Short & Drake v Queensland Building and

[2014] QCAT 157

CITATION:

Short & Drake v Queensland Building and

Construction Commission [2014] QCAT 157

PARTIES:	Jennifer Short Barbara Drake (Applicants)
v
Queensland Building and Construction Commission (Respondent)

APPLICATION NUMBER: GAR380-12

MATTER TYPE: General administrative review matters

HEARING DATE: 22 October 2013

HEARD AT: Brisbane

DECISION OF: Dr Cullen, Member

DELIVERED ON: 14 April 2014

DELIVERED AT: Brisbane

ORDERS MADE:

1.    The Application for review is allowed, and the Tribunal sets aside the 4 October 2012 decision of the QBSA and substitutes it with a direction that the Applicants’ claim under the Queensland Home Warranty Scheme be allowed.

2.    The matter of costs will be decided following an oral hearing in Brisbane on 15 May 2014 at 9:30am.

CATCHWORDS:

Queensland Home Warranty Scheme – whether satisfactory explanation for delay – no prejudice to Respondent – claim allowed.

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20

APPEARANCES and REPRESENTATION (if any):

APPLICANT: Andrew Wallace, Counsel, instructed by Hemming + Hart Lawyers

RESPONDENT: Robert Lovrincevic, Principal Lawyer for the Queensland Building and Construction Commission

(AMENDED) REASONS FOR DECISION

1. The Applicants, Jennifer Short, and her sister, Barbara Drake, are the joint owners of a home located on Marina Boulevard at Banksia Beach. Mrs Short’s late husband, Kingsley Short, was also an owner of this property. There are significant moisture problems with the property, which are the result of defective building work.

2. Prior to his passing away, Mr Short invested significant time liaising with the builder, Hegira Pty Ltd B.V. Mackenzie Building Pty Limited, attempting to ascertain the underlying cause of the moisture problem, without success. Unfortunately, Mr Short died on the 15th of April 2012. Mrs Short and Ms Drake were generally aware of his discussions with Hegira, but as in commonly the case with division of labour in domestic relationships, the direct role of dealing with tradespeople fell within Mr Short’s jurisdiction.

3. Following numerous unsuccessful attempts by the developer Hegira Pty Ltd to fix the moisture problem, on 31 August 2012, the Applicants filed a claim with the Queensland Building Services Authority (‘QBSA’),[1] seeking to make a claim on its Queensland Home Warranty Scheme insurance policy with regard to the defective work.

   [1]The Queensland Building Services Authority is now known as the Queensland Building and Construction Commission.

4. On 4 October 2012, the QBSA advised the Applicants that it was denying the claim on the basis that the claim was made out of time. Clause 2.5 of the applicable Insurance Policy states that:

   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 the 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 such further time as the BSA may allow.

5. It is this decision that is now under review by the Tribunal, which stands in the shoes of the QBSA, and is obliged to make the correct and preferable decision on the basis of the information available at the time of the Tribunal’s review.[2]

   [2]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), s 20.

The QBSA should have allowed the claim, despite it being out of time

1. There is no dispute in relation to the date that the Applicants made their claim – it is clear that the claim was made out of time. Further, there is no dispute that the defect identified – “slab edge dampness” – is a Category 1 defect.

2. The slab edge dampness defect has resulted in the following symptoms, which were the subject of the complaint to the QBSA:

   (1)slat/silicon build up or corrosion of aluminium tracks of stacker doors;

   (2)corrosion of ant capping; and

   (3)the rendering around the foundations at the property lifting and/or deteriorating.

3. Identification of the underlying cause of the defect, as opposed to the symptoms, is a complex matter. Homeowners should not be expected to possess knowledge sufficient to identify matters that fall within the ambit of industry expert evidence. Here, the Applicants purchased the property from a developer, Hegira Pty Ltd, on 24 April 2009. I accept the evidence before the Tribunal, given by Ms Short, which supports a finding of fact that the Applicants were not shown, and were unaware, that industry expert Don Dixon had provided a report to Hegira Pty Ltd on 24 February 2009. Mr Dixon’s report identified the defects complained of as symptoms of a serious moisture problem at the property, but did not go so far as identifying the defect to be “slab edge dampness”. The Applicants cannot be presumed to have knowledge of a report that they have never seen.

4. Pre-purchase, the Applicants commissioned a property inspection report from Paul Haskard, dated 19 March 2009. Mr Haskard’s report did identify corrosion of the ant capping, and moisture build-up in an area outside the laundry. Hegira Pty Ltd then purported to rectify the defects identified in Mr Haskard’s report. I accept the evidence given by Jennifer Short that Hegira Pty Ltd had applied an epoxy coating to the garage slab at some point prior to Mr Haskard’s inspection.

5. I also accept the conclusion that this work would have concealed efflorescence at the time of Mr Haskard’s inspection, making it impossible for him to identify the existence of a more serious fault in the building. Again, there is nothing unreasonable or dilatory about the Applicants’ approach to the moisture problem in light of this evidence – one cannot be expected to identify a defect, the existence of which has been masked through application of a cosmetic rectification.

6. In November of 2010, Ms Drake noticed the symptoms described above. Sensibly, she contacted her home insurer and followed the advice given that there was a “building fault” and she should contact the builder. Failing a response by the builder, she was told to then contact the QBSA. This advice was consistent with that which she received in December of 2011, when she received a newsletter from her Body Corporate that advised:

   [i]f you fail to notify your builder of a Category 1 defect within this timeframe [6 years 3 months] the BSA cannot assist you if the builder does not rectify the problem.

7. Although the Body Corporate newsletter should instead have made reference to notifying the QBSA, it cannot be reasonably suggested that the Applicants were at fault in assuming that the advice was correct, and in notifying the actual builder (instead of the QBSA at that stage) of the problems.

8. The Applicants, at numerous points throughout 2010, 2011 and 2012, commencing on the 23rd December 2010, notified Hegira Pty Ltd B.V. Mackenzie Building Pty Limited. Hegira Pty Ltd B.V. Mackenzie Building Pty Limited inspected, and attempted rectification. The Applicants assumed, as reasonable people would, that the works performed would have the desired result. After the symptoms reappeared, the Applicants then attempted to obtain further advice from Mr Haskard, in September 2011. Mr Haskard died before providing the building report sought by the Applicants. Shortly thereafter, on 21st December 2011, the deadline for notification to the QBSA of a Category 1 defect passed; the Applicants were none the wiser.

9. Tragically, Mrs Short’s husband was diagnosed with cancer at approximately the same time as expiry of the deadline (in December of 2011), and died on 15 April 2012.  I accept Mrs Short’s evidence that it was her husband who was responsible for liaising with Hegira Pty Ltd B.V. Mackenzie Building Pty Limited, and consider it to be entirely reasonable that for a short period of time whilst Mr Short was dying, the couple refocussed attention on his medical needs and away from the building problems that plagued his last few months of life. For this reason alone, the Tribunal considers that the QBSA should have exercised its discretion in accepting the Applicants’ claim on the insurance policy out of time.

10. The claim was ultimately made on 31 August 2012, only a few months after the death of Mr Short. That Mrs Short was able to harness any energy to deal with a problem that she had little practical involvement in prior to her husband’s death is remarkable. This factor should have been given significantly more consideration by the QBSA’s decision maker in this matter.

11. The Tribunal considers that the QBSA should have extended the timeframe for the making of the Applicants’ claim in these circumstances. The Applicants did not sit on their hands, but were proactive in endeavouring to resolve the matter with the builder. They cannot be presumed to have been aware that the symptoms of the much bigger slab-edge defect were anything more than minor cosmetic matters, for the reason that they are ordinary homeowners without industry specialist knowledge. The Applicants followed the advice provided to them by both their home insurer, and in ad-hoc fashion via the Body Corporate newsletter. The Tribunal considers this approach to have been reasonable, and a basis upon which the QBSA should have afforded the Applicants the benefit of an extension of time within which to make their claim.

The defects were not evidence to the Applicants at the time of purchase

1. In its original decision, the QBSA rejected the Applicant’s complaint on the basis of time. It has since also raised two further bases for rejection: (1) that the defects were evident prior to the Applicant’s purchasing the property;[3] and (2) that through inaction in failing to rectify the defects, the Applicants have contributed to the loss as the defects have worsened.[4] The Tribunal rejects both of these justifications for refusal of the Applicant’s claim for the reasons that follow.

   [3]For this reason, the QBSA says that Clause 5.2 of the Queensland Home Warranty Scheme policy is applicable.

   [4]Here, the QBSA says that Clause 5.4 of the Queensland Home Warranty Scheme policy is applicable.

2. As explained above, Mr Dixon’s report was not made available to the Applicants prior to their purchase. Further, I find that the work Hegira Pty Ltd performed following receipt of Mr Dixon’s report would have masked the existence of the slab defect (as opposed to some of its symptoms) at the time of Mr Haskard’s pre-purchase inspection. Given these findings, there is no evidence capable of supporting a conclusion that the Applicants knew of the existence of any slab defects at the time of purchase.

The Applicants have not contributed to their loss

1. In relation to the QBSA’s assertion that the Applicants have contributed to their loss through inaction, I consider the argument to be without merit. The evidence before the Tribunal is that the Applicants actively sought resolution of their concerns through dialogue with the builder.

2. The precise nature of the defect (“slab edge dampness”), as opposed to the symptoms of the defect identified in the complaint, only became known to the Applicants following the QBSA’s receipt of a report from an external expert, NJA Consulting. I find that the NJA Report is the first point at which the actual defect, as opposed to the symptoms, is articulated. Until such point in time, it is unreasonable to expect a homeowner to take steps to repair a defect, the nature of which is elusive to all but the most qualified experts.

3. The QBSA asserts that it will be prejudiced if the claim is accepted out-of-time, as it is now unable to issue a Direction to Rectify to Hegira Pty Ltd B.V. Mackenzie Building Pty Limited.  I am not convinced that there is any prejudice to the QBSA, for the reason that it is still able to seek the costs of any payments made to the Applicants from Hegira Pty Ltd.  In any event, the prejudice is significantly greater to the Applicants if their claim is not accepted, as they are closed out of relief under a policy that is intended to protect homeowners from defective works of this nature.

4. The Application for review is allowed, and the Tribunal sets aside the 4 October 2012 decision of the QBSA and substitutes it with a direction that the Applicants’ claim under the Queensland Home Warranty Scheme be allowed.

Costs

1. Having found that the Applicants’ claim should have been accepted, the Tribunal must now consider the issue of costs. The Tribunal will schedule a 1-hour oral hearing for the purposes of allowing the parties to make submissions in relation to the issue of costs.