Tracey and Anor v Olindaridge Pty Ltd and Ors
[2014] QCAT 617
•28 November 2014
| CITATION: | Tracey and Anor v Olindaridge Pty Ltd and ors [2014] QCAT 617 |
| PARTIES: | Martha-Lee Joelyn Tracey Todd Anthony Tracey |
| v | |
| Olindaridge Pty Ltd Rodney Wagner Caral Wagner |
| APPLICATION NUMBER: | BDL 276-12 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 13 and 14 March 2014 |
| HEARD AT: | Bundaberg |
| DECISION OF: | Member Suthers |
| DELIVERED ON: | 28 November 2014 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. That the matter be listed for directions not before 5 January 2015 regarding all issues outstanding. 2. Costs of the Application to date are reserved. |
| CATCHWORDS : | DOMESTIC BUILDING DISPUTE – NEGLIGENCE – BREACH OF CONTRACT – BREACH OF STATUTORY WARRANTY – whether directors and nominee builder of builder who homeowners contracted with owed a duty of care to the homeowners – where slab not built at correct height. LIMITATION OF ACTION – in contract, tort and breach of statutory warranty. PROCEDURAL FAIRNESS – where party attends hearing without sufficient understanding of Tribunal process. STATUTORY INTERPRETATION – where Council fails to comply with statutory requirement. Domestic Building Contracts Act 2000 (Qld) ss 43 - 46 Limitation of Actions Act 1974 (Qld) s 10 Bryan v Maloney (1995) 182 CLR 609 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANTS: | In person |
| RESPONDENTS: | Mr Hall of Hall Lawyers for each Respondent |
REASONS FOR DECISION
Olindaridge Pty Ltd is a company which built houses in the Woodgate area. Mr Rodney Wagner was, at the relevant time, the company's nominee and one of its Directors. The company traded as RK & CA Wagner. Rodney Wagner was principally involved in the hands-on construction work on behalf of the company, with the assistance of subcontractors.
In November 2001 the Traceys entered into a building contract[1], where Olindaridge was described as the builder, for a house to be built for them. They believed that they were contracting with Mr and Mrs Wagner in their individual capacity. Their reasons for this belief included that the contract also showed the company's trading name, was signed by Mr Wagner in the space marked "signed for and on behalf of the builder" and that Mr Wagner's name was inserted into that space (rather than the Company name). Mr Wagner signed the contract with no other apparent indication made in the signing clause that he was doing so on behalf of the company.
[1] In fact, two contracts were entered into. Similar issues arose in relation to both
Contracts. Nothing turns on the fact that two separate contracts for the same work
were signed other than as detailed below. The Tribunal accepts that the later
Contract dated 12 November 2001 encompasses the agreement.
Practical completion was reached on 21 December 2001.
In about April 2008 the Traceys started to notice problems with their house. By September of that year it became apparent that there were significant difficulties with the house caused by termite infestation.
In May of 2011 the Traceys filed proceedings in this Tribunal seeking to have Olindaridge and Rodney Wagner held responsible for the damage caused by the termite infestation.
Prior to that matter being determined by the Tribunal, Olindaridge and Mr Wagner brought interlocutory proceedings seeking an order that, in effect, Mr Wagner could not be held responsible for the actions of the company as builder.
In May 2012 a QCAT Member found in favour of Olindaridge and Mr Wagner. The Traceys appealed. They were successful, and in February 2013 the Appeal Tribunal found that, in the appropriate circumstances, Mr Wagner could be held personally responsible for any defective building work.
After the initial application was filed, the Traceys discovered that the slab of their house was lower than that which had been intended by the former Isis Shire Council. They amended their claim in February 2012. The amendment included a claim for damage caused by the slab being lower than desired by the Council. The Traceys also discovered that the overflow relief gully (ORG) attached to their plumbing by the builder did not comply with the building code. During the course of these proceedings they were also informed by an officer of the QBCC that there were insufficient downpipes installed at the house to meet building code standards.
What happened then is best set out in the reasons of Member Lewis[2] of this Tribunal at paragraphs 13 and 15. For the sake of completeness the parts of those paragraphs which are relevant are reproduced below as follows:
…During the course of the proceedings, the Respondent's solicitors raised the issue that the Council may have some liability in this aspect of the matter and that the Council could not be a party to these Tribunal proceedings. The Applicant's solicitors therefore filed another amended claim, deleting any claim under this head, while indicating that their clients might pursue that matter in another jurisdiction. From then until the experts conclave just prior to the hearing, the matter continued on the assumption that the slab height issue was not part of these proceedings, except perhaps to the extent that it might have contributed to the termite infestation.
When the matter came on to trial, the Respondent's solicitors raised the question of whether that height issue was to be part of the claim, given its "on again, off again" history. Initially the Applicants indicated that they wanted it included. The Respondent intimated that if it was allowed to be included he would seek an adjournment, as he had prepared for the hearing in the belief that it was not part of the claim, given the second amended claim filed months ago. In the event the Applicants agreed that it was to be excluded (except to the extent that it might be relevant to the termites) while reserving the right to raise it in separate proceedings. The hearing proceeded on that basis.
[2] Tracey and Anor v Olindaridge Pty and Ltd & Anor [2013] QCAT 401.
The hearing in relation to the damage caused by the termite infestation took place over four days in August 2012 and March 2013. A decision was made by the Tribunal on 5 August 2013 awarding the Traceys the sum of $98,600.00, to be paid by Olindaridge and Mr Wagner as Respondents. The learned Member indicated in his decision in reference to the slab height issue that:
I have set this out in some detail, given that the matter may be subject of other proceedings, to make it clear that this decision makes no finding on that issue, and these proceedings should not be seen as including that matter as being decided in this application.[3]
[3] Ibid at [16].
Olindaridge and Mr Wagner appealed that decision. That appeal had not been decided at the time this matter came before me in March 2014.
The claim before me related to the issue of the slab height being too low and any damages which flowed from it together with complaints by the Traceys about the ORG and downpipes. There was some complaint about mould forming at the house, but, in the end, there was no evidence that this was related to the slab height or defective building work, beyond Mrs Tracey’s concern that it was.
The claim before me was against Olindaridge, Mr Rodney Wagner and Mrs Caral Wagner as Respondents. Mrs Wagner was also a director of Olindaridge at the relevant time and was included as a Respondent in the Tracey’s application.
The Traceys claim the sum of $351,955.00 against the Respondents. This amount, they say, is the cost to demolish and completely rebuild their home. They say that there is no other appropriate remedy, given that the house has been built below the height intended by the former Isis Shire Council. As a result of the height of the slab, they say, the house is more likely to be subject to flooding and storm surge damage.
It is agreed that the house itself has not yet been the subject of inundation, although it is clear that flood waters have previously entered the house yard.
Since the hearing of this matter before me in March the Appeal Tribunal has handed down its decision in relation to the appeal against the decision of Member Lewis. The appeal was allowed. That matter was remitted for rehearing in October 2014. The Tribunal's record reflects that the matter was settled and an order made by consent. No determination was required of the Tribunal of the issues before it on the rehearing.
Whilst the parties were able to resolve the issues contained in the other proceedings, this aspect of the matter still requires determination.
During the course of the hearing the Respondents made a number of concessions which, appropriately, narrowed the issues.
They concede that Olindaridge owed a duty of care to the Traceys. They agree that the house slab was finished to a height lower than that intended by the Isis Shire Council. They agree that the overflow relief gully was built too high to be compliant.
The Respondents claim, however that the Traceys have suffered no damage in relation to these issues. They say that the Isis Shire Council did not validly declare a minimum floor height for Woodgate and so the slab is not too low. They say that Mr and Mrs Wagner owe no duty, and have no contractual liability to the Traceys. They also say that the claim by the Traceys is statute barred under the Limitation of Actions Act 1974. Finally, they say that an estoppel arises if damages awarded by the Tribunal in this matter can been seen to overlap with damages awarded by the Tribunal in the earlier proceedings, or if the Traceys unreasonably failed to prosecute these issues at the earlier hearing.
The issues identified for determination by the Tribunal then, are as follows:
Whether Rodney Wagner or Caral Wagner owed a duty, or had a contractual liability, to the Traceys?
Did the slab of the house have to be finished to 3.4m AHD?
Are any of the Respondents liable to the Traceys for breach of contract, duty or breach of statutory warranty, in relation to the slab height of the home above finished ground level?
Have the Tracey’s suffered any damage as a result of the height of the slab either in its position above finished ground level or relative to AHD and if so, what order should be made?
What orders should be made as a result of the overflow relief gully being constructed at the wrong height?
Whether the downpipes to the home were constructed as required and if not, what orders should be made as a result?
If the Traceys have suffered damage caused by any of the Respondent’s, how should that damage be assessed?
Whether the Traceys are now estopped from pursuing damages or prevented from pursuing their claims by the expiration of the limitation against such claims?
Whether Rodney Wagner or Caral Wagner owed a duty, or had a contractual liability, to the Traceys?
There has, over recent years, been development in relation to the laws of negligence as they relate to the potential duties owed by a builder to a customer. Those more recent developments in the law are set out in the decision of Member Brabazon QC in the Appeal Tribunal[4] between the parties to this action (other than Mrs Wagner) relevant to the joinder of Mr Wagner in an earlier aspect of the dispute over this building work. The learned Member sets out those developments in his decision as follows:
The decisions of the High Court of Australia in two cases are important.[5] Those cases discuss the principles of the law of negligence that apply to defects in dwelling houses.
In particular, Bryan v Maloney[6]established the basic principle “that the builder owed the first owner a duty of care to avoid economic loss of that kind[7]” - that is, losses caused by defects in construction.
In Woolcock, Gleeson CJ, Gummow, Hayne and Heydon JJ took into account the vulnerability of a home owner – a reference to home owner’s ‟inability to protect themselves from the consequences of a builder’s want of reasonable care[8].”
In Woolcock, McHugh J reviewed similarly decided cases. Those in Canada and New Zealand permitted an action in negligence for economic loss caused by defective premises. Bryan v Maloney[9] approved those principles[10]. As McHugh J put it, “[t]he decisions … make it difficult to argue that claims in negligence for pure economic loss should be excluded merely because such claims may outflank or undermine fundamental doctrines of the law of contract.” [11]
The New Zealand cases reveal a similar approach. In Morton v Douglas Homes Ltd[12], the directors of a building company were personally liable, because of the control they exercised over the building work. More recently, in Dicks v Hobson Swan Construction Ltd (in liquidation) and Ors HC Ak Civ 2004-404-1065[13], a director of the building company was found to have been negligent, for failing to maintain proper standards of workmanship. He was personally liable for the loss suffered by the home owner.
None of those cases were mentioned in the submissions made to the QCAT Member. They make it clear that it is now appropriate to make personal claims, for negligence, against a builder whose company enters into a building contract. In this case, the nature of the alleged defects and their consequences, the owners ‟apparent reliance on the builder,” and Mr Wagner’s personal involvement make it clear that they are issues that will have to be dealt with as part of the owners’ claims.
[4] Tracey v Rodney Wagner Olindaridge Pty Ltd [2013] QCATA 048.
[5] See Bryan v Maloney (1995) 182 CLR 609; Woolcock Street Investments Pty Ltd v
CDG Pty Ltd (2004) 216 CLR 515 (‘Woolcock’).
[6] (1995) 182 CLR 609.
[7] Woolcock at [14] per Gleeson CJ, Gummow, Hayne and Heydon JJ.
[8] Ibid.
[9] (1995) 182 CLR 609.
[10] Ibid; Woolcock at [65].
[11] Woolcock at [92].
[12] [1984] 2 NZLR 548.
[13] [2006] NZHC 1657.
I accept that this is a correct summary of the law on this issue. Of course, it is not a binding determination on these parties, in this action. Nor does it mean that a duty is owed by either of the Wagner’s to the Traceys. Those issues need to be separately determined.
It is convenient to deal firstly with the claims against Mrs Wagner as Third Respondent. The evidence reveals that she had little input into the negotiations between the parties. She was not ‘hands on’ in the building work itself, or actively involved in supervising it. There is no suggestion that she is a builder. She did not sign either of the contracts that were executed. On that basis I am not satisfied that there is any duty owed by her to the Traceys.
In relation to Mr Wagner, though, the situation is quite different. He was primarily involved in negotiating with the Traceys. He brought the first contract which he drafted to their house to be signed. When he discovered that the contract was on the incorrect form he then brought another version for them to sign. They did this at the time, in his presence and at his suggestion. They signed both of the contracts without first obtaining legal advice. They accepted his advice that the second contract needed to be signed without question. Mr Wagner then organised for the house plans to be drawn for the Traceys. He signed each of the contracts without in any way clarifying that he only did so in his capacity as a director of the Company. He was directly responsible for some of the building work that was undertaken and for ensuring that the plans were followed. Whilst the Respondents say that this was all done in Mr Wagner’s capacity as director of the Company and its nominee builder, I find that through a combination these factors, Mr Wagner assumed responsibility to the Traceys to take reasonable care to avoid causing them loss through defective building work. I am also satisfied that the nature of his involvement as described created a very different understanding of his involvement in the Tracey’s minds. This should have been readily apparent to Mr Wagner.
The Respondents submit, correctly, that the New Zealand cases referred to above rely on the level of ‘control’ exercised by a director in finding a duty. They say that this test is at odds with the established law in Australia as set out in Woolcock which refers to the concept of ‘vulnerability’. In my view the two are not contradictory or mutually exclusive. The high degree of control exercised by Mr Wagner is, in my view, a salient feature of why the Traceys were ‘vulnerable’ in the nature of their dealings with him.
In those circumstances I am satisfied that there was a vulnerability of the Traceys to Mr Wagner, and they were unable to adequately protect themselves from the consequences of his want of reasonable care. It is not enough to say that they had other remedies against Olindaridge. The nature of their dealings with Mr Wagner and their subsequent reliance on him led to a situation that they did not, for example, seek to protect themselves by having him guarantee the obligations of the Company under the contract. I find that he owed them a duty, personally, to take reasonable care to prevent foreseeable loss being suffered by them when building the house. The nature of the duty, I find, is the same as that owed by the Company in negligence to the Traceys. The Respondents submit that the Civil Liability Act does not apply to this matter and so I am not required, where relevant, to apportion any liability for damage between Olindaridge and Mr Wagner. I have no difficulty in finding that any loss suffered by the Traceys due to a breach of the duty owed by Olinadridge or Mr Wagner to them was foreseeable. There is no suggestion that any of the matters of complaint were caused by, or contributed to by others. There is no allegation in relation to the issues before me that there was any break in the chain of causation. Given their experience in the industry, Olindaridge and Mr Wagner were clearly aware of the potential risk in failing to abide by their duty and the magnitude of the risk.
I am not satisfied, though, that there was any contractual relationship between Mr Wagner and the Traceys. Despite the issues regarding the way the contract is executed and, indeed, discrepancies in statements he filed in the Tribunal, I am satisfied that both of the contracts which were prepared and signed clearly showed that the builder, as contracting party, was Olindaridge.
Did the slab of the house have to be finished to 3.4m AHD?
There is no dispute that the Isis Shire Council intended in 1992 to adopt a minimum height for the construction of houses in the Woodgate area.
By 2001, the Council had power to do so in certain circumstances. It is agreed between the parties that the Council’s power to adopt a minimum height requirement at the relevant time came from section 53 of the Standard Building Regulations 1993. That section provided:
53 Land liable to flooding
(1) A local government, by resolution, may declare –
(a)land to be liable to flooding (including by tidal surge or sewage discharge); and
(b)the level to which the floor levels of habitable rooms must be built.
(2) The local government must –
(a)keep a register of the resolutions and the information supporting the resolution; and
(b)keep the resolutions available for inspection
At a meeting on 23 April 1992 the Isis Shire Council purported to adopt a minimum building height, referable to the Australia Height Datum (AHD) for buildings in the Woodgate area. The proposed floor height for habitable rooms was 3.4 m AHD.
A record of the minute of the Council’s meeting was before the Tribunal. It said, relevantly to this matter:
Correspondence
10.1 Kinhill Cameron McNamara (A22 256968)
advising of recommended floor heights and residential land levels for Buxton & Woodgate.
Decisionmoved by Cr Mattsson, seconded by Cr Fitzsimmons. That the following Australian height data for floor and land levels be adopted; -
Buxton - land level for building be 3.8 AHD
- minimum floor height (habitable rooms) be 4.2m AHD.
Woodgate - land level for building to be 3.0 m AHD
- minimum floor height (habitable rooms) be 3.4m AHD
Carried”[14]
[14] Annexed as MT-6 “B” to exhibit 1.
It is accepted by the parties and, tolerably clear, that the reference to Kinhill Cameron McNamara is a reference to a letter from that firm who were engineers. Receipt of a letter from that firm regarding “Floor heights” and described as "advising of recommended floor heights for Buxton and Woodgate" is referred to as inward correspondence at the meeting.
In so far as the Bundaberg Regional Council (who took over from the Isis Shire Council on amalgamation in 2008) was concerned, that minimum AHD requirement remained in force until at least November 2011. It was the Council's belief that the minimum floor height had been appropriately adopted by the Isis Shire Council at its meeting on 23 April 1992.[15] By 2011 the Bundaberg Regional Council Isis Shire planning scheme still did not include any flood mapping for Woodgate or identify land in Woodgate inundated by a defined flood event.[16] At the date of hearing, the mapping was underway but incomplete. I should pause, at this point, to note that after the hearing the Traceys applied to introduce completed flood mapping in the form of Coastal hazard areas maps for storm tide inundation and erosion prone areas in Woodgate. They acknowledge that this evidence was not available earlier. The Respondent’s object, and say it is of no relevance. Given that both maps are dated 2014 and that the information within them was not available to the parties at any relevant time, I will not admit them in evidence.
[15] Letter from Evan Fritz, Bundaberg Regional Council annexed as MT-6 “A” to
exhibit 1.
[16] Ibid.
The Respondents agree that the house was built with a slab height for the habitable rooms of 2.765 m AHD.[17] They say though that the Isis Shire Council failed to effectively pass and implement its resolution of the 23rd April 1992, and so it was not binding upon builders constructing houses in Woodgate.
[17] Statutory declaration by Wayne Say annexed as MT-7 to exhibit 1.
The Respondents point out that the resolution of the Council does not in fact:
a)declare any land to be liable to flooding in accordance with section 53 (1)(a); or
b)declare the level to which the floor levels of habitable rooms MUST be built.
The un-controverted evidence was that the letter from Kinhill Cameron McNamara, which I infer must have been ‘information supporting the resolution’, was not kept with the resolution and is now not available.
The evidence of Mr Evan Fritz, the manager of structural planning with the Bundaberg Regional Council and formerly involved in town planning with the Isis Shire Council from 2004 was that the Isis Shire Council’s attempt at compliance with section 53(2) consisted of maintaining a folder on its computer system where a computerised copy of minutes were kept. There was no register as such. He said that the information was not readily available for inspection in 2001 although it is now. The resolution had not been incorporated into the relevant town plan in 2001. It was not referred to in any relevant town planning scheme until 2007. All of this was confirmed by Mr Richard Jenner who is the manager of development assessment at the BRC. There was no evidence to the contrary. I find that this was the position.
The Tribunal must determine whether these failures by the Isis Shire Council in the strict compliance with section 53 of the Standard Building Regulations makes the purported adoption of a minimum height for habitable rooms in Woodgate invalid.
In support of their submission that it does, the Respondents referred to two cases, the first a decision of Senior Member Oliver of this Tribunal in the matter of Demac Homes (QLD) Pty Ltd v. Queensland Building Services Authority[18] and the second a decision of the building and development Tribunal in the matter of Gold Coast Certification Group v Gold Coast City Council[19].
[18] [2010] QCAT190.
[19] File number 3-01-048.
In the first matter Senior Member Oliver considered an application relating to a direction to rectify issued by the Queensland Building Services Authority where the question was whether the Caboolture flood management policy applied to the subject land. It was acknowledged in that matter that the flood management policy was not legally enforceable as it had not been formally adopted by the Council. Its existence was relevant, in that matter, to a consideration of whether the builder had conducted defective building work. That decision is of no assistance to me on this issue.
In the second of those cases a member of the former Tribunal found in 2001 that:
The resolution of the Gold Coast City Council, dated 25 May 1995, does not comply with subsection 53. (1) of the Standard Building Regulations 1993 as it does not declare land liable to flooding as required by subsection 53.(1) (a) and does not nominate habitable rooms as required by section 53.(2)(b) but instead nominates the floor clearance for residential, commercial and industrial buildings.[20]
[20] Reasons for Decision at paragraph 1.
This decision, whilst not binding on me, is clearly relevant to my considerations in this matter. Unfortunately I have not been provided with any of the submissions made to the learned Member and the Member was not required to expose his reasons for the decision to any greater extent. The decision then is of limited assistance to me but it does clarify the potential effect of a Council failing to properly implement a decision under section 53.
It is not surprising that the Council's resolution in 1992 was not worded in accordance with the requirements of the Regulation, given that the regulation was not in existence at the time the resolution was passed.
Both parties accept that the resolution by the Council, in so far as it was maintained in their records, was intended to be in compliance with section 53.
There is no evidence before me about whether Council had the power to pass a resolution which had any effect in April of 1992. There is also no evidence to assist the Tribunal as to why, upon passing of the Standard Building Regulations in1993, the issue was not revisited by Council.
The Isis Shire Council did not declare any land to be liable to flooding by its resolution dated 23 April 1992. I must decide whether that invalidates the declaration.
This provision is drafted to place an obligatory requirement on the Council in order to make a declaration. The question is what the consequences are of the Council’s non-compliance. As was stated in Project Blue Sky[21]:
An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends on whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition.
[21] Project Blue Sky Inc v Australian Broadcasting Authority (1998)194 CLR 355 at 388-9
Per McHugh, Gummow, Kirby and Hayne JJ.
There is, in my view no great injustice or inconvenience which would follow from requiring strict compliance by the Council in declaring land subject to flooding before it goes on to set a floor level. It is the fact that the land is subject to flooding which is the basis for the height requirement. The declaration is, I find, invalid due to the Council’s non-compliance with the statute.
Obviously the Traceys may say that this works an injustice to them, but they still have other remedies if the builder does not comply with its contractual or statutory warranties including as described later in these reasons. Conversely, to not require strict compliance in this regard would allow the Council to stipulate floor heights with no apparent basis, which is not the intent of the statute.
For completeness, the Respondents submit that the Council also failed to comply with s.53 (1)(b) because it did not state the level to which the floor levels “must be built.” The wording of the resolution in this regard, insofar as it relates to a minimum floor height, is sufficient compliance, in my view, to make clear the height to which relevant floors must be built. The failure by Council to use the exact wording of the section is, in this case, a distinction without a difference. The mere failure to use the exact words of the section causes no injustice or harm and is not fatal to the resolution in that regard. Indeed, it would be difficult for a Council to declare a height at which habitable floors must be built. To do so would potentially prevent development of an appropriate building with an even higher proposed habitable floor height.
The failure by the Isis Shire Council to subsequently comply with subsection 2 of section 53 calls into question whether it was truly intended that the resolution be a declaration applicable under s.53 at all. There is no evidence on this point.
The Act does not stipulate the consequence of the failure by the Council to comply with s 53(2) of the Regulation in failing to keep a register of the declarations and the information supporting them, or making those items publicly available. As can be seen from the history of this matter, the consequences of that failure can be serious and significant. There was no publicly available information to draw the attention of builders to the Council’s intended AHD requirement for Woodgate in 2001. Whilst it is true that the Respondents did not ask anyone at the Council if there was a height requirement, the Council was at that time responsible for certifying the plans and later, the construction work. This it did, without drawing the issue to anyone’s attention. I cannot infer that anyone at the council who could have been asked by the Respondents would have had knowledge of the resolution in 2001. Mr Fritz and Mr Jenner only discovered the existence of the resolution at later dates. On that basis the Council’s failure to comply with subsection 2 at the relevant time would, in my view, excuse the Respondents from compliance with the declaration, even had it been appropriately made.
Are any of the Respondents liable to the Traceys for breach of contract, duty or breach of statutory warranty, in relation to the slab height of the home above finished ground level?
A building contractor provides, under the provisions of the Domestic Building Contracts Act 2000 (Qld) (“DBCA”), various statutory warranties. Each of those warranties is, in this case, also contractual, under the general conditions of the Master Builders Residential Building Contract used in this instance[22].
[22] At clause 10.
Under section 43 DBCA the building contractor warrants that the subject work will be carried out in accordance with all relevant laws and legal requirements, including, for example the Building Act 1975 (Qld). There is no evidence to satisfy the Tribunal that the slab height above finished ground level does not comply with any relevant laws or requirements.
Under section 44 DBCA the building contractor warrants that the subject work will be carried out in an appropriate and skilful way and with reasonable skill and care. In Tamawood v Paans and another [2004] QDC 427 his Honour McGill DCJ found that obligation:
…must necessarily involve building the floor of the house to such a height that water does not run into it when there is heavy rain. It may well be unreasonable for a builder to foresee the extent of substantial flooding, particularly in circumstances where the flooding is not the result of immediate local conditions. In addition, water ingress into a house may be caused by other things that are done later, by someone else, either landscaping works or other construction work within the property concerned, or on another property which deflects rainwater onto this property, or prevented from running away from it. There is certainly an issue of causation involved, one of identifying the real cause of the inundation of the property. Logically the first issue is whether the property is regularly inundated, but if it is that it is a matter of determining why that is so. If it is the result of that investigation that the floor was built too low, then the builder is liable, unless perhaps you can show that he was under a contractual obligation to build the floor as low as that.”[23]
[23] At paragraph 22.
There has been no actual flooding of the Traceys’ house. They cannot satisfy the Tribunal that this obligation was breached in relation to the slab height. Other than in respect to complaints dealt with in application number 136 of 11 (being the matter remitted and subsequently settled), the only other alleged defects in the building work itself relate to the downpipes and overflow relief gully and will be dealt with later.
Under section 45 DBCA the building contractor warrants that the subject work will be carried out in accordance with the plans and specifications. Here, the building contractor carried out the construction of a home substantially in accordance with the approved building design drawings.[24] The drawings themselves did not refer back to any AHD requirement of the Isis Shire Council. The draftsperson’s drawings of L.A. & D.L. Pohle[25] (arranged by Mr Wagner for the Traceys) did, however, clearly provide for a slab height of 300 mm above finished ground level. Mr Bentley, a building certifier, gave evidence that this was the correct interpretation of the plans and engineering drawings.
[24] Experts conclave joint report paragraph 2.
[25] Attached MT – 1”E” to exhibit 1.
It is common ground that the slab was in fact constructed to no more than 220mm above finished ground level. In 2012 the property was inspected by Rob Marshmann and he found that the slab height above finished ground height was 100mm.
Mr Wagner says he built the house to 220mm above finished ground level, instead of 300 mm, because that was the figure shown in the earlier slab details drawing prepared by G.S.A. Consulting Engineers[26] for the slab. It is clear though, upon a proper examination of that document that 220mm is intended to be a minimum figure. Given the passage of time before the measurements were taken by Mr Marshmann, and the fact that the slab was certified compliant to the plans, I find it more probable that the slab was constructed at 220mm above finished ground level.
[26] Attached MT – 1”F” to exhibit 1.
Upon being questioned by the Tribunal, Mr Wagner was prepared to accept that, in hindsight, the slab should have been finished to 300 mm above finished ground level according to the drawings by Pohle. I accept, based upon the evidence of Mr Bentley, who was called by the Respondents and who was the only independent expert to comment on the matter, that the Engineering drawings provided only a minimum height. On that basis, to comply with the plans, the slab should have been finished to 300mm. To that extent, then, I find that Olindaridge as the building contractor has failed to comply with section 45 DBCA, and is in breach of this statutory and contractual warranty. It has also breached its duty to the Traceys to take reasonable care, as has Mr Wagner.
Under section 46 DBCA for the construction of a detached dwelling the building contractor warrants that the home will be suitable for occupation when the work is finished. The home is clearly suitable for occupation in that the Council has granted a certificate of occupancy and the Traceys have resided in the house since completion. There is an outstanding notation on the Council's file in relation to the overflow relief gully and that will be dealt with later in the reasons.
The Respondents submit that the provisions of s 44 DBCA and presumably the other sections of that Act referred to, do not meet the requirements set out in the decision of Byrne v Australian Airlines Ltd.[27] such as to provide a right of action to the Traceys. I cannot accept that submission. Those provisions create various warranties by the building contractor, irrespective of any contractual obligation it might have to the homeowner. A breach of those warranties must be intended by the Statute to be actionable by the homeowner. I accept that this applies only to Olindaridge as the building contractor and not Mr Wagner.
Have the Traceys suffered any damage as a result of the height of the slab either in its position above finished ground level or relative to AHD and if so, how that damage should be assessed?
[27] 185 CLR 410.
An examination of these issues requires a clear understanding of the difference between “finished ground height” and “height relative to AHD”.
The first indicates simply the height of the ground where the slab is to be laid, once preparatory earthworks have been completed. It does not relate to any objective or fixed point. It may be higher than surrounding land or lower than it. The height of the slab above finished ground level determines how the far the slab protrudes above the soil surrounding it.
The second is measured against a fixed standard and so by measuring the height of land or a slab relative to AHD, one is able to better determine whether that point is lower or higher than surrounding land and therefore, potentially, more or less likely to be subject to inundation as a result.
The principles to be considered when deciding the issue are set out in Bellgrove v Eldridge[28], a decision which has been followed in a number of more recent decisions.
[28] (1954) 90 CLR 613.
In summary, Bellgrove v Eldridge provides that if there is a finding of defective work in breach of contract and, by extension, statutory warranty or breach of duty, consideration has to be given to the reasonableness of rectification. The decision is authority that the cost to demolish and reconstruct so that the works accord with the contract will be awarded as damages if it is necessary to remedy the defects and if it is reasonable to do so. If it is not necessary and reasonable the Tribunal is required to assess whether there is any loss in value from the defect not being otherwise addressed. If the work is to be rectified the Tribunal has to determine whether the contractor does the work, or whether damages are awarded in lieu.
Slab height above finished ground level
The accepted evidence of Mr Way[29] establishes that an extra 80 mm of slab height above finished ground level would still only take the slab to 2.845 m AHD.
[29] Attached MT – 7 to exhibit 2.
It is again relevant in this regard that the house has never been inundated by floodwaters or storm surge. There is no evidence before the tribunal which would establish that there is a significantly greater likelihood of inundation due to the slab being 80 mm lower than was proposed by the drafting service. There was no evidence that the drafting service inspected the property to obtain any information about the likely finished slab height relative to the AHD in the area that slab was to be located on the block. The Tribunal can accept, as a matter of general principle, that having the slab 80 mm higher away from the finished ground level than it currently sits may provide some increased buffer to inundation. In the absence of any evidence that water has encroached even to the base of the slab, though, the Tribunal cannot be satisfied that any damage flows from the breach of contract, warranty or duty. It would be unreasonable for the Tribunal to order demolition and rebuilding, or to direct rectification on this basis. There is no evidence to establish a diminution in value of the house attributable to this issue.
Slab height relative to AHD
In case the Tribunal is found to be wrong in determining that the Traceys have no cause of action in relation to the slab height not being set to 3.4 m AHD, I should go on to assess the issue of damages or other remedies in that regard. Unfortunately, it was clear at the hearing that the Traceys had not fully grasped the importance of ensuring that the authors of documents relevant to their claim for damages were available for cross examination. Mrs Tracey said that she had formed what was an incorrect view of the obligation to make witnesses available, as a result of the way earlier proceedings in the Tribunal were conducted.
Whilst the obligation to have witnesses available for cross-examination or face a submission that no weight should be given to their evidence was explained to the Traceys at the hearing, they were clearly potentially disadvantaged by their failure to understand the Tribunal's process earlier.
It was canvassed with the parties at the end of the hearing that the Tribunal may, in certain circumstances go on to make findings about liability and then seek further submissions about damage or, indeed, entertain any potential application by the Traceys for leave to adduce further evidence in relation to damage or make witnesses available.
The importance of them having a proper opportunity to do so and the Respondents being given an opportunity to test the evidence was clearly set out in the decision of the Appeal Tribunal dated 21 July 2014 in relation to appeal number 379/13[30] between these parties and does not need to be repeated here. Of course that decision was not available to the parties when this hearing was conducted.
[30] At [42] and [43].
Given the findings I have made in relation to liability and the fact that the Traceys may have sought leave to adduce further evidence in relation to damage (which was fairly acknowledged by the Respondents in their written submissions[31]) I will not attempt to assess damage in relation to this issue at this time, or make a determination of whether the claim for the house to be totally demolished and rebuilt on this basis is reasonable and necessary.
What orders should be made as a result of the overflow relief gully being constructed at the wrong height?
[31] Dated April 2014 paragraph 40.
The purpose of the overflow relief gully is to permit waste water to escape from the house drainage system without backing up into the house. It must be placed sufficiently below the lowest drainage point of the house, usually the shower drain. It is agreed that the ORG was not built to the correct height to meet the building code requirements. I am satisfied, on this basis that it would not operate effectively. Non-compliance of the ORG has been noted on the council file since shortly after the house was constructed, notwithstanding that a certificate of occupancy issued. Mrs Tracey says that in 2012 she discovered sewage coming up from her shower drain. Unsurprisingly, she attributes this to the defective ORG.
The Respondents say that this could not happen, because the Council installed a vacuum pump system to houses in Woodgate when local houses were connected to sewage in 2008. Mr Wagner accepted, though, that it was possible, albeit unlikely, if the vacuum system failed that sewage could back up to affected houses. In those circumstances the Traceys’ house would be made more vulnerable due to the defective ORG. I accept Mrs Tracey’s uncontroverted account that she had what appeared to her to be faecal matter emerging from the shower grate in 2012. She otherwise complains of “gurgling” in the drain. I accept, on the balance of probabilities, and in the absence of any other explanation that this was caused by the defective ORG. In any event, failure to build the ORG to the correct height demonstrates a failure by Olindaridge to comply with the warranty it gives under s 45 DBCA, its contractual obligations and its duty to take reasonable care. It is also a breach by Mr Wagner of his duty to take reasonable care in this regard.
Unfortunately, the cost to rectify this issue was not the subject of evidence. Given my earlier findings, calculation of this damage, or a decision as to other Orders which should be made, will need to be done after the parties have an opportunity to be heard further on the issue, unless they can otherwise reach agreement in the meantime.
Whether the downpipes to the home were constructed as required and if not, what orders should be made as a result?
The Traceys discovered, as a result of advices given to them by an officer of the QBCC, who inspected the house for the Tribunal during these proceedings, that an insufficient number of downpipes were affixed to the gutters to meet the requirements of the building code when the house was built. There was no evidence to the contrary.
I find that this demonstrates a failure by Olindaridge to comply with warranties under ss 43, 44 and 45 DBCA, its contractual obligations and its duty to take reasonable care. It is also a breach by Mr Wagner of his duty to take reasonable care in this regard.
Again, the issue of whether any damage has been suffered, and the cost to rectify this issue was not the subject of evidence. An opportunity for the parties to be heard further as to the appropriate Orders on the issue will need to be arranged, unless they can otherwise reach agreement in the meantime.
Whether the Traceys are now estopped from pursuing damages or prevented from pursuing their claims by the expiration of the limitation against such claims?
In circumstances where the proceedings in BDL 136-11 have been resolved by consent, and without the need for a determination by the Tribunal on the merits, I am satisfied that no issue estoppel can operate against the Traceys in relation to the assessment of any damage or the issue of any direction to rectify made by the Tribunal in this matter. Given the history of the actions between the parties as outlined in paragraphs 8 to 10 of these reasons I am satisfied that it was reasonable for the Traceys not to pursue the floor height issue in the earlier proceedings[32]. The same finding applies to the ORG and downpipe issues, for the same reasons.
[32] See Port of Melbourne Authority v. Anshun [1981]147 CLR 589.
The claim by the Respondents in relation to the Limitation of Actions Act 1974 is that the Traceys are now prevented from bringing their action in this matter by operation of s10 of the Act which states, relevantly:
10 Actions of contract and tort and certain other actions
(1) The following actions shall not be brought after the expiration
of 6 years from the date on which the cause of action arose—
(a) subject to section 10AA, an action founded on simple
contract or quasi-contract or on tort where the damages
claimed by the plaintiff do not consist of or include
damages in respect of personal injury to any person;
Where the claims by the Traceys relate to breach of contract the right of action accrued as at the date the contract was breached[33]. This was in 2001 when the work was done. That date is more than 6 years prior to the date on which this claim has been brought. I accept then, that in relation to any matters where I have found that there was a breach of a contractual duty by any of the Respondents, the action was statute barred when the action for these issues was first brought in 2012. This has the effect of denying the Traceys a remedy in relation to the breaches of contract I have found[34].
[33] Gould v Johnson (1702) 2 Salk 422.
[34] McKain v. RW Miller & Co (SA) Pty Ltd (1991) 174 CLR 1 per Mason J at para 19.
The time limit for bringing claims for breach of the statutory warranties under the DBCA is governed by that Act which states, relevantly at section 51:
51 Proceedings for breach of warranties
(1) A proceeding for a breach of a warranty under this part for a
regulated contract must be started within 6 years and 6 months
after—(a) the subject work is finished
The Applicants are also prevented, by virtue of this section from obtaining a remedy under the DBCA in relation to any of the building work which, I find, was finished in 2001.
The cause of action in regard to negligence arises when a patent defect is caused. It arises when a latent defect is discovered or becomes manifest; that is discoverable by reasonable diligence[35]. The time limit is six years from the cause of action arising.
[35] Bryan v Maloney (1995) 182 CLR 609, Clarkson v Modern Foundries Ltd.
[1957] 1 WLR 1210.
The Respondents argue that the height of the slab above finished ground level, the issue with the ORG and the issue about the downpipes are all patent defects, that is that they ought to have been obvious to the Traceys from the date of construction of the house or presumably upon reasonably diligent inspection thereafter.
I accept this submission in relation to the height of the slab above finished ground level. Any inspection of the plans would have indicated the intended finished height to the Traceys. That the slab was in fact at least 80mm lower than intended, as I have found, should have been obvious to the Traceys. This is particularly the case where they maintain that the slab was as low as 100mm above finished ground level from completion of construction[36]. I find on that basis that this aspect of the claim is statute barred and the Traceys are denied a remedy in relation to the breach of a duty of care I have found in this issue in relation to both Olindaridge and Rodney Wagner
[36] Applicant’s submissions filed 9 May 2014 at page 15.
In relation to the height of the ORG, I find that this was a latent defect which did not become known to Mrs Tracey until 2012. There was nothing to sufficiently put her on notice about the defect prior to that time, despite hearing some “gurgling” in the drain at earlier times. The height of the ORG relative to the shower drain is not readily apparent, and had to be assessed with a dumpy level[37]. The claim for breach of duty in relation to this issue is not statute barred.
[37] Exhibit 10.
The issue regarding the downpipes falls into the same category as the ORG. Whilst one can readily observe the downpipes on the exterior of the house that is not the information required to recognise that there is a defect. The number of downpipes to be installed is not readily ascertainable from the plans. I accept that the defect only came to the Traceys notice during the course of these proceedings. The claim for breach of duty in relation to this issue is not statute barred.
In summary then, it is only claims by the Traceys against Olindaridge and Mr Rodney Wagner for breach of duty in tort in relation to the ORG and the downpipes which are able to be pursued at this point.
Having made these findings I will remit the matter for further determination of the issues I have identified as outstanding. Costs of the Application so far are reserved.
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