Orlanski v Queensland Building Services Authority
[2011] QCAT 35
•27 January 2011
| CITATION: | Orlanski v Queensland Building Services Authority [2011] QCAT 35 |
| PARTIES: | Grace Orlanski |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | QR260-08 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 10 January 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Michelle Howard, Member |
| DELIVERED ON: | 27 January 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: |
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| CATCHWORDS : | Review of decision of Queensland Building Services Authority to disallow a claim under the statutory insurance scheme - where a claim was made within required time frames - where another claim subsequently made outside of time frames - meaning of ‘became evident’ in policy - Queensland Building Services Authority Act 1991 - section 70 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Applicant |
| RESPONDENT: | Ms Cheridan Farthing, legal officer, Queensland Building Services Authority |
REASONS FOR DECISION
History of Application
1. By application filed in the Commercial and Consumer Tribunal on 17 November 2008, the applicant sought a review of the decision of the Queensland Building Services Authority (QBSA) dated 22 October 2008 which in effect disallowed a claim under the statutory insurance scheme, together with her legal costs and reimbursement of her filing fee.
2. The claim or complaint which was disallowed had been lodged with the QBSA on 3 October 2008 (the second claim) and related to water damage to the ensuite shower recess of premises owned by the applicant. An earlier claim or complaint (the original claim) had been lodged by the applicant on 17 March 2008 for items including water damage to the shower recess in the main bathroom and as a consequence to the kitchen. The failure which resulted in the damage in the main bathroom and the kitchen ceiling below it, was allowed on the original claim under the statutory insurance scheme.
3. It is not controversial that the relevant statutory insurance period for the premises concerned extended from 24 September 2001 to 24 March 2008.
4. From 1 December 2009, the Commercial and Consumer Tribunal (the former tribunal) ceased to exist and the Queensland Civil and Administrative Tribunal (QCAT) became responsible for dealing with the proceeding.
Law and Policy
5. Part 5 of the Queensland Building Services Authority Act 2001 (the Act) establishes the statutory insurance scheme administered by the QBSA.
6. Under section 69(2) a policy of insurance comes into force in the terms prescribed by regulation if a consumer enters into a contract for the performance of residential construction work and the contract is imprinted with the licensed contractor’s licence card, in the terms stated in the Board’s policies for the purpose. Under section 70 of the Act, a person claiming to be entitled to indemnity under the statutory insurance scheme must give notice of the claim to the QBSA as required.
7. The relevant policy of insurance is Insurance Policy Conditions Edition 5 effective 1 July 2001 (the Policy). It includes the following:
Part 2: Defective Construction
2.1 Payment for Defective Construction
(a)Subject to the terms of this policy, BSA agrees to pay the cost of rectifying defects in the residential construction work, other than for defects from subsidence or settlement referred to in Part 3 of this policy…
2.4 Expiry of Cover
(a)Subject to clause 2.4(c), BSA is only liable to pay for loss under this Part for a category 1 defect where the defect first became evident within six years and six months after:
(i) the date of payment of the insurance premium or the date of entering into the contract (and where more than one date, whichever is the earlier); or
(ii) where no insurance premium was paid and there was no written contract, the date of commencement of construction….
2.5 Time Limit for Making a Claim
The Insured is NOT ENTITLED to payment for loss under this Part unless:
(a)in the case of a category 1 defect, the claim is made within three months of that defect first becoming evident (in the opinion of BSA); or
(b)In the case of a category 2 defect, the claim is made within seven months of the date of practical completion,
Or within such further time as BSA may allow…
Part 5: General Exclusions
5.1 Completion of Rectification Without Approval
BSA may refuse to make a payment for loss under this policy where residential construction work or associated works have been completed or rectified (as applicable) without the prior written approval of BSA.
Part 6: Claims
6.3 Duty of Good Faith
(a)The Insured has a duty to BSA to act in utmost good faith in respect of any matter arising under or in relation to this policy.
(b)This duty includes, but is not limited to, a responsibility to disclose to BSA every matter the Insured knows, or could reasonably be expected to know, which may be relevant to a determination of the liability or the extent of the liability of BSA to pay a claim under this policy.
(c)If the Insured fails in the duty of utmost good faith, the Insured is liable to pay BSA any amount paid in excess of BSA’s actual liability to pay for loss under this policy, and BSA may recover such sum accordingly.
8. Category 1 and 2 defects are defined in Part 9 of the Policy. A defect which may allow water penetration into a building is a category 1 defect.
9. It is not controversial that when the tribunal reviews a decision of the QBSA, it stands in the shoes of the original decision-maker in deciding whether the confirm the original decision; set it aside and substitute its own decision; or set the decision aside and refer it back to the decision-maker with directions.
The Evidence
10. The applicant relied upon evidence of herself; her daughter-in-law, Sandra Wajs, who lived in the premises concerned at all relevant times; and Dennis McKellar, a builder who was commissioned by QBSA to rectify the defects in the main bathroom.
11. The QBSA relied on its statement of reasons and an amended statement of reasons as well as documents attached to those statements of reasons, together with evidence from the assessments officer concerned, Jenny Burslem; and the building inspector, Peter Doak, who inspected the premises after the initial claim was made on or about 21 April 2008.
12. The original claim submitted by the applicant refers to, among other matters which are not relevant, concerns about the main bathroom, namely ‘shower base leaking, damaged membrane, damaged floor tiles’ and in the kitchen, ‘leaking water damages ceiling plasterboard in the kitchen’. Regarding the ensuite bathroom, it says ‘roof or skylight damaged - water damages ceiling plasterboard’.
13. Following an inspection and report to QBSA by Peter Doak, the original claim was relevantly allowed in respect of the main bathroom shower and the kitchen ceiling. The applicant was advised that the issues raised regarding the ensuite were considered not to be defective building work. The insurance claim in respect of them was denied.
14. The applicant and Sandra Wajs were present when building inspector Peter Doak conducted his inspection of the premises on 21 April 2008. They both say that they discussed with him, problems of water pooling in the ensuite shower which they considered indicative of the same construction defect as identified in the main bathroom, as well as mould on the ceiling in that room. They both say that he stated he could not assess whether the floor was defective because it was tiled and there was no visible damage.
15. Dennis McKellar was asked by the applicant to look at the ensuite bathroom shower recess after he had been commissioned by QBSA to rectify the main bathroom. The rectification included replacement of one tile above floor level only in the main bathroom. The applicant could not match the tiles and decided that to maintain the standard of the premises, the tiles (other than those to be replaced under the insurance claim) in both bathrooms should be replaced at her expense. He said that when he first visually inspected the ensuite bathroom in July 2008 that he identified a fault with the waste, namely incorrect fall of the bedding material resulting in ponding or pooling of water, which was not installed in accordance with building regulations. He considered that this defect extended back to the time of construction and was clearly visible to any reasonable professional.
16. He subsequently discovered when he removed the tiles in the ensuite bathroom on 1 October 2008, that there had been a failure in the waterproofing under the tile bed. Mr McKellar states that the flooring to the ensuite had completely disintegrated in some places, and the worst damage was in the area where water had been pooling.
17. He was unable to say when the membrane in the showers in each bathroom had failed, but considered that because of the extent of the damage that it could have been close to the time of construction. He considered that the defect and resultant damage to the ensuite floor would have been clearly visible and evident for a considerable period prior to 21 April 2008, and prior to 17 March 2008. He considered that a diligent professional inspecting the premises on 21 April 2008 would have inspected the under-side of the ensuite shower recess.
18. Mr McKellar considered that the waterproofing problems occurred in both the main bathroom and ensuite bathroom either because the water-proofing membrane failed or because the membrane was not correctly applied. He considered that if the waterproofing in the shower recess had failed in one area that it was prudent to consider whether the other shower recess which had water-proofing applied at the same time, had the same problem. He considered it reasonable to assume that in a new building such as this one, all of the waterproofing was done at the one time, and the same process was used to do it. Therefore, if there was one failure, it was reasonable to inspect the other wet areas, and this would include inspecting the under-side of the shower recess.
19. He said that by entering a storage area and observing through the plumbing duct, water damage from the ensuite bathroom would have been visible, indicating the ensuite bathroom had the same defect as the main bathroom. He did not do this himself, as he was only to quote for the QBSA on the main bathroom according to the scope of works he was given. However, he said that the underside of the new flooring which he had subsequently installed in the ensuite bathroom was clearly visible from the plumbing duct and it was on this basis that he made the assertion.
20. His evidence was that if he had been requested by QBSA to provide a quotation for rectification work for the ensuite bathroom to repair the water damaged floor, and maintain the conditions contained in the original scope of work, which QBSA provided for the main bathroom, that his quotation would have been $3,016, including GST.
21. Peter Doak said that as a QBSA inspector he only looked at what was referred to on the claim form, and other issues as may be raised by a complainant while he was there. He considered that a failure in one shower did not suggest a failure in another.
22. He agreed that he went into the ensuite bathroom to look at the mould but did not recall any discussion about water pooling. He said that if it had been brought to his attention he would have conducted a test, and would usually have noted it on his inspection report, which he did not do. Mr Doak thought he recalled the layout of the premises in a general sense, and specifically recalled looking at a bathroom fan in the ensuite which his report refers to as not working. However, the applicant says there is not a fan in the ensuite bathroom.
23. He agreed that the failure of the waterproofing membrane was the cause of the water damage in the two bathrooms but asserted that there could have been different failures in each bathroom. He outlined various possible reasons for water penetration in shower recesses including improper installation of membrane systems, movement in the floor and walls associated with the shower recess, failure of the membrane around the waste outlet in the recess, insufficient curing of the membrane system, and damage to the membrane after installation. He said that as there was no indication from the owner that there was a problem with the ensuite bathroom that therefore it was not necessary, in his professional view, to inspect the floor under the ensuite bathroom.
24. The report prepared by Mr Doak for QBSA is a brief undated typed report. It is not a contemporaneously prepared handwritten report, and it contained numerous errors which he later corrected in his statement provided to the Tribunal in July 2009. It refers to inspecting mould in the ensuite bathroom, but nothing else in that room. It was used by Jenny Burslem to consider the original claim and therefore must have been prepared and provided to QBSA by 25 June 2008 when she issued a letter to the applicant containing the QBSA’s decision about the original claim.
25. At the hearing, Mr Doak was asked to look at photographs said by the applicant to have been taken on 3 September 2008 of the floor underneath the membrane in the ensuite bathroom after the tiles had been removed. He considered, looking at the extent of the damage, that there would have been a large amount of water stain underneath the ensuite bathroom on inspection. Although nothing turns on it, it appears that the photographs could not have been taken until at least 1 October 2008, when Mr McKellar removed the floor tiles in the ensuite bathroom.
26. The applicant said that she spoke with Jenny Burslem shortly after the tiles had been removed in the ensuite bathroom and that Ms Burslem advised her to submit another claim form, but that it would be treated as the one original claim. She says she intended it to be an additional item on the original claim lodged on 17 March 2008. The applicant did submit the second claim on 3 October 2008. On the second claim the applicant indicates that the defect was first noticed on 1 October 2008. She also noted on it ‘same problem as main bathroom’. The applicant’s covering letter accompanying the second complaint states, ‘please find new claim…as requested’ and refers to it as an ‘emergency.’
27. Ms Burslem did not recollect any such conversation with the applicant. She said that she only became aware of the issues with the ensuite when she received the second claim form. She said that she has been an assessments officer for some time and knows that it is a separate claim, and that it is standard to request a complaint form each time a defect to building works becomes evident.
28. She advised the applicant by letter on 22 October 2008 that the claim was denied. The applicant again wrote to the QBSA on 5 November explaining that the ensuite bathroom had the same problem as the main bathroom. A file note made by an employee of the QBSA, Peter MacGregor, of a telephone conversation between him and the applicant on 12 November 2008 indicates that he advised the applicant that QBSA ‘would not be processing another claim for the leaking ensuite shower at this time’ while noting that she had indicated that she would probably exercise her right to seek a review of the decision.
29. Mr McKellar commenced work on the ensuite bathroom on 15 December 2008 and completed it on 30 January 2009. QBSA was not made aware that the ensuite shower recess was rectified under a contract between the applicant and Mr McKellar.
Submissions
30. The applicant submits that the decision should be set aside. The applicant argues that either, the second claim relating to the ensuite bathroom forms part of the same claim and was therefore made within the required time frames or alternatively, if it is to be considered a second claim, that time should be extended for the making of the claim, as the defect was evident within the required time frames.
31. She argued that contrary to the respondent’s approach, there is a difference between a defect being ‘evident’ and a homeowner being ‘aware’ of the defect. Further, it was argued that the defect was not required to be ‘noted’ or ‘observed’, it simply had to be evident, which the respondent confused with awareness of it by a homeowner.
32. It was submitted that the view could be formed that in this instance, that there was one defect, namely a defect in the waterproofing, which had failed as a result of either incorrect application or a failure in the waterproofing itself, which affected the main bathroom and the ensuite bathroom. On this view, which the applicant favours, the claim for the ensuite was part of the initial claim, and should have been allowed as part of it.
33. It was submitted that the defect became evident when water came through the ceiling into the kitchen. The applicant was not an expert and could not reasonably be expected to know to look or where to look to find evidence of the defect in respect of the ensuite bathroom. A reasonable inspection however could have identified it, and on the available evidence it is clear that it would have been evident to a person with expert knowledge in April 2008, when Mr Doak inspected.
34. Further, it was argued that if the ensuite bathroom waterproofing defect was considered a separate claim, the defect was still evident during the statutory period. It was visible in the storage room under the stairs. It was argued that issues regarding the pooling of water had been reported to Mr Doak, although he had not noted them. If they had been rectified by QBSA, the waterproofing issue would have been observed.
35. Also if it was considered a second claim, as the defect ‘first became evident’ within the statutory period, it was argued that an extension of time should have been granted to allow the claim to be made. It was submitted that this did not require the extension of the insurance period.
36. Regarding arguments that the respondent was prejudiced due to the applicant having proceeded to have the defect remedied after discovery of the water damage, it was argued that the QBSA had the opportunity to inspect from the time of the contact with QBSA in early October 2008, until the work was commenced in mid-December 2008.
37. The respondent submits that the decision should be confirmed. It says that the question for determination by the tribunal is whether the QBSA correctly applied Clause 2.4 of the insurance policy condition to reject the second claim, noting that at the time of the inspection, it had not received a written complaint relating to the ensuite shower floor as required under section 71A of the Act. Further, it argues that the defect was not identified by the applicant until after the expiry of the insurance cover on 24 March 2008.
38. In this regard, the respondent argues that at the time of the second claim, coverage had expired. It submits that the defect in the ensuite became evident at the time Mr McKellar commenced work in September 2008, and that it was not evident in March 2008 when the original claim form was submitted and it was not evident to Mr Doak when he inspected in April 2008. It argues that if the defect had been evident, Mr Doak would have inspected it, but he did not do so because nothing was brought to his attention. It was argued that it is not necessary for an inspector to conduct an inspection of an entire premises when particular defect issues are raised by a complaint.
39. QBSA argues that clause 2.4 sets out a strict and mandatory time frame. Further, for clause 2.5 to operate, it argues that coverage under the policy must be current and that it cannot operate if coverage has expired, as it had in this instance.
40. The respondent argues that the second claim dated 3 October 2008, identifies the date the defect was noticed as 1 October 2008. Further, because the 6 years and 6 months time frame during which a defect must first become evident had expired, that in accordance with part 2 of the policy conditions the QBSA was not liable to pay for any loss.
41. Also, the QBSA submits that as a result of the applicant’s actions in engaging a licensed builder to rectify the building work complained of in the ensuite, it has been denied the opportunity to inspect the building work complained of and it will be unable to assess whether it constituted a defect which was covered by the insurance scheme. It relies on clause 5.1 which entitles it to refuse a payment for loss where building work has been rectified without the prior written approval of the QBSA. Further, it argues it has been denied the opportunity to seek tenders for carrying out the work, a mandatory requirement under section 74 of the Act.
42. It is also argued that the applicant contravened section 71A of the Act, by not providing a written complaint about the ensuite shower floor at the time of the inspection by Mr Doak. Section 71A applies when a consumer wants the authority to direct rectification of building work under section 72.
43. Reliance is placed by the QBSA on decisions of the former tribunal regarding the ‘strict and absolute time restraints …upon the period in which any statutory policy of insurance remains current, and is available for making claims’[1] and prejudice to the QBSA in the case of a late claim.[2] Further, reliance is placed on decisions in which homeowners were not compensated as they had not complied with the terms of the policy by instructing unapproved rectification work.[3]
[1] Reiterer v QBSA [2007] CCT QR 148-06 [21].
[2] Little v QBSA [2006] CCT QR077-06, especially at [44].
[3] Valbeck Pty Ltd v QBSA [2008] CCT QR079-06 and Chi Le & Van Tran v QBSA [2009] CCT QR148-08.
44. The respondent argues that Clause 2.4 operates independently of Clause 2.5 and therefore, in essence, that time to lodge a claim cannot be extended to a time after the insurance coverage had ceased and therefore could not assist the applicant.
Discussion of the Evidence
45. The applicant is a homeowner. Neither she nor her daughter-in-law, Sandra Wajs, has expertise in identifying the nature of building defects. She made the original claim under the Policy when issues were noted. She did raise issues concerning the ensuite bathroom at the time of the original claim, although they did not refer to potential waterproofing problems in the ensuite shower recess.
46. Both the applicant and Sandra Wajs recalled a discussion with Mr Doak in which they raised the issue of ponding of the water in the ensuite and suggested it may indicate the same problem as identified in the main bathroom. Although Mr McKellar says the ponding represents a fault and non-compliance with building regulations, the evidence does not suggest that ponding of water indicates a waterproofing failure. Mr Doak’s recollection was limited, and indeed, he incorrectly recollected inspecting a fan in the ensuite bathroom when there is not a fan. Further, his report was brief and did not contain an account of conversations which occurred during the inspection. Also, it is unclear when the report was prepared between the inspection date, 21 April 2008, and the date of the QBSA decision on the original claim, 25 June 2008.
47. No doubt Mr Doak inspects many premises, and understandably his recollection some weeks or months later, and by the time of the hearing, almost three years later of this particular inspection is limited. He said that if the issue had been raised with him, he would have made a note of it, as was his usual practice. However, his notes were not available or referred to in the evidence. In any event, if they were used to assist the preparation of the typed report, it appears that the notes were deficient and unreliable given the numerous errors subsequently identified by him in the report. Accordingly, I prefer the evidence of the applicant and Sandra Wajs and accept that a conversation occurred about the applicant’s concerns regarding the ensuite shower recess as the applicant and Sandra Wajs recollect.
48. Mr Doak suggests that waterproofing can fail for numerous reasons. I accept that this is so. However, this was not a situation when the bathrooms in the property had been built or renovated at different times, and therefore waterproofing is likely to have been effected differently at those different times. He says that he did not consider it necessary to inspect the ensuite bathroom. Mr McKellar opined, when a building is new and there is a waterproofing failure in one wet area, it is reasonable to consider whether other wet areas, which are likely to have been waterproofed at the same time, have the same problem.
49. Mr Doak does not in his evidence comment directly on this particular proposition. He says that he inspects what is on the list. A building inspection of the entire premises could not reasonably be required when limited issues are raised. However, a building inspector is, in my view, reasonably expected to bring his expertise to bear on the inspection conducted. Indeed, QBSA relied upon him to do so and considered the original claim in light of his report. I accept Mr McKellar’s reasoning for his expressed view and prefer his evidence regarding the reasonableness of considering the waterproofing in the other wet areas, given the nature of the defect in the main bathroom.
50. Mr McKellar’s evidence is that the defect or defects in the main bathroom and the ensuite bathroom was/were either a failure of the water-proofing membrane or the membrane was incorrectly applied. He could not say when the failures had occurred. Mr Doak suggests a variety of reasons why water penetration may be experienced in shower recesses, but agrees that the failure of the membrane caused the water damage. On the evidence of both of them, it is apparent that waterproofing membrane failures occurred in the ensuite bathroom and the main bathroom. It is also apparent on the expert evidence of Mr McKellar that the water damage in the ensuite bathroom was evident by 17 March 2008, and likely for some considerable prior period. This is supported by Mr Doak‘s concession that given the extent of the damage there would have been a large amount of water stain underneath the ensuite bathroom on inspection.
51. The evidence suggests that the mechanism of the failures may have been similar. However, the two bathrooms occupy different areas in the premises and must have occurred independently of one another. They may have occurred at different times. Therefore, I am satisfied that they are separate, although similar, defects.
52. Jenny Burslem does not recall a conversation to the effect that the applicant should lodge a second claim. The covering letter sent contemporaneously by the applicant with the second claim clearly states ‘as requested’. It is inherently implausible that it would have been framed in this way and marked to Ms Burslem’s attention in the absence of a conversation between the applicant and Ms Burslem. Also, the lodgement of the second complaint form is consistent with Ms Burslem’s comments that it was standard to request a complaint form each time a defect ‘becomes evident’. At the time of the telephone discussion alleged by the applicant Ms Burslem might be expected to follow standard procedure and request a second claim form. Accordingly, I prefer the evidence of the applicant regarding this exchange and accept that there was a discussion and a request for the claim. Any assertions made about the manner in which the second claim would be treated are ultimately irrelevant to the outcome of the application in my view.
53. The evidence of the witnesses is otherwise uncontroversial and is accepted.
Decision
54. The Tribunal’s task is to review the decision of QBSA of 22 October 2008.
55. The applicant’s preferred submission is that the defect in both bathrooms is one defect in the waterproofing and should be accepted as part of the original claim. As a matter of fact, I have found that there are two separate defects. In any event, the applicant has not sought a review of the decision made on 25 June 2008 regarding the original claim. The Tribunal’s jurisdiction does not extend to disturbing decisions which were reviewable but not reviewed.
56. Under section 70 of the Act, a person claiming indemnity under the insurance scheme must give notice of the claim to the QBSA. Indemnity was sought for the waterproofing issues in the ensuite bathroom only on the second claim.
57. The second claim was lodged by the applicant immediately after the defect to the ensuite bathroom waterproofing membrane had been observed. The observations confirmed her earlier suspicions of a failure in the ensuite bathroom. She could not reasonably have earlier lodged a claim for these issues. She had however made reasonable efforts to explore her suspicions during Mr Doak’s inspection without success.
58. Clause 2.4 of the Policy provides that QBSA is only liable to pay for loss for a category 1 defect where the defect ‘first became evident’ within 6 years and 6 months. I accept the respondent’s argument that it is not possible to extend the period of the insurance cover. It is a strict time frame which can not be extended. QBSA is only liable to pay for losses for defects which first become evident within the stated period.
59. The Policy does not define the phrase ‘first became evident’ or the word ‘evident’. In my view, the words therefore have meaning according to their common usage.
60. Under clause 2.5, an insured is not entitled to a payment for loss in the case of a category 1 defect, unless a claim is made within 3 months of that defect first becoming evident in the opinion of the QBSA or such further time as the QBSA may allow. This clause provides for time frames for making claims, and for the QBSA to extend the time frame provided. It does not provide for extension of the period of insurance cover.
61. In the ordinary course, accepting that liability may exist for defects first becoming evident up until the last day of the six years and six months insurance cover period, claims might be made at latest 3 months after the expiry of the insurance cover. That is, unless the QBSA allows additional time for the making of the claim. The Policy does not indicate factors to be taken into account in considering whether to exercise the discretion to extend time. It is appears to be a broad discretion which may be exercised in appropriate circumstances.
62. The respondent argues that clause 2.5 only applies regarding the giving of an extension of time to circumstances when the Policy cover remains current under clause 2.4. Reading the Policy as a whole and clauses in Part 2 together does not lead me to conclude that an extension of time to lodge a claim cannot be granted in appropriate circumstances when it is apparent that a defect did become evident during the period of insurance, although the period has concluded. The Policy specifically contemplates that claims may be made after the insurance period has concluded, provided the claim is made within the prescribed period. It also specifically allows for time to be extended for the making of a claim.
63. In many situations, there would likely not be evidence to support a finding that the defect became evident during the insurance period, but where there is, that evidence must be considered to consider whether an extension of time to lodge the claim should be granted. In this case, the claim was made a little over 6 months after the expiry of the insurance period, and a little over 3 months after the expiry of the period during which claims are anticipated may be made without an extension of time under the Policy.
64. The circumstances to be taken into account in considering whether to extend time for the making of the claim in this case are somewhat unusual. Not only is there evidence that the defect was evident during the insurance period, but the applicant had some suspicions about the existence of a defect and endeavoured to have the QBSA’s inspector explore them when she made the original claim which included a claim for a similar issue in the main bathroom. The original claim was made within the insurance period.
65. The applicant identified for the respondent when she lodged the second claim immediately after the tiles had been removed in the ensuite that a waterproofing defect was complained of, and she considered it was the same problem as she had encountered in the main bathroom. She again completed the complaint form indicating that the defect was first ‘noticed’ on 1 October, 2008, that being the date on which she first had actual knowledge, suspicions aside, that the ensuite had the same defect as the main bathroom. It was the date on which the defect was first observed. However, the Policy refers to payment of claims for defects which first became evident within the insurance period. When a defect ‘first became evident’, is not necessarily synonymous with the first time the defect is observed by a homeowner.
66. In the circumstances of this proceeding, it is apparent from the evidence of Mr McKellar and Mr Doak that the defect to the waterproofing in the ensuite shower was extensive, observable and obvious, although not observed by any person at the time of the original claim in March 2008 or Mr Doak’s inspection on 21 April 2008, and probably for a significantly longer earlier period. It is reasonable to infer from the evidence that if the ensuite had been constructed above a living area, water damage would have been visible in that living area, as was the case when water damage appeared on the kitchen ceiling below the main bathroom. In this case, the defect would have been observed much earlier. The evidence supports a finding that the defect to the waterproofing in the ensuite bathroom existed during the insurance period. It could reasonably have been discovered by Mr Doak at the time of his inspection, but it was not. On the evidence of both Mr McKellar and Mr Doak, it is a defect covered by the scheme.
67. Accordingly, I am satisfied that the category 1 defect to the waterproofing of the ensuite bathroom first became evident within the relevant 6 years and 6 month insurance period, despite being unobserved in respect of the ensuite bathroom until 1 October 2008.
68. Perhaps, it would have been prudent for the applicant to identify the pooling of water in the ensuite on the original claim, or once that issue was explained to Mr Doak, to have lodged a further claim or an amended claim at that point regarding the inadequate fall. But she did not do so. Her attempts to have the area investigated because of her suspicions had failed. Section 71A of the Act provided for her to apply in writing if rectification was sought. However, she has not sought rectification of the water ponding issues in the ensuite. I do not consider it significant and do not draw any adverse inference from the fact that her original claim did not identify the ponding issue, since her second claim was not for the inadequate fall but the waterproofing issue. The evidence does not suggest a lack of good faith on the applicant’s part. She is a lay person with no building expertise who did her best to raise defects with the expert body.
69. The respondent argues that the actions of the applicant in engaging a licensed builder to rectify the work has denied it the opportunity to inspect the work and assess whether it constituted a defect covered by the scheme. The applicant did not proceed to have Mr McKellar do the work until mid-December 2008. Therefore, there was ample opportunity for QBSA to inspect if it wished. It was the decision to reject the claim without investigation or consideration of the substance of the claim which led to any possible disadvantage.
70. QBSA also relies on clause 5.1 which gives it the discretion to refuse a payment for loss where building work has been rectified without its prior written approval. The provision is not mandatory. Further, in my view, the provision should not be relied upon to either refuse to extend time for the making of the second claim or refuse the second claim in circumstances where QBSA rejected that claim, and then reiterated to the applicant that it would not be considering her claim further. She could not reasonably be expected to leave the bathroom in the state it appears in the photographs while the applicant exercised her review rights. As it transpires, this would have been a period of some years.
71. QBSA argues it has been denied the opportunity to seek tenders as required under section 74. In my view, QBSA’s own approach to the second claim denied it this opportunity, rather than the actions of the applicant. Further, I make the observation that the contractor engaged by QBSA to rectify the main bathroom after a tendering process, was engaged by the applicant to complete the work in the ensuite bathroom.
72. In my view, the correct and preferable decision, given the unusual circumstances of the case, including that the defect complained of was first became evident during the insurance period; the applicant’s earlier suspicions that the defect existed; her attempts to raise them with Mr Doak relying upon his expertise brought to the building inspection; and her actions to make the claim immediately after the defect was finally observed; and the unanimous expert evidence that the defect resulted from the failure of the waterproof membrane, is to allow the applicant additional time for the making of the second claim under clause 2.5 to 3 October 2008 and to accept the claim. Further, Mr McKellar, who undertook the repair work was the successful tenderer regarding the original claim, and has provided evidence which I have accepted that observing the same conditions as the original tender, the quotation would have been $3,016, including GST.
73. In the circumstances, I will make orders to set aside the reviewable decision of 22 October 2008 and substitute it with my own decision, extending the time for making the claim, as well as accepting the claim in the sum of $3,016.00 including GST as quoted by Mr McKellar.
74. I will make directions for both parties to make written submissions regarding the application for costs and the applicant’s filing fee and for the determination of this issue on the papers in due course.
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