THE OWNERS OF RICHMOND QUARTER STRATA PLAN 66227 and PINDAN CONTRACTING PTY LTD
[2020] WASAT 103
•2 SEPTEMBER 2020
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION: THE OWNERS OF RICHMOND QUARTER STRATA PLAN 66227 and PINDAN CONTRACTING PTY LTD [2020] WASAT 103
MEMBER: MS C BARTON, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 2 SEPTEMBER 2020
FILE NO/S: CC 1843 of 2019
BETWEEN: THE OWNERS OF RICHMOND QUARTER STRATA PLAN 66227
Applicant
AND
PINDAN CONTRACTING PTY LTD
Respondent
Catchwords:
Building service complaint - Meaning of 'carried out' a regulated building service - Failure to transfer building permit - No notice of cessation to act as responsible person - Whether person named in the building permit carried out the regulated building service - Related entity - Common directors - Whether related entity acted as implied agent
Legislation:
Building Act 2011 (WA), s 3, s 9, s 29, s 29(1), s 34, s 34(1), s 37, s 37(1)
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 3, s 5, s 5(1), s 11(1)(d), s 38(1), s 38(1)(a)
Building Services (Registration) Act 2011 (WA), s 3, s 17, s 18
Corporations Act 2011 (Cth)
State Administrative Tribunal Act 2004 (WA), s 47(1)(a), s 60(2)
Result:
Preliminary issue determined for respondent
Application dismissed
Representation:
Counsel:
| Applicant | : | N/A |
| Respondent | : | N/A |
Solicitors:
| Applicant | : | Atkinson Legal |
| Respondent | : | Corporate Solicitor |
Case(s) referred to in decision(s):
Hawke and Ennis [2018] WASAT 118
Owners of Strata Plan 52843 and Psaros Pty Ltd [2018] WASAT 113
Owners of Strata Plan 65323 and Palazzo Homes Pty Ltd [2020] WASAT 57
Shami and Teo [2017] WASAT 73
Shaw v McLeod (unreported, WASC, Library No 4707, 8 November 1982)
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
On 6 November 2019, The Owners of Richmond Quarter Strata Plan 66227 (applicant) lodged a building service complaint with the Building Commissioner comprising 35 items (Complaint). The applicant is the strata company for the strata scheme known as Richmond Quarter.
The complaint was made against Pindan Contracting Pty Ltd (respondent) in relation to the construction of a seven storey residential, commercial building and rooftop tavern with a two storey basement carpark (Project) located at 147 Canning Highway, East Fremantle (Premises).
On 19 November 2019, the Building Commissioner referred the complaint to the Tribunal under s 11(1)(d) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (Act). Where a building service complaint is referred to the Tribunal by the Building Commissioner, the Tribunal may make a building remedy order under s 38(1)(a) of the Act where it is satisfied that the regulated building service has not been carried out in a proper and proficient manner or is faulty or unsatisfactory.
A preliminary issue arose for determination. The respondent contends that it was Pindan Pty Ltd as The Trustee for Chamois Unit Trust trading as Pindan Constructions (Company) that carried out the regulated building service the subject of the complaint and, therefore, the Company should be named as the respondent in this proceeding before the Tribunal. The Company is not a party to the proceeding.
The issue for determination
The preliminary issue for determination by the Tribunal is as follows:
Was the respondent the person who carried out the regulated building service the subject of the application for the purposes of the Act?
Each party filed written submissions on the preliminary issue and a bundle of documents on which they sought to rely. On 1 May 2020, the respondent filed a reply to the applicant's submissions and a supplementary bundle of documents. On 22 May 2020, the applicant filed additional submissions on the preliminary issue. The parties also filed a minute of agreed facts on 28 May 2020 following orders made by the Tribunal on 12 May 2020 (agreed facts).
The applicant filed 11 documents in support of its position comprising 77 folios (denoted by 'A' followed by the document number) and the respondent filed a total of 41 documents comprising 273 folios in reply (denoted by 'R' followed by the document number). With the consent of the parties, the Tribunal made an order on 5 June 2020 that the matter is to be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act). The Tribunal reserved its decision.
The relevant statutory framework
Section 5(1) of the Act relevantly provides that a person may make a complaint to the Building Commissioner about a regulated building service not being carried out in a proper and proficient manner or being faulty or unsatisfactory. A complaint made under s 5(1) of the Act is defined as a 'building service complaint': s 3 of the Act.
A 'regulated building service' is defined in s 3 of the Act to be a building service carried out by a registered building service provider or an approved owner-builder. A 'building service' includes 'building work' as defined in s 3 of the Building Act 2011 (WA) (Building Act) which includes, amongst other things, the construction, erection, assembly or placement of a building or an incidental structure (being a structure attached to or incidental to a building). Relevantly, a 'registered building service provider' has the meaning given in s 3 of the Building Services (Registration) Act 2011 (WA) (Registration Act), being a building service practitioner or a building service contractor registered under s 17 and s 18 of the Registration Act respectively.
Section 9 of the Building Act provides that a person must not do 'building work' as defined in s 3 of the Building Act unless:
(a)a building permit is in effect for the building work; or
(b)a building permit is not required for the building work under Part 5 or regulations or an order mentioned in Part 5 Division 1; or
(c)the work is done in accordance with a building order; or
(d)the work is done in the course of taking action under section 118(2).
Under s 29(1) of the Building Act, the person named as the builder on a building permit must ensure that:
(a)the building or incidental structure to which the permit applies is completed in accordance with the plans and specifications that are specified in the applicable certificate of design compliance; and
(b)the building work otherwise complies with the building permit including each condition that applies to the permit.
A holder of a building permit may cease to be the person named as the builder on the permit by giving a notice of cessation to the relevant permit authority before completion of the work, or the stage of the work, for which the permit was granted: s 34(1) Building Act.
The holder of a building permit must, under s 37 of the Building Act, ensure that the building complies with applicable building standards. Section 37(1) of the Building Act provides:
The person who is named as the builder on a building permit must ensure, on completion of the building or incidental structure to which the permit applies, that the building or incidental structure complies with each applicable building standard.
Chronology of events and parties' agreed facts
A summary of the agreed facts, in chronological order, is set out below by way of background to the preliminary issue.
•The developer of the Premises was AFG Developments Pty Ltd and Russell Phillip Quinn as trustee for the RPQ Trust, and later solely AFG Developments Pty Ltd (Developer).
•The Company and the respondent were registered building service providers for the purposes of the Registration Act.
•During early negotiations and tenders in 2013, the respondent was nominated as the builder for the Project.
•In early October 2013, the Developer submitted a building permit application form for the Project to the Town of East Fremantle (Town/permit authority). The application form did not specify the builder's name. Later, on 7 November 2013, a representative of NS Projects Pty Ltd (Superintendent) sent an email to the Town confirming the respondent as the builder for the purposes of the building permit.
•On 13 November 2013, the Town issued building permit 2013135 (original building permit) in respect of the Project. The original building permit identified the respondent as the building contractor. There is no dispute between the parties that a building permit was required for the regulated building service undertaken at the Premises.
•Whilst negotiations for the building contract were still underway, it was proposed by a representative of the Company that it would be the builder for the purposes of the Project and not the respondent. Around this time, the Company was given early access to the site to undertake preparatory works.
•An exchange of emails occurred on 20 November 2013 between the Superintendent and representatives of the Company, including its construction manager, in relation to updating the original building permit from the respondent to the Company.
•Following negotiations in December 2013, a formal instrument of agreement for the Project was made on 23 December 2013 between the Developer as 'Principal' and the Company as 'Contractor' (the 'Contractor' having been changed from the respondent) (building contract).
•On 6 February 2014, the Superintendent sent an email to the construction manager for the Company enquiring whether 'the Building Permit name has been changed from Pindan Contracting to Pindan Pty Ltd'.
•On 24 February 2014, the Developer sent a letter to the Town requesting that the infrastructure bond for the Project be returned to the Company upon completion of the Project.
•On 10 March 2014, the Project's building surveyor and building certifier, appointed by the Developer, sent a Form BA20 to the Superintendent identifying the Company as the 'person responsible for work details'.
•On or around 21 March 2014, the Company (as 'Builder'), the Developer (as 'Mortgagor') and the Commonwealth Bank of Australia (as 'Mortgagee') signed a builder's side deed in connection with finance for the Project.
•On 28 March 2014, a representative of the Company signed an application form for Works of Low Complexity to Main Roads Western Australia in connection with the project.
•On 16 September 2014, a representative of the Company signed a Form BA1 application for building permit in respect of an amendment to the construction of the Premises, with an estimated value of $40,000, identifying the Company as the builder.
•On 21 January 2016, the permit authority issued building permit no 2015157. The building permit identified the Company as the building contractor and described the works the subject of the permit as 'Amendment to 7 Storey Residential and Shortstay Accommodation, Commercial Tenancies, Tavern and Carpark'.
•On or around 18 March 2016, the Company completed and lodged with the Town a Form BA7 notice of completion of building works in respect of the original building permit.
•On or around 22 March 2016, the Project's building surveyor and building certifier, appointed by the Developer, completed and lodged a BA17 certificate of construction compliance in respect of the original building permit.
•Following the notice of completion and the certificate of construction compliance, on 24 March 2016, the Town issued a Form BA10 occupancy permit for the Project.
The parties agree that there is no evidence before the Tribunal that the respondent gave the Town a notice of cessation to act as the responsible person, under s 34 of the Building Act, in relation to the original building permit.
The following additional facts are agreed by the parties subject to the applicant's contention that the regulated building service was undertaken by the Company as agent for the respondent:
•All building works under or in connection with the building contract were undertaken by the Company (including through subcontractors engaged by the Company).
•All relevant insurance policies were in the name of Pindan Constructions, a trading name of the Company at the relevant time.
•Communications related to the project and comprising the respondent's documents R11, R13, R15, R18, R19, R20 and R27 reference the Company.
•All subcontracts and supply contracts for the project were made between the relevant subcontractor or supplier and the Company.
•All financial and accounting documents, including progress claims, reference the Company.
•All administrative documents in connection with the Project, including monthly progress reports, programming, Superintendent assessments, certificates and site diaries reference the Company.
•There has been no novation or other assignment of the Company's contractual or other obligations to the respondent.
The parties further agree that at all relevant times (up until October 2018) both the Company and the respondent had common directors.
The applicant's contentions
The applicant's contentions, in support of its position that the respondent carried out the regulated building service at the Premises, may be summarised as follows:
1)The original building permit was issued by the Town in the name of the respondent.
2)The respondent has the responsibilities imposed by s 29 and s 37 of the Building Act. Under s 29 of the Building Act, the builder named on the building permit must ensure that the building to which the permit applies is completed in accordance with the relevant plans and specifications. Under s 37 of the Building Act, the builder named on the building permit must ensure that the building complies with each applicable building standard.
3)The decision of Shami and Teo [2017] WASAT 73 (Shami) outlines the factors to be considered in determining the question of who carried out a regulated building service for the purposes of the Act.
4)The regulated building service, the subject of the complaint in Shami, was completed before the commencement of the substantive provisions of the Building Act, including s 29 and s 37, on 2 April 2012. Therefore, those provisions were not relevant to the Tribunal's determination of who carried out the regulated building service.
5)The significance of s 29 and s 37 of the Building Act to the interpretation of the phrase 'carried out' in s 5 and s 36 of the Act cannot be ignored. Having regard to these provisions, it is the builder named in the original building permit to which the relevant work relates who is ultimately responsible for the overall building project.
6)The respondent did not give a notice of cessation to the Town. The respondent was the builder named in the original building permit and remained the builder throughout the construction process. The notice of completion and bond refund requests were in respect of the original building permit issued to the respondent.
7)The Company's conduct in undertaking the construction of the Premises and the respondent's acquiescence to that conduct gives rise to an implied (if not explicit) relationship of agent and principal between those parties. That is, all that the Company did in relation to the construction of the Premises it did as agent for the respondent. The Company undertook 'the mechanics of the work' on behalf of its principal, the respondent.
8)The fact that the Company complied with a requirement of the Building Act that rested solely with the respondent (as holder of the original building permit) supports the applicant's contention that the Company acted as agent for the respondent.
9)The respondent cannot escape the responsibilities imposed on it by the issue of a building permit under the Building Act by reason of its lack of care in observing the requirements of s 34 of the Building Act.
The respondent's contentions
The respondent's contentions, in support of its position that it was not the builder who carried out the regulated building service at the Premises, are summarised below:
1)The Company was the registered building service provider who constructed the Premises and, therefore, the proper respondent in any complaint or proceeding.
2)The respondent was identified as the potential builder of the Premises during early negotiations with the Developer and was subsequently named by the Developer in the original building permit. In or around late 2013, prior to the execution of the building contract, the Company was substituted for the respondent.
3)The substitution of the Company as the builder is referenced in an email dated 20 November 2013. The email also foreshadows the need to apply to the Town to change the original building permit once the Developer had approved the Company as the builder.
4)By a formal instrument of agreement dated 23 December 2013, the Developer officially engaged the Company to construct the Premises.
5)By email dated 6 February 2014, the Superintendent advised the Company that the relevant statutory levies had been paid and asked for confirmation that the original building permit issued in the name of the respondent had been changed to the Company. The respondent has been unable to locate a copy of the document filed with the Town by either the respondent or the Company effecting the change of builder.
6)The Company executed the building contract, performed the construction works and was paid by the Developer for those works. The payments are evidenced by the debtor's transactions ledger for the Company dated 17 July 2018 listing payments received from the Developer in respect of the construction works at the Premises.
7)There are numerous documents in existence that are consistent with the Company's role in the construction of the Premises and support a finding that the Company was the registered builder who carried out the building service the subject of these proceedings. The relevant documents include a certificate of insurance, progress claims, monthly reports, project risk management plans, subcontract agreements, superintendent instructions, and a certificate of practical completion.
8)The Tribunal in Owners of Strata Plan 52843 and Psaros Pty Ltd [2018] WASAT 113 (Psaros 2018) at [64] rejected the notion that legal responsibility was assumed by the existence of a name on a building permit.
9)The applicant's contention that the Company was carrying out the regulated building service as an agent of the respondent is without substance. An agency relationship is one involving authority in one person to create or affect legal relations between another and third parties. There is no evidence of that in this proceeding. Rather, the evidence supports a finding that the Company contracted with the Developer to carry out the works and was the party intended to be named as the builder on the original building permit.
10)The opportunity to initiate an application against a respondent builder who is no longer available cannot be remedied by an applicant choosing to lodge a complaint against a different builder.
The Tribunal's consideration
For a building remedy order to be made against the respondent under s 38(1) of the Act, the Tribunal must be satisfied that the respondent 'carried out' a regulated building service.
The meaning of the phrase 'carried out' was recently considered by the Tribunal in the decision of Owners of Strata Plan 65323 and Palazzo Homes Pty Ltd [2020] WASAT 57 (Palazzo). A helpful summary of the principles to be applied when construing the phrase 'carried out' is set out in Palazzo at [29]-[32] which refers to Shami, Shaw v McLeod (unreported, WASC, Library No 4707, 8 November 1982) and Hawke and Ennis [2018] WASAT 118:
29In the decision of Shami and Teo [2017] WASAT 73 (Shami), the Tribunal considered the proper construction of the phrase 'carried out' in s 36(1), s 37(1) and s 38(1) of the Act. The Tribunal decided that the phrase 'carried out' means the completion of the entirety of the building work of which the work the subject of a building service complaint forms part. The Tribunal described the entirety of that work as 'the building project'. In the case of the construction of an entire building, the building project will be the construction of the 'edifice' referred to in Shaw v McLeod (unreported, WASC, Library No 4707, 8 November 1982).
30In Shami, the Tribunal concluded that a building remedy order can only be made against the person who had the role of ensuring that the entire building project, which includes the work which is the subject of a building service complaint, is brought to completion. The Tribunal stated at [14]:
For the purposes of s 36(1), s 37(1) and s 38(1) of the BSCRA Act, it is the entirety of the work of the building project which is carried out, not the components of it. What follows from that construction is that a building remedy order can only be made against the person who had the role of ensuring that the entire building project which includes the work which is the subject of a building service complaint was 'carried out', or in other words 'brought to completion'. It does not matter whether the work was done personally by that person or by persons whom they arranged to perform the various components of the overall work.
31In Hawke and Ennis [2018] WASAT 118 (Hawke), the Tribunal considered whether the regulated building service was carried out by a corporate entity or an individual, who was the sole director of the corporate entity. The work involved the removal and replacement of asbestos roof sheeting with a Colorbond roof. The restricted asbestos licence was held personally by the sole director and the corporate entity was contracted to remove the asbestos. The Tribunal stated at [20]:
What is made clear in the decision of Shami is that the entity who has carried out the regulated building service for the purposes of the BSCRA Act is not necessarily the person on site undertaking the mechanics of the work but is that entity which is responsible for the entirety of the building project. It is the entity who has the role of ensuring that the entire project is carried out and brought to a completed state.
32The Tribunal concluded in Hawke at [53] that the written quotation and invoicing and the depositing of funds received in support of the asbestos removal work all support a position that the corporate entity carried out the regulated building service.
The applicant contends that the respondent was responsible for delivery of the Project because the respondent was named on the original building permit and the permit was never transferred to the Company. The applicant referred the Tribunal to the decision of Psaros2018 at [60]
It is clear from the decision of Shami that it is not necessarily the entity that undertakes the mechanics of the work which is the entity who carried out the regulated building service. It is the entity who is ultimately responsible for the overall building project that is the entity which carried out the building service.
The respondent contends that Psaros 2018 rejected the notion that legal responsibility was assumed by the existence of a name on a building permit. The respondent further contends that it was the Company that executed the building contract, performed the construction works and was paid by the Developer for those works.
It is relevant to the test in Shami that at no time did the respondent apply to the Town to transfer the original building permit from the respondent to the Company. However, this is only one factor for the Tribunal to consider and it is not determinative. It is necessary for the Tribunal to consider all of the factual circumstances that relate to the delivery of the Project to determine who had overall responsibility to bring it to completion.
The applicant has raised in its submissions the issue of implied agency for consideration by the Tribunal. The applicant contends that the Company acted as agent for the respondent in performing the regulated building service at the Premises, and that the relationship of agent and principal is to be implied. In support of its contention, the applicant points to the following:
•the Company and respondent had common and shared knowledge of the Project because they were related entities for the purposes of the (Corporations Act 2001 (Cth)) with common directors;
•the Company complied with the requirements of the Building Act that rested solely with the respondent as holder of the original building permit; and
•the construction manager for the Company at the time, Mr Shayne Jennings, liaised with representatives of the applicant in June 2019 with respect to defects included in the complaint when it appeared that the Company was no longer part of the Pindan group structure.
The question before the Tribunal is which corporate entity 'carried out' the regulated building service at the Premises for the purposes of s 38(1) of the Act. There is evidence before the Tribunal that the original building permit for the Project was issued in the name of the respondent. However, the weight of evidence supports a finding by the Tribunal that it was the Company that had the role of ensuring that the Project was brought to completion. Whether or not the two related entities had common and shared knowledge of the Project, as contended by the applicant, does not assist the Tribunal to determine who 'carried out' the regulated building service.
The applicant has asked the Tribunal to infer from the Company's compliance with the requirements of the Building Act (in circumstances where the Company did not hold the original building permit) that the respondent gave its implied assent to the Company acting as its agent in carrying out the regulated building service. There was evidence from the respondent, which was accepted by the applicant in the agreed facts, that the respondent's name on the original building permit should properly be amended to the name of the Company. However, this had not been actioned and the original building permit was never updated. Because of this evidence, the Tribunal is unable to find that the Company's conduct impliedly manifests an intent by the respondent that the Company was to act as its agent.
Further, the Australian Securities and Investment Commission historical extract at A11 shows that the Company operated from 13 June 1996 to 14 August 2019 and, therefore, the Tribunal finds that the Company was in existence at the time that Mr Jennings liaised with representatives of the applicant in relation to the defects.
The Tribunal makes the following findings based on the documents before it:
1)The Company and the respondent were related entities when the original building permit was granted for the Project and during the period of its construction. However, there is no evidence before the Tribunal to support a finding of implied agency as contended by the applicant.
2)The Company entered into a building contract with the Developer. The parties agreed that all building works at the Premises, in connection with the building contract, were undertaken by the Company or subcontractors engaged by the Company.
3)The Company was paid by the Developer for the works performed under the building contract. There was no dispute between the parties that all financial and accounting documents, including progress claims, refer to the Company.
4)The Company lodged an application for a building permit in respect of an amendment to the construction of the Premises and was issued building permit 2015157 by the Town.
5)The Company prepared project risk management plans for the Project. The management plans identify key areas affecting health, safety and environment (HSE), and establish HSE objectives for the Project. The existence of the management plan supports a finding that the Company had overall responsibility for the Project by managing risks that arose from carrying out the building work at the Premises.
6)The Company completed and lodged with the Town a notice of completion. The conduct of the Company in lodging the notice of completion supports a finding that the Company had the role of ensuring that the Project was brought to completion.
Accordingly, the Tribunal finds that it was the Company that had overall responsibility for delivery of the Project for the purposes of the test in Shami. The Company entered into the building contract with the Developer, undertook the construction work at the Premises that was the subject of the contract, was paid by the Developer for the work, produced risk management plans for the construction site, and lodged the notice of completion with the Town. Having regard to these factors, the Tribunal finds that it was the Company who carried out the regulated building service that is the subject of this proceeding.
Conclusion
Applying the test in Shami, the Tribunal concludes that the Company, and not the respondent, carried out the regulated building service the subject of the complaint by the applicant. It follows that the preliminary issue in this proceeding is to be answered in the negative. That is, the respondent was not the person who carried out the regulated building service the subject of the application before the Tribunal.
In accordance with these reasons, the Tribunal dismisses the application as misconceived pursuant to s 47(1)(a) of the SAT Act.
Orders
The Tribunal orders:
1.The preliminary issue in this proceeding is answered in the negative. That is, the respondent was not the person who carried out the regulated building service the subject of the application for the purposes of the Building Services (Complaint Resolution and Administration) Act 2011 (WA).
2.Pursuant to s 47(1)(a) of the State Administrative Tribunal Act 2004 (WA) the proceeding is dismissed as misconceived.
3.The respondent has liberty to apply within 21 days from the date of this order to file with the Tribunal and give to the applicant an application for costs, including written submissions and any supporting documents.
4.If the respondent elects to make an application for its costs, the applicant has 14 days from the date of the application to file with the Tribunal, and give to the respondent, written submissions and any supporting documents in reply.
5.Subject to any further order of the Tribunal, an application for costs will be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA).
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS C BARTON, MEMBER
2 SEPTEMBER 2020
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