Spectrum Homes Qld Pty Ltd v Country-Wide Water Pty Ltd
[2024] QCAT 526
•3 December 2024
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Spectrum Homes Qld Pty Ltd v Country-Wide Water Pty Ltd [2024] QCAT 526
PARTIES:
SPECTRUM HOMES QLD PTY LTD (applicant)
v
COUNTRY-WIDE WATER PTY LTD (respondent)
APPLICATION NO/S:
BDL070-22
MATTER TYPE:
Building matters
DELIVERED ON:
3 December 2024
HEARING DATE:
22 July 2024
HEARD AT:
Brisbane
DECISION OF:
Senior Member Brown
ORDERS:
Proceeding dismissed
CATCHWORDS:
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – whether the parties entered into a contract – where there is no evidence of a written contract – where the applicant engaged the respondent – where there is no evidence any specific terms were agreed upon – where there is no dispute that the parties entered into a contract – where it was an implied term of the contract that the respondent would perform its obligations under the contract with reasonable care and skill
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – whether the respondent breached its obligations under the contract – where the design by the respondent was compliant with Australian Standards and approved by the Gold Coast City Council – where AS1546.2012 is concerned with the requirements for the design and installation of domestic wastewater treatment units – where AS1547:2012 relates to on-site domestic wastewater management – where the respondent was not responsible for the design and installation of the wastewater treatment system – where the action notice issued by the Gold Coast City Council specifically refers to AS1546.2012
Queensland Building and Construction Commission Act 1991 (Qld)
APPEARANCES & REPRESENTATION:
Applicant:
Self-represented
Respondent:
Self-represented
REASONS FOR DECISION
Spectrum is a building contractor which undertook the construction of a domestic dwelling on the Gold Coast. Country-Wide is also a building contractor and undertakes, inter alia, the design of wastewater management systems.
Spectrum says that it engaged Country-Wide to undertake a site and soil evaluation and prepare a wastewater management design for the dwelling. Spectrum says that it engaged a contractor to install a wastewater management system. Spectrum says that after the system was installed, the Gold Coast City Council issued an action notice on the basis that the system did not comply with relevant design requirements and standards. As a result says Spectrum, it has suffered financial loss.
The issues for determination are:
(a)Did the parties enter into a contract and what were the terms of the contract?
(b)Did Country-Wide breach the contract and if so what are the consequences of the breach?
Jurisdiction
Before addressing the issues to be determined I make the following findings about jurisdiction:
(a)Spectrum is a building contractor;[1]
(b)Country-Wide is a building contractor;[2]
(c)The building work the subject of the dispute is domestic building work;[3]
(d)The dispute the subject of the proceeding is a domestic building dispute;
(e)Spectrum has complied with s 77(2) of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’);
(f)The Tribunal has jurisdiction to decide the dispute.
[1]Queensland Building and Construction Commission Act 1991 (Qld), sch 2.
[2]Ibid.
[3]Ibid sch 1B, 2.
Consideration
The first issue to be determined is the whether the parties entered into a contract and, if so, what were the terms of the contract.
The evidence on this issue is scant to say the least. There is no evidence that the parties entered into a written contract. Any contract was therefore verbal. The evidence of Mr Reeves for the applicant and Mr Lonergan for the respondent is that Spectrum ‘engaged’ Country-Wide to conduct a site and soil evaluation and provide an on-site wastewater management design for a property on the Gold Coast on which it was proposed to construct a residential dwelling. There is no evidence that any specific terms were agreed upon. Presumably a price was agreed however there is no evidence of this.
Noting that there is no dispute between the parties that they in fact entered into a verbal agreement I proceed on this basis. I would note that as both parties to the agreement are building contractors, the requirements for a regulated contract found in schedule 1B of the QBCC Act do not apply.[4]
[4]Ibid s 3(2)(a), sch 1B.
In the absence of a written contract and any specifically agreed terms, it is necessary to consider whether any terms may be implied by law. Where a contract is for the performance of work, the only warranty that will ordinarily be implied at common law is that the contractor will perform the work under the contract with reasonable care and skill.[5]
[5]Costa Vraca Pty Ltd v Berrigan Weed and Pest Control Pty Ltd (1998) 155 ALR 714.
I find that the parties entered into a contract requiring Country-Wide to conduct a site and soil evaluation and provide an on-site wastewater management design. I find that it was an implied term of the contract that Country-Wide would perform its obligations under the contract with reasonable care and skill.
I turn now to the second issue for determination: did Country-Wide breach its obligations under the contract? It is useful to start with a chronology of the relevant events:
Date
Event
08.09.20
Site & Soil Wastewater Evaluation report prepared by respondent
12.02.21
Further Site & Soil Wastewater Evaluation report prepared by respondent
19.02.21
Gold Coast City Council issues Form 17 – permit for plumbing, drainage and on-site sewerage work. Approval granted with conditions
25.02.21
Development Application Decision Notice issued in relation to proposed new residence
29.09.21
Amended Site & Soil Wastewater Evaluation report prepared by respondent
08.10.21
Gold Coast City Council issues Form 17 – permit for plumbing, drainage and on-site sewerage work. Approval granted with conditions
10.11.21
Gold Coast City Council issues Action Notice relating to installation of wastewater system
12.07.23
Amended Site & Soil Wastewater Evaluation report prepared by respondent
21.07.23
Gold Coast City Council issues Show Cause Notice to property owners identifying defective plumbing and drainage
21.03.24
Gold Coast City Council issues Form 19 – final inspection certificate
A relevant feature of the design prepared by Country-Wide was the Land Application Area (LAA). The LAA is the designated area on a property where output from an on-site wastewater treatment system is disposed of.
Distilled to its basics, the contention by Spectrum may be summarised as follows:
(a)The design by Water-Wise was defective because it failed to take into consideration the actual contours of the land;
(b)The design by Water-Wise was defective because it did not provide for the LAA to be set back at least three metres from an embankment on the land.
It is not contentious that when Country-Wide undertook the inspection of the site before preparing the initial report, earthworks on the site preparatory to the construction of the dwelling had not been undertaken by Spectrum. It appears that some previous earthworks had however been undertaken by a developer.[6]
[6]Statement of David Lonergan, attachment 7.8.
The evidence of Mr Reeves is that it should have been apparent to Country-Wide that earthworks at the site would be required to be undertaken given the contour of the land and that the design prepared by Country-Wide should have taken this into consideration. Mr Reeves says that the plan prepared by Country-Wide refers to a site slope of 8% whereas the site survey plan records a slope of 28.1%. The evidence of Mr Reeves is that it should have been apparent to Country-Wide that to achieve the 8% slope required for the installation of the system, earthworks were required to reduce the 28.1% gradient.
Mr Lonergan is the managing director of the respondent company. Mr Lonergan’s evidence is that a site visit and evaluation was carried out by Country-Wide on 2 September 2020. This was prior to the house pad being cut on the site and the house being constructed. Mr Lonergan says that the site was observed to have an existing slightly sloped bank and existing lightly treed area at the base of the bank. The proposed site of the LAA was recorded as having an 8% slope. Attached to Mr Lonergan’s statement are a number of photographs taken of the site at the time of his site visit. The photographs are marked with various notations identifying three features: a change of grade noted on the site; the bottom of the change of grade; and the proposed area noted on site for the installation of the LAA. On 8 September 2020 Country-Wide issued a site and soil wastewater evaluation report. The report notes that the LAA was required to be constructed, installed and maintained to, inter alia, avoid the likelihood of stormwater run-off entering the system and avoid the likelihood of root penetration or ingress of ground water entering the system. The report also notes that the site of the LAA had a slope of 8%. The evidence of Mr Lonergan is that Country-Wide uses a calibrated slope inclinometer to accurately measure the slope in the proposed LAA on every site.
The issue of the degree of the slope of the site where the LAA was to be situated is contentious. As I have noted, Mr Reeves relies upon the site survey plan recording a slope of 21.8%. The site survey is in evidence.[7] The surveyor who prepared the site survey plan was not called to give evidence. Mr Reeves proceeds on the basis that it is apparent the site survey accurately recorded the degree of slope at the site the LAA was to be situated and not the degree of slope contended for by the respondent. Against this is the evidence of Mr Lonergan who says that Country-Wide measures the degree of slope of every site at which an LAA is to be situated using a calibrated slope inclinometer. I find that, using a calibrated slope inclinometer, the slope of the proposed LAA was measured by Country-Wide at 8%. In making this finding I prefer the evidence of Mr Lonergan over Mr Reeves’ reliance on the site survey and photographs of the site.[8]
[7]Document 5, Applicant’s response to respondent’s statement of evidence, bundle of documents titled ‘Material to be relied upon’.
[8]Exhibit 2.
Mr Lonergan says that on 12 February 2021 Country-Wide issued a further report. I take this to be the amended report which Mr Lonergan refers to as having been provided to Spectrum Homes on 15 February 2021. The only change in the amended plan from the earlier plan that I am able to discern is the reference to the residence having four bedrooms rather than three. The report refers to design drawings supplied with the report for the required installation criteria. The design drawing is in evidence.[9]
[9]Exhibit 14 – drawing no. CWW 2372.20.
In evidence is a letter from the Gold Coast City Council to Spectrum Homes dated 19 February 2021 approving the proposed on site sewerage facility (OSSF) on the following condition: ‘The installation of the OSSF shall be carried out in accordance with the stamped approved evaluators report (if a land application is to be installed), full size colour copy to be on site at all times, hydraulic drawings and the following conditions’. I do not understand it to be controversial that the ‘evaluators report’ is a reference to the amended report prepared by Country-Wide dated 12 September 2021.
In evidence is a copy of a ‘Form 17 – permit for plumbing, drainage and on-site sewerage work’ issued by the Gold Coast City Council on 19 February 2021. The evidence of Mr Lonergan, which I accept, is that a Form 17 is issued by the local authority upon the local authority being satisfied the site and soil evaluation report is compliant with relevant codes and standards and the local authority plumbing and drainage department requirements. The issuing of the Form 17 enables the installation of the OSSF to be undertaken. I accept that the issuing of the Form 17 by the Gold Coast City Council on 19 February 2021 is evidence that the Council was satisfied Country-Wide’s design for the wastewater system complied with relevant codes and standards.
It is appropriate to pause here to consider Spectrum’s argument that Country-Wide’s design was not compliant with the relevant Australian Standard. Spectrum says that Country-Wide’s design did not accommodate a three metre set back from an embankment on the land. Spectrum adduced no expert evidence in the proceeding nor indeed any evidence, other than by Mr Reeves, that Country-Wide’s design was non-compliant with the Australian Standard. Mr Lonergan gave evidence that the relevant Australian Standard was AS1547:2021. The standard is in evidence.[10] Mr Lonergan’s evidence is that a wastewater management design must generally accord with the standard.[11]
[10]Exhibit 15.
[11]T1-76, line 32.
Appendix R to AS1547:2021 deals with recommended setback distances for land application systems. The appendix is noted in brackets as ‘informative’. Appendix R notes, ‘This Appendix provides a summary of information on setback distances compiled from a literature review. Local conditions and sensitive receiving environments may require different setback distances. The tables in this Appendix provide a guide on the setback distances that may be applied to land application areas, based on site constraints identified during the site-and-soil evaluation.’ Table R1 of appendix R sets out ‘guidelines for horizontal and vertical setback distances.’ The table refers to ‘retaining wall and embankments, escarpments, cuttings’ and notes a setback distance range of ‘3.0 metres or 45 degree angle from toe of wall (whichever is the greatest’. I accept the evidence of Mr Lonergan that Appendix R provides guidelines only for setback distances and is not mandatory in effect. Support for this conclusion is found in Appendix R being stated to be ‘informative’. On the other hand, a number of other appendices contained in the standard are stated to be ‘normative’.
Mr Lonergan says that the design prepared by Country-Wide, and approved by the Gold Coast City Council, took into consideration the relevant features of the land including the change in grade noted on the site as evidenced in photographs attached to his statement of evidence.[12]
[12]Statement of David Lonergan, document 3, pages 1 and 2.
Mr Lonergan’s evidence, which I accept, is that the installation of the LAA by Evergreen Wastewater was not undertaken in accordance with the design drawing prepared by Country-Wide. The evidence of Mr Lonergan is that:
(a)The LAA was required to be installed on natural ground. The LAA was in fact installed by Evergreen on top of fill imported to the LAA which it is assumed was the result of excavations undertaken for the house pad;
(b)The rubble pits for stormwater installed by Evergreen Wastewater were not indicated on the approved plans and were installed adjacent to the LAA, directing all roof water from the dwelling onto and directly next to the LAA;
(c)A steep bank/batter had been constructed upslope from the LAA which did not retain fill and stop any erosion of fill onto the LAA;
(d)The design and construction of earthworks was not the responsibility of Country-Wide;
(e)There was a failure by Spectrum and/or Evergreen Wastewater to undertake storm and ground water drainage works at the house pad level to divert water away from the LAA;
(f)The discharge pipe from the HSTP[13] to the LAA had been washed out and exposed due to not being properly installed causing further storm and ground water to be directed from the southern part of the building pad directly on to the LAA.
[13]Acronym for ‘home sewerage treatment plant’.
On 10 November 2021, following the installation of the LAA by Evergreen, the Gold Coast City Council issued an action notice in respect of non-compliant plumbing and drainage work. The notice identified the following defects:
(a)The design and installed work does not comply with the QPWC performance requirements and AS/NZS1546:2012;
(b)No setback from cut embankment;
(c)No consideration or controls of overland flow upslope of the LAA;
(d)The installing drainer is required to engage with the designer to amend the application and design to include appropriate set backs and control measures or provide Gold Coast City Council written declaration stating the installed work complies with the performance requirements of the QPWC.
Mr Lonergan’s evidence, which I accept, is that AS/NZS1546:2012, as referred to in the action notice issued by the Gold Coast City Council, is the standard relating to the design and installation of treatment plans, not the design of land application areas.[14] The evidence of Mr Lonergan is that reference in the action notice to ‘the design and installed work’ is a reference to the design of the treatment plant and the installation of the treatment plant, neither of which was undertaken by Country-Wide.[15] AS/NZS1546:2012 is not evidence. I accept the evidence of Mr Lonergan that the standard is concerned with the requirements for the design and installation of domestic wastewater treatment units and not the design of on-site domestic wastewater management to which AS1547:2012 relates.
[14]T1-91, lines 23-26.
[15]T1-91, lines 32-38.
In relation to the reference in the action notice to ‘no setback from cut embankment’, and as has been earlier referred to in these reasons, Mr Lonergan’s evidence is that Country-Wide’s design was approved by the Gold Coast City Council as is evidenced by the issuing of the Form 17. Mr Lonergan’s evidence is that Country-Wide’s design is fully compliant with all performance requirements and standards and that the Gold Coast City Council would not have approved the amended plan and issued the Form 17 had there been any aspect of non-compliance.
Mr Geoffrey Woodall was called to give evidence at the hearing. Mr Woodall was, prior to October 2023, the plumbing and drainage co-ordinator at the Gold Coast City Council. Mr Woodall’s evidence, which I accept, is:
(a)Mr Woodall did not assess the plan prepared by Country-Wide;
(b)The Form 17 was issued when the Gold Coast City Council officer who assessed Country-Wide’s plan considered the plan to be compliant;
(c)The design prepared by Country-Wide was, as evidenced by the issuing of the Form 17, considered by the Gold Coast City Council to comply with AS1547:2012 and the Queensland Plumbing and Wastewater Code;
(d)The Queensland Plumbing and Wastewater Code makes no mention of setbacks in respect of an LAA from a sloped batter – the Code refers only to the setback distance from retaining walls;
(e)An LAA should be installed on land that is as flat as possible;
(f)AS1547.2012 is a risk managed standard and it is for the designer of a system to design for a slope of greater than 10, 20 or 30 percent;
(g)There is ‘a lot of flexibility’ in AS1547.2012 in respect of the design of wastewater management systems, the standard providing guidance rather than imposing normative standards;
(h)While a wastewater design will generally contain details of the slope of the site, the Council can use a GIS (geographic information system) to confirm that the slope provided by the designer is accurate however Mr Woodall was unable to say whether this was done in the particular instance of the subject property;
(i)The action notice was issued by the Gold Coast City Council following the installation of the wastewater system by Evergreen Wastewater;
(j)Had the inspector identified an issue with the LAA being situated on a slope, this would have been identified in the action notice.
In evidence is an email from Mr Woodall to Mr Lonergan dated 22 December 2021.[16] Mr Lonergan referred to the email in his oral evidence at the hearing. Mr Woodall was not cross examined by Mr Reeves about the email. The email was sent relatively soon after the Gold Coast City Council issued the action notice. In the email Mr Woodall says, inter alia: the design of the wastewater management system prepared by Country-Wide was at the time of assessment by the Council, compliant and approved; the impact of subsequent building work including cut and fill caused the LAA to be impacted by additional stormwater overland flows; the LAA as installed cannot be approved without a redesign of the LAA or additional stormwater mitigation works.
[16]Statement of David Lonergan – attached document 2.
I accept that the content of the email represents Mr Woodall’s assessment of both the wastewater management system design prepared by Country-Wide and the subsequent installation of the wastewater management system by Evergreen. I accept the accuracy of that assessment. In making this finding I am particularly mindful that Mr Reeves had the opportunity at the hearing to raise with Mr Woodall any issues he had regarding the contents of the email and did not do so.
There is also in evidence an email from Mr Woodall to Mr Lonergan dated 19 August 2022.[17] In that email Mr Woodall, referring to the Council action notice, says: ‘You could argue that the word ‘design’ used in the action notice was relevant to the installation based on the variations from the approved design and not the approved design you submitted. As per advice I have previously provided, we would not have issued a permit for the work if the design was not compliant with the code requirements. I agree with your position that no set-back distance is referenced in the QPWC as it only refers to retaining walls.’
[17]Exhibit 13.
As I have found, AS1546.2012 is concerned with the requirements for the design and installation of domestic wastewater treatment units and not on-site domestic wastewater management to which AS1547:2012 relates. Country-Wide was not responsible for the design and installation of the wastewater treatment system. Evergreen was. The action notice issued by the Council specifically refers to ‘(t)he design and installed work does not comply with the QPWC performance requirements and AS/NZS1546:2012’. The opinion expressed by Mr Woodall regarding the reference in the action notice to ‘the design’ in the email dated 19 August 2022 is, in my view, likely to be the correct interpretation of the action notice. I base this conclusion on the following: firstly, the action notice specifically refers to AS1546.2012 which is the relevant standard applicable to the wastewater treatment system, not the wastewater management system; secondly, the action notice refers to ‘the design and installed work’, the use of the conjunctive indicating that the non-compliance was confined to the work undertaken by Evergreen and did not relate to Country-Wide’s original design; thirdly, the action notice issued after Evergreen had undertaken the installation of the wastewater treatment system; fourthly, the Gold Coast City Council had approved Country-Wide’s design wastewater management design and there is no evidence to suggest once approved that the approval was no longer valid. I should add that the author of the action notice was not called by Spectrum to give evidence.
The evidence of Mr Lonergan is that he visited the site on 24 November 2021, 1 December 2021 and 3 December 2021. Photographs taken at the time of the visit are in evidence.[18] It was put to Mr Reeves in cross-examination that the intended location of the LAA was on natural ground and that photographs taken after the installation had been completed showed fill and spoil placed over the LAA site. Mr Reeves’ evidence was that he did not know where the fill had come from.[19] It was put to Mr Reeves that the system as installed had not been placed on imported fill up to 100mm to 150mm. Mr Reeves’ evidence was that this was not achievable.[20] Mr Reeves’ evidence was that significantly greater amounts of fill were required to be placed on the land where the LAA was to be located as the slope of the land was 40 percent and the fill was required to achieve the 8 percent slope required by the approved design.[21] In this regard I found the evidence of Mr Reeves to be somewhat contradictory. It seems from the evidence that Mr Reeves did in fact know that the fill spread over the LAA, as identified by the respondent, was the result of earthworks undertaken by or at the direction of Spectrum. This supports my conclusion that when Country-Wide undertook the initial assessment of the proposed site of the LAA, the grade of the land was measured at 8 percent.
[18]Statement of David Lonergan – attached documents 3.3, 3.4, 3.5, 3.6.
[19]T1-40, line 39.
[20]T1-41, line 3.
[21]T1-41, lines 24-43.
As I have previously noted, Country-Wide was not responsible for the design and installation of the wastewater treatment system. Country-Wide was responsible only for the design of the effluent disposal system. The installation of the wastewater treatment system was a matter between Spectrum and Evergreen. If Spectrum had concerns regarding Country-Wide’s design it is unclear why these concerns were not raised with Country-Wide before Evergreen undertook the installation of wastewater treatment system, which included the installation of the LAA. Mr Reeves offers no evidence about this issue. Nor did Spectrum call anyone from Evergreen to give evidence.
It is not contentious that after the Gold Coast City Council issued the action notice Country-Wide undertook a re-design of the wastewater management system to account for the changed site conditions. I am satisfied that this re-design was occasioned by actions taken on site by or on behalf of Spectrum subsequent to the preparation of the original wastewater management report by Country-Wide. It is also not contentious that the Council subsequently issued a Form 19 confirming that all plumbing works at the property were compliant. This included the wastewater treatment and wastewater management systems. Despite the Form 19 being issued by the Council, the evidence of Mr Reeves is that the wastewater management system is non-compliant. Mr Lonergan’s evidence is that the revised design by Water-Wise, approved by the Council, places the LAA outside the building envelope and that this outcome was achieved as a result of Country-Wide working with the Council to achieve an acceptable solution. Mr Reeves says that the LAA being placed outside the building envelope means that the conditions of the original town planning approval have been breached. When Mr Reeves was asked at the hearing why he was questioning Council approval of the redesigned system his response was that he considered ‘it’s corrupt’ and that the Gold Coast City Council and Water-Wise had ‘tried sweeping this whole matter under the carpet.’[22]
[22]T1-44, line 28, lines 32-34.
I find the evidence of Mr Reeves in relation to the issuing of the Form 19 unpersuasive. There is no evidence of any inappropriate practices by the Gold Coast City Council, the respondent, or any other individual. I consider the allegations by Mr Reeves of corruption to be entirely groundless and I reject them entirely. Further to the specific findings I have made, to the extent the evidence of Mr Reeves and Mr Lonergan conflicts, I prefer the evidence of Mr Lonergan. I found Mr Lonergan to be a thoughtful and considered witness who attempted to answer questions truthfully and accurately. Mr Reeves on the hand was prone to giving evidence that was otherwise unsupported by any documentary or other evidence. And as I have observed, Mr Reeves expressed views of a conspiratorial nature about collusion between the Gold Coast City Council and the respondent which were without any foundation.
I am satisfied that the wastewater management plan and design prepared by Country-Wide dated 12 February 2021 was approved by the Gold Coast City Council. I am satisfied that the plan and design satisfied the requirements of AS1547.2012 and the Queensland Plumbing and Wastewater Code. I am satisfied that the action notice issued by the Gold Coast City Council on 10 November 2021 was directed at the design and installation of the wastewater treatment system by Evergreen and that Country-Wide was not involved in, or responsible for, the wastewater treatment system. I am satisfied that Country-Wide subsequently prepared an amended site and soil wastewater evaluation report to address the changed conditions on the site and that the Gold Coast City Council then issued a Form 19 certifying compliance of all plumbing and drainage works.
Conclusion
In conclusion I am satisfied that Country-Wide undertook the preparation of the wastewater management plan and design with reasonable care and skill. I am satisfied that Country-Wide did not breach the contract with Spectrum in undertaking the preparation of the wastewater management plan and design.
The proceeding is dismissed.
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