Vandenhoven v Queensland Building Services Authority
[2011] QCAT 673
•22 December 2011
| CITATION: | Vandenhoven v Queensland Building Services Authority [2011] QCAT 673 |
| PARTIES: | Mrs Diane Patricia Vandenhoven |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | GAR369-10 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 12 September 2011 |
| HEARD AT: | Rockhampton |
| DECISION OF: | Gerald Byrne, Member |
| DELIVERED ON: | 22 December 2011 |
| DELIVERED AT: | Rockhampton |
ORDERS MADE: | 1. Application allowed. 2. Direction that the application to claim against the insurance fund be allowed. 3. Direction that the scope of the works listed in the decision be completed. |
| CATCHWORDS: | BUILDING DISPUTE – BSA Statutory Insurance Scheme – considerable delay in complaint to the BSA – waiver by BSA of time limits under insurance scheme – prejudice – appropriate scope to the works – judicial notice Queensland Building Services Authority Act 1991, s 26A |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mrs Diane Patricia Vandenhoven represented by Steven Deaves of Counsel instructed by Kerry Connolly Howard Lawyers |
| RESPONDENT: | Queensland Building Services Authority represented by Scott Seefeld, Senior Lawyer |
REASONS FOR DECISION
Background
Diane Vandenhoven entered into a residential building works contract with Trueline Aluminium Pty Ltd ACN 10137783 (the builder) for an extension to her house at 9 Pacific Drive Yeppoon in Queensland.
In April 2004 the works were substantially completed and the Certificate of practical completion was issued on 11 October 2004. The Applicant gave evidence that the final payment was also made on 11 October 2004.
Prior to completion of the works, in December 2003 Diane Vandenhoven noticed water penetration from the roof of the internal room of the extension. This was the start of a long list of defects and rectification attempts.
The Applicant gave evidence about much of the process and I found her to be a very open and honest witness.
I set out below the chronology in brief as detailed in the Applicant’s affidavit and Application, including defects and rectification attempts.
Date Description 6 Oct 2003 Contract signed 6 Dec 2003 Building commended Jan 2004 Notification by owner to the builder of a water leak from roof 16 Jan 2004 Builder inspected water leak 23 Jan 2004 Builder installed new roof flashings 7 Feb 2004 Owner noticed roof flashings were lifting and advised builder End Feb 2004 Builder rectified with new roof flashings March 2004 Owner noticed the floor was warped and twisted – called the builder Later in Mar Builder sands corrugations in floor etc Late Apr 2004 Owner notified builder of new leak in a different place May 2004 Builder rectified leak 11 Oct 2004 Practical completion 11 Oct 2004 Final payment Dec 2004 Water entering under window frames – owner phoned builder – builder rescheduled 2 or 3 times Unknown Builder attended – siliconed crevice adjacent to the window Feb 2005 Same leak from windows – owner advisors builder A week later Builder resealed leak from windows and also worked on roof again March 2005 More leaks from roof and windows and owner called builder April 2005 Builder attended to fix leaks again June 2005 Floor boards warped and twisted and noisy due to flex – owner notified the builder June/July 2005 Several instances of builder not able to get to property and rescheduled August 2005 Owner went overseas for 3 months w/o repair to floor boards Nov 2005 More water penetration – owner phoned builder – builder advised it would use more silicone to seal leak and if all ok it will sand the floorboards Pre Christmas 2005 Builder attended to install additional silicone Christmas 2005 Water penetration noticed and owner called builder about second week of January 2006 End Jan2006 Builder attended with more silicone to stop leak Feb 2006 Builder had G James Glass remove windows and put in flashings where none were put in originally March 2006 Water penetration in window area – owner phoned builder, but not much follow up by builder Most of the rest of 2006 Owner had cancer diagnosed – kidney removed, months of complications from surgery and rehabilitation Dec 2006 Water in from roof again – new spot – builder contacted immediately by owner Pre 2006 Christmas Builder attended and owner raised issue of the railing flex and builder advised it is all according to specifications Just pre Christmas 2006 Builder attended with more silicone to seal leaks in roof and windows Dec 2006 to Jan 2008 Property appeared to be waterproof and there were no further issues requiring rectification Jan 2008 Water penetration at windows and floor turning black – owner contacted builder Jan – March 2008 Scheduled inspections did not take place March 2008 Owner noticed unlevel floor – 12 to 20 ml drop – phoned builder March 2008 Karl Maskery Building (Karl) attended on behalf of builder to fix leaks March – mid August 2008 Karl attended on 4 occasions to fix leak June/July 2008 Unseasonal rains – water penetration at windows – owner contacted builder again July – Sept 2008 Owner went on a 3 months caravan holiday 17 Oct 08 Email to Trueline by owner detailing concerns Within 10 days 4 employees of builder attend property to install new roof flashings and silicone – removed windows and installed new flashings Dec 2008 Builder returns to install new ventricle flashings – wrong colour, but with wet season coming owner gives temporary approval 2008/09 Wet No water penetration Pre August 2009 Floor boards sanded etc August 2009 Builder returned to put in correct coloured flashings Sept – Oct 26/7 2009 Owner travelled overseas to see son and meet daughter in law and returned on 27 October 27 or 28 Oct 2009 Owner phoned builder as work had not been done in her absence and call transferred to Trueline in Brisbane. Owner advised that the builder was in liquidation and to contact the BSA Oct/Nov 2009 Owner contacts BSA – Katie – details defects Nov 2009 Owner again contacted BSA and Lisa told her to fill in Complaint 17 Nov 2009 Complaint form completed by owner lodged with BSA Jan 2010 Inspection by BSA 11 Aug 2010 Scope of Works issued 20 Aug 2010 Scope of Works received by applicant 3 Sept 2010 Applicant’s engineer engaged 8 Sept 2010 Applicant’s engineer inspected site 21 Sept 2010 Email by owner to BSA with photos of water leaks 1 Oct 2010 Email BSA to owner that area manager would look into it 19 Oct 2010 Engineer’s report given to owner 21 Oct 2010 BSA email owner regarding inspection by area manager on 26 or 27 Oct 1 Nov 2010 BSA email owner regarding inspection on 1 Nov 2 Nov 2010 Complaint filed by owner
Waiver
The Applicant submitted that the letter of 11 August 2010[1] from the BSA to the Applicant amounted to a waiver of the benefit of Clause 2.5 of the Insurance Policy Conditions.
[1]I note there were apparently two letters of the same day from the BSA to the Applicant or the date mentioned in the first paragraph of the later letter is incorrect. It is not material which.
The relevant policy provisions of the BSA Insurance Scheme set out below were not in contention.
Clause 2.5 of the Insurance Policy Conditions provides as follows:
"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 three 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."
Below is the text of the relevant BSA letter of 11 August 2010:
On 11 August 2010 the BSA wrote to you advising that an assessment of your insurance entitlement under the Queensland Home Warranty Scheme (the Scheme) would be undertaken.
I have assessed your claim and advise that you are eligible for insurance assistance under the Scheme.
The reasonable cost of rectification will be determined by calling quotes from licensed contractors. These quotes will be arranged by BSA. These contractors will contact you shortly to arrange a site inspection.
Contractors have been issued with the attached Scope of Work. Quotes will be forwarded to BSA by a date which will be determined by BSA. A copy of the scope of works is enclosed for your consideration.
For your own protection, you are reminded BSA may decline insurance compensation where rectification works being considered as a claim under the Queensland Home Warranty Scheme are carried out without the prior written approval of BSA.
Any claim approval will be subject to the payment by you of the amount retained, if any, under the original contract. The payment should be made to the contractor engaged to carry out the works.
The attached scope of work is BSA's assessment of the extent of rectification work required to rectify the defective residential construction work detailed in your complaint. This represents BSA's assessment of your entitlement under your policy of insurance. BSA's acceptance of the lowest conforming quotes will form BSA's offer to settle your insurance claim.
It is important that you read the scope of work to ensure you are aware of BSA's offer. BSA's decision about the scope of works to be undertaken is reviewable in the Queensland Civil and Administrative Tribunal (QCAT). Review applications to QCAT must be made within 28 days. Before making an application, you should consider obtaining independent legal advice. The QCAT Registry can be contacted on 3247 3333.
[10] In written submissions filed after the hearing, in line with the Directions of the Tribunal, the Applicant argued:
3 In the field of insurance law waiver "is almost invariably used ... in the sense of an election involving a choice between two mutually exclusive rights."1
4. In Khoury v Government Insurance Office of NSW2 their Honours Mason, Brennan, Dean and Dawson JJ said:
"A person confronted by two truly alternative rights or sets of rights, such as the right to avoid or terminate a contract and the right to affirm it and insist on performance, may lose one of them by acting 'in a manner which is consistent only with his having chosen to rely on [the other] of them' (per Lord Diplock, Kammins Ballrooms v. Zenith Investments (1971) AC 850, at p 882; see also Tropical Traders Ltd. v. Goonan [1964] HCA 20; (1964) 111 CLR 41, at p 55 and Sargent v. A.S.L. Developments Ltd. [1974] HCA 40; (1974) 131 CLR 634, at p 665). Where an insurer is confronted with such alternative rights and elects to affirm the contract of insurance, he is commonly said to have 'waived 'the right to avoid or terminate it (cf. Craine v. Colonial Mutual Fire Insurance Co. Ltd. [1920] HCA 64; (1920) 28 CLR 305, at p 325ff). While actual 'prejudice to the other side' may be relevant, particularly in determining whether an election should be imputed to a person who is not shown to have made a conscious decision to elect (see, e.g., Sargent, at p.656, Tropical Traders, at p 55, Champtaloup v. Thomas (1976) 2 NSWLR 264, at pp 274-275 and Scarf v. Jardine (1882) 7 App Cas 345, at p 360), it is not necessary that such prejudice be demonstrated to establish a completed election between the right to affirm and the right to avoid a contract. An election, unlike estoppel, is concerned with what a party does and not what he causes the other party to do (see, e.g., Craine at p.326; per Rich, Dixon and Evatt D. in Newbon v. City Mutual Life Assurance Society Ltd. [19351 HCA 33; (1935) 52 CLR 723, at pp 733-5). At tile latest, it is complete or 'final' when made and 'communicated' to the other party (see Newbon, at p.733)."
5. That the Queensland Building Services Authority can waive its right under clause 2.5 to avoid its obligation to indemnify a homeowner is well established. In Builder's Registration Board of Queensland v Fielde3 His Honour Judge Daly held that the fact that the policy of insurance arose pursuant to statute did not mean that the Board as it then was) could not waive the benefit of an exclusion clause relating to the notice a homeowner was required to give to the Board under the statutory insurance policy.
1.Insurance Law in Australia, 3re ed., Sutton, K, LBC Information Services, 1999 at p. 928
2.(1983-1984) 165 CLR 622 at pp 633-634
3.(1989) 11 Qld Lawyer Reps 27
[11] The BSA in submissions filed after the hearing, in line with the Directions of the Tribunal, indicated:
4. In the Authority's submission, these two sentences should not be read in isolation. (Referring to paragraph 2 and the first sentence of paragraph 7 of the BSA letter above) The first of these sentences states that the Applicant is eligible for assistance. That is, that she has been assessed to meet the threshold eligibility criteria in order to be considered for assistance under the insurance scheme. It does not state that an insurance claim has been approved. The letter makes it clear that such an approval is yet to occur. This is evident in the sixth paragraph, which refers to, "Any claim approval . . ." and the last sentence of the seventh paragraph which refers to BSA's offer to settle the claim being based on acceptance of the lowest conforming quote. In the Authority's submission no waiver can have occurred in circumstances where an insurance approval has not yet been made.
5. The third and fourth paragraphs of the letter proceed to set out the further steps to be taken for any approval to occur. These paragraphs make it clear that any assistance is limited to the reasonable cost of rectification of the items described in the attached scope of works. Reference is made to the scope of works at four places in the letter. This is emphasised in the eighth paragraph which states:
"It is important that you read the scope of work to ensure you are aware of the BSA's offer."
In the Authority's submission, when read as a whole, the letter makes it abundantly clear that any claim approval is limited to the attached scope of works.
6. The Applicant submits that the letter of 11 August 2010 makes no reference to the Authority seeking to avoid liability under the Insurance Policy Conditions. In the Authority's submission that is not so. The second sentence referred to by the Applicant is immediately followed by:
"This represents BSA's assessment of your entitlement under your policy of insurance."
In the Authority's submission this makes it clear that the assessment of the Applicant's entitlement has been made against the terms of the Insurance Policy Conditions. That is, that the items included in the scope of work represent the extent of assistance that the Applicant may be eligible for under the terms of Insurance Policy Conditions. In the Authority's submission no waiver can have occurred where the Insurance Policy Conditions are specifically referred to.
[12] The BSA argued that the letter makes it clear that the assessment of the Applicant’s entitlement was made against the insurance policy and that the scope of the works are the extent of the entitlement. If the letter stopped at this the BSA might have some validity in its submission. But the letter does not. The letter goes on to state that the scope of work is the BSA’s assessment of what is required to rectify the defective residential construction work detailed in the applicant’s complaint and that the decision of the scope of the works is reviewable by QCAT.
[13] The BSA submits further that that the letter does not state the insurance claim has been approved relying on the opening to paragraph 6 and paragraph 7 of the letter. The letter advises that the Applicant’s claim has been assessed, that she is eligible for insurance assistance and that the scope of the works will rectify (on BSA assessment) the defective construction work in the complaint. This seems to me to be a clear statement that the BSA will rectify the defective construction in the complaint from the insurance scheme.
[14] Paragraphs 3 to 6 of the letter on my reading set out the machinery provisions and the ‘do’ and ‘don’ts of how the defects in the complaint will be remedied at the BSA’s expense under the policy. It sets out that quotes will be called for, inspections, how the quote process will happen and how the BSA will decide which contractor is successful and that any retained monies will be need to be paid to the contactor approved to do the rectification work and a reminder that the BSA may not pay if rectification work is done without the BSA’s prior written approval. None of this on my reading detracts from or puts in doubt in the readers mind that the BSA has stated the Applicant is eligible to have the defects in her complaint rectified under the insurance scheme.
[15] Nowhere in the letter does the BSA give any indication that it will restrict or limit work needed to rectify the defects outlined in the complaint due to the issue of time.
[16] The BSA has limited its argument to the point that the letter factually does not amount to a waiver, other than a submission that ‘no waiver can have occurred where the Insurance Policy Conditions are specifically referred to’.[2] It has not submitted beyond this that the Applicant’s argument on waiver is legally incorrect. I do not agree with the BSA submission on waiver quoted in this paragraph. There is nothing to indicate in the letter that the BSA will rely on possible ‘exclusion clauses’ in the policy. The letter states clearly that the claim has been assessed and the issues in the complaint will be rectified under the policy.
[2] See last paragraph of BSA’s submissions above.
[17] For clarity, the BSA does not have any power in my understanding to limit the scope of the works once it has approved the claim or to approve a claim based on a certain scope of works, rather than rectification of items in a complaint. The BSA proposes a scope of the works and it is up to QCAT to decide the scope of the works, if the parties are not in agreement.
[18] This letter was the time in the process for the BSA to take the issue of time under the policy if it chose to. It did not. I find that the letter of 11 August 2010 set out above amounts to a waiver of the BSA’s right to take the issue of time in relation to the applicant’s complaint.
[19] I will look at the further argument of the parties on delay and prejudice in the event my decision on waiver is not correct.
Delay
[20] The first aspect of making a decision on extending time is the explanation of delay by the Applicant.
[21] I have set out a brief time line above. What I find that it shows is that the Applicant persisted in attempting to have the defects in her home extension rectified by the builder time and time and time again.
[22] From the date of practical completion until March 2006 there were many instances of a defect appearing, notification to the builder and rectification attempts. I regard the actions of the owner to be diligent and the builder always came to rectify the defect, though at times there may have been an amount of rescheduling of the attendance by the builder. In cross-examination the Applicant denied being concerned or frustrated by the time the builder took to attend and indicated it was the lack of notification about the need to reschedule that was frustrating.
[23] From March 2006 the Applicant experienced a very serious illness that she detailed in her evidence, including major surgery and removal of a kidney and months of complications following the surgery before she was well again. I find that this hiatus in focussing on her home to be reasonable and not something that needs further explanation in terms of delay.
[24] From late 2006, when the Applicant had recovered from her medical problems, until early 2008 things appeared to be ‘fixed’ at the Applicant’s home and there was no activity by the Applicant or the builder. The Applicant gave evidence she was not aware of the fact that there were still a number of defects and that she only came to understand the problems after she engaged the engineer Mr Scott in late 2010. I find there is no delay to be explained for this time.
[25] In 2008 Karl Maskery Building (Karl) attended on behalf of builder to fix leaks on four occasions. The owner and the builder were still engaged in notice of issues and rectification attempts.
[26] On 17 October 2008 the Applicant expressed her frustration to Trueline in an email and within 10 days four employees of the builder arrived and a series of rectification steps occurred as outlined including installing new roof flashings and removal of windows and the installation of new window flashings. These attempts to rectify appeared to be successful as there was no water ingress in the wet season of 2008/2009.
[27] Prior to August 2009 the builder returned and sanded the floors and in August 2009 the builder returned to put in the correct coloured flashings.
[28] For this time that the Applicant it seems to me the Applicant was still diligent in attempting to get the builder to remedy any defect as and when it appeared. The builder by and large, although sometimes tardy, did come to the property and ‘remedy’ defects. Kurt Story, who worked for the builder, gave evidence, which accords with the Applicant’s evidence that at no stage did the builder refuse to attend to rectify the problems at the property.
[29] In September 2009 the Applicant travelled overseas to see her son and meet her daughter in law and returned on 27 October 2009. The Applicant saw that work that was to be done in her absence had not been done and immediately phoned Trueline to discover the builder was in liquidation and she set about the process with the BSA that has led to this Application.
[30] I note that during the process the builder had other contractors come in an attempt to remedy defects at presumably a direct cost to the builder.
[31] There is nothing before the Tribunal to suggest that the Applicant knew of the BSA Insurance scheme prior to her telephone call to the builder that was transferred to Trueline in Brisbane on 27 or 28 October 2009. From that point on the Applicant’s conduct regarding delay in not questioned by the BSA.
[32] Ms Jane Skerman, a witness for the BSA, gave evidence that the BSA routinely send the insurance policy to the owner with a letter advising its purpose and importance. I accept that is the usual process. There is nothing before me to establish the Applicant got such a letter or whether she received it and later forgot about it. I am willing to find it is likely she received such a letter, but that does not establish that she had the insurance scheme in her mind as the long process unfolded with defects and rectification attempts.
[33] I realise this is a very long delay. However, in line with the decision in Holmes v BSA[3] I find that the Applicant at all times persisted in having the builder return to rectify defects until such time that the builder went into liquidation. I also find she had a genuine and reasonable belief, if somewhat naive, as a person with no building knowledge, that the defects would be rectified by the builder.
Prejudice
[3] [2010] QCAT 197.
Opportunity to direct rectification and recover amounts paid
[34] The BSA has submitted that the delay in filing the complaint caused prejudice in that the BSA was denied the right to direct rectification work under section 72 of the QBSA Act and the right to recover money paid under the insurance scheme for rectification work under section 71 of the QBSA Act.
[35] The Applicant submitted that the BSA led no evidence on this ground and in the absence of evidence the tribunal cannot find this to be a ground of prejudice.
[36] What is before me is clear evidence and common ground that the builder went into liquidation and that prompted the Applicant to file the complaint with the BSA on the advice of Trueline in Brisbane. What is not before me is that the BSA attempted to direct the liquidator of the builder to remedy defects and was refused. Also there is nothing before me to indicate that the BSA cannot lodge a claim with the liquidator to recover money paid under the insurance scheme for rectification work under section 71 of the QBSA Act.
[37] I am not suggesting the BSA needs to routinely go to this process in circumstances where it may incur costs with no prospect of a useful outcome. The BSA presumably assesses whether it has a prospect of any relief under section 71 or section 72 of the QBSA Act where companies go into liquidation. Some companies trade on after going into liquidation, some do not. There is no evidence before me that this risk was assessed or that there was no prospect of success for the BSA under either section of the QBSA Act.
[38] Generally speaking, I accept that the company going into liquidation will make rectification work very unlikely. However, there is a prospect of some monetary return to creditors, but I have nothing before me to suggest the BSA could be a creditor in the circumstances, was creditor or there was simply no money available and no point in the BSA attempting to get money under section 71 of the QBSA Act.
[39] Alternatively, there is nothing before me to suggest the BSA could have had any success in seeking rectification or money from the builder under the QBSA Act after it went into liquidation.
[40] I find the BSA on balance had probably lost the opportunity to direct repairs to the builder and the opportunity to recover all the money from the builder if the builder failed to rectify the defects. This may not have been the case if the Applicant had lodged a complaint with the BSA in a period some years earlier than she did lodge.
[41] This is to me, in line with the authorities, some element of prejudice on balance, but I do not have material before me to assess the level of prejudice.
[42] I note in Holmes’ case the member stated:[4]
[4] [2010] QCAT 197 at paragraphs 39 and 40.
39. The Authority has relied on a number of decisions6 of the former Commercial and Consumer Tribunal. In each of those cases the application was dismissed on the grounds that the Authority would suffer prejudice because it could not recover against the licensee. Quite obviously that is one ground of prejudice; as indeed I have found, but it must be considered in the overall context of the circumstances of the particular case and still have regard to the purpose of the Insurance Scheme.
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 sections 26(3).”
6 Murray v Queensland Building Services Authority (2005) QCCTB 33; Reiterer v Queensland Building Services Authority (2007) QCCTB 177.
[43] The BSA made similar submissions and took the tribunal to other cases in line with the ones quoted from Holmes above.
[44] Given the above from Holmes’ case, which I quote with approval, the fact the BSA has not led direct evidence on the extent of the prejudice to it, I find this aspect of the BSA’s submission to be limited as to prejudice.
Increased Cost of Repairs
[45] The Applicant submitted that there is no evidence placed before the Tribunal on this issue at all by the Respondent. The Applicant submits no evidence was led on oath and more importantly the Applicant has no opportunity to test any evidence led under cross-examination. I accept these submissions as an accurate summary of what has occurred in the Application.
[46] The BSA submitted paragraphs 23 to 27 in its further submissions that:
23. In the Authority's submission, the general increase in building costs, due to normal inflationary trends, over the five year period from 2004 to 2009 is a fact, "so generally known that every ordinary person may be reasonably presumed to be aware of it'. (Holland v Jones (1917) 23 CLR 149 at 153)
24. In Holmes, whilst holding that the prejudice was not significant enough to warrant a rejection of the claim in the particular circumstances of that case, the Tribunal accepted at [38], that rectification costs may increase, "due to normal inflationary trends".
25.Past inflation is a matter about which courts have taken judicial notice. (See also Beneke v Franklin [1975] 1 NSWLR 571 at 593). In Rendell v Paul (1979) 22 SASR 459, the Full Court of the Supreme Court of South Australia, citing Hawkins v Lindsley (1974) 4 ALR 697 held, at 465-6, that:
"in selecting a rate of interest, the Judge may take judicial notice, in accordance with established principles, of such knowledge as he possesses in common with other members of the community as to general economic trends, the effects of inflation, prevailing rates of interest and returns on investments."
26. In Todorovic v Waller [1981] HCA 72, the Gibbs CJ and Wilson J noted, at [18] that:
"Courts can of course take judicial notice of the way in which rates of interest, and the rate of inflation, have moved in the past, in so far as that is commonly and certainly known. "
27. In this case, the Tribunal is not being asked to carry out a precise calculation of the rate of inflation and the resultant specific increase in building costs over the relevant five year period. The Tribunal is being invited to accept that normal inflationary trends would result in building costs increasing over a period of five years, and as a consequence, the Authority would be prejudiced if required to pay that higher rectification cost. See page 68 of the annexures to the Statement of Reasons (Blue folder, yellow tab) and para 4 of the Applicant's statement of 4 August 2011 (Blue folder purple tab).
[47] I am able to take judicial notice that there has been inflation over the period relevant to this matter. I may even be able to take judicial notice that building costs have risen. What I cannot take judicial notice of is that the cost of repair in this particular matter has risen such as to be prejudicial to the BSA.
[48] I accept that rectification cost may increase due to normal inflationary trends as cited from the Holmes’ case above and I am willing to find that inflation occurring over the past five years is something I can take judicial notice of as it is something I regard so generally known that an ordinary person may be reasonably presumed to be aware of it.
[49] I find that if it is not sufficient for the BSA to convince me that if I take judicial knowledge of the inflationary trend over the last five years that that means the cost of rectifying the defective work has increased.
[50] There may have been inflation over the last five years, but it is my perception that some things have dropped significantly in cost while inflation went up. I could not for example take judicial notice that the cost of computers had risen as a result of inflation as it is my perception that the cost has dropped significantly over that time in straight dollar terms. I could not take judicial notice that the cost of repair of computers has increased as I do not know if the significant drop in component cost means they are not also cheaper to repair then five years ago. The same may be able to be said about a particular building project where some major component part has reduced in price. More importantly, I could not find that I have such knowledge “in common with other members of the community.”[5] The BSA, in my view, must lead evidence to show that building costs have increased and that in all probability the cost of these repairs has increased.
[5]Full Court of the Supreme Court of South Australia, citing Hawkins v Lindsley (1974) 4 ALR 697 held, at 465-6.
[51] If am incorrect on both of the above I would make a further finding that to be of real prejudice the BSA must establish that there has been a real increase in the cost of rectification, not just that there has been an increase based on the time value of money. I make this finding on the basis that in economic terms, to be truly prejudicial, that real cost to repair must have risen. If inflation has risen 20% and the cost of building 18% then there is in my view no prejudice to the BSA. The BSA takes in premiums each year and is charged to do so by actuarially sustainable principles under section 26A of the Queensland Building Services Authority Act 1991. The nature of the operation of the insurance fund is that premiums are calculated to cover the expected costs and are paid in with each building project. The insurer then has use of that money. Any particular claim may result in a payment out of the fund soon after or it could be years later, realistically a decade later in the more extreme case.
[52] The premiums are set in the base dollar for the year the building is done. The authority has the money and the use of the money. It must demonstrate a prejudice greater than the time value of money. It has not done that.
[53] Put another way, if the BSA would have had to pay out $40,000 in 2004 to rectify defects and it had to pay out $50,000 in 2011, but the value of that money in 2004 dollars equates to $45,000, there is no prejudice. What has occurred is that in reality in this example the BSA would have had the benefit of the time value of the $5,000 or its equivalent for five years. This is a benefit not a prejudice. If on the other hand the cost in 2011 is $60,000, there is prejudice.
[54] The BSA put nothing before me to establish that building costs connected with this rectification are or are likely to be prejudicial to it in terms of increased costs. I find this is not substantiated as a ground of prejudice.
[55] If I were to accept the BSA’s submission that I can take judicial notice of the increase in building costs, I find this is not a ground that is so prejudicial to the BSA to deny the Applicant’s claim.
Conclusion on Prejudice
[56] Overall, there is probably some prejudice to the BSA, but it is not so prejudicial to my mind as to outweigh the rights of the Applicant taking into account her attempts to have her home repaired by the builder, as is expected by the BSA and keeping in mind the purpose of the insurance fund and her diligence in seeking the builder to rectify the work and her belief that it was being rectified.
Appropriate Scope of Works
[57] There is a dispute as to the appropriate method to rectify items in the scope of the works. The Applicant submitted the scope of the works in the submissions after the hearing in paragraph 16 numbered from (a) to (i) as set out below. I will use this scope and the BSA’s response to the scope.
Appropriate Scope of Works
16.The applicant submits that the appropriate Scope of Works in the circumstances is as follows:(a) With respect to roof over the internal sunroom:
1.Remove and dispose of the existing insulated roof components
2.Install four (4) 50mmx50mmx3metre steel posts to the existing deck
3. Install one (1) 100mmx50mmx3metre edge beam
4. Install a backchannel
5. Install new roof profile sheets
6. Install new guttering (colour-matched to suit existing dwelling)
7. Install a 90mm PVC downpipe (colour-matched to suit existing dwelling)
With respect to roof over the deck:
1. Remove and dispose of the existing single skin patio roof components
2. Install a 150mmx6Omm roll formed edge beam
3. Install a backchannel
4. Install double-U roof sheets
5. Install roll formed guttering
6. Install a 90mm PVC downpipe (colour-matched to suit existing dwelling)
This course of action is supported by the evidence of Mr Hiron that the repairs effected by the builder are temporary in nature and an inappropriate use of silicon-based products.
[58] The BSA disagrees with this part of the scope from the Applicant on the basis that it is excessive and provided its own scope of the works as:
"Allow to install over-flashing to weatherproof the patio roof / fascia junction in accordance with the Building Code of Australia:
Install new pan inserts to roof profile at existing flashing line. Unscrew bottom row of house roof screws to allow new flashing to slip underneath. Fully seal the new pan inserts with flexible sealant to fully seal. Allow to install new custom made metal flashing system ensuring the flashing extends over the newly installed pan inserts. Allow to over-flash the newly installed flashing ensuring the flashing extends a minimum of 150mm under the existing house roof sheeting. Re-instate existing roof sheeting ensuring all fixings are fully sealed."
[59] The BSA submitted that there is no evidence before me to justify the Applicant’s scope of the works. The Applicant submitted a scope that requires the total replacement of the roof, but I do not have any expert opinion to justify such a course. In early material from the Applicant’s solicitors in this matter the lack of slope of the roof was submitted to be part of or the cause of the leaks. This was not contended in evidence nor does it appear to be part of the Applicant’s final Scope of the Works in her submissions. Mr Hiron in cross-examination agreed that neither roof is of sufficient pitch to meet the manufacturer’s specification and he agreed further that this is likely to be problematic.
[60] In the absence of contrary evidence I find the Scope of the Works submitted by the BSA in submissions to be the appropriate scope. In so finding I am conscious that the BSA will effectively take responsibly for the rectification of the Applicant’s water ingress issues so it is in the BSA’s interests to ensure the water problems are rectified. I note that Mr Hiron indicated that the roof pitch is likely to be problematic.
[61] The second part of the Applicant’s scope of the works is:
(b) Remove all windows from the sunroom, cut down where necessary and reinstall them on to the joists or appropriate wall plates attached to the joists and trim existing floorboards so that they terminate at the inside edge of the window frames.
[62] The BSA disagrees with the necessity to remove the windows and prefers a solution of a platform floor.
[63] Mr Scott gave evidence about the windows forming part of the structural integrity of the wall and that it is not suitable because the windows are not fastened to the bearers and joints. He also gave evidence that the dry rot would mean the windows could not be guaranteed in a cyclone or a major thunderstorm or from impact from within. He gave further evidence that it may be possible to weather proof the area, but not without removing the window frames. Given the evidence of Mr Scott and his established expertise in this matter, I find that the better solution to be the Applicant’s scope of the works.
[64] The third part of the Applicant’s scope of the works is:
(c)Replace all floorboards affected by dry rot.
[65] The Applicant gave evidence that nails are again starting to protrude from the floor boards making it unsafe.
[66] The Authority submitted that Mr Scott did not give evidence that the dry rot represented a structural weakness. I have listened to the recording of the hearing and find that Mr Scott did give that evidence and evidence that it would represent a safety issue as well. In cross-examination Mr Hiron stated he did not think the dry rot was extensive, but did not contradict the proposition put to him that Mr Scott indicated the dry rot amounted to structural weakness and a safety issue and he indicated Mr Scott had probably undertaken a more through investigation.
[67] The BSA accepts that the Applicant’s scope of the works is appropriate if I was to make a finding in favour of the applicant on this issue of dry rot. I make such a finding.
[68] I find this part of the Applicant’s scope of the works is to be the appropriate scope.
[69] The fourth part of the Applicant’s scope of the works is:
(d)Remove all fixings in the floorboards and replace with stainless steel square drive TY/7 screws before filling the screw top cavities with wood putty and sanding and polishing the floor to finish.
[70] The Applicant and Mr Scott gave evidence of nails popping up and twisted floor boards that represent a health and safety risk. I accept that evidence and make a finding consistent with it. The BSA submitted that if I was to make such a finding, which the BSA did not concede, then the Applicant’s scope of the works is appropriate to rectify the defect.
[71] I find this part of the Applicant’s scope to be the appropriate scope.
[72] The fifth part of the Applicant’s scope of the works is:
(e) Secure each blocking piece at the termination of each M12 hold down bolt to its adjoining joists with framing anchors.
[73] The BSA agreed with this solution adding that given the location stainless steel fittings should be used. Based on the common ground I find this to be a part of the scope of the works adding the use of stainless steel fittings.
[74] The sixth part of the Applicant’s scope of the works is:
(f) Fasten each double edged joist to the adjoining bearer with framing anchors.
[75] The BSA agreed with this solution adding that given the location stainless steel fittings should be used. Based on the common ground I find this to be a part of the scope of the works adding the use of stainless steel fittings.
[76] The seventh part of the Applicant’s scope of the works is:
(g) Replace each SHS column with columns, which comply with the design documentation.
[77] The BSA submitted that there was no evidence that these posts represented a risk of failure or amounted to a defect or structural deficiency.
[78] Mr Scott gave evidence that the posts will inevitably corrode from the inside and will not be sufficient to support the structure. When asked about the posts and corrosion he agreed that it “would compromise the structural integrity of the extension.”
[79] In cross examination he conceded that currently the posts comply with the building code, but it is not a matter of owner maintenance that will keep them compliant, as due to the coastal conditions, they will corrode from the inside. Mr Scott also said in cross-examination that the posts will fail at some future date. He stated that he would never recommend these posts as part of any design for this type of use.
[80] In answering questions for the tribunal Mr Scott indicated that a total failure could have a dramatic effect. It would appear to me that posts that will fail in time, because they are not of adequate thickness by design, is an issue that represents an unacceptable safety risk.
[81] I accept the evidence of Mr Scott and find that the SHS columns will compromise the structural integrity at a future unknown date. I find they should be replaced with posts that comply with the design documentation of 3 mm thickness.
[82] The eighth part of the Applicant’s scope of the works is:
(h) Remove all fixings from the timber balustrade on the open deck and replace them with galvanised fixings.
[83] As this is agreed between the parties I find it is to form part of the scope of the works.
[84] The ninth part of the Applicant’s scope of the works is:
(i)Remove and dispose of existing handrail and balustrade components on the unbraced span before installing hardwood timber handrails and balustrade and finish (colour-matched to the finishing of the removed components).
[85] The BSA agrees with this part of the scope adding that a 65 x 65 profiled handrail (otherwise known as bread loaf profile), in hardwood, may only span up to 3000mm. Therefore, to be in strict compliance with the TQ Data Sheet, the new hardwood handrail will need to be a different profile size to that already fitted.
[86] I find that the Applicant’s scope of the works is appropriate adding that the new rail must be compliant with the TQ Data Sheet.
[87] The final two parts of the Applicant’s scope of the works are:
(j)All rectification work to be in accordance with the Building Code of Australia and any manufacturer's recommendations; and
(k)All disturbed areas to be made in good to match existing finishes and, on completion, clean and remove all building rubbish from site.
[88] The BSA agrees with both so they will form part of the scope of the works.
[89] I order the scope of the works to be as follows:
(a)Allow to install over-flashing to weatherproof the patio roof / fascia junction in accordance with the Building Code of Australia. Install new pan inserts to roof profile at existing flashing line. Unscrew bottom row of house roof screws to allow new flashing to slip underneath. Fully seal the new pan inserts with flexible sealant to fully seal. Allow to install new custom made metal flashing system ensuring the flashing extends over the newly installed pan inserts. Allow to over-flash the newly installed flashing ensuring the flashing extends a minimum of 150mm under the existing house roof sheeting. Re-instate existing roof sheeting ensuring all fixings are fully sealed;
(b)Remove all windows from the sunroom, cut down where necessary and reinstall them on to the joists or appropriate wall plates attached to the joists and trim existing floorboards so that they terminate at the inside edge of the window frames;
(c)Replace all floorboards affected by dry rot;
(d)Remove all fixings in the floorboards and replace with stainless steel square drive TY/7 screws before filling the screw top cavities with wood putty and sanding and polishing the floor to finish;
(e)Secure each blocking piece at the termination of each M12 hold down bolt to its adjoining joists with framing anchors using stainless steel fittings;
(f)Fasten each double edged joist to the adjoining bearer with framing anchors using stainless steel fittings;
(g)Replace each SHS column with columns which comply with the design documentation;
(h)Remove all fixings from the timber balustrade on the open deck and replace them with galvanised fixings;
Remove and dispose of existing handrail and balustrade components on the unbraced span before installing hardwood timber handrails and balustrade and finish (colour-matched to the finishings of the removed components). The new handrail is to comply with the TQ Data Sheet;
(j)All rectification work to be in accordance with the Building Code of Australia and any manufacturer's recommendations; and
(k)All disturbed areas to be made in good to match existing finishes and, on completion, clean and remove all building rubbish from site.
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