Tracey v Rodney Wagner Olindaridge Pty Ltd
[2013] QCATA 48
•21 February 2013
| CITATION: | Tracey v Rodney Wagner Olindaridge Pty Ltd [2013] QCATA 048 |
| PARTIES: | Todd Anthony Tracey Martha-Lee Tracey (Applicants/Appellants) |
| v | |
| Rodney Wagner Olindaridge Pty Ltd (Respondents) |
| APPLICATION NUMBER: | APL172-12 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr Charles Brabazon QC, Member |
| DELIVERED ON: | 21 February 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The appeal is allowed. 2. The orders made on 8 May 2012 are set aside. 3. Reserve any issues about costs, including the costs of the appeal. |
| CATCHWORDS: | APPEAL – DOMESTIC BUILDING DISPUTE – where there was a building contract – where there was alleged defective work that caused structural damage – where the builder was the sole director of the building company – where the builder was also named as a respondent to the proceedings – whether the builder is personally liable for the defective work – whether the builder owes the same duty of care as the building company Council of the Shire Noosa v Farr & Ors [2001] QSC 60, cited |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (‘QCAT Act’).
REASONS FOR DECISION
This appeal raises an interesting and important issue – does the builder of a domestic house owe a common law duty to the owners to take reasonable care in its construction, in addition to any contractual duties imposed by the building contract?
In this case, Mr Wagner, a builder, is the sole director of a building company called Olindaridge Pty Ltd. Is he personally liable for defects in a house which, it is claimed, resulted in serious structural damage by termites?
The home owners have joined Mr Wagner as a defendant to their claims. He says that he should be released from further proceedings, as all claims should be directed to the company of which he is a director – Olindaridge.
Olindaridge is the builder, according to a Master Builders Contract Schedule. (That is part of a larger standard contract, which must contain further terms and conditions. However, those terms and conditions were not filed in the Tribunal).
Mr and Mrs Tracey thought that they were entering into a contract with Mr Wagner, and that he was “trading as Olindaridge Pty Ltd.” He was the man who was in charge of the house building, and he did most of the work. They also say that he was the man who made mistakes when installing a termite barrier – mistakes which have led to this litigation.
The Contract Schedule contains some careless details, which could have led to their confusion. On the first page, “[t]he builder” is described as “OLINDARIDGE PTY LTD” trading as “R. K. & C. A. WAGNER”. At the bottom of the page, the “SIGNED by the Builder” entry contains the name, “Rodney K Wagner”.
On a following page, the builder is shown as “OLINDARIDGE P/L”, trading as “RK & GA WAGNER”. On page 4, the “Builder’s Representative” is accurately named as “RODNEY K. WAGNER”.
On the final page, this appears:
Signed for and on behalf of RODNEY K. WAGNER
the Builder NameRodney K Wagner
SignatureThe QCAT Member pointed out, in a judgment of 8 May 2012, the distinction between an individual and a company – they are separate legal entities. She went on – “[t]he individual does not owe the same duty or obligation as the company unless there is an agreement as to that effect or the duty is imposed by law.”[1] The learned Member quoted some remarks by Chesterman J in the Supreme Court:
[i]t will not ordinarily be the case that directors, even of “small one man companies”, will assume personal responsibility to a customer with whom they transact business on behalf of the company. The ordinary expectation of persons is that the company, not the individual, assumes responsibility for the consequences of not effecting the transaction with reasonable care.[2]
[1] Tracey and Anor v Wagner and Anor [2012] QCAT 193 at [6].
[2] Council of the Shire Noosa v Farr & Ors [2001] QSC 60 at [86].
The QCAT Member went on to say:
Mr and Mrs Tracey do not point to any specific activity by Mr Wagner that indicates he was doing anything more than acting as the company’s agent. There is nothing to indicate that he accepted a personal liability to them for the quality of the work performed by the company.
Mr and Mrs Tracey could have gone further and asked Mr Wagner to sign the contract both personally and as agent for Olinderidge Pty Ltd [sic]. There is no evidence that Mr Wagner did sign in his personal capacity and there are many good reasons why he would resist doing so.
It is not enough for Mr and Mrs Tracey to say that he did the work. I find that Mr Wagner’s work was conducted as agent of the building contractor, Olinderidge Pty Ltd [sic].[3]
[3] Tracey and Anor v Wagner and Anor [2012] QCAT 193 at [8]-[10].
Therefore, the claims against Mr Wagner were dismissed.
In their appeal, Mr and Mrs Tracey say that, “we want Mr Wagner to remain as a respondent in our case”.
The reasons given by the QCAT Member were an appropriate response to the arguments put before her.
However, there is another dimension, not raised before the Member, which has to be taken into account. The laws of contract no longer supply the only answers to this situation. Other now established legal principles have to be taken into account. They might make a significant difference to the end result. The remarks by Chesterman J are, no doubt, generally appropriate, but they do not consider this situation.
The decisions of the High Court of Australia in two cases are important.[4] Those cases discuss the principles of the law of negligence that apply to defects in dwelling houses.
[4]See Bryan v Maloney (1995) 182 CLR 609; Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 (‘Woolcock’).
In particular, Bryan v Maloney[5] established the basic principle “that the builder owed the first owner a duty of care to avoid economic loss of that kind”[6] - that is, losses caused by defects in construction.
[5] (1995) 182 CLR 609.
[6]Woolcock at [14] per Gleeson CJ, Gummow, Hayne and Heydon JJ.
In Woolcock, Gleeson CJ, Gummow, Hayne and Heydon JJ took into account the vulnerability of a home owner – a reference to home owners’ inability to protect themselves from the consequences of a builder’s want of reasonable care.[7]
[7]Ibid.
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[8] approved those principles.[9] 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.”[10]
[8] (1995) 182 CLR 609.
[9]Ibid; Woolcock at [65].
[10]Woolcock at [92].
The New Zealand cases reveal a similar approach. In Morton v Douglas HomesLtd[11], 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[12], 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.
[11] [1984] 2 NZLR 548.
[12] [2006] NZHC 1657.
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. Mr Wagner must remain as a defendant.
The proper course is to set aside the present orders so that Mr Wagner remains a defendant to the owners’ claims in these proceedings.
Order that:
1.The appeal is allowed.
2.The orders made on 8 May 2012 are set aside
3.Reserve any issues about costs, including the costs of the appeal.
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