between the carrying out of the building work of the type defined in the dictionary to sch 2 of the QBSA Act, and the services provided under s 72(11)(b).
In my opinion, it is unnecessary to resort to the explanatory notes to the 2007 Bill amending s 72[18] to construe s 72 prior to its 2007 amendment. That is because the ordinary meaning of the terms of s 72 was not ambiguous, obscure or manifestly absurd: see s 14B(1)(a) and (b) Acts Interpretation Act 1954 (Qld). Further, explanatory notes to legislation post-dating the enactment of a provision being construed are not normally in that category of extrinsic material considered helpful in construing an earlier provision: see s 14B(3) Acts Interpretation Act. But if the explanatory notes to the 2007 Bill amending s 72 are considered in construing s 72 prior to its 2007 amendment, they do provide support for the construction I have taken. Under the heading "Reason for the Bill", the explanatory notes include the following statement: "The fine tuning of other provisions [of the QBSA Act] will clarify the original intent of the legislation". And under the heading "Review of QBSA Act and DBC Act[19]" the explanatory notes include the statement: "… amendments are also necessary to better articulate and provide guidance to building contractors, nominees, construction managers, owner-builders and consumers as to their rights and responsibilities". These aspects of the explanatory notes suggest that the legislative intent in the 2007 amendments was to clarify the already existing position pursuant to s 72, not to create a new and previously non-existent category of persons who might be subject to directions to rectify under the QBSA Act.
[18]See Queensland Building Services Authority and Other Legislation Amendment Bill 2007 (Qld).
[19]Domestic Building Contracts Act 2000 (Qld).
For these reasons, and for the reasons of Holmes JA with which I agree, QBSA was able to give all 15 directions to McNab Constructions to rectify building work in respect of the construction of the apartments under s 72 QBSA Act as it stood before the 2007 amendments. This conclusion disposes of QBSA's cross appeal and McNab Construction's appeal. Of course, the merits of McNab Construction's review applications before QCAT remain to be determined.
I propose the following orders:
1. The application for leave to appeal and the application to cross-appeal are granted.
2. The appeal is dismissed and the cross appeal allowed.
3. The orders of the District Court are set aside.
4. The matter is remitted to the Queensland Civil and Administrative Tribunal for hearing in accordance with these reasons.
5. The appellant is to pay the respondent cross appellant's costs of the appeal and cross-appeal and of the District Court proceeding.
HOLMES JA: I adopt with gratitude Chesterman JA’s setting out of the subject matter of this appeal and cross-appeal and the relevant statutory provisions. With respect, however, I have come to the conclusion that the respondent’s cross-appeal should succeed on the ground that the applicant was a person who carried out building work within the meaning of s 72 of the Queensland Building Services Authority Act 1991 (Qld) as it stood when the building contract was entered, having, for reward, provided services for the work which fell within the compass of s 72(11)(b).
As Chesterman JA explains, having analysed the terms of the contract, the services provided by the applicant fit the description of “administration services, management services or supervisory services” in s 72(11)(b) of the Act; but the issue is whether those services were provided “for the work”. His Honour has concluded, by application of the reasoning in Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd,[20] that they were not: that s 72(11)(b) applies only where the relevant services are provided by someone who is himself or herself erecting or designing the building. His Honour’s application of the Puerto Galera reasoning is based on the premise that s 72 is not relevantly distinguishable from s 42 of the Act, which was under consideration in that case.
[20][2008] QSC 356.
With respect, I disagree with that proposition. As the respondent pointed out, the provisions have very different purposes. Section 42 is concerned with the consequences of performing building work unlicensed, s 72 with rectification of defects by persons licensed or unlicensed. The ambit of the offence provision in s 42(1) (which makes it an offence for an unlicensed person to carry out building work) depends directly on the width given to the expression “carry out building work”. Section 72 contains no equivalent offence turning on whether the individual carries on building work. Concerned with rectification of building work, the only offence it creates is one of non-compliance with a direction to rectify.[21] There is not the direct relation identified in Puerto Galera[22] between the construction given to “carry out building work” and the criminalisation of conduct.
[21]Section 72(10).
[22]At [50].
And, too, under s 72 a person who is not a licensed contractor or building contractor can be caught by the section only if he or she carried out the building work “for profit or reward”. There is no such qualification in s 42. Accordingly, the concern that the helpful bystander who advises of a defect (assuming such advice constituted providing “advisory services”) would commit an offence does not apply in relation to s 72. The other example given in Puerto Galera, of a bank paying a cheque drawn to satisfy a builder’s claim might be in a different class, because that is work done for a fee. Even in that case there is, I think, still a question about whether that act could amount to provision of administration or management services and whether it could be said to be “for the work”, in the sense of having any real connection with it.
In Puerto Galera, Chesterman JA (then Chesterman J) explained that the narrow construction he adopted of s 42(2)(b) did not render the subsection inutile, because it eliminated the prospect of an unlicensed builder, disentitled to payment for erection of the building, seeking instead to claim his services in advising, supervising, managing or administering on the basis that they did not constitute building work. The applicant sought to argue in support of its similarly narrow construction of s 72(11)(b) that the subsection served to extend the concept of building work in relation to which a rectification direction could be given under s 72(1). Otherwise, it would not be possible to direct the rectification of work where the necessary rectification might consist of supervision, management, administration or advice. I do not think, however, that the argument holds water. The power of the authority in s 72(1) is to direct rectification of the building work, whatever that may entail. There is no warrant for supposing some limitation as to the activities involved in rectification which would require or make useful the reading of s 72(11)(b) for which the applicant contends.
To limit the class of persons providing advisory, administration, management or supervisory services in s 72(11)(b) to those who are also erecting or designing the building would, in my respectful view, render that sub-section otiose. Since a person erecting or designing the building is by definition[23] a person carrying out building work, the fact that he or she also provided one or more of the services described in s 72(11)(b) would add nothing. The sub-section should be given its literal meaning, without that implied restriction.
[23]The definition of “building work” in sch 2 to the Act includes “erection or construction of a building”.
Section 72(11)(b) (in its original form) does not capture all those who provide advisory services, administration services, management services or supervisory services to builders. It is limited to those who provide such services “for the [building] work”. That connection must be established before the service provider is liable to a direction to rectify. It is not, for the purposes of this case, necessary to attempt to describe in what proportions and with what regularity a person would have to perform advisory, administrative, management or supervisory work before he or she could be said to “[provide] … services” of the relevant kind, or how immediate the connection between those services and the building work must be. It is sufficient to say that the work here was the provision over some two years of supervisory, management and administration activities performed directly for the purpose of having the building constructed.
It is relevant to note that one of the objects of the Act is “to provide remedies for defective building work”.[24] It seems to me counter to that object to limit the class of persons to whom a rectification direction may be given to those erecting or designing the building. I agree with the respondent’s submission that the answer to the proposition that the wider construction might cause hardship lies in s 72(2), which requires the Authority to take into account all reasonably relevant circumstances, and s 72(14), which absolves it from giving a direction if it is satisfied that in the circumstances it would be unfair. Where its discretion is exercised unfavourably, the person affected has, of course, rights of review.
[24]Section 3(b).
On the view I have taken, s 72(11)(b) is not sufficiently ambiguous to warrant resort to extrinsic materials to aid in its interpretation. But I should add that in my respectful view, the amendments made to s 72 by the Queensland Building Services Authority and Other Legislation Amendment Act 2007 do not compel the conclusion that construction managers were not previously within its compass. The sub-paragraphs added to s 72(5) by the amending Act were:
…
(f) a construction manager engaged under a construction management contract to provide building work services for the building work; and
(g) a principal who was the contracting party for a building contract for building work for a building, or part of a building, intended for sale if…
[certain conditions follow]
(h) a person who was the nominee for a licensed contractor that is a company, for work carried out by the company while the person was the company’s nominee.
The explanatory memorandum for the relevant Bill makes it clear that the purpose of the amendment was not to add to the existing classes of persons regarded as carrying out building work but rather to elaborate on the circumstances in which the three classes dealt with in those sub-paragraphs come within the embrace of s 72:
“Clause 51 amends section 72 (Power to require rectification of building work) to expressly state the circumstances when a construction manager, a developer or a nominee is taken to have carried out building work for section 72(1).”
I would give leave for the appeal and the cross-appeal, dismiss the appeal and allow the cross-appeal. I would set aside the orders of the District Court and remit the proceeding to the Queensland Civil and Administrative Tribunal for hearing in accordance with these reasons. The respondent should have its costs of the appeal and cross-appeal and of the District Court proceeding.
CHESTERMAN JA: By a contract dated 22 December 2004 (“the contract”) the applicant agreed with Advanced Traders Pty Ltd (“the principal”) to manage the construction of a residential apartment building at Skyring Terrace Teneriffe. The actual construction of the building, and the fitting out and finishing of the apartments were performed by a number of separate trade contractors each of whom was engaged by the principal. The building and its apartments were accepted as practically complete on 30 November 2006. Following disagreements between the applicant and the principal the contract between them was terminated on or about 29 November 2007.
On 22 August 2007 the Body Corporate for the development complained to the respondent (“QBSA”) of a defect in the common property. On 3 October 2007 the QBSA issued a direction to the applicant to rectify the defect. Subsequently a number of apartment owners complained of defective construction or finishes. Between 21 December 2007 and 15 January 2009 the respondent served on the applicant directions calling on it to rectify specified defects in each of the 14 apartments.
The Queensland Building Services Authority Act 1991 (“the Act”) as it was when the applicant made its contract with the principal, and when the first rectification direction was given, provided:
“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.
In deciding whether to give a direction … the authority may take into consideration all the circumstances it considers … relevant … .
…
(5)For subsection (1), the person who carried out the building work is taken to include –
…
(c)a building contractor by whom the building work was carried out; and
(d)a person who, for profit or reward, carried out the building work;
…
(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.
(11)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 if the person provides advisory services, administration services, management services or supervisory services for the work.
…
(14)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 to the person to give the direction.”
“The authority” is the QBSA.
Schedule 2 to the Act contains the Dictionary. “Building work” was defined as meaning:
“(a) the erection or construction of a building; or
(b)the renovation, alteration, extension, improvement or repair of a building; or
(c)the provision of lighting, heating, ventilation, airconditioning, water supply, sewerage or drainage in connection with a building; or
(e)any site work (including the construction of retaining structures) relating to work of a kind referred to above; or
(f)the preparation of plans or specifications for the performance of building work; or
(fa)contract administration carried out by a person in relation to the construction of a building designed by the person; or
…”
Section 72(11)(b) is the provision of particular relevance to the appeal. The Dictionary did not define “advisory services”, “administration services”, “management services”, or “supervisory services”. It did define “contract administration” in terms which include much of what the applicant was to perform under the contract. However, contract administration was only building work, as defined in the Dictionary, if carried out by a person in relation to the construction of a building designed by the person. The applicant did not design the development at Skyring Terrace.
The Act was amended by the Queensland Building Services Authority and Other Legislation Amendment Act 2007 with effect from 21 December 2007. The date is significant. There was an important change to s 72(5). Paragraph (f) was added so that the subsection read:
“For subsection (1), the person who carried out the building work is taken to include –
…
(f)a construction manager engaged under a construction management contract to provide building work services for the building work; … .”
The Dictionary in schedule 2 was also amended to include new definitions. “Carry out”, for building work was defined to mean:
“(a) carry out the work personally;
(b)directly or indirectly cause the work to be carried out;
(c)provide building work services for the work.”
A “construction management contract” was defined to mean:
“… a contract under which a principal engages a construction manager to provide building work services for building work carried out for the principal under construction management trade contracts.”
“Building work services” were in turn defined to mean:
“… 1 or more of the following for building work –
(a) administration services;
(b) advisory services;
(c) management services;
(d) supervisory services.”
“Administration services” as newly defined included:
“(a)preparing tender documentation and calling and selecting tenders;
(b) arranging and conducting on-site meetings and inspections;
(c) arranging payments of subcontractors;
(d) arranging for certificates … to be issued;
(e) administration for the work usually carried out by –(i) a construction manager; or
(ii) a project manager … ;
(f)other administration for the work usually carried out by a licensed contractor … .”
Advisory services were also given a particular meaning but are not relevant to the appeal. “Management services” were defined to include:
“(a)coordinating the scheduling of the work by building contractors including as agent for another person; and
(b)management for the work usually carried out by -
(i)a construction manager; …
(c)other management for the work usually carried out by a licensed contractor … .”
“Supervisory services” were defined to include:
“(a)the development, implementation and management of a system for the supervision of the work; and
(b)the coordination or management of persons undertaking the supervision of the work; and
(c)the personal supervision of the work; and
(d)any other supervision of building work under this Act.”
After these amendments a construction manager, performing a construction management contract, and who was thereby providing building work services “for the work”, was carrying out building work. These concepts were absent from the Act as it stood prior to 21 December 2007.
Included in the amendments were sections imposing new obligations on construction mangers so as to ensure that building work was properly supervised. Section 43B provided:
“(1)This section applies if a construction manager provides building work services … under a construction management contract for the carrying out of building work.
(2)For a construction manager that is a company, the company … must … ensure that building work carried out by licensed contractors … is personally supervised by –
(a)the company’s nominee; or
(b)an officer or employee … who holds 1 of the
following licences … –
(i)a nominee supervisor’s licence;
(ii)a site supervisor’s licence; …
(iii)…
(iv)…
(3)For a construction manager that is an individual, the construction manager must ensure that building work carried out by license contractors … is personally supervised by –
(a) the construction manager; or
(b)an employee … who holds 1 of the following licences … -
(i) a nominee supervisor’s licence;
(ii) a site supervisor’s licence;
… .”
Section 43C applies if:
“a construction manager provides building work services … under a construction management contract for the carrying out of building work.”
The section goes on to provide:
“(2)For a construction manager that is a company, the company … must … ensure that the building work carried out by licensed contractors … is adequately supervised.”
Two further sections, inserted by the amending Act, should be noted. Section 30A provided for the issue of a nominee supervisor’s licence. This authorises an individual to provide supervisory services for building work and to perform the functions required of a nominee under the Act. Section 30B allows for the issue of a site supervisor’s licence, authorising the licensee to personally supervise building work.
The amendments also effected a change to s 42. Subsection 2 was omitted. It had provided, relevantly:
“(2) For the purposes of this section –
…
(b)a person is taken to carry out building work if that person provides advisory services, administration services, management services or supervisory services in relation to the building work … .”
Section 42(1) of the Act prohibits any person from carrying out building work “unless that person holds a contractor’s licence of the appropriate class … .” Until the Act was amended in 2007 there was no class of licence appropriate to advisory, administration, management or supervisory services. The prohibition contained in s 42(1), after the Act was amended to provide inter alia for the issue of a supervisor’s licence, had the consequence that a construction manager performing a construction management contract had to engage a licensed supervisor.
Between 31 October 2007 and 3 February 2009 the applicant challenged each of QBSA’s decisions to issue the directions by 15 review applications filed in the Commercial and Consumer Tribunal (“Tribunal”, whose abolition and replacement by the Queensland Commercial and Administrative Tribunal may be ignored for the purposes of the appeal). On 20 March 2009 the applicant filed a further application in the Tribunal seeking the consolidation of the 15 proceedings and an order, in the nature of summary judgment, setting aside all decisions to issue the directions on a point of law, that the applicant was not a person to whom QBSA could address such directions, because it had not carried out building work. The summary determination, if made, would have avoided rehearing the merits of the decisions.
By s 86 of the Act, the Tribunal may review the following decisions of QBSA:
“(e) a decision to direct … rectification … of … work … .”
By s 104 of the Commercial and Consumer Tribunal Act 2003 the Tribunal could:
“(1) …
(a)confirm the decision being reviewed; or
(b)set aside the decision and substitute another decision; or
(c)set aside the decision and return the matter to the … agency that made the decision … .
(2)In substituting another decision, the tribunal has the same powers as the … agency that originally made the decision.”
On 26 August 2009 the Tribunal made an order consolidating the proceedings but decided the application for summary relief in favour of QBSA. The result was that the 15 applications would proceed to a full hearing of the merits.
An appeal by the applicant to the District Court succeeded with respect to the first direction issued on 3 October 2007 but failed with respect to those issued on and after 21 December 2007. The primary judge found that:
“as a matter of law, under the … Act as it existed at the time of the first direction to rectify, (QBSA) did not have power to issue a direction to rectify the relevant building work to the applicant … .”
His Honour however thought that after the amendments there was such a power.
On 24 March 2010 the learned judge published reasons but made no orders. On 7 April 2010, having received further written submissions, his Honour:
(a)Gave the applicant leave to appeal and gave QBSA leave to file a Notice of Contention;
(c)Confirmed the Tribunal’s decision to dismiss the applicant’s application for summary determination filed 20 March 2009;
(d)Remitted proceedings to the Tribunal for further hearing “in accordance with the law determined in this appeal”;
(e)Ordered QBSA to pay 25 per cent of the applicant’s costs of the appeal;
(f)Remitted the question of costs of an interlocutory application to the Tribunal.
The applicant seeks leave to appeal from those orders pursuant to s 118(3) of the District Court of Queensland Act 1967. QBSA similarly seeks leave to cross-appeal from the judgment that would see the first direction set aside. Each accepts that leave should be given to the other. The point raised by the proposed appeal and cross-appeal will determine the effect of the December 2007 amendments to s 72 of the Act and, more particularly, their effect on the powers of QBSA to direct rectification of defective building work. The point is of general importance and the controversy should be settled authoritatively. It is an appropriate case in which to grant leave to appeal to both the applicant and QBSA.
Should it succeed the applicant asks that the orders made in the District Court on 7 April 2010 be set aside and that the following orders be made instead:
(a)The decision of the Tribunal made on 26 August 2009 dismissing the applicant’s application of 20 March 2009 be set aside;
(b)The decisions of QBSA to issue the directions to rectify be set aside;
(c)QBSA pay the applicant’s costs of the proceedings in the Tribunal and in the District Court.
By its cross-appeal QBSA seeks an order that the applicant’s application for leave to appeal to the District Court, or the appeal to that court, be dismissed with costs, thereby leaving the Tribunal’s decision of 26 August 2009 in force.
The contract between the applicant and the principal was:
“for the construction management of the W4 Apartments Project at Lot 8 Skyring Terrace, Teneriffe … as detailed in the documents comprising the Contract.”
In those documents the applicant was designated “Construction Manager”. One of them, Annexure Part B, set out a “task list” which identified whether the principal or the applicant had responsibility for each specified task. Relevantly the following tasks were assigned to the applicant as construction manager:
“G QUALITY ASSURANCE
1.Develop a quality assurance strategy for the Principal’s approval
2.Manage quality assurance issues to the approved strategy
3.Advise on all matters relating to quality assurance …
4.Ensure that the contractors’ quality assurance policies and procedures are appropriate
5.Co-ordinate contractors’ and site procedures so that any quality assurance matters on the project may be fully monitored and influenced
H SITE MANAGEMENT
…
9.Secure the prompt remedying of all defects by contractors in accordance with their contracts
10.Secure the prompt remedying of all defects discovered at practical completion of the project and at the end of the relevant defects liability period
…
J CONSTRUCTION PHASE
…
6.Management systems for quality, health, safety and environment
7.Compliance of work
8.Contract administration
…
10.Manage contractors’ performance
…
23. Progressive work inspections and tests
…
33. Make regular visits to the work places of the contractors and suppliers to inspect quality, progress and delivery in relation to the detailed construction program
…
35.Progressive completion of the works:
…
(d)Quality
...
K CONSTRUCTION MONITORING AND CONTROL
1.Manage construction program
…
3.Establish and implement construction monitoring and reporting system
4.Liaise with Principal on progress and quality”.
The principal agreed to pay the applicant $1,650,000 for performing the contract together with the cost of what were called “Preliminaries” which appeared to be expenses incurred in establishing the building site. The agreed figure for Preliminaries was $3,888,332.
By Clause 2.1 of the contract the applicant agreed to:
“carry out and complete the Services free from any defect or omission in accordance with the Contract and directions authorised by the Contract.”
“Services” were defined to mean the tasks identified in Annexure Part B. The contract also defined “construction manager” to mean “the person bound to carry out and complete the Services” i.e. the applicant. “Contractor” was defined to mean a consultant or trade contractor “of the Principal for any part of the project.”
The contract incorporated the Australian Standard Construction Management General Conditions, in two editions. Other relevant clauses in the Standard were:
“7.2 Engagement
Where the Services require the Construction Manager to engage a contractor on behalf of the Principal, the Construction Manager shall disclose that fact. The Principal shall meet all its obligations to the contractors so engaged.
If the Principal has included an invitation to tender a list of … contractors … the Construction Manager shall, as agent for the Principal contract that particular part of the project to one of those contractors and thereupon give the Principal written notice of that contractor’s name.
If no contractor on the Principal’s list will contract to carry out the particular part of the project the Construction Manager shall provide a list for the written approval of the Principal.
7.3Project account
Where the Services require the Construction Manager to make payments to contractors on behalf of the Principal, the Principal shall maintain a project account with sufficient funds from which the Construction Manager shall pay project debts when due and payable.
7.4Contract administration
Except where the Contract otherwise provides, where the Services include contract administration on behalf of the Principal, the Construction Manager acts as the Principal’s agent to the exclusion of the Principal and not as superintendent.
…
17.1Construction Manager’s representative
The Construction Manager shall manage the Services personally or by a competent representative. …
20 Construction Manager
The Principal shall ensure that:a)at all times there is a Construction Manager … (who) fulfils all aspects of its roles and functions; … .
Except where the Contract otherwise provides, the Construction Manager:
a)acts as the Principal’s agent in the roles and functions to the exclusion of the Principal; and … .
…
29.3Defective Work
If the Construction Manager becomes aware of work done … by the Trade Contractor which does not comply with the Contract, the Construction Manager shall as soon as practicable give the Trade Contractor written details thereof. If the subject work has not been rectified, the Construction Manager may direct the Trade Contractor to do any one or more of the following (including times for commencement and completion):
…
If:
a)the Trade Contractor fails to comply with such a direction; and
b)that failure has not been made good within 8 days after the Trade Contractor receives written notice from the Construction Manager that the Principal intends to have the subject work rectified by others,
the Principal may have that work so rectified and the Construction Manager shall certify the cost incurred as moneys due from the Trade Contractor to the Principal.
…
30.1Tests
At any time before the expiry of the last defects liability period, the Construction Manager may direct that any (work under contract) be tested. … .
…
35Defects liability
…
During the defects liability period, the Construction Manager may give the Trade Contractor a direction to rectify a defect which:
a)shall identify the defect and the date for completion of its rectification; and
b)may state a date for commencement of the rectification …
If the rectification is not commenced or completed by the stated dates, the Principal may have the rectification carried out by others but without prejudice to any other rights and remedies the Principal may have. The cost thereby incurred shall be certified by the Construction Manager as moneys due and payable to the Principal.”
According to the engineer who appears to have been the applicant’s representative for the project it involved the renovation of an existing wool store and the construction of a new building comprising two basement levels and eight suspended levels. The principal engaged its own consultants to design the project. They included architects; designers; structural, mechanical, electrical and acoustic engineers; a building certifier, and a quantity surveyor. The principal also engaged a project manager to give “directions and approvals for the construction of the project”. The principal entered into contracts with all the trade contractors who carried out the actual construction work.
It is apparent from those terms of the contract which I have set out that the applicant did not erect or construct the apartments, or prepare plans or specification for the construction. Its role was that of a construction manager as that term came to be defined in the 2007 amendments to the Act. It may, I think, be accepted that the services it provided could properly be regarded as administration services, or management services, or supervisory services, as those terms appeared in s 72(11)(b) of the Act, before the 2007 amendments. The services also met the definition of administration services, management services, and supervisory services as those terms appear in the dictionary after December 2007. The applicant’s role as described in the contract was to coordinate aspects of construction, monitor its progress, check the quality of construction, administer the individual trade contracts and report on these matters to the principal. Administration of trade contracts included paying the contractors with monies furnished by the principal for that purpose.
The contract conferred on the applicant only a limited capacity to deal with defective work. Clauses 29.3 and 35 describe the limits of the applicant’s powers. It could do no more than point out a defect to the trade contractor, request its rectification and report to the principal. It was given no power of sanction in the event a recalcitrant contractor refused to make its work good. The power rested with the principal who could, no doubt, withhold monies or have defective work repaired by others, and set off the cost of doing so against monies it owed the contractor. It could sue the contractor for damages.
It is convenient to deal firstly with the subject matter of the cross-appeal, which is the legal efficacy of the first direction given by QBSA prior to the 2007 amendments. The Tribunal had ruled that QBSA could lawfully give the applicant a direction to repair the common property. The learned primary judge held the pre-amendment terms of the Act did not give QBSA that power.
QBSA could not direct the applicant to rectify the defect to the common property unless it had “carried out the building work”, within the meaning of that phrase in the Act as it was in October 2007, prior to the amendments. It is apparent that unless the applicant came within the expanded scope of the concept described in s 72(5)(c) or s 72(5)(d) and s 72(11), it will not have carried out such work. Only s 72(11)(b) is a possible basis for concluding the applicant may be taken to have “carried out building work”, by providing “advisory services, administration services, management services or supervisory services for the work”.
Certainly the contract obliged the applicant to give advice of various kinds to the principal, to administer certain parts of the separate contracts by which the building was to be erected, to manage certain aspects of the building work and supervise others. The question is whether s 72(11) was satisfied. It will have been only if the applicant provided the relevant services “for the work”.
QBSA submits that the:
“contract obliged the applicant to perform … one or more of the categories of advisory services, administration services, management services or supervisory services for the work comprising the construction of the apartment project”,
and then argues that “the plain words” of s 72 should be given their ordinary meaning and not “read down”. It is, I think, debatable whether the meaning of s 72(11)(b) is plain but I accept that the section, whatever it means when properly construed, must be given effect.
The subsection requires a connection between the services described and “the work”. This is obvious from the requirement that the services must be provided “for the work”. The subsection does not give any indication of what is required to establish the connection.
A very similar problem arose in Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd [2008] QSC 356. The case concerned s 42 of the Act, not s 72, but the two provisions are relevantly indistinguishable. Section 42 provided:
“(1)A person must not carry out … building work unless that person holds a contractor’s licence of the appropriate class … .
(2) For the purposes of this section –
(a) …(b) a person is taken to carry out building work if that
person provides advisory services, administration services, management services or supervisory services in relation to the building work; … .”
The only difference between the two sections is that the former speaks of the services being “in relation to the building work” and s 72(11)(b) speaks of services “for” that work. The difference is, I think, incidental and insignificant.
The question in Puerto Galera was whether a superintendent appointed under a building contract “carried out building work” and so required a licence. In concluding that he did not carry out such work I said:
“[43] The essence of ‘building work’ as defined in the dictionary to the Act is the erection of a structure or part of a structure, and designing a structure for construction and, in connection therewith, preparing tender documents and building contracts. The rather tedious recital of the superintendent’s contractual role which I have essayed shows that Mr Jolly did not build the apartment block, or part of it, or design it.
[44] It is only if one has regard to the extended meaning of ‘building work’ given by s 42(2)(a) and (b) that one can consider whether the superintendent ‘carried on building work’.
…
[50] The terms are themselves nebulous and the vagueness of the concept underlying s 42(2)(b) is increased by reason of the fact that each of the four types of service must be provided ‘in relation to the work’ before providing the service will amount to carrying out building work. If taken to literal extreme the definition, coupled with the prohibition contained in s 42(1), criminalises conduct that would ordinarily be regarded as beneficial and which could not, apart from statute, sensibly be thought to be building. Suppose an observant pedestrian, passing a building site, notices a defect in some part of the structure which, if left unattended, might lead to collapse, damage to property and perhaps loss of life. If the passerby, being a responsible citizen, should seek out the foreman and advise him of the defect, has he not provided advice (‘an advisory service’) in relation to the construction (‘the building work’)? Likewise a bank paying a cheque drawn to satisfy a claim by a builder is providing an administration or management service in relation to building work.
…
[52] It is, I think, significant that the extended prohibition contained in s 42(2)(b) extends only to providing advisory etc. services to the building work. The definite article limits building work in relation to which the provision of services is prohibited. The subsection does not prohibit the provision of the stated services to building work generally, or any building work. It is only in relation to the building work that the specified services may not be provided.
[53] What then is meant by ‘the building work’? It can, I think, be only the building work which the person referred to in s 42(1) is carrying out.
[54] So understood s 42(2)(b) extends the range of activities which a builder may not perform without a licence. The subsection applies to cases in which a person is erecting or designing a structure and in relation to that work provides advisory services, administration services, management services or supervisory services. The subsection does not apply to the provision of such services by someone who is not himself erecting or designing the structure (or causing it to be erected or designed).”
The case therefore decided that advisory etc., services are provided “for the work” if they were ancillary to building work (construction or designing) and were provided by the person during that building work. This view of the subsection limits its operation but QBSA’s reading of the provision operates so widely as to make persons with a peripheral connection to building work liable for making good the defects of others. The submission ignores the requirement that the services be provided “for the work”. The reasoning in Puerto Galera is equally apposite to the present case.
The language chosen by Parliament for the two sections is relevantly indistinguishable. It would be odd if the sections had different meanings. The respondent did not challenge the correctness of the decision in Puerto Galera. Instead it submitted that the decision was not relevant to s 72 for two reasons.
Firstly it is said that s 72:
“is not concerned with prohibiting persons from carrying out certain work without a licence … (but it) is directed to identifying persons who may be responsible … for the defective building work and who … might be directed to rectify the work. It is not remarkable that the section would be drafted in wide terms.”
The observation postulates a distinction without a difference. It is true that it is not surprising that s 72 should be “drafted in wide terms” to identify persons who may be directed to make good defective work, but the observation is equally applicable to a designation of building work which unlicensed persons are prohibited from carrying out. What the criticism ignores is the striking similarity of the language used in both sections. Moreover the submission begs the question of who is “responsible” for the defective work. To answer the question one must turn to the words of s 72(11)(b), which includes the requirement, expressed in the subsection, that before building work is taken to have been carried out the services mentioned must have been performed “for the work”. This was the point stressed in Puerto Galera.
The second reason advanced is what was said by Pincus JA in Baulderstone Hornibrook Pty Ltd v Beneficial Finance Corp Ltd [1998] QCA 430 at [13]:
“… s 42 is about a licensing requirement and it would be odd to read down s 72 because of any supposed difficulty in applying s 42, which deals with quite a different subject. Secondly, the operation of s 72 in the present case depends on the proposition that the mortgagee carried out building work for profit or reward, because it directly or indirectly caused such work to be carried out; these concepts come from s 72(2)(d) and s 72(8)(a) which have no counterpart in, nor any relevance to, the construction of s 42.”
The s 72(2)(d) referred to is now s 72(5)(d) and s 72(8)(a) is s 72(11)(a).
The case concerned a mortgagee who took possession of mortgaged property, a partly built home unit development, and had it completed by contractors whom it engaged to carry out the work. The mortgagee clearly fell within the ambit of s 75(5)(d) and (11)(a), one who caused building work to be carried out for profit or reward. The case has nothing to say about the meaning of s 72(11)(b). While, as an abstract proposition, it is no doubt right to say that one section of the Act (s 72) should not be read down because of a “difficulty” in applying another section (s 42), the generality of the proposition is of no assistance in determining what a particular phrase, common to both sections, means.
The decision in Puerto Galera emphasised the need for a rational connection between the provision of services and building work as defined in the dictionary. If the need for the connection is ignored or loosened the results can be odd, not to say unjust. In the context of s 42 the oddness was explained in paragraph [50] of Puerto Galera. The observation, though not perhaps the examples, apply with equal pertinence to s 72. The concept of advisory, administration, management or supervisory services is extremely wide. On QBSA’s submission a person performing any of those services in connection with building work can be made liable for very extensive remedial work it did not undertake. Someone engaged to perform administrative or managerial services, such as checking bills of quantities or suppliers’ invoices for internal accuracy and preparing cheques or making other arrangements to pay suppliers or contractors, will, on the submission come within s 72(11)(b). So will a company engaged to hire employees for the builder or to attend to the payment of wages. QBSA’s submission is that such people are liable to make good the work of others, perhaps at a cost of many millions of dollars.
I would give the applicant leave to appeal and the respondent leave to cross-appeal. The cross-appeal should be dismissed with costs. The appeal should be allowed and the orders made by the District Court on 7 April 2010 be set aside. Instead there should be orders that the applicant’s appeal to the District Court from the Commercial and Consumer Tribunal on 26 August 2009 be allowed and a further order that the 15 decisions made by the respondent to direct the applicant to rectify defective work to the common property and to apartments 327, 8, 618, 627, 337, 603, 628, 615, 320, 620, 617, 604, 601 and 319 be set aside. The respondent should pay the applicant’s costs of the appeal to the District Court and of the application for leave to appeal and of the appeal to this Court.
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