Tucker v Queensland Building and Construction Commission
[2014] QCAT 35
•28 January 2014
| CITATION: | Tucker v Queensland Building and Construction Commission [2014] QCAT 35 |
| PARTIES: | Mr Jeffrey Tucker (Applicant) |
| v | |
| Queensland Building and Construction Commission (formerly the Queensland Building Services Authority) (Respondent) |
| APPLICATION NUMBER: | GAR013-12; GAR415-12 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 15 July 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Paratz |
| DELIVERED ON: | 28 January 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The decision of the Queensland Building and Construction Commission dated 14 May 2012 is set aside and substituted as follows:- (a) Items 3, 4 (of items 7-13) and 20 (of items 7-13) in the disputed issues list (for the 14 May 2012 Decision) are category 1 defects and accepted under the insurance policy. (b) Items 9, 11, 12, 13, 18, 21, 31, 32, 36, 40, 41 and 42 (of items 7 – 13) in the disputed issues list (for the 14 May 2012 Decision) are category 2 defects and accepted under the insurance policy. 2. The decision of the Queensland Building and Construction Commission dated 15 November 2012 that items 1, 2 and 3 in the disputed issues list are not category 1 defects is confirmed. 3. If either party wishes to seek costs:- (a) The party seeking costs is to file in the Tribunal and give to the other party a clear description of the costs sought and submissions in support by 4pm on 21 February 2014. (b) The other party is to file in the Tribunal and give to the other party submissions in reply by 4pm on 7 March 2014. (c) The issue of costs will be determined on the papers not before 7 March 2014. |
| CATCHWORDS: | Building dispute – extension of time – category of defects – claim under insurance policy –review of decision of Queensland Building Services Authority - discretion to extend time under insurance policy – bankruptcy of builder – whether prejudice is caused by delay Queensland Building Services Authority Act 1991 (Qld) s 86 Ackermann v QBSA (2006) QCCTB 4 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Simon Taylor of Counsel instructed by Shand Taylor, Solicitors |
| RESPONDENT: | Mr Robert Lovrincevic, Senior Lawyer, Queensland Building Services Authority |
REASONS FOR DECISION
Mr Tucker was the owner of a block of land at 29C Maidenhair Place, Willowvale in Queensland.
He and Carol Tucker entered into a “Residential Building Contract” with “Living Design Homes Pty Ltd” dated 19 January 2006. The contract detailed the construction of a high-set home at the property for the total value of $419,526. Attached to the Contract was a document which stated that Living Design Homes Pty Ltd utilises other persons to enter into the Contract, including “Gavin Wright Builders”.
The records of the Queensland Building Services Authority (now known as The Queensland Building and Construction Commission, and referred to hereafter as the Commission) disclose a “Construction Notice” of the property which identified “Gavin John Wright”, bearing Licence Number 25333, as the contractor. The value of the proposed new dwelling construction was identified on the Construction Notice as $419,526 and the period of insurance cover was stated as 5 April 2006 to 5 October 2012.[1]
[1] Commission statement of reasons GAR415-12 at [32] – [34].
The records of the Commission also discloses in its Participant Profile, that the contractor entered into bankruptcy on 12 November 2010, and that administrators were appointed to Living Design Homes Pty Ltd on 23 May 2007.
There are two Review proceedings relating to these matters. The Tribunal ordered on 24 January 2013 that the two applications GAR013-12 and GAR415-12 be heard together.
The hearing of evidence was conducted before me over a full day on 15 July 2013, concluding at 5:30pm. Oral submissions were not made, and it was agreed that written submissions were to be made, and I made directions as follows:
1.The Respondent, the Queensland Building Services Authority, is to file closing submissions in the Tribunal, and give a copy to the Solicitors for Mr Jeffrey Tucker by 4pm on 09 August 2013.
2.The Applicant, Mr Jeffrey Tucker, by his Solicitors, is to file closing submissions, and submissions in response, in the Tribunal, and give a copy to the Queensland Building Services Authority by 4pm on 30 August 2013.
3.The Respondent, the Queensland Building Services Authority, is to file submissions in reply, if any, in the Tribunal, and give a copy to the Solicitors for Mr Jeffrey Tucker by 4pm on 24 September 2013.
4.The closing submissions are to address the costs issues as to subsidence raised in paragraphs 10, 26, 43 and 50 of the Applicant’s chronology which has been handed up on the hearing. The chronology shall form part of the Applicants submissions.
5. If any party wishes to address as to costs generally, that shall be included in their closing submissions.
6.Leave is given to either party to inspect the Tribunal files in these matters, and to make copies of any exhibits, at any time until 24 September 2013.
7.The decision in this matter will be delivered after all submissions are received, and not before 25 September 2013.
Those directions were varied by consent by further directions made on 28 August 2013, that:
1.The Directions made by the Tribunal dated 15 July 2013 be varied in accordance with these directions.
2.The applicant, Jeffrey Tucker, by his solicitors, is to file closing submissions, and submissions in response, in the tribunal and give a copy to the Queensland Building services authority by 4.00pm on 6 September 2013.
3.The respondent, Queensland Building Services Authority, is to file submissions in reply, if any in the Tribunal and give a copy to the solicitor for Jeffrey Tucker, by 4.00pm on 1 October 2013.
The Commission filed final submissions and submissions in response to cost application of 44 pages on 1 August 2013. Mr Tucker filed closing submissions and submissions in response of 30 pages on 6 September 2013. The Commission filed submissions in reply of four pages on 19 September 2013.
I have been provided with a 15 page chronology of events. The issues in dispute were set out in an agreed three page “Issues in Dispute” schedule.
Mr Tucker has sought costs as outlined in items 10, 26, 43 and 50 of the chronology.
At the hearing, evidence was given for Mr Tucker by himself, and an expert, Mr Andrew McCarthy, who is a registered builder in New South Wales, a workplace trainer and assessor, and has been a building instructor for seven years. Evidence was given for the Commission by Mr Stephen Ferguson who is a building inspector with the Commission, and Ms Josie Strazzeri who is an assessment officer within the insurance division of the Commission.
This is the decision in regard to both applications.
GAR013-12
Mr Tucker lodged a complaint form with the Commission on 29 August 2011 alleging 50 items of defective or incomplete building work.
The Commission advised Mr Tucker on 19 December 2011 that he was eligible for insurance assistance, but that only one item of work in respect of ventilation was approved. Mr Tucker filed an application on 5 January 2012 to review that decision, which is GAR013-12.
The Commission further notified Mr Tucker on 14 May 2012 that it had reviewed the matter, and that the claim under the Queensland Home Warranty Scheme was wholly disallowed. For the purposes of these proceedings, that decision is known as ‘the first decision’.
In GAR013-12 Mr Tucker seeks orders that:
(a) Items 3, 4, 5 and 14 and items 4, 19, 20 and 34 (of items 7-13) in the disputed issues list are category 1 defects and accepted under the Insurance Policy, and
(b) Items 9, 11, 12, 13, 18, 21, 31, 32, 36, 40, 41 and 42 (of items 7-13) in the disputed issues list are category 2 defects and accepted under the Insurance Policy.
GAR415-12
Mr Tucker lodged a complaint form with the Commission on 26 September 2012 alleging four items of defective or incomplete building work.
The items were:
(1)Water/moisture penetration. Lack of barrier to the underside of slab. Internal garage/workshop.
(2)Brickwork weepholes. Not completed to building code requirements. Weephole guards missing.
(3)Spa pump fitted leaving holes accessed from the sub-floor and poses a Health and Safety risk.
(4)Rear of dwelling. Subsidence. Please see Engineers report from Jeffrey Hills and associates. Subsidence/foundation movement.
The Commission advised Mr Tucker on 15 November 2012 that given the findings of the Commission’s investigation and determination that the structure is performing within expected tolerances, the Commission did not propose any further action at this stage and had closed its file on the matter (‘the second decision’).
Mr Tucker filed an Application on 10 December 2012 to review that decision of the Commission to refuse to direct the rectification of building work, which is GAR415-12.
In GAR415-12 Mr Tucker seeks orders that:
(a) Items 1, 2 and 3 in the disputed issues list are category 1 defects and a direction to rectify be issued
(b) The Commission pay Mr Tucker’s costs on an indemnity basis for the costs he has incurred in relation to the “subsidence’ issue, from the date the Commission was first provided with evidence that its resistance to the subsidence issues was bound to fail until the date the applicant was granted indemnity by the Commission under the scheme.
Review
The Tribunal has jurisdiction to review the decision of the Commission.[2] On review, the Tribunal may confirm or amend the decision, set aside the decision and substitute its own decision; or set aside the decision and return the matter to the decision-maker.[3]
[2] Queensland Building Services Authority Act 1991 (Qld).
[3] Queensland Civil and Administrative Act 2009 (Qld) (QCAT Act), s 24.
The Tribunal has all the functions of the decision-maker for the reviewable decision.[4] The purpose of the review is to produce the correct and preferable decision, following a fresh hearing on the merits.[5] The Tribunal stands in the shoes of the decision-maker and makes the decision afresh.
[4] Ibid, s 19(c).
[5] Ibid, s 20.
It is agreed that the first decision is a “reviewable decision” under s 86(1)(h) of the Queensland Building Services Authority Act 1991 (Qld) (‘QBSA Act’) which allows the Tribunal to review the Commission’s “decision to disallow a claim under the statutory insurance scheme wholly or in part”. The relevant policy is Insurance Policy Conditions Edition 6, effective 1 September 2003.
The Commission submits that the second decision is a ‘reviewable decision” under s 86(1)(e) of the QBSA Act which allows the Tribunal to review the Commission’s decision to not direct rectification or completion of tribunal work.[6]
[6] Commission Submissions dated 1 August 2013 at [77].
Matters to be decided
This matter has been difficult to unravel, as there are multiple lists of complaints extending over several years, with different numberings on the items of complaint.
Generally, the Commission is saying as to defects, that items that have been claimed as category 1 defects are actually category 2 defects or are not defects at all; and that Mr Tucker is out of time to claim category 2 defects.
In addition there is a dispute as to costs in relation to a “subsidence issue” to be decided.
In GAR013-12 the matters to be decided are:
a) whether the defects were correctly classified;
b) whether Mr Tucker complied with the time limits of the policy;
c) whether Mr Tucker should be granted an extension of time;
d) whether payment should be made.
In GAR415-12 the matters to be decided are:
a) whether the 3 defects were correctly classified;
b) whether costs should be allowed on the “subsidence issue”.
Defect categories
The following definitions under Part 9 of the Insurance Policy relate to the expressions used in this decision:
“category 1 defect” means a defect which may:
(a)allow water penetration into a building
(b)adversely affect the health and/or safety of the occupants
(c)adversely affect the structural adequacy of the building; or
(d)adversely affect the serviceability, performance or functional use of the building
“category 2 defect” means a defect which is not a defect of another category and which:
(a)results from a failure of the contractor to meet the reasonable standards of construction and finish; or
(b)is of a kind which commonly occurs during the “settling in” period of a new building
The first decision
Mr Tucker alleges that each of the defects covered by the first decision claimed in GAR013-12, first became evident within the prescribed periods under Part 2.4 of the Insurance policy,[7] namely:
(1)for the category 1 defects, within 6 years and 6 months after date of the Contract (19 January 2006); and
(2)for the category 2 defects, within 6 months after the date of practical completion (19 December 2006 in accordance with the Commission’s submissions).
and that although the Commission was notified of the defects outside the prescribed periods under part 2.5 of the Insurance Policy that:
(3)the Commission has already exercised its discretion to extend time or waived strict time compliance with the time requirements and cannot now rely upon the strict insistence of time, or
(4)the complaints ought to be accepted in the exercise of the discretion afforded by part 2.5 of the Insurance Policy as there are satisfactory explanations for his delay and there is no prejudice to the Commission.
[7] Mr Tucker’s closing submissions filed 6 September 2013 at [7].
I shall deal with each of the category 1 claimed items in GAR013-12 in turn, referring to the “Issues in Dispute” schedule.
Item 3
Item 3 is “Block wall not taken up to joists as per plans. Rainwater has permeated walls – split-level retaining block wall”.
Mr Tucker says Item 3 is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says it is no defect – contractual matter, and Mr Tucker is out of time to make a complaint.[8]
[8] Schedule of issues in dispute.
Mr McCarthy said that the block wall is clearly shown on the plan as butting onto the joist.[9] He said the distance as constructed between the top of the block wall and the joists would be approximately 1200 mm from the top of the block wall to the underside of the joist. He drew a diagram of the wall and surrounds as constructed, which was marked as Exhibit 3.
[9] Transcript page 29, lines 25-30.
Mr Ferguson said that he deemed this item as contractual as the blocks hadn’t gone as far up as the joists as shown on the architectural plans, and the floor joist was supported by an adjacent timber frame approximately 200 mm away.[10] He deemed it as not being a defect in that the block wall was high enough to be able to cope as a retaining wall in that it was higher than the (indistinct) it was holding back and also that any moisture would dissipate around it. He didn’t believe it was a structural issue as he did not believe it was load bearing, and there was no evidence of it cracking or moving.
[10] Transcript page 134, line 19 to page 135, line 15.
In an affidavit Mr Ferguson said that at the time of his inspection the wall was performing adequately, and he was unable to find any evidence of moisture to the internal area.[11]
[11] Affidavit of Mr Ferguson dated 28 September 2012 at page 7.
Mr Tucker submits that that Mr Ferguson’s evidence that the as-constructed dwelling does not require the block wall to support the floor loads ought not to be given significant weight, as there is no evidence to suggest Qld Structural Engineering was consulted on and approved any change by the builder; and he had not undertaken any structural investigations to determine the structural adequacy of the alternate timber framing support; and there was no evidence of a frame certificate being issued.[12]
[12] Tucker submissions dated 6 September 2013 at [12(d)].
Mr McCarthy has responded that there is an engineering issue as the building approval would have been issued with the plans showing the block wall as the structural component holding up the floor joists, and for a builder to change this requires re-engineering and re-certification. In his view the work is primary building work under the meaning in Queensland Building Services Authority Regulation 2003 (Qld) Division 2 s 11 as the block wall is part of the construction of the residence. He considers the correct classification is as a category 1 defect.[13]
[13] Exhibit AJM-1 to Affidavit of Mr Mc Carthy sworn 1 November 2012 at page 5.
Mr McCarthy’s evidence was that water was entering the building through the block wall:[14]
Mr Taylor: … So the first one is the item 3 “Block wall not taken up to joist as per the plan. Rain water has permeated walls”. Within your affidavit of the 19th July 2012 you basically say – your point 7, you talk about it there. For the benefit of the Tribunal, could you describe what this issue is.
Mr McCarthy: Basically, water was getting into the building. It’s causing problems on the internal of the building.
Mr. Taylor: Okay. And whereabouts?
Mr McCarthy: It’s coming – there were two areas of concern. One is through the brick wall – the brick retaining wall at the back of the garage – or the – if you look at the front garage from the left-hand side. The other one is the issue of water coming up through the slab into the garage.
[14] Transcript page 16, line 36 to page 17, line 4.
Mr McCarthy argued that 2.2 of the Building Code of Australia 2006 talks about safeguarding “The objective of … waterproofing this section is to safeguard occupants from illness or injury and protect the building of damage caused by (2) the external moisture entering the building and the accumulation of internal moisture in a building”, and that a breach of this would be a category 1 defect.[15]
[15] Transcript page 17, lines 6-11.
Mr Ferguson noted that the policy provides that a category 1 defect is defined as something that adversely affects the structural performance of the dwelling. He described the difference between a Cat 1 and Cat 2 “in a nutshell” as:
I think the word “adversely” is the main difference; something that adversely affects the performance of the building, as opposed to something that may be a defect, but will not adversely affect – adversely (indistinct) the structural (indistinct).[16]
[16] Transcript page 133, lines 35-41.
I accept that the failure to build the wall to the joists is a category 1 defect. There is a clear failure to complete the construction of a load-bearing wall in accordance with the approved plans. This is clearly a structural item, and absence of a structural item must be adverse to, and adversely affect, the integrity of the structure as a whole.
I also accept the evidence of Mr McCarthy that water has entered the building through the wall, and that this is another basis to find a category 1 defect in the wall.
The Commission argues that should the Tribunal make a finding that this item is a defect, then there has been no reasonable explanation for Mr Tucker’s delay in bringing it to the Commission’s attention. They point out that the delay was from the rectification works by the former licensee (June 2008) to the date it was brought to their attention (sometime after 16 June 2011).[17]
[17] Commission Submissions dated 1 August 2013 at [22].
Mr Tucker however says that he first became aware of the defect in December 2006 and that it was included in the first complaint dated 1 November 2007 as item 27.[18]
[18] Exhibit JST1 to the Affidavit of Mr Tucker sworn 1 November 2012, page 2.
The Commission agrees that that this item was included as item 27 of the December 2006 complaint list, and was subsequently inspected and assessed by Mr Hollyman, a former building inspector employed by it. Mr Hollyman deemed the retaining wall to be functioning correctly, contained adequate drainage incorporated within the design, and held no load bearing capacity, and stated in his report that there was “no requirement to extend the wall beyond the existing height”.[19]
[19] Commission Submissions dated 1 August 2013 at [19.2.2].
It is clear therefore that that the wall was brought to the attention of the Commission in November 2007, which was within time as argued by Mr Tucker.
The Commission submit that even if the claim is found to be a defect, and was first evident within the timeframes of part 2.4 of the Insurance Policy, that there has been no reasonable explanation for Mr Tucker’s delay in bringing the item to the Commission’s attention from the date of the rectification works to when it was again brought to the Commission’s attention sometime after 16 June 2011.
This alternate argument of the Commission appears circular, as it acknowledges that Mr Tucker did complain within time, but when the Commission deemed (wrongly as I have found) that it was not a structural defect, argues that he did not complain again. The situation is that the Commission was made aware of the defect, but they chose to not accept it as a defect.
I therefore find that this item is a category 1 defect, and the claim in respect of it was brought within time.
Item 4
Item 4 is “No steel screens, weep-hole protection, cladding type? – Bush fire requirements”.
Mr Tucker says Item 4 is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says it is no defect – contractual matter, and Mr Tucker is out of time to make a complaint.[20]
[20] Schedule of issues in dispute.
Mr McCarthy argued that this was a category 1 defect on the following basis:[21]
Mr McCarthy: Okay. The – the building is in a bushfire zone, okay, which means that it must be protected from bushfire, obviously, and fire fronts. It’s a level 1 construction, which is a building term not a certification or anything term It’s a level 1. It comes straight out of the Australian Standards and it says that this and – the level 1 is called up in all the drawings, by the way, as well. So it’s called up as a level 1 on all the drawings. From the certifier, the approved plans, it’s called up as a level 1. Okay. And a level 1 needs to be protected from bushfire, obviously because of positioning of the building, and one of the provisions – one of the provisions to protect a building from bushfire is a – steel screens and the like in weepholes. The idea of those steel screens is to stop embers or sparks getting through into the timber behind the brick wall and start a fire. That’s one of the provisions of a bushfire.
[21] Transcript page 31, lines 36-47.
Mr Ferguson agreed that the builder had not installed this bushfire protection, but said that he was looking for defective installation. He was asked if the fact that the Australian Standard was called up on the documents would take the responsibility back to the builder, and responded:[22]
Mr Ferguson: It could do, if the builder was contracted to put them in. From my certification experience, what usually happens is the builder puts a set of plans in to a certifier. The certifier does his checks and planning check. The planning check will bring up the project as being in a bushfire zone. The certifier then has to enact the BCA provisions for bushfire, where he’ll go out and do an assessment of site under 3959, and then assess the level of the bushfire – they (indistinct) a different thing, bushfire-prone areas (indistinct) bushfire attack level. Sorry. Like, he’ll assess the level of bushfire attack level, and then – and then make an assessment of the sort of protection it needs.
Member: but in this case, where the plan calls up the standard …
Mr Ferguson: Yeah. The certifier would have stamped that plan as part of his conditions of approval. Yeah.
Member: All right. Yes.
Mr Ferguson: But I’m not 100 per cent sure without contractual – contractually, who was to provide the screens, because what happens then, again from my certification experience, I’ve done quite a few bushfires, the builder then realises he has to install screens. He then does a variation to the owner to put them in. Not the owner (indistinct) raise the variation. It changes the contract, because, generally speaking, the just sell the – they just contract the house at whatever the plans were, as (indistinct) certification. It may not have included the bushfire.
[22] Transcript page 141, lines 9-32.
The builder can only be expected to comply with the terms of the contract, and the specifications and plans which are part of it. There is no specific provision in the contract for works as referred to in this item. I accept Mr Ferguson’s opinions in this regard
The builder therefore cannot be said to have conducted defective building works by not providing works that were not stipulated in the contract. I therefore disallow this claim.
Item 5
Item 5 is “Joists need to be treated – joists”.
Mr Tucker says Item 5 is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says it cannot determine whether untreated joists are a category 1 or category 2 defect, and Mr Tucker is out of time to make a complaint.[23]
[23] Schedule of issues in dispute.
Mr McCarthy argued that because the joists were painted, and there is no confirmation of the type of timber used, that it is a category 1 defect:[24]
Mr McCarthy: So what we’re talking about here is basically – joist incorrect. Item 5. Correct? There is no way of telling what timber has been used in this dwelling which is of a concern, especially going on the decking, etcetera, where the timber needs to be of a certain type so that rot or decay does not affect its performance down the track. I’ve called it a category 1 defect because we have no idea what timber was used, we have nothing wrong with the original absorber. My concern was that if I did not raise – this point – as we know there’s been some very serious accidents with decks, etcetera, in Brisbane and other places. As a building inspector and as a building inspection I felt it was in my best interests to raise the point that he had no idea what timber was used. He had no idea whether it complies with Australian standards, so down the track this may become a health and safety issue, and that would be a building issue and it would also be an issue that once again I felt it was only right to (indistinct) about.
[24] Transcript page 36, lines 1-14.
Mr Ferguson said that there were probably 20 joists, and possibly 30, and that there was no evidence to show that there was any deterioration. He noted that:[25]
Mr Ferguson: I guess correctly, if we were going to make a direction against the builder we’d have to prove (indistinct)
Mr Lovrincevic: So would you – if you were doing a basement inspection, would you have to for each joist?
Mr Ferguson: I guess correctly, if we were going to make a direction against the builder, we’d have to prove that (indistinct)
Mr Lovrincevic: Okay. Did they appear to be functioning correctly, these joists?
Mr Ferguson: I couldn’t see any issue with (indistinct)
Mr Lovrincevic: Any issue at all?
Mr Ferguson: (indistinct)
[25] Transcript page 143, lines 22-36.
My understanding of Mr Ferguson’s evidence (as the transcript is deficient at several important places) was that he saw no issues with the performance of the joists.
The claimant has to make out a case that an item is a defect. Mr Tucker has not raised any evidence suggesting that the joists are defective in any way, or not within specification. His argument is mere conjecture that the joists may be defective.
I am not satisfied that any defect has been shown in the joists, and I disallow this claim.
Item 14
Item 14 is “No certificates for construction given. Termite protection etc – Certificates”.
Mr Tucker says Item 14 is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says it is no defect, and Mr Tucker is out of time to make a complaint in relation to a category 1 or category 2 defect.[26]
[26] Schedule of issues in dispute.
Mr Tucker argues that final certification for the dwelling has not been achieved, as the certifier engaged by him considers there are outstanding items that preclude final certification being issued, including a failure to provide all certificates.
He submits that “the defect is in the primary building work undertaken by the builder, where the building work is the construction of a residence and the builder has failed to achieve, or establish that he has achieved, all the requirements for the construction of the residence.[27]
[27] Tucker submissions dated 6 September 2013 at [20(d)].
He refers to Leo v Queensland Building Services Authority[28] as authority for the proposition the where it was found that the required certificates did not exist, that this was properly the subject of a direction to rectify.
[28] [2012] QCAT 640.
The Commission refers to the evidence of Mr Ferguson that the issuing of certificates is not building work within the meaning of the Queensland Building Services Authority Regulation 2003 (refer to s 5(1)(ze) and s 5(1)(e).[29]
[29] Commission Submissions dated 1 August 2012 at [74].
The reference by Mr Ferguson is in an affidavit.[30] The sections of the regulation which he refers to were repealed in 2013.[31] A similar provision is to be found in Schedule 1AA (Section 5) Clause 34 of the current regulation, which refers to the work of private certifiers. That does not explicitly refer to the work of a builder.
[30] Affidavit of Mr Ferguson sworn 28 September 2012, page 24.
[31] 2013 SL No 244 [36].
The finding in Leo v Queensland Building Services Authority as to certificates is distinguishable from this case. The learned Member said in that case:-
[83]The definition of ‘building work’ in the QBSA Act (QBSA Act, Sch 2, ‘building work’ (fa)) specifically includes contract administration work in relation to a construction designed by the person. It is not controversial that Mr Leo designed the building. Building work which is defective or incomplete may be the subject of a direction to rectify. The building work is incomplete in that the required certificates do not exist. Therefore, I am satisfied that the item covers matters which may properly be the subject of a direction to rectify.
In this case, the builder did not design the building, so that aspect of building work does not apply.
I am not satisfied that it has been shown that a failure to obtain certificates by the builder in this matter, who was acting solely as a builder, is a defect.
I therefore do not allow this claim.
Item 4 (of items 7-13)
Item 4 (of items 7-13) is “Mains junction box in garage trips out during heavy rain – rainwater is accessing the mains due to retaining wall being too low and water breaches the wall”.
Mr Tucker says Item 4 (of items 7-13) is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says that electrical work under the Electrical Safety Act 2002 is not building work within the meaning of the Queensland Building Services Regulation 2003, and Mr Tucker is out of time to make a complaint in relation to a category 1 or category 2 defect.[32]
[32] Schedule of issues in dispute.
The mains junction box is mounted on the inside wall of the garage, adjacent to the block wall earlier discussed as item 3. I have found that the block wall is leaking and is a category 1 defect, and the claim is within time.
Mr McCarthy argued that this defect is not electrical work:[33]
Mr McCarthy: The electrical work has nothing to do with the water penetrating the building (indistinct) box. That’s my argument. That there’s water penetrating the building and that’s affecting the electric work, yes. I agree.
Mr Taylor: Yes
Mr McCarthy: But it has nothing to do with the actual electrical work itself.
Mr Taylor: So what you say is the trip out of electricity is, I guess, the symptom, not the cause.
Mr McCarthy: That’s right.
[33] Transcript page 20, lines 35-46.
Mr Tucker gave evidence that the rainwater that tripped the mains was first evident in 2007. He said he knew it was rainwater that tripped the mains because when he went to switch it back on, it was wet.[34]
[34] Transcript page 101, line15.
Mr Ferguson did not investigate whether water was entering the mains box, or investigate any cause of entry because he said it needed an electrician to do so:[35]
Mr Taylor: But you agree there’s water coming through?
Mr Ferguson: I don’t know what’s causing it. It could be anything; you know, I’m not an electrician.
Mr Taylor: Okay
Mr Ferguson: They need an electrician to open up the box and have a look.
Mr Taylor: So in respect of this issue, the mains junction box, no actual search of any type – no actual inspection was actually undertaken.
Mr Ferguson: yeah. Not (indistinct) can’t open up (indistinct) have a look.
[35] Transcript page 168, lines 16-29.
I accept the evidence of Mr Tucker that water was entering the switchboard. Mr Ferguson does not contradict that, and he did not make any extensive investigation or cause one to be made.
There could hardly be a more compelling defect to categorise as category 1, as adversely affecting the health and/or safety of the occupants, than water entering a live mains junction box.
I am satisfied that water is entering the mains junction box as a result of a defect in the wall, and that this is a category 1 defect.
Mr Tucker says that the defect was first evident around December 2007.[36] This is well within six years and six months of the date of contract of 19 January 2006. I consider this claim is within time.
[36] Transcript page 102, line 21.
I therefore find this item is a category 1 defect and is within time, and allow the claim.
Item 19 (of items 7-13)
Item 19 (of items 7 – 13) is “Cracks appear in concrete floor appear wet after heavy rain – 1st floor, Garage”.
Mr Tucker says Item 14 is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says it is no defect, and Mr Tucker is out of time to make a complaint in relation to a category 1 or category 2 defect.[37]
[37] Schedule of issues in dispute.
This is perhaps the most contentious defect. It relates to the concrete slab of the garage floor. Mr Tucker says that there is some fault in the construction of the slab which is causing water to come up through it. The Commission says that is not the case, and water is just naturally flowing in from the adjoining driveway area.
Mr McCarthy said that there was moisture on the slab which he measured:[38]
Mr McCarthy: A visual inspection – I took a moisture reading and my moisture readings are all slab. And as plainly evidence, there is also moisture staining and also moisture rising. You can see the moisture. But I also took a moisture reading with my moisture meter.
Mr Taylor: Okay. And what sort of meter do you use?
Mr McCarthy: It’s a tramex moisture meter. It’s a general purpose one.
Mr Taylor: Okay. And what reading did you take?
Mr McCarthy: It was high. It was a high reading. It actually went off the scale, to be quite honest.
[38] Transcript page 18, lines 31-44.
He argued that the defect had the potential to adversely affect the structural adequacy of the building:[39]
Mr McCarthy: Obviously, you have a timber slab – sorry, timber frame for a start sitting on the garage floor. So, obviously, that’s going to cause rot and decay at some stage. It may not be obvious immediately, but it will happen. Also, obviously, it affects the use of the building because the slab is constantly wet which means that they can’t store anything in that area. It also means it would be difficult to get out of your car or whatever. If you had, for example, bare feet, you’d have to put something on your feet to walk on the slab because it’s wet.
[39] Transcript page 19, lines 7-14.
In cross-examination, he said that the moisture was only where there cracks in the slab. He said the cracks were between one or two mms which was acceptable, but that one was growing.
He was questioned as to the suitability of the particular moisture meter which he used, and was adamant that it was suitable to test moisture on concrete. He said that the meter has limitations on concrete, but that the instructions don’t say it is not to be used on concrete.[40]
[40] Transcript page 50, line 21.
His view was that there was either no membrane below the slab, or it had been penetrated, which was allowing the water to come through the slab:[41]
Mr Lovrincevic: No problems. Earlier you stated that, in your opinion, there’s either no membrane below the slab or it’s been penetrated.
Mr McCarthy: That’s correct.
Mr Lovrincevic: Is that correct? Okay. Say for example, there was membrane in place and it wasn’t penetrated, what could be causing that, in your opinion, your expert opinion?
Mr McCarthy: I can see no other reason.
Mr Lovrincevic: There’s no other reason there’s water. So that’s – therefore, that’s the – in your opinion, that’s the reason why there’s water because it either has to be membrane underneath – sorry a lack of membrane underneath, or there’s holes in the membrane.
Mr McCarthy: Or there’s holes in the membrane, or there’s a problem with depth. So the water is getting through there, it’s building up.
[41] Transcript page 57, lines 8-25.
Mr Ferguson argued that the cracks were just normal settlement cracks and were acceptable. His view was that water was just wicking back into the slab from the driveway:[42]
Mr Ferguson: What (indistinct) is – it’s not coming over the step. I think the driveway is very flat. Like, there’s not – it’s pretty much a flat driveway. Because it’s a rural (indistinct) you know, quite a large driveway. I think the waters just sitting on the driveway and just naturally moist everywhere on the driveway, and then it’s just getting to the slab edge and then just capillaring back into the slab. That’s just my opinion.
Member: And it’s soaking through the whole slab?
Mr Ferguson: It’s only soaking along the cracks of the slab, because at – the moisture is only at the cracks. It’s not in the slab. Well, it didn’t appear to – coming out the slab. Wherever there was a crack was – there was evidence of a moisture mark around that – around the crack.
[42] Transcript page 146, line 45 to page 147, line 10.
Mr Ferguson had made some inquiries as to the presence of a membrane under the slab. He said he had received an email from Andrew O’Carroll of the engineer’s firm who had completed the slab inspection, which said that:-
“3. Slab (19/05/06) = Inspected slab (3-L11TM, SL 72, membrane in place)”.
The email was marked as Exhibit 7. Counsel for Mr Tucker objected to the email being received into evidence, and I said I would allow it to be received as evidence of an email received, but that whether it was evidence of the material contained on it was another question altogether. No affidavit of Mr O’Carroll deposing to the accuracy of the records or the content of the email was filed.
I do not rely on the email from the engineer, but note that if proved as evidence, that it would not be consistent with the speculation of Mr McCarthy that there was no membrane in place, and would support that an engineering inspection was conducted.
I am not satisfied that Mr Tucker has established that there is a defect in the slab. The explanation of Mr Ferguson for the presence of water in the cracks from capillary action is quite plausible, and consistent with the pattern of moisture. McCarthy speculates that there must be a problem with, or absence of, the membrane, but he does not substantiate that theory by any testing or supporting evidence.
I therefore do not allow this claim.
Item 20 (of items 7-13)
Item 20 (of items 7-13) is “Rainwater penetrates interior wall during heavy rain. (See item 4) – 1st floor, Garage”.
This item repeats the matters which are related to the wall in item 4, as to the mains junction box.
It appears unnecessary, as it concerns the same wall, and remediation would have to take the whole wall into consideration. For completeness however, I will formally allow this claim as a class 1 defect within time for similar reasons to Item 4.
Item 34 (of items 7-13)
Item 34 (of items 7-13) is “Incorrect wet-floor level (water does not fall to floor waste, but instead runs into toilet door frame) – 2nd floor, Powder Room”.
Mr Tucker says Item 34 is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says it is no defect, and Mr Tucker is out of time to make a complaint in relation to a category 1 or category 2 defect.[43]
[43] Schedule of issues in dispute.
There is confusion as to what the floor fitting actually is. McCarthy considered it was a waste which the water was intended to flow to, and be taken away from.[44] However, Mr Ferguson considered it was a gully, which acts as a vent and is not intended to drain.
[44] Transcript page 79, line 39.
A waste that was intended to drain could be expected to have a fall to it. However, if there is no intention to drain, then there would be no need for a fall.
Mr Ferguson was somewhat critical of the laws in Queensland which do not require floor wastes in a bathroom, but said they were not required in class 1 buildings. He said he could not see that this was a waste, and would not expect it to be:[45]
Member: Did you inspect that to see whether it was a floor waste or a floor waste gully?
Mr Ferguson: I couldn’t tell the difference. When I say I couldn’t tell the difference, I couldn’t – I had a look down the waste and it just looked like a floor waste gully to me. It had a trap at the bottom. It’s very unusual for a house in Queensland to have a floor waste. It’s also very unusual for a plumbing department to require one, so it’d be in (indistinct).
Mr Taylor: Now..
Mr Ferguson: And I guess the answer to your initial question is the lawmakers in Queensland must think it’s okay for water to flow down the hallway. I don’t know what the answer is, to be quite honest. I guess traditionally we never had them.
[45] Transcript page 176, lines 29-34.
I share Mr Ferguson’s puzzlement as to the failure to require a floor waste in a bathroom, and a fall to one, but this does appear to be the case. It is also not established that this fitting is indeed a floor waste. I therefore cannot find that this is a defect.
Category 1 claims in GAR415-12
There are three items in GAR415-12 which are claimed to be category 1 defects. I shall now deal with these.
Item 1
Item 1 is “Water/ moisture penetration. Lack of barrier to the underside of slab – Integral Garage/Workshop”.
Mr Tucker says Item 1 is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says it is no defect, and there was a delay between Mr Tucker first noticing the defect and date of lodgement of complaint.[46]
[46] Schedule of issues in dispute.
This is the same complaint as item 19 discussed in GAR013-12. I have found that there is no defect.
For the sake of completeness, I do not allow this claim.
Item 2
Item 2 is “Not completed to building code requirements. Weephole guards missing – brickwork weepholes”.
Mr Tucker says Item 2 is a category 1 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission says it is no defect, and there was a delay between Mr Tucker first noticing the defect and date of lodgement of complaint.[47]
[47] Ibid.
This is the same complaint as item 4 as to bushfire protection. I have found there is no defect.
For the sake of completeness, I do not allow this claim.
Item 3
Item 3 is “Spa pump fitted leaving holes accessed from the sub-floor and poses a health and safety risk – Spa pump fitting”.
This is a relatively minor claim. The claim is that the void around the hot and cold pipes leading through the floor is not sealed, which can lead to vermin or damp entering. Mr McCarthy assessed the rectification cost as $50.00[48] plus parts of $3.
[48] Transcript page 63, line 35.
I am not satisfied that this item has been shown to be a category 1 defect as to safety or structural adequacy, or the other required issues. It is related to reasonable standards of finish, and I find it is not warranting of a direction to rectify.
Category 2 claims in GAR 013-12
There are a large number of items which are claimed as category 2. The basis for the claim, and the response, is similar in each instance, and I will consider these as a group.
The items are - Items 9, 11, 12, 13, 18, 21, 31, 32, 36, 40, 41 and 42 (of items 7-13). They are described as:-
Item 9 – Cracks, gaps and visible joins in cornice throughout residence
Item 11 – Ill fitted niche wall light – 1st floor, Entrance hall
Item 12 – Cracks and splits in plasterwork – 1st floor, Entrance hall
Item 13 – Cracks in cornice – 1st Floor, Living
Item 18 – Cracks/splits in plasterwork – 1st Floor, Stairs
Item 21 – Visible joints in walls / plasterboards and running up to light switches – 2nd Floor, Entrance hall
Item 31 – Cracks between cornice and ceiling – 2nd Floor, Powder Room
Item 32 – Visible joints in walls to light-switches – 2nd floor, Bedroom 1
Item 36 – Crack in wall entrance – 2nd Floor, Powder Room
Item 40 – Cracks in cornice – 2nd Floor, Bedroom 4
Item 41 – Mis-aligned and cracked face-brickwork – Exterior
Item 42 – Cement pointing inconsistent and cracked or loose in places - exterior
In each case Mr Tucker says the item is a category 2 defect, and the complaint ought to be allowed in the exercise of discretion. The Commission previously said it is no defect, and Mr Tucker is out of time to make a complaint in relation to a category 1 or category 2 defect.[49]
[49] Schedule of issues in dispute.
Mr Tucker submits that all these (except items 41 and 42, but including item 11) are agreed between himself and the Commission to be category 2 defects. The issue that arises as to them is as to whether they are within time or not.[50]
[50] Submission Tucker dated 6 September 2013, page 19.
The Commission also now submits that all of these items (except 11, 41 and 42) are agreed by the experts to be category 2 defects, and therefore Part 2.4 and Part 2.5 of the Insurance Policy must then be considered.[51]
[51] Commission Submissions dated 1 August 2013, page 16.
Item 11 is said later in the submissions by the Commission to be an agreed category 2 defect,[52] as is item 41 and 42[53] and I will include them in the list of defects.
[52] Ibid at [45].
[53] Ibid at [68].
These items therefore will stand or fall together as a group, depending on the resolution of the “time issue” which I will deal with next.
The time issue
Mr Tucker submits that the date of claim for the purposes of the Insurance Policy was 29 August 2011.[54] He concedes, with respect to the items the subject of the May 2012 decision that:
a) for the items which he claims as category 1 defects, the claim was not made within three months of the defect first becoming evident to him; and
b) for the times which he claims are category 2 defects, the claim was not made within seven months of the date of practical completion.
[54] Tucker submissions dated 6 September 2013, page 18.
He argues that the items arose within the time periods covered by the section 2.4 of the Insurance Policy as:
a) all category 1 defects were first evident within six years and six months of the date of the contract (being 19 January 2006); and
b) all category 2 defects were evident within six months of practical completion. (which he accepts as 19 December 2006, being the date when the property was occupied and fit for use).
For Mr Tucker to be able to be paid out under the Insurance Policy, on his argument, he needs it to be found that the time periods under 2.5 of the Insurance Policy should be extended, or that the time period has been waived by the Commission.
The Commission argues that the category 2 items were only evident to Mr Tucker at a date later than six months after practical completion and that the Insurance Policy had expired.[55]
[55]Exhibit SOR 30 to the Commission Statement of Reasons dated 13 June 2012, at pages 200-201.
Mr Tucker says that all category 2 defects (items 9, 11, 12,13, 18, 21, 31, 32, 36 and 40 (of items 7-13)) were evident in December 2006, and were included in the email sent by him to the builder shortly after he moved into the house, and were discussed with the builder on 27 December 2006. In cross-examination he said:[56]
[56] Transcript page 99, lines 19-40.
Mr Lovrincevic: Okay. Okay, if I can take you to page 89? If we can have a look at the report of Geoff Holman, items 1 and 2, so this is his response to items 1 and 2. So you would agree that items 1 and 2 do not discuss the issue of cracks in cornices, joint issues; you would agree with that? They only address scuffing to the walls as item 1 and a low standard of paintwork in item 2; would you agree with that?
Mr Tucker: Yes.
Mr Lovrencevic: Can I suggest to you that those items that we have discussed before, and its 9, 12, 13, 18, 21, 31, 32, 36 and 40 are therefore – weren’t evident to you in December of 2006?
Mr Tucker: Which ones? The..
Mr Lovrincevic: You say that these items…
Mr Tucker: ..(indistinct) walls or cracks in the cornice.
Mr Lovrincevic: Yes. You say these items were evident to you in December of 2006?
Mr Tucker: yeah.
Mr Lovrincevic: I put it to you that they weren’t evident in December 2006, for the reason that they’re not specified in December 2006, nor are they indicated in the report of Geoff Holman of the December 2006 complaint.
Mr Tucker: No. I thought they covered it with the various nicks and holes in the walls.
I accept Mr Tucker’s evidence that the category 2 defects arose within the time periods specified in 2.4 of the Insurance Policy. The builder was not called by the Commission, and the evidence of Mr Tucker as to contact with him about them is not challenged.
I therefore find that the category 2 defects arose within time as required under the Insurance Policy.
The Commission has a discretion under 2.5 of the Insurance Policy to grant an extension of time, which provides:
2.5 Time Limit for Making a Claim
The insured is not entitled to payment for loss under this Part unless:
(a)in the case of a category 1 defect, the claim is made within 3 months of that defect first becoming evident (in the opinion of BSA); or
(b)in the case of a category 2 defect, the claim is made within seven months of the date of practical completion,
or within such further time as BSA may allow.
It is conceded that the claims were made outside the required time under 2.5 of the Insurance Policy, so the remaining question then is as to whether this time should be extended.
The agreed Chronology shows that Mr Tucker:
a) On 19 January 2007 sent a letter to the builder providing a complete list of outstanding works and items of a low standard requiring attention.
b) In early 2007 contacted the Commission regarding the defects. A joint inspection of the property was undertaken by the Commission (Geoffrey Holloway) and the builder. As a consequence of the inspection, the Commission required rectification/completion of some minor matters.
c) On 8 August 2007 lodged a complaint in respect of the builder with the Office of Fair Trading.
d) On 13 November 2007 lodged the first complaint.
e) On 29 August 2011 lodged the second complaint.
The agreed Chronology records the following actions of the Commission:
a) On 28 September 2011 the Commission wrote to Mr Tucker stating: “Your complaint form has been assessed and BSA would like to arrange an inspection”. There is no mention by the Commission that the claim has been brought out of time.
b) On 19 December 2011 the Commission (per Josie Strazzeri) writes to Mr Tucker and states: “I have assessed your claim and advise that you are eligible for insurance assistance”. At no material time does the Commission raise any concerns that Mr Tucker is out of time to make application under the scheme.
c) On 18 January 2012 the Commission (per Josie Strazzeri) writes to the builder, advising that: it had approved an insurance claim, and it may seek to recover all claim expenses from the builder.
d) On 14 May 2012 the Commission (per Josie Strazzeri) writes to Mr Tucker raising for the first time that the complaints have not been brought within the required tine under clause 2.4 and 2.4 of the policy.
It is evident that the Commission was proceeding on track to approve the claim under the Insurance Policy in January 2012, but that by May of that year had changed its stance.
Ms Strazzeri gave oral evidence. She said that in disallowing the insurance claim that she took the following items into consideration in exercising “the discretion to allow further time as offered in part 2.5”:[57]
a) the category 2 items.
b) the previous complaint that Mr Tucker lodged “where, apparently, (indistinct) dismissed a lot of the items (indistinct). So I took that onto account and also the list that he provided which, to me, looked very similar to what (indistinct) first complaint of Geofffey Holman”.[58]
c) delay.
d) bankruptcy events.
e) the cost of rectification.
[57] Transcript pages 115-116.
[58] Transcript page 116, lines 15-20.
I queried Ms Strazzeri as to what matters she had turned her mind to at the different times:[59]
Member: So, you’re saying that in December 2011 the authority didn’t properly turn its mind to delay, but in May 2012 it did turn it’s mind properly to delay.
Ms Strazzeri: Sorry. Could you repeat that (indistinct).
Member: Well, I’m looking at the difference between JMS-9 and JMS-11. So in JMS-9 there’s no mention of any problem with timing, and the claim is approved. And there’s a statement there that “You are eligible for insurance assistance”.
Ms Strazzeri: (indistinct) the (indistinct).
Member: Five months later it all changes.
[59] Transcript page 119, lines 41 to page 120, line 1.
After some further discussion I asked her:[60]
Member: I was just asking you if you had the same considerations in mind at the time of writing each of these letters.
Ms Strazzeri: Yes, I did
[60] Transcript page 120, lines 44-46.
In cross examination, Ms Strazzeri was asked further about the change of attitude:
Mr Taylor: Okay. Now at page number 46, which is JNS 11 would you agree if I could use the expression, backflip, had occurred in respect o suddenly, now, this is the first time that the issue of time has been raised?
Ms Strazzeri: Yes, because (indistinct) backflip, yeah. So, yes, to answer your question.
Mr Taylor: Okay. There was another question that the member asked you in respect of things that you put into consideration between – or something that isn’t in consideration – between the dates of those two letters and I think your answer was that (indistinct) your builder had gone bankrupt; is that correct?
Ms Strazzeri: That was (indistinct).
Mr Taylor: Okay. But you’d agree there’s nothing within the guidelines of the Act which makes it a pre-requisite that the BSA gets reimbursed by the builder, is there?
Ms Strazzeri: Not that I know of.
Ms Strazzeri had written to the Insolvency Trustees Services Australia on the 12 December 2011 advising them that if the claim was approved that the Commission may seek recovery from the administration or liquidation pursuant to s 111C of the QBSA Act.[61] I asked her about the lack of response:[62]
Member: You didn’t get any response from the Insolvency Trustee Service in reply to your letter of…
Ms Strazzeri: No.
Member: ..the 12th of December. So between the two letters that I was asking you about before, between your letter of December 2011 and May 2012, something that did intervene was that you’d had no response from your Trustee Service application of bankruptcy; is that right?
Ms Strazzeri: Me, myself (indistinct)
Member: No response. And was that something you took into account when you reconsidered the matter in May 2012?
Ms Strazzeri: That I had no response (indistinct)
Member: That you’d received no response from the Trustee Service.
Ms Strazzeri: Well, I don’t – I mean, my job is (indistinct) we don’t normally – the assessment officer (indistinct) possibly (indistinct) but, yeah, to answer your question, did I take that into consideration, well, yes.
[61] Exhibit 18 to Commission statement of reasons, page 141.
[62] Transcript page 127, line 41 to page 128, line 15.
The Tribunal now has to decide whether to allow an extension of time under Part 2.5 of the Insurance Policy, as a fresh decision. The matters to be taken into account were discussed in Ackermann v Queensland Building Services Authority[63] and Mansour & Rezaee v Queensland Building Services Authority[64].
[63] (2006) QCCTB 4 at 75-79.
[64] [2011] QCAT 53 at [55].
I do not consider that the whether the Commission is likely to recover payments made under the Insurance Policy from the builder (or from the builder’s administrator or Trustee) is a proper consideration on its own in accepting a claim. The duty of the Commission as an insurer is to act bona-fide and to pay out valid claims exercising due and reasonable discretion where required.
Whether the Commission is able to recover those monies by virtue of other provisions of legislation it has access to, should not have any bearing upon its proper consideration of an insurance claim. By taking into consideration whether recovery can be made, the Commission is having regard to protecting the revenue of the fund rather than to discharging its duty as an insurer acting in good faith and with fairness.
In Holmes v Queensland Building Services Authority,[65] Senior Member Oliver noted that:
40.Although recovery from a licensee is desirable, the management of the fund pursuant to section 26A of the Queensland Building services Authority Act is not dependant only upon such recovery it provides:
“The Authority must ensure that the statutory insurance scheme is managed in accordance with actuarially sustainable principles so that the amounts paid into the Insurance Fund under section 26(2) will be sufficient to satisfy the amounts to be paid from the Insurance Fund under section 26(3).”
[65] [2010] QCAT 197.
It is clear from the evidence of Ms Strazzeri that the Commission did take into consideration whether it had prospects of effecting recovery of monies paid under the Insurance Policy, in exercising its discretion as to granting an extension of time.
If the delay in making a claim leads to prejudice to the Commission in that its prospects of recovery have been affected by the delay, then this may be a valid consideration in terms of prejudice. If, for example, it could be clearly demonstrated that there was a fund available for recovery within the time period, but that delay has resulted in a situation where that fund has been dissipated, then there may be a valid argument as to prejudice. That is not the situation here.
In Mansour & Rezaee v Queensland Building Services Authority, Member Cotterell said:[66]
Likewise, the Tribunal; considers that where the claim on the insurance policy has been delayed to the extent that the respondent is unaware of the claim until the builder has filed for bankruptcy, the respondent will most probably always be prejudiced.
[66] At [63].
He went on to refer to an earlier decision:[67]
In Little v Queensland Building Services Authority [2006] QCCTB 195 Member Coyne considered the issue of prejudice to the respondent in exercising its discretion under the policy. In Little the builder also had been placed into liquidation prior to the complaint being made to the Authority. The Tribunal held that the fact that the authority was no longer able to recover any payment from the builder with respect to the cost of rectification of the defects established sufficient prejudice to deny the claim.
[67] At [57].
He did comment on that decision that:[68]
The Tribunal considers that the reason in Little was really late notification and, while prejudice is mentioned, the fact was that the claim was out of time with the result that the insured was not entitled to payment for loss under the policy. The reasoning in Little needs to be clarified to that extent.
[68] At [59].
I do not consider that the delay in making the claim in this matter has caused prejudice as referred to in the quote from Mansour & Rezzae v Queensland Building Services Authority above. In this case the Commission was aware of the defects as I have found, from early 2007 which was well before the builder went into bankruptcy on 12 November 2010.
I therefore do not take the factor of ability to recover into consideration in exercising my discretion as to granting a time extension.
The Commission conceded that it did not lead any evidence to show whether the cost of rectification would have increased between June 2008 (being the date of rectification of the original complaint items) and June 2011 (being the date Mr Tucker next contacted the Commission to advise of their concerns).[69] It submits that the Tribunal could take judicial notice of an increase in building costs due to normal inflationary trends and general economic trends.[70]
[69] Commission submissions dated 1 August 2013 at [15].
[70] Todorovic v Walter [1981] HCA 72.
The only indication of the cost of rectification was given by Mr McCarthy who, the Commission submit, suggested an amount of $50,000 (although this is not agreed on behalf of Mr Tucker).[71] In the absence of evidence, I do not accept that the increase on that amount in that three year period (which was not a period of high activity in the residential construction industry) was such that it could be said to cause prejudice.
[71] Submissions Tucker dated 6 September 2013 at [42].
The chronology shows that Mr Tucker tried to get satisfaction from the builder between December 2006 and July 2007, made complaint to the Office of Fair Trading, and lodged a complaint with the Commission in November 2007.
Mr Tucker says that the 58 items of complaint which were set out on the complaint form in November 2007 were all evident to him in or about December 2006. Mr Wright was required to complete work to four items. Mr Tucker says he was told by the Commission’s inspector that the other matters were contractual issues and he would have to take civil action against Mr Wright.[72]
[72] Affidavit of Mr Tucker sworn 17 July 2012 at [27]-[34].
Mr Tucker did not take civil action against Mr Wright as he could not afford to do so. He says that he does not recall being made aware that he had any right to appeal the decision of the Commission.[73]
[73] Ibid at [36]-[39].
The issue which drove Mr Tucker to seek further redress was advice he received from the certifier on or about 16 June 2011 that the building approval for the construction would lapse on Friday 16 September 2011 if the building work did not obtain final approval before then, or if the lapsing date was not extended. He then telephoned the Commission to discuss the continued problems he was having with the building work, quoted the case number from the 2007 complaint and advised that he wanted to reopen his case. He says that he was advised that the case could not be reopened, but that the commission would consider a new complaint lodged by him.[74]
[74] Ibid at [43]-[46].
Mr Tucker then lodged the complaint dated 28 August 2011, which led to the first decision under review in this matter.
I am not persuaded that the failure of Mr Tucker to seek a review of the decision of the Commission after his initial complaint in November 2007 should weigh against him in considering whether he has taken steps to make prompt complaint. He says that he was unaware of his right to seek a review, but in any event it is a daunting task for a homeowner to obtain a review of a decision of the Commission, as these proceedings demonstrate. It is entirely understandable that Mr Tucker would feel at a loss as to what to do after being rebuffed as to nearly all of his initial complaints.
The salient point is that I am satisfied that Mr Tucker did bring defects to the attention of the Commission as far back as November 2007. I accept his evidence as to the dates he became aware of the various defects as set out in the table attached to his affidavit.[75] He later renewed his efforts to seek remedy which led to the decisions under review.
[75] Ibid; Exhibit JST-20.
I note that the Commission initially refused to make recompense under the Insurance Policy in relation to the subsidence issue, and said it was going to close its file, but then agreed, after an application for review was made in this matter, to accept subsidence as a defect.
I also note that the apparent opinion of the Commission until May 2012 was that time was not an issue, and that the Commission wrote to Mr Tucker on 18 January 2012 saying that “BSA has approved an amount of $7,924.50 as an insurance payment to the contractor you engage to carry out the works”,[76] and wrote to a repairing builder in similar terms,[77] and wrote to the builder care of his Trustee in similar terms.[78]
[76] Exhibit 26 to the Commission statement of reasons, page 176.
[77] Exhibit 27 to the Commission statement of reasons, page 179.
[78] Exhibit 28 to the Commission statement of reasons, page 182.
In all the circumstances, I am satisfied that Mr Tucker has taken reasonable steps to bring the defects to the attention of the Commission, that he has demonstrated reasonable excuse for the delay in bringing the current claims, that it has not been demonstrated that the Commission has suffered prejudice by the delay, and that an extension of time should be granted.
The effect of granting the extension of time is that all the claims which I have identified as defects are accepted under the insurance policy.
Subsidence and Costs generally
Mr Tucker is seeking indemnity costs in relation to a subsidence issue. He contends that costs should be calculated from the date which the authority was provided with evidence that it should have properly considered, and that it caused him undue cost by failing to appoint an appropriate expert in its refusal to grant indemnity under the scheme.
The chronology records the following sequence of events:
(a)On 1 September 2012 Mr Tucker lodges a complaint with the Commission which specifically refers to subsidence issues, and attaches a report of Jeffery Hills (engineer) dated 19 July 2012 which identifies subsidence.
(b)On 15 November 2012 the commission writes to Mr Tucker stating that it investigated the cracks to the external brickwork, and there was some minimal movement however it was within the expected tolerances, and the commission did not propose any further action, and the file was to be closed.
(c)On 13 March 2013 as a consequence of the commission’s decision not to insure Mr Tucker, he again commissions Mr Hills who undertakes a second inspection and again identifies subsidence.
(d)Between 19 March 2013 and 28 March 2013 the Commission engages its own expert engineer (Mr John van de Hoef) to investigate the subsidence complaint. Mr Van de Hoef inspects the property and identifies subsidence.
(e)On 19 April 2013 the commission writes to Mr Tucker and issues a scope of work for defective building work, with respect to the “subsidence” complaint only.
This chronology shows that the Commission has capitulated on this issue, but not before denying the claim and saying it would close its file. Mr Tucker says that he was required to obtain a further expert report before the Commission conceded on this claim.
Mr Tucker is seeking indemnity costs over a period. This may not be as simple as is sought though, as this claim was intermingled with the other claims that Mr Tucker was pursuing. If legal costs are being sought, it may be difficult to be able to extract and define those. If it is expert costs that are being sought, these would need to be identified and quantified.
I have found in favour of Mr Tucker’s contentions on some claims overall, and in favour of the Commission’s decisions on other claims.
In the submissions made on behalf of Mr Tucker, reference is made to offers to settle which he has made. These may be relevant under s 105 of the QCAT Act. I am not aware of those offers to settle.
As there may be further argument as to costs, and as there may influences from offers to settle, I will not make any order as to the costs of the subsidence issue at this stage, or as to costs generally, without hearing further submissions in light of my decision.
I will make orders allowing the parties to make submissions on costs once they have considered this decision. I would urge the parties to have discussions as to costs, if they are sought, before entering into further proceedings, and attempt to resolve any claims between themselves before entering into further dispute.
Orders
The decision of the Queensland Building and Construction Commission dated 14 May 2012 is set aside and substituted as follows:
(a) Items 3, 4 (of items 7-13) and 20 (of items 7-13) in the disputed issues list (for the 14 May 2012 Decision) are category 1 defects and accepted under the insurance policy.
(b) Items 9, 11, 12, 13, 18, 21, 31, 32, 36, 40, 41 and 42 (of items 7 – 13) in the disputed issues list (for the 14 May 2012 Decision) are category 2 defects and accepted under the insurance policy.
The decision of the Queensland Building and Construction Commission dated 15 November 2012 that items 1, 2 and 3 in the disputed issues list are not category 1 defects is confirmed.
If either party wishes to seek costs:
(a) The party seeking costs is to file in the Tribunal and give to the other party a clear description of the costs sought and submissions in support by 4pm on 21 February 2014.
(b) The other party is to file in the Tribunal and give to the other party submissions in reply by 4pm on 7 March 2014.
(c) The issue of costs will be determined on the papers not before 7 March 2014.
0
4
3