Pilleris v Queensland Building Services Authority
[2010] QCAT 373
•22 July 2010
| CITATION: | Pilleris v Queensland Building Services Authority [2010] QCAT 373 |
| PARTIES: | John Pilleris |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | QR091-09 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 22 July 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr Phillip Pennington, Member |
| DELIVERED ON: | 22 July 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | The decision of Queensland Building Services Authority contained in its notice to the applicant by way of letter dated 27 March 2009 is confirmed. If as a matter of law any appeal or review of the Tribunal’s decision provided orally at the conclusion of the hearing 21 July must be instituted within a certain time frame, it is ordered that the time period for commencement of such review or appeal commences from the date of these Reasons and Orders. |
| CATCHWORDS : | Domestic Building Contracts Act 2000 section 16, 45, 79; Building Services Authority Act 1991 section 86, section 71; application to review authority decision that domestic building contract validly terminated |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | John Pilleris |
| RESPONDENT: | Legal Representative Mr B Cole |
REASONS FOR DECISION
The Applicant is a builder who undertook to carry out domestic building work as defined under the Domestic Building Contract Act (DBCA) for a Consumer (“the Consumer”). The contract price was $100,000.00. The completed copy of the BSA Major Works Contract schedule comprises pages 45 to 49 of the Exhibits of the statement of the Consumer’s husband (BSA8). The General Conditions of the QBSA Major Works Contract were accordingly incorporated into the contract. The contract schedule described the works as “carport and alteration” in respect to premises at 99 Cecil Road, Bardon. The plans were:
·Plans identified exhibit at pages 24 to 27, and pages 29 to 32 of BSAS8;
·Engineers drawings (RB Hoskins and Associates (comprising pages 34 to 36 of exhibit BSA8))
Paragraph 1.17 of the undated statement of the Applicant filed with the Tribunal 27 July 2009 records the Applicant having “received a copy of the new plans” before the contract was signed.
Aside from the Domestic Building Contract Act applying, the Queensland Building Services Authority Act 1991 Qld also has relevance. If it applies, it provides the Consumer with the benefit of the statutory insurance scheme as the above works meets the definition of residential construction work carried out by a registered builder. The Tribunal was not provided with information of the payment of policy insurance on the approval of the works but no argument was raised with this Tribunal that the works were not insured under the policy applicable by reason of section 69(2) of the QBSA Act.
A dispute arose between the Applicant and the Consumer. The Consumer issued a notice to the Applicant on 7 December 2008 allowing him 7 business days to make good certain specified breaches of the contract. The letter was provided in purported compliance with condition 26 of the contract, which allows that a party, when alleging another party to be in substantial breach of the contract, may give it a notice requiring it to make good that breach within 7 business days.
Subsequently, the Consumer issued a termination notice on 17 December 2009 on purported reliance on its rights under clause 26 of the contract.
These steps lead to the Respondent exercising its statutory jurisdiction on a complaint made to it by the Consumer. The decision of the Respondent was set out in its letter of 27 March 2009 to the Applicant. It included a finding that the contract had been validly terminated for reasons other than the fault of the owner, notification that the BSA was proceeding with the Consumer’s claim, and that the BSA might seek to prove a debt against the Applicant (which arises under section 71 of the QBSA Act).
The decision of the QBSA to issue the above notification to the Applicant is a “reviewable decision” under section 86(1)(i) of the QBSA Act.
Application
The Applicant started these proceedings for a review of the Respondent’s decision embodied by the notice mentioned above.
These proceedings were commenced before the Commercial and Consumer Tribunal. The Queensland Civil and Administrative Tribunal has jurisdiction to finalise an unresolved disciplinary proceedings, upon the former Tribunal having ceased to function as of 14 December 2009 (sec 256 Queensland Civil and Administrative Tribunal Act).
The Issues
10.The Consumer could only lawfully terminate the contract if;
· the Respondent was ‘in substantial breach of the (this) contract’;
· an applicable notice specifying the breach was given;
· the breach wasn't remedied.
(Clause 26 General Conditions)
11.The General Conditions provide 5 specific situations of what will amount to substantial breaches, but these are couched in phrasing indicating that there might be other situations which will amount to a substantial breach of the contract.
12.The central issues for the Tribunal to determine therefore are whether the grounds on which the Consumer relied in giving the notice met the requirements of the contract, and whether the Applicant remedied such breaches.
The evidence of the Applicant
13.The Applicant filed these statements, and at the 21 July hearing they were re-numbered as indicated:
·Exhibit JP1 - Statement filed 27 July 2009, which includes paragraphs Nos 1.1 to 1.43 described as “chronology”. It continued by way of paragraphs numbers 2.1 to 2.8;
·Exhibit JP2 - response to statement of The Consumer’s husband;
·Exhibit JP3 - the statement of the wife of the Applicant;
·Exhibit JP4 - a CD and video;
·Exhibit JP 5 - statement of the Applicant;
·Exhibit JP 6 - response to statement Mr J Hills;
·Exhibit JP 7 - Blake Waterproofing letter to the Consumer’s husband dated 14 August 2009.
The evidence of the Respondent
14.The evidence of the Respondent comprised:
· BSA 1 – Statement of Reasons dated 3 June 2009;
· BSA 2 – statement of H Stenton, a Case Manager with the
Respondent;
· BSA 3 – statement of Mr B Hanes, building inspector employed
by the Respondent;
·BSA 4 – statement of Mr J Hills, engineer and director of Jeffrey Hills and Associates Pty Ltd;
· BSA 5 – statement of the Consumer’s husband;
· BSA 6 – further statement of Mr J Hills
· BSA 7 – statement of R Watters, Assessment Officer employed
by the Respondent;
· BSA 8 – statement of the Consumer’s husband dated 6 April
2010;
· BSA 9 – statement of the Consumer dated 7 April 2010
15.The Deputy President issued a direction on 27 April 2010 requiring a party to serve on the other an applicable notice as to which, if any, of the above persons would be required to be present in person for cross-examination upon their statements, and the only applicable response to that was the Respondent requiring that the Applicant and the Applicant’s wife be available for cross-examination. Accordingly, with the exception of Mr Walker, who for reasons discussed below provided also sworn evidence in the afternoon of the hearing, the Tribunal allowed all of the Respondent’s statements to be admitted as evidence. The Applicant and his wife were present in person on the date of the hearing and were duly sworn to their statements. The Applicant was cross-examined by the Respondent.
Alleged contract breaches
16.The breach notice appearing as pages 73 and 74 of the exhibits to BSA1 cited numerous alleged contractual breaches. These will be addressed in turn.
‘Unreasonably failing to perform the work diligently or unreasonably delaying, suspending or failing to maintain reasonable progress’
17.The building contract required building work to be carried out in two areas. At the time of the giving of the breach notice, works had been carried out in relation to the carport, but nothing had taken place in relation to the enclosure of the whole of the area underneath to create habitable areas.
18.In relation to the work to be carried out underneath the existing home, there were concrete block walls bounding 5 faces of the L shaped structure, that is, all but the southerly sides at ground level, and this work enclosed poured concrete floors. The plan appearing on page 31 of BSA 8 denotes that a former storeroom area was to become a bedroom.
19.The Applicant contends that there was a substantial issue in relation to waterproofing of the underneath area. At approximately the same time as the Consumer was arranging for issue of the breach notice, the Applicant was contemplating preparing a notice to the Consumer about water problems affecting the area beneath the house. After the breach notice was issued, and before the Consumer’s termination notice was given, the Applicant gave the Consumer a letter about its concerns.
20.Ensuring that the constructed works would remain watertight and dry would ordinarily be a prime consideration when constructing occupiable parts of a dwelling. The Domestic Building Contracts Act contains a number of implied warranties in division 3 of Part 4. Where plans and specifications form part of a contract, then the building contractor warrants the subject work will be carried out in accordance with the plans and specifications (Sec 45). If the work involves renovation or improvement to a home to a stage suitable for occupation, then the building contractor warrants that the home will be suitable for occupation when the work is finished (Sec 46).
21.The Applicant’s contention, as explained in exhibit JP5, is that;
·the Consumer had undertaken to carry out certain waterproofing works, which it didn't do;
·by reason of new circumstances (much higher levels of flooding and water seepage than could have been contemplated) the Applicant was disabled from performing the contract, such that, as a matter of law, the circumstances amounted to "frustration" of the contract;
· alternatively, it wasn't able to reasonably advance and complete the works;
· for any of these reasons this breach was not made out;
22.The Respondent put expert evidence before the Tribunal. Exhibit BSA6 is a statement of Mr J Hills which observes that in relation to the “front office waterproofing” the plans provide for an additional roof structure being constructed over the office area. Mr Hills expresses the opinion that the building work proposed would be in compliance with a part of the Building Code of Australia named “damp and weatherproofing of dwellings” (section 2.2 of that Code).
23.Pool overflow is also addressed in the abovementioned expert report. The report refers to water entering through an opening in block work on the right hand side of the property. Mr Hills’ report notes that block work was to be completed to aboveground level resulting in this temporary access point ceasing to be a source of surface water flow.
24.The Applicant submitted a response to Mr Hills report, but it did not directly contradict Mr Hills’ evidence. The Applicant says that had he known that ‘none of the existing work under the house had not been approved (sic)’, he would not have agreed to do the work under the house (exhibit JP6, paragraph 1.1). There is however no representation in the contract that existing works had been approved, and while it is correct, as the Applicant contends “as per the contract all plans, specifications and foundation data were the responsibility of the owner”, it is not being contended that there is a design error in the plans.
25.The Consumer says that the Applicant attributed the “leaking roof” to an inadequate down pipe arrangement, and that the Applicant had maintained that this would be made good during the carrying out of the contract works (BSA5, para 1.13).
26.The Tribunal is satisfied on the evidence of Mr Hills and the Consumer that the outflow from the existing roof and the pool stormwater were both aspects that were required to be addressed by the Applicant in carrying out the building works.
27.The final aspect of water entry of concern to the Applicant was water seepage through the block work.
28.Mr Hills, the expert briefed by the Respondent, commented upon the possibility of water entering through the “wall 1”. That is the wall identified on a plan exhibited to his report. Mr Hills expresses the opinion that an ‘inspection passage’ was included in the construction plans and that good building practice for a professional builder would be to ensure that the bottom plate was flashed to eliminate water seepage from the slab coming into contact with the wall timbers, and that adequate drainage methods would prevent water entry into the built fabric in this area.
29.The Applicant contends at paragraph 1.17 of exhibit JP1 that a representative of a waterproofing business came to a meeting on site some months prior to the June 2008 contract formation. At that meeting a section of soil had been dug away from the wall to the immediate east of the storeroom block wall by the Applicant. Agricultural pipe was observed by the Applicant to be present at the base of the wall. The Applicant says the representative advised that this wall needed to be waterproofed. Both the Applicant and the Consumer’s husband agree that the representative claimed that he would issue a waterproofing certificate if he had an assurance that certain waterproofing works would be done (refer exhibit BSA8, paragraph 16).
30.The Applicant contends that the Consumer agreed that she would see to this work being carried out at her cost. The Applicant maintains that his conduct was consistent with the understanding that these works remained the responsibility of someone other than him, and vigorously defended this position when cross-examined by the Respondent’s legal representative at the hearing on 21 July.
31.The Consumer however contends in exhibit BSA9 that she did not state to Applicant that she would have the waterproofing works carried out at her cost. The Consumer’s husband maintains that he was at that meeting (he swore to this personally on the afternoon of the hearing), that he observed the agricultural pipe at the wall base and the location of a storm water inlet drain passing from this location beneath the house and to the vicinity of the Cecil Road perimeter, which was tested to be operating by use for some type of dye.
32.The Consumer’s husband declared in exhibit BSA5 that the waterproofing measures were to be included in the works in the contract (para 1.16 BSA5), and that the Applicant told him that the Applicant would carry out those works at a stage considered appropriate by the Applicant (BSA 8, paragraph 18). The Consumer’s husband maintains that the difference between the first of the applicant’s quotes to carry out work, and the increased price appearing in the final contract was attributed by the Applicant to the price of the additional water proofing measures (exhibit BSA 5 paragraph 19).
33.The Tribunal has to determine, in conflicting versions of who undertook responsibility for the waterproofing works, whose version is to be preferred. The Tribunal prefers the account provided by the Consumer. There is no documentary evidence that contradicts the Consumer’s version on this point. The Applicant has not disputed that the Consumer’s husband was at the meeting involving the waterproofing contractor, or sought to provide evidence from anyone else at the meeting as to what was said. With his understanding of the plans, and as a building professional, he would have appreciated how good building practice would have overcome seepage concerns, and if he was concerned at the possible impact of an un-waterproofed wall on the works he should have addressed it unequivocally in the contract.
34.Finally, there is the matter of the adverse weather conditions that had applied. By reason of an agreed 30 day extension, the project was due to be completed by Friday 21 November 2008. The agreed extended completion date was in part attributed to rain delays. The Consumer and the Applicant have differing claims as to the extent of wet weather that prevailed during the period of the contract. A further extension for weather delays was capable of being claimed by way of a notice process provided for under clause 13 of the contract. There is no evidence before the Tribunal in which it is claimed that a further extension was applied for by the Applicant by these means.
35.As rain delays would have been a valid reason for extension of the completion date under the contract, it cannot be claimed that the consequences of rain wasn't contemplated by the parties in the formation of the contract. Accordingly, the claim for "frustration" of the contract by reason of rain cannot be sustained.
36.It follows that the Applicant had ‘unreasonably failed to perform the work the subject of the contract, or unreasonably delayed or failed to maintain reasonable progress with respect to the works’, to paraphrase the definition of a substantial breach in clause 26 of the contract.
“Failure to perform the work under the contract competently”
37.The Consumer’s breach notice noted numerous particular aspects of non-compliance with the plans. The Tribunal will not make specific observations about each of the claim aspect non-compliance. Several are of greater significance than the others.
Non-installation of drainage behind carport retaining wall
38.Sheet 33 of the approved drawings denote the drainage measures required, comprising an agricultural pipe laid low at the rear of the retaining wall, gravel and a surface drain. Photographs comprising pages 52-59, 62-66 and 70 contained in exhibit BSA 8 demonstrate the absence of the drainage measures and the observed water entry through the block work into the carport space. Non-adherence to the design specifications was a substantial breach and the Applicant had failed to make good the breach within the time specified in the Consumer’s breach notice. The Tribunal is satisfied with this ground of breach under clause 26 of the contract.
Failure to adhere to plans with regards to materials and design
39.The Applicants did not install carport roof bearers or a ceiling as per plan. The approved plans called for roof trusses, which the Applicant elected not to install. In his oral evidence before the Tribunal he declared that he never used trusses, and always hand built roof bearers. Ceiling battens had not been affixed. Separately, cast in wall/footings had not been installed, instead bolts and fasteners had been affixed to the outer gate house side columns. The Applicant contended, quite aside from any obligation to use roof trusses, that the carport interior height, pitch and overall roof height reflected in the plans could not be accommodated because the initial excavation works struck rock, the Consumer would not agree to additional expense to be incurred to accommodate the original carport width, and this consequently affected the achievable height and roof design. (Paragraph 1.20 exhibit JP1).
40.For her part the Consumer contended that when advised that rock had been struck she ultimately initialed a plan denoting a reduced inner and outer width of the carport (refer paragraph 5 exhibit BSA 9 and paragraph 25 of exhibit BSA 8).
41.When this Tribunal asked the Applicant as to how the Consumer might have come to know of the consequential changes, he posited that when the footings were redrawn by the Owner’s engineer, Mr Hodkins, the onus would have been upon that engineer to inform the Consumer of this consequential impact. A hand drawn note, comprising page 25 of exhibit JP1, is the redesigned plan that the Applicant said was provided to him by Mr Hodgkins. The Applicant had no other evidence of a redesigned footing.
42.At paragraphs 2.2 and 2.3 of exhibit JP1 the Applicant contends having obtained oral approval from the Consumer to deletion of the requirement for trusses and use of a hand pitched roof (para 2.2) and as to the need to not affix a ceiling to avoid causing access problems to the carport doors. The Consumer denies having had such discussions. When the Consumer’s husband provided oral evidence before this Tribunal on the afternoon of the hearing, he denied any knowledge of any consequential impact on the footings change on achievable interior heights or difficulties with the ability to install a ceiling.
43.The construction of stairs of an inadequate width to the southern side of the gatehouse was contended to be a substantial breach of the contract. The dimensions of the stairs are shown on the first page of the approved plans. The Consumer attempted to prevent a breach of the contract occurring by interceding at the time of construction, the Applicant objected to any interference with the Applicant’s concreting contractor, and according to the Consumer denied any obligation to ensure that the steps conformed with the contract (exhibit BSA 9).
44.This Tribunal is satisfied that the failure to adhere to the design in relation to the particulars for truss bearers, the failure to install FC lining under the trusses and ceiling battens, and the failure to install stairs of the required width were all serious departures from the approved plans and no variation in that regard were approved. Compliance with the design was relevantly “work under this contract” as defined by section 28 and this ground for a substantial breach is made out.
Other alleged breaches
45.The cumulative effect of each of the following alleged instances of failure to comply with the contract could amount to a failure on the Applicant’s part to adhere to the contract plans or make good damage to the property arising from carrying out the works:
· Damage to main sewer line;
· Failure to match façade of carport to existing house;
· Failure to complete carport trim;
· Failure to complete concrete path from gatehouse to stairs;
· Failure to install outlet drain from agricultural drainage;
· Failure to install weep points to front fence and retaining walls;
· Failure to backfill retaining walls and front fence;
· Failure to complete gutters, drain pipes and trim in gatehouse;
· Failure to supply and install main drainage from new down pipes;
· Failure to supply and install gates.
46.The particulars of the alleged breaches are contained in paragraph 37 of exhibit BSA 8.
Steps taken to remedying alleged breaches
47.The building contract was capable of being terminated by the Consumer where a valid notice specifying one or more substantial breaches was given and it hadn't be remedied within seven business days. The time period for compliance commenced on Monday 8 December. Seven business days would end on the succeeding Wednesday 15 December.
48.The Applicant’s evidence as to what took place following receipt of the breach notice is set out on pages 15 to 16 of exhibit JP1. Correlation of some of the 20 numbered items indicates (using the applicants numbering in this item);
1.The Applicant is addressing here partly the reduced internal dimensions of the carport (an agreed change), but does not address the failure to commence works in the main part of the property, or the failure to use trusses or affix the FC ceiling in the carport. His response under this number moves to addressing particular aspects of drainage requirements of the carport, and links the failure to do the work to the excessive water flowing from the main home. The Applicant does not in substance address the failure to achieve practical completion by 21 November 2008.
2.……..
3.As far as departing from plan details as to materials and design, the Applicant contends that ‘all building work was to Australian standard’.
49.The Consumer’s evidence as to what took place after issue of the breach notice is contained at paragraph 1.32 of exhibit BSA5, provided by the Consumer’s husband. He says there were no works carried out under the home and only minor attention to carport works.
50.The Tribunal will not review each aspect of the applicant's responses to the breaches, or the Consumer’s evidence on each aspect. It is clear that at the end of the compliance period the Applicant had not;
1. commenced works under the main residence;
2.achieved the design of the carport roof and interior works, involving trusses and the ceiling;
3. finalized the drainage works behind the carport wall;
4.achieved concrete step width as per drawing;
5.achieved other specific design elements of the plans; or
6.made good other breaches itemized in the breach notice which, viewed cumulatively as provided for in paragraph 45 of these Reasons, would amount to a substantial breach.
51.The Tribunal has considered whether adequate particulars were supplied in the breach notice as to a failure on the Applicant's part to achieve specific design aspect of the carport. In this regard, it can be noted that;
·the contract preserved the rights of a contracting party to terminate under general law;
·His Honour McPherson JA in Botros v Freedom Homes (1999) QCA 50 (at para 8) found that;
termination of a contract can as a matter of law later be justified on any sufficient grounds available to a party claiming to terminate a contract even if that specific ground was not relied on at the time of termination
52.The Tribunal is satisfied in the circumstances that it was not necessary for particulars of the Applicant's failure to comply with roof profile, truss requirements, or ceiling details to later rely on the breaches in the proceedings.
53.The Consumer sent a notice to the Applicant on 17 December whereby the contract was terminated on failure to make good the alleged substantial breaches of the Contract.
54.Having found that there were substantial breaches of the contract which had not been made good in the notified period, it follows that the Consumer validly terminated the contract and for these reasons the Tribunal affirms the decision of QBSA to issue the notice of 27 March 2009.
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