Sedl v Queensland Building Services Authority
[2012] QCAT 2
•5 January 2012
| CITATION: | Sedl v Queensland Building Services Authority [2012] QCAT 2 |
| PARTIES: | Mr Patrick Sedl |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | GAR102-10 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 14, 17, 24 June 2011; 8 July 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr Paul Favell, Member |
| DELIVERED ON: | 5 January 2012 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The date of practical completion is 4 October 2003. 2. The QBSA is released from liability in relation to the insured works. 3. The decision of the Queensland Building Services Authority of 12 March 2010 to reject the claims made by the applicant under the BSA Statutory Insurance Scheme is confirmed. |
| CATCHWORDS: | Domestic building contract – Complaints made – Practical completion – Deed of compromise – Effect – Further complaints – Some rectification – Further complaints – Refusal of complaints and indemnity by Queensland Building Services Authority – Review of determination of refusal – QBSA Insurance Policy edition 5 clauses 2.4, 2.5, 4.7 and 9.1 Queensland Building Services Authority Act 1991, ss 10, 11, 72 Lange v Queensland Building Services Authority [2011] QCA 58 Morgan v SS Constructions Pty Ltd [1967] VR 149 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Patrick Sedl represented by Mr C Watters of Counsel (acting Pro Bono) |
| RESPONDENT: | Queensland Building Services Authority represented by Mr B N S Turnbull of HWL Ebsworth |
REASONS FOR DECISION
Mr and Mrs Sedl wanted a holiday home at Caloundra. They contracted with Amaroo Homes (Mr Bartlett) to build a two storey duplex on land at 32 The Esplanade Golden Beach Caloundra (exhibit 2). Central to some of the issues here is the date of practical completion.
The building was to consist of two, three bedroom apartments on levels one and two, to be serviced by a lift and two double garages, rumpus room, showers and small kitchenette on the ground floor. The contracted price was $593,000.00 and two separate QBSA statutory insurance policies were taken out (one for each residence or apartment). The relevant certificates were issued on 31 January 2002 with a nominated start date for cover as 30 January 2002.
The construction of the duplex took longer than the contract allowed and the Sedls were eager to get possession of the duplex.
In September 2002 the Sedls inspected the site and found 22 defects. They wrote to the builder concerning those defects on 21 September and 30 September 2002.
A Certificate of Classification dated 4 October 2002 was signed by a building certifier Peter Burchard (exhibit 10). It is not clear when that certificate was issued.
The Sedls contend that the Certificate of Classification was erroneously issued because fire, safety and related components were not installed and complete. The relevant fire safety certificate had not been issued at the date of the issue of the Certificate of Classification. The Sedls submit that the non issue of the fire safety certificate has the consequence that the builder and the Queensland Building Services Authority (“QBSA”) could not rely upon the issue of the certificate of classification as proof of practical completion.
Mr Sedl says they were locked out of the building soon after 4 October 2002 when the builder nailed the front door shut.
By a letter dated 5 October 2002 the builder sent to the Sedls a minor defects list “at practical completion 04.10.02” (exhibit 34).
By a letter dated 7 October 2002 (exhibit 44) the builder purported to give a notice of practical completion under clause 25 of the contract.
On 14 October 2002 the Sedls filed a proceeding against the builder in the Queensland Building Tribunal (QBT) (exhibit 41).
A complaint made in the Queensland Building Tribunal (QBT) (exhibit 41) was in part in respect of defects set out in an inspection report dated 30 September 2002 (exhibit 4, attachment 2) and, as I am informed by Mr Watters for the applicant and agreed by Mr Turnbull for the respondent, in a letter dated 21 September 2002 (exhibit 9).
On 22 October 2002 the Sedls terminated the contract (exhibit 36).
On 18 November 2002, an inspector from QBSA, Mr Hayes, carried out a site inspection and prepared a report (exhibit 11).
The QBT made a number of directions and the builder carried out some rectification work and a rectification attendance schedule was prepared.
Exhibit 1 is a deed of settlement dated 7 February 2003 in respect of the proceeding in the QBT (exhibit 41).
The Sedls deny a contention by the QBSA that the deed was intended to settle all and any future claims or disputes in relation to the building. They say there was no such intention and if the deed had that effect the contractual rights of the Sedls under the QBSA insurance policy would be abrogated as would their statutory rights under the Act for directions to rectify. They point out that the builder and the QBSA committed to rectification work during the 2003-2008 period. They contend that clause 1(b) of the deed only discharges the parties from any future claims in relation to proceedings expressed in the deed as “these proceedings”.
On 19 May 2003 the Sedls identified issues which they contended required rectification and lodged a complaint with the QBSA (exhibit 14).
On 24 June 2003 the QBSA requested the Sedls to provide a list to the authority indicating “which terms of the new dispute are considered to be part of the QBT settlement agreement and which are considered extra to that agreement.”
On or about 1 July 2003 the Sedls gave a response to that request as a “list of present issues requiring rectification” (exhibit 16).
On 12 September 2003 the QBSA advised Mr Sedl of the items it considered required rectification by the builder (exhibit 19).
On 24 September 2003 Mr. Sedl wrote to the Building Services Authority complaining that the rectification had not been carried out correctly and requiring various windows to be reinstalled correctly (exhibit 20).
On 4 November 2003 Mr Sedl wrote to the Building Services Authority expressing concerns about repairs to the building, complaining about the lack of a report from the Authority and seeking a signed completion certificate for the building (exhibit 21).
Directions to rectify, rectification and re-rectification occurred in the late 2003 and 2008 period. A complaint was made on 2 March 2005.
By a letter dated 7 April 2005 (exhibit 27) the Building Services Authority advised Mr Sedl that it had evaluated the items of dispute and considered that two items required rectification. It also advised that it considered some items identified by Mr Sedl as of concern were not category 1 defects or were a defect which it would be unreasonable to require the builder to rectify.
Mr Sedl was advised that if he was dissatisfied with the decision of the Authority he could seek a review of that decision within 28 days of the letter.
The Sedls continued to express concern about defects. On 28 November 2006 the QBSA advised the builder that it considered there was a defect with respect to five doors and it requested rectification (exhibit 28).
On 4 April 2007 the QBSA issued a notice to rectify and/or complete No. 29957 with respect to five doors and the lower toilet pedestal. A further notice (exhibit 30) dated 6 February 2008 issued with respect to water penetration to areas of unit. A further notice (exhibit 28) No. 31234 issued on 5 March 2008 with respect to water penetration and painting of a cap fitted to a drainage stack in the garage.
On or about 7 January 2009 and 15 January 2009 the Sedls by complaints dated 2 January and 13 January 2009 complained of defective work (exhibits PC-1 and PC-2 to affidavit of Patrick Cupitt).
In September of 2010 the Sedls identified items which they considered still needed rectification (exhibit 32).
The claims were assessed by Mr Cupitt of the QBSA. He took the date of practical completion as being 4 October 2002 as it appeared on a Certificate of Classification (exhibit PC-4 to exhibit 39 of the affidavit of Patrick Cupitt). He classified that one item of the complaint was a category 2 defect and the remainder as category 1 defects.
He applied the terms of the insurance policy and QBSA’s policy on defective work. He referred to clause 2.4(a) and (c) of the Terms and Conditions of the Policy.
Clause 2.4(a) provides:
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.
Clause 2.4(c) provides:
Where the residential construction work, excluding any associated works (and residential construction work comprising more than one separate residence will be considered separately), has not reached practical completion within six months after:
(iii)the date of payment of the insurance premium, or the date of entering into the contract (and where more than on date, whichever is the earlier); or
(iv)where no insurance premium was paid and there was no written contract, the date of commencement of construction
the period of insurance cover under this policy in respect of category one defects will be extended by the amount of time by which the time taken to reach practical completion of the residential construction work (and residential construction work comprising more than one separate residence will be considered separately) exceeds the period of six months from that date.
On the basis of the policy document, the QBSA’s policy on defective work and the time of practical completion the claim made by the Sedls was rejected and accordingly it was determined there was no insurance cover.
By a letter dated 12 March 2010 (PC-7 to exhibit 39), Mr Cupitt advised the Sedls that their claim for assistance under the QBSA Statutory Insurance Scheme was declined and that the ability of the QBSA to direct the builder on the original building works expired as of 4 January 2009. It also advised that where a contractor has returned and performed rectification works, the rectified work is afforded a further six years and three months from the time of rectification in which the QBSA can direct the contractor to rectify. It advised that an inspector was assessing what works, if any, a direction to rectify could be issued upon.
That statement concerning rectification works is in my view correct.
This application is for a review of that decision to reject the claim.
Any review of the decision to reject the claim requires examination of the basis of the rejection.
Identified issues
Two issues requiring examination have been identified by the parties as:
a) The date of practical completion of the building; and
b) The effect of the Deed of Agreement referred to in the respondent’s letter to the Tribunal dated 15 March 2011 (exhibit 1).
Although I was initially asked to consider a question of estoppel that issue was not articulated in submissions and written submissions. The parties concentrated their submissions on the two identified issues set out above.
The QBSA submits that the date of practical completion was 4 October 2002. That was in part the basis of the decision under review. It was based on the issue of a Certificate of Classification.
The Sedls submit that the Certificate of Classification issued on 4 October 2002 was issued erroneously on the basis that fire, safety and related components were not installed and complete as at that date. Specifically, the relevant fire safety certificate had not been issued by that date.
Mr Bartlett gave evidence that the fire brigade service successfully carried out pressure tests prior to 4 October 2002. He says that he provided Mr Sedl with a minor defects list (exhibit 34) and exhibit 33 to satisfy clauses 24 and 25 of the contract.
The applicant contends that the respondent, the Building Services Authority (Qld), cannot rely on the Certificate of Classification for proof of practical completion.
Issues regarding completion of defective and/or incomplete works and rectification of works were purportedly resolved in a Deed of Settlement which was sealed and filed in the Queensland Building Tribunal on 7 February 2003.
The applicant submits that the Deed was not intended to settle all and any future claims or disputes in relation to the building. That contention is made on the following bases:
a) Such an interpretation of the Deed was never intended;
b) Such an interpretation of the Deed would abrogate both the applicant’s contractual rights under the QBSA insurance policy and his statutory rights under the Act for Directions to Rectify; and
c) Both the QBSA and the builder readily committed to further rectification works throughout the period 2003 to 2008 inclusive.
On 4 November 2003, the Sedls wrote to Danny Hayes, a QBSA Inspector, confirming that he considered practical completion to have been reached. In that letter, the Sedls requested some form of certification or acknowledgement that practical completion had been effected. This was despite the fact that rectification works continued to occur throughout 2004 to 2008.
On 2 January and 13 January 2009 respectively, the applicant filed two further complaints with the respondent.
The respondent Building Authority contends that:
a) The defects which the applicant seeks indemnity for are out of time because practical completion took place on 4 October 2002;
b) The date of practical completion is inconsequential by virtue of the fact that the applicant released the respondent from liability by entering into a Deed of Release with the builder;
c) The date of practical completion is inconsequential by virtue of the fact that the kerbing and guttering works are properly defined as “associated works” under clause 9.1 and are therefore not covered by the statutory insurance scheme.
The Tribunal heard evidence from Mr Sedl, the builder Mr Bartlett, Mr Blackman and Mr Cupitt an assessment officer employed by the QBSA. With the exception of Mr Bartlett, each of the witnesses has sworn an affidavit/s which have become exhibits.
Much of the relevant evidence is documentary evidence.
One of the questions to be considered is whether the complaints made to the QBSA and the subject of the decision under review are the same as complaints made earlier and if so when those complaints were made. It is also necessary to consider whether the matters covered in the settlement agreement are the same as the complaints the subject of the decision under review and if so the effect of the settlement agreement and the relevance of any identified effect on matters relevant to the decision under review.
Exhibit 16 does not identify items which are considered to be part of the agreement or items which are extra to the agreement. Rather, it identifies a “list of present issues requiring rectification”.
The relevant portion of the QBSA policy on defective work provided:
“It is a guideline policy of the Queensland Building Services Board that a person who carries out category 1 or 2 defective building work should be required to rectify that building work, unless in all the circumstances rectification is an unreasonable remedy.
Under section 72(1) of the Queensland Building Services Authority Act 1991 (the Act), if the Queensland Building Services Authority (the Authority) is of the opinion that building work is defective, the Authority may direct the person who carried out the building work to rectify it. In deciding whether to give a direction for rectification of building work, the Act allows the Authority to take into consideration all the circumstances it considers area reasonable relevant. Those circumstances might include any delay by an owner in notifying the Authority of a defect, where the delay:
(a)in respect of a category 1 defect, exceeds 3 months after the defect became apparent; or
(b)in respect of a category 2 defect, exceeds:
(i) 6 months after the building work was completed or left incomplete; or
(ii) 7 months, if the owner notified the contractor of the defect within 6 months after the building work was completed or left incomplete.
Under the Act, a direction cannot ordinarily be given more than 6 years and 3 months after the building work was completed or left in an incomplete state. The only exception is if the Commercial and Consumer Tribunal is satisfied, on application by the Authority, that there is sufficient reason for extending that time.
The fact that a direction is given under the Act does not prevent disciplinary action in respect of the defective building work.”
Was there practical completion, and if so when was it?
The importance of the answer to the above question is evident from a reading of clauses 2.4 and 2.5 of Edition 5 of the Queensland Building Services Authority Insurance Policy conditions.
Any entitlement to payment for loss in respect of a category 1 defect requires a claim to be made within three months of the defect first becoming evident and entitlement for a category 2 defect requires a claim to be made within 7 months of practical completion or within such further time as the QBSA may allow.
For a category 1 defect the BSA is not liable to pay for loss under Part 2 of the Policy (Defective Construction) unless that defect became evident within six years and six months after the earlier of the date of payment of the insurance premium or the date of entering into the contract.
Where the residential construction work has not reached practical completion within six months after the earlier of the date of payment of the insurance premium or the date of entering into the contract, the period of insurance cover under the policy in respect of category 1 defects will be extended by the amount of time which the time taken to reach practical completion exceeds the period of six months from that date.
For a category 2 defect the BSA is only liable to pay for loss under Part 2 where the defect first became evident within six months after the date of practical completion of the residential construction work.
Item 1 set out in the complaint dated 2 January 2009 was a category 2 defect and the remainder were category 1 defects.
“Practical completion” is defined in clause 9.1 of the policy to be “unless the context suggests otherwise is that stage, in the opinion of the QBSA, when the residential construction work becomes fit for intended use or occupation”.
The prefacing of the definition with the words “unless the contract suggests otherwise”, in my view, requires an examination of clauses 2.4 and 2.5 (those relevant clauses which use the term “practical completion) to ascertain whether in the context of those clauses something other than the remainder of the definition is suggested. In my view, the purpose and effect of the words “practical completion” in clause 2.5, is as a trigger for the calculation of the seven months in which a claim in respect of a category 2 defect is to be made (without any extension of time) for an entitlement to payment for loss to accrue. In clause 2.4 it is the trigger for the calculation of the six months relevant to a category 2 defect and the trigger when it is necessary to determine an extension of the period of insurance cover in respect of category 1 defects.
In my view “the opinion of BSA” referred to in the definition must be reasonably held and be properly based on appropriate criteria and evidence.
That is not to say that practical completion needs to accord with the definition of “practical completion stage” in s 67(6) of the Domestic Building Contracts Act 2000 (“DBCA”). In my view that definition is for a regulated contract for s 67 DBCA and the QBSA is not required to have regard to that definition in determining “when the residential construction work becomes fit for intended use or occupation”.
The phrase “fit for intended use or occupation” is not defined in the policy. In my view, regard must be had to the contract for the construction, statutory requirements, and obligations relevant to use or occupation, and any approvals relevant to the intended use. In that regard I have considered the “well established principles” for the interpretation of commercial contracts summarised in Velvet Glove Holdings Pty Ltd v Mount Isa Mines Limited [2011] QSC 95 at [16].
In my view “the residential construction work” (the term is not defined in the policy) can be ascertained by having regard to the definition in the Queensland Building Services Authority Act 1991 (“QBSA Act”) which is “building work classified by regulation as residential construction work”. Division 2 of the Regulation classifies that work.
Section 10 classifies “residential construction work” as primary building work and associated building work. Section 11 provides that “primary building work” is building work carried out by a building contractor under a contract for a residence or a related roof building which is of a value of more than $3,300.00. “Building work” includes construction of the residence.
An examination of the contract for the work at 32 The Esplanade, Golden Beach, Caloundra, discloses that it is residential construction work. That being so, it is then a question of when it became fit for intended use or occupation.
In my view, it is appropriate to ascertain the intended use or occupation from the contract.
Though “practical completion” is defined differently to the definition in clause 9.1 of the policy, it is relevant to have regard to its meaning in deciding when the residential construction work becomes fit for intended use or occupation. The definition in the contract is that “practical completion” means the stage “when the works have been completed in accordance with [the] contract and all relevant statutory requirements apart from minor defects or minor omissions and are reasonably fit for habitation”.
The contract clearly identifies the intended use of the works as “a duplex residence”. The builder has a performance obligation to complete the works in accordance with [the] contract and comply with all laws and lawful requirements of any statutory or other authority with respect to the carrying out of the works.
Clause 11 of the contract requires compliance with requirements of local and other authorities and clause 18 requires compliance with the Workplace Health and Safety Act 1995.
Clause 25 of the contract deals with practical completion and sets a procedure on reaching practical completion for dealing with claims for payment and the deeming of a date of practical completion.
In my view, to “be fit for use or occupation”, the residential construction work must be such that is able to be used or occupied in the natural and usual meaning of the word “fit”.
Various dictionaries have meanings of “fit” as “well adapted or suited”, “prepared or ready”, “qualified or competent”, “suitable or proper”, and “suitable and proper”.
There was a Certificate of Classification dated 4 October 2002 issued. The QBSA in part relies upon that fact in determining the date and fact of practical completion.
In my view, that approach ignores the requirement for the QBSA to form an opinion whether the residential construction work was fit for use or occupation and if so when. There must be an examination of the actual work done to make that determination.
The Sedls contend that there were health and safety issues which reflected adversely on the work such that it was not fit for use or occupation. Those issues included water penetration, essential electrical components not being connected, incorrect fire rating frame doors and missing temper values in the hot water system.
In my view the defects identified by the QBSA inspector in exhibit 11 should have been considered in forming an opinion concerning whether work was fit for the intended use or occupation.
Some of the defects were such that further or remedial work was required. That further or remedial work included the raising of an internal floor area in the ground floor storeroom, rectification of the inward fall of the threshold tile at the front entry, rectification of aluminium windows with fixed lower panels and rectification of various areas of painting and rectification of the garage door.
Fire extinguishers required to be installed by the builder were not installed until the Sedls provided then so as to obtain Fire Department approval. That was done by 4 November 2003.
In my view, the QBSA in forming its opinion should have regard to requirements of regulations concerning safety issues.
In Morgan v SS Constructions Pty Ltd [1967] VR 149, the Court was in part concerned with “whether the degree and extent to which work fell short of what the contract required meant that the works were not in a state of completion”. The judge at first instance held that completion in the contract meant “the reaching of a stage of construction at which the house is ready for occupation in all ways relevant to the contract and is free from known omissions or defects”, adding that “the de minimis rule would of course apply in both respects”.
The Full Court held “the proper view would appear to be that, until the work to be done under the contract had been carried out in accordance with the contract both in respect of manner and materials (except for departures from the contract which were either latent or undiscovered or merely trivial) it would not be completed”. The consideration that occupation by the owner would otherwise be exposed to interference by the presence of the workmen making good the departures from the contract, ex hypothesi presumed to exist, would support this view. In Emden and Watson’s Building Contracts and Practice, 6 ed, at p 84, there is this passage:
It may be said that ‘completion’ of a project means the realization or fulfilment of the conception, so that where the contract is for a dwelling house the term ‘completion’ denotes a readiness for immediate occupation.
Whilst that case was concerned with the term “completion” and not whether residential construction work had become fit for intended use or occupation, what the Court held is instructive.
In my view the QBSA must have regard to the requirements of the contract, relevant statutory and regulative requirements and the extent and suitability of the work done and required to be done.
In my view, if the QBSA had examined those matters it should not have concluded that the residential construction work was fit for intended occupation or occupation and accordingly practical completion had not been reached until 4 October 2003, the time at which the Sedls acknowledged that the necessary work and materials were complete (exhibit 21).
The QBSA in its submission submits that “the question for the Tribunal is whether or not the context of the matter indicates another date for practical completion”. I take that submission to seek to refer to a determination of a date other than the date determined by the QBSA.
In my view that submission is not correct. The term “unless the context suggests otherwise” appears in the definition in clause 9.1 of the policy of “practical completion”. I have taken the phrase “unless the context suggests otherwise” as referring to the “context” where the term “practical completion” appears in the policy and accordingly there being not such “context” in clauses 2.4 and 2.5 of the policy which “suggests otherwise”, the appropriate concept of “practical completion” is “that stage” when in the opinion of the QBSA the “residential construction work becomes fit for intended use or occupation”.
The QBSA relies upon an agreement between Mr Owen-Jones and Mr Blackman in paragraph [5] of the Joint Expert Report (exhibit 38), that it was reasonable to rely upon the date of when a Certificate of Classification was issued as the date when practical completion was achieved. In my view that reasoning ignores the need for the QBSA to properly reach an opinion about the stage when the residential construction work becomes fit for intended use or occupation.
Section 95 of the relevant Standard Building Regulation 1993 (Revision 2D) (“SBR”) prohibits a person from using or occupying any part of a building for which a Certificate of Classification is required unless the Certificate has been issued and remains in force.
In my opinion, given that prohibition, it is relevant for the QBSA in forming its opinion to have regard to whether a Certificate of Classification has issued but the issue of a Certificate is not determinative of whether the residential construction work is fit for intended use or occupation.
The Certificate of Classification (exhibit 10) does not purport to certify anything other than that the building is a Class 2 building. It does not certify the building as fit for its intended use or occupation.
In my view, s 95 of the SBR does not, as was submitted by the QBSA, allow lawful occupation of a premises. All it does is prohibit use of occupation unless a certificate has issued and remains in force.
Insofar as the Joint Expert Report supports the submission by the QBSA, I do not accept that it is a correct statement. Much of the Joint Expert Report purports to determine the issue of whether there was practical completion but it substantially ignores the obligation of the QBSA to form an opinion as required by the definition.
Given that the time the QBSA is, in my view, required to form an opinion, is when it is considering the complaints from the Sedls (see exhibit 39 and exhibit PC-7 to exhibit 39).
The person on behalf of the QBSA who was required to form an opinion was Mr Patrick Cupitt. It is apparent that he “took the date of practical completion” as being the date of the Certificate. He did not do anything else to form an opinion and I find on the evidence that he did not form an opinion as to whether the residential construction work was fit for intended use or occupation.
At the time of considering the complaints he should have had regard to all the available information to form the required opinion. That included whether there were matters which had not been completed and whether there were defects which would render the occupation or use unfit for occupation. Included would be whether the fire regulation regime had been complied with.
In my view the evidence available at that time should have lead to an opinion that the residential construction work was not fit for intended use or occupation until 4 October 2003.
Given that the building is a Class 2 building, it was required by the Building Code of Australia (BCA), Performance Requirement FP1.4 to be such as to prevent penetration of water. It is apparent that the performance requirement FP1.4 was not achieved. The performance requirement is meant to prevent unhealthy and dangerous conditions or loss of amenity for occupants.
In my view the statement made in paragraph [22] of the Joint Expert Report (exhibit 38) is not correct. Section 98(2) does not require the building certifier to only issue a Certificate of Classification when any of the matters listed in s 98(2) have happened. What it does is require the preparation of a Certificate of Classification when one of those matters has happened. If for example the building was substantially completed or the building certifier gave a written consent to the occupation of part of the building before the whole building was substantially completed then the certifier would be obliged to prepare a Certificate of Classification.
[100]In my opinion, the fact that a Certificate of Classification had issued did not mean that any of the matters in s 98(2) had occurred or that the residential construction work was fit for intended use or occupation.
[101]I do not accept the expressed belief in paragraph [25] of the Joint Expert Report. It is based on a flawed premise identified above and on its face does not identify any evidence to support the belief.
[102]The term “substantially completed” is defined in s 92 of the SBR and requires all fire safety installations to be installed and operational; the electricity supply is connected to the building to the extent necessary for the building to be used in accord with the classification and the building is weatherproof as required by the SBR.
[103]The joint experts considered that the SBR, by s 8, called upon the BCA as forming part of the SBR. The SBR and the BCA are to be read together. On that basis the experts considered that the requirements of the BCA for weatherproofing applied and was an aspect of building work which must be satisfied before the building can be considered substantially completed.
[104]There is no evidence that the certifier had any regard to whether the building was weatherproofed but there is evidence that when the QBSA made their determination the building was not so weatherproofed.
[105]Section 88(4) of the SBR prevented the certifier from issuing a certificate until the Queensland Fire and Rescue Authority (“QFRA”) provided the certifier with written notice of a satisfactory inspection by the QFRA under s 88(3) of the SBR. The evidence is that such notice was not given before the certificate was issued.
[106]Portable fire extinguishers were required under Part E1.6 of the BCA, Volume 1 and AS2444-1995 and should have been installed within the building before any Certificate of Classification was issued. The evidence is that they were not and the QBSA knew that was so when their decision was made.
[107]I accept that the evidence supports the view that the building had not reached the stage of practical completion on 4 October 2002. Further I accept that the evidence supports the view that defects concerning water penetration around openings within external walls and fire doors along with the non-provision of a relevant documentation request (attachment LJ-1 to exhibit 38) and a failure to install portable fire extinguishers, meant the Certificate of Classification should not have issued when it did issue.
[108]Whether a Certificate should have issued is not really a relevant matter required to be determined. However, in forming the opinion the QBSA was required to form, in circumstances when the QBSA had notice of the defects and the contentions about the Certificate, it should have considered all of those matters in forming an opinion whether the residential construction work was fit for intended use or occupation. In my view such an opinion could not be properly held.
[109]I accept the view formed by Mr Jones (expert) explained in paragraph [63] of exhibit 38, namely that the certification of fire safety doors, door jambs and door frames were not complete until 2007 and as such the building was in a condition short of the legislative requirements for practical completion. I will, however, order, as submitted by the applicant, that the practical completion date be 4 October 2003.
[110]On the view I have formed, that the QBSA was required to form an opinion as to whether the work was fit as expressed and in forming that view it was not sufficient to only rely upon a Certificate of Classification given some years before an opinion was required to be formed, it is not necessary for me to decide whether the Certificate was valid.
[111]I do not accept the submission made on behalf of the QBSA that there is ‘no reliable evidence that the premises were not inhabitable or complete as at 4 October 2002’. In my view, at the time the QBSA should have been forming its opinion it was entitled to and should have had regard to all of the then available evidence to determine when the work was fit for occupation or intended use. It was not bound by the issue of a Certificate of Classification. But in any event, given the benefit of the evidence existing at the time of making the decision it should have formed the opinion that the premises were not habitable and that the residential construction work was not fit for intended use or occupation.
[112]I find that the practical completion date is 4 October 2003.
What is the effect of the Deed of Agreement?
[113]Exhibit 1 is a Deed of Settlement dated 7 February 2003 between the Sedls and Vaughan and Kate Bartlett trading as Amaroo Homes. The recitals in the deed noted an agreement to settle “the claims” made in application number B385-02 dated 15 October 2002.
[114]The fact of and the effect of the Deed of Settlement was not a matter relied upon in refusing the claims made by the Sedls.
[115]Application B385-02 is part of exhibit 41. It claimed damages for breach of contract for delay and costs of rectification. It also claimed declarations that the Sedls be allowed to take control, possession or use of the works and receive the keys for the works forthwith and that the Bartletts provide particulars of all variations, including credits owing to the Sedls carried out in completing the works in accordance with the subject contract.
[116]The operative part of the Deed set out the “agreement, discharge and consent”. It was agreed that the Sedls and the Bartletts would consent to an order that $15,000.00 would be paid out of the funds standing to the credit of the application to the Bartletts and the balance to the Sedls. The Bartletts agreed to supply to the Sedls a letter addressed to all suppliers, manufacturers and subcontractors authorising those people to comply with reasonable requests by the Sedls to attend the premises and provide whatever rectification or advice necessary to rectify defects.
[117]That agreement was on the basis that the Sedls and the Bartletts released and discharged each other forever from “all actions, suits, claims and demands whatsoever which but for the execution of (the) deed they may have had or may in future have in respect of or in any way connected with (the) proceedings or any entitlement to costs”.
[118]The Sedls released the Bartletts “from the performance of rectification of defects contained in the Building Services Authority’s list filed in the Tribunal which has been compiled by Mr Danny Hayes in a report dated 6 February 2003 with the following additional items, namely:
a) rectification to windows of bedroom 3 of Units 1 and 2 to the southern side and in the living room of Unit 2 on the eastern side;
b) any rectification of the wall on the kitchen of Unit 1.
[119]The Sedls agreed to indemnify the Bartletts “in respect of claims which may arise by these parties arising from a perceived need for rectification of any item for which the Applicants have relieved the respondent from performance” previously in the deed.
[120]The deed was to be an absolute bar to “all actions, suits, claims and demands (including claims for legal costs and expenses) threatened to be brought or attempted to be brought by or in the name of either the applicant or the respondent…”.
[121]In the context of considering this question it is necessary to know that this application is to review the decision of the Queensland Building Services Authority dated 12 March 2010 that the claims lodged by the Sedls concerning unsatisfactory building works at the relevant property including a request for an order for rectification and associated assistance under the BSA statutory insurance scheme are out of time.
[122]It is also necessary to recognise that the complaints rejected by the QBSA were made on 7 January 2009 and 15 January 2009 (exhibits PC-1 and PC-2 to exhibit 39) and were in respect of alleged defective work undertaken by the Bartletts.
[123]The complaints generally described are complaints identified after the deed was executed with some in October 2002 and some in 2008.
[124]The QBSA contends that whatever view this Tribunal takes in relation to practical completion the Sedls have released the builder and consequently they have released the QBSA from liability.
[125]I accept that the terms and conditions of the policy are a form of delegated legislation and should be interpreted in a purposive way: Lange v Queensland Building Services Authority [2011] QCA 58.
[126]The purpose of the policy is consumer protection: Lange at [30].
[127]The proper approach to interpretation of this policy is to construe the wording of the policy in its ordinary sense that will best achieve the purposes of the policy: Acts Interpretation Act 1954, s 14A.
[128]The submission concerning the effect of the deed (exhibit 1) made on behalf of the QBSA is that clause 1(a)(ii) “effects a full release of all actions in any way connected to the proceedings”, and “the deed should be read as having released the builder from further responsibility with the effect that (the) deed has likewise released the respondent”.
[129]In my view the deed itself does not release the respondent. The deed was between the Sedls and the Bartletts and was in respect of defects contained in a list compiled by Mr Danny Hayes in a report dated 6 February 2003 with the additional items set out in clause 1(ba). The indemnity given was for the benefit of the Bartletts. There was no specific release in respect of any insurance claim.
[130]Clause 4.7 of the Insurance Policy Conditions Edition 5 provides for the effect of release of contractor or Provision of Indemnity.
[131]Clause 4.7 states:
a)where the contractor or any other person has been released from any liability in relation to the insured works BSA is thereby released from liability under this policy to the same extent;
b)where the contractor or other person has been indemnified by the insured in relation to the insured works the insured thereby releases BSA from liability under this policy to the extent of that indemnity.
[132]Exhibit 7, the Certificate of Insurance, names the contractor as Vaughan Maitland Bartlett.
[133]The report of Danny Hayes referred to clause 1(ba) of the deed is in evidence. It is Document 13 to exhibit 4. The content of that report is important to determine the extent of the release and the indemnity agreed in the deed.
[134]The release in clause 1(ba) only releases the Bartletts from the performance of rectification of the identified works.
[135]The indemnity is in wider terms than the release in that it covers “claims which may arise … arising from a perceived need for rectification of any item for which the applicants have released the respondent from performance in clause (ba)”.
[136]A comparison of the claims under review here with the defects identified in the report of Mr Hayes dated 6 February 2003 in my view was necessary to determine whether the complained of defects is the subject of release or indemnity.
[137]In my view on the proper construction of the deed and clause 4.7 of the Policy the QBSA is released to the extent the builder was released.
[138]I have not been required to determine whether any defects in the rectification work carried out is able to be the subject of a proper enforceable claim.
Conclusion
[139]I find that the practical completion date is 4 October 2003. I also find that the QBSA is released from liability in relation to the insured works.
[140]The decision of the Queensland Building Services Authority of 12 March 2010 to reject the claims made by the applicant under the BSA Statutory Insurance Scheme is confirmed.
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