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  • Unreported Judgment

Felstead v Bundaberg Homes Pty Ltd

 

[2016] QCAT 294

CITATION:

Felstead v Bundaberg Homes Pty Ltd [2016] QCAT 294

PARTIES:

David Nigel Felstead

Kim Felstead

(Applicants)

v

Bundaberg Homes Pty Ltd

(Respondent)

APPLICATION NUMBER:

BDL145-15

MATTER TYPE:

Building matters

HEARING DATE:

10 March 2016, 20 June 2016

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

DELIVERED ON:

11 July 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The application for miscellaneous matters is dismissed.
  2. David Nigel Felstead and Kim Felstead must file in the Tribunal two (2) copies and give to Bundaberg Homes Pty Ltd one (1) copy of a further amended application by:

4:00pm on 19 July 2016

  1. Bundaberg Homes Pty Ltd must file in the Tribunal two (2) copies and give to David Nigel Felstead and Kim Felstead one (1) copy of an amended response to the further amended application by:

4:00pm on 2 August 2016

  1. David Nigel Felstead and Kim Felstead must file in the Tribunal two (2) copies and give to Bundaberg Homes Pty Ltd one (1) copy of a reply to the amended response by:

4:00pm on 16 August 2016

  1. David Nigel Felstead and Kim Felstead must file in the Tribunal two (2) copies and given to Bundaberg Homes Pty Ltd one (1) copy of any further statements of evidence upon which they intend to rely by:

4:00pm on 30 August 2016

  1. Bundaberg Homes Pty Ltd must file in the Tribunal two (2) copies and give to David Nigel Felstead and Kim Felstead one (1) copy of any further statements of evidence upon which they intend to rely by:

4:00pm on 13 September 2016

  1. The application is listed for an Experts’ Conclave to commence in Brisbane at 9:30am on 10 October 2016.
  2. The member of the Tribunal convening the conclave shall have such powers, including making directions or other orders, as are required:
    1. for the conduct of the conclave; and
    2. for the conduct of the proceeding.
  3. The parties must file in the Tribunal two (2) copies of:
    1. The name, specialisation and contact details of the experts to participate in the Conclave; and
    2. An agreed list of issues to be considered by the experts at the Conclave; and
    3. A list of documents provided to their experts by:

4:00pm on 19 September 2016

  1. If the parties are unable to agree on a set of issues, each party must file in the Tribunal two (2) copies and give to each other one (1) copy of a list of issues they propose to be considered by the experts at the Conclave, by:

4:00pm on 26 September 2016

  1. In either case the Tribunal will settle the list of issues to be considered by the experts at the Conclave and will provide the settled list to each party and to the experts, by:

4:00pm on 3 October 2016

  1. The Registrar must provide a copy of the experts’ joint report to the parties within seven (7) days of receipt by the Tribunal.
  2. If the experts prepare a joint report, that report will be the experts’ evidence in chief.  An expert may only submit a further report on issues of disagreement recorded in the joint report.
  3. Except with the Tribunal’s leave, a party may not:
    1. raise a matter not already mentioned in the joint report.
    2. submit evidence from an expert (whether or not they participated in the conclave) that contradicts, departs from or qualifies an opinion about an issue the subject of agreement in the joint report.
    3. submit evidence from any other expert about matters mentioned in the joint report.
  4. The application is listed for a Directions Hearing on a date to be advised.
  5. The parties must file in the Tribunal two (2) copies and exchange one (1) copy of submissions as to the costs of the application which will include any submissions on fixing the costs, by:

4:00pm on 25 July 2016.

  1. The costs of the application will be determined on the papers by written submissions from the parties, and without an oral hearing, not before:

4:00pm on 25 July 2016.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGEMENT FOR DEFENDANT OR RESPONDENT – where respondent asserts applicants’ claim statute barred – where applicants rely assert fraud and rely upon Limitation of Actions Act 1974 (Qld) – building dispute – claim for negligence for pure economic loss – accrual of cause of action –  where respondent asserts non compliance by applicants with s 77(2) Queensland Building and Construction Commission Act 1991 (Qld)

Limitation of Actions Act 1974 (Qld), s 10, s 38

Queensland Building and Construction Commission Act 1991 (Qld), s 19, s 77, Schedule 2

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 47, Schedule 3

Baldwin v Von Knorring [2015] QCATA 107

Bartlett v Barclay’s Bank Trust Co Ltd [1980] Ch 515

Cartledge v E Jopling & Sons Ltd [1963] AC 758

Cyril Smith & Associates Pty Ltd v The Owners – Strata Title Plan No 64970 [2011] NSWCA 181

Dey v Victorian Railways Commissioners (1949) 78 CLR 62

Go & MJ Nominees Pty Ltd v Hollywells Homewares Pty Ltd [2010] QSC 169

Haraba Pty Ltd as trustee for the Haraba Trust trading as Brisbane Gateway Resort v Mortley [2015] QCATA 48

Isherwood v Butler Pollnow Pty Ltd (1986) 6 NSWLR 363

Leyden v NJ Tierney Constructions Pty Ltd [2015] QCAT 483

Lyons v Queensland Building Services Authority & Anor [2011] QCATA 240

Menegazzo v Pricewaterhousecoopers (A Firm) & Ors [2016] QSC 94

Moreton Island Development Group v Smith Development Pty Ltd [2012] QCATA 15

Newgate Stud Co v Penfolds [2004] EWHC 2993 Ch

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27

Ryan v Worthington [2014] QCATA 277

Springfield Land Development Corporation v Melisavon Pty Ltd [2013] QSC 228

The Sands Gold Coast Pty Ltd v Body Corporate for the Sands [2016] QCAT 069

Tito v Waddell [1977] 1 Ch 106

UBAF Ltd v European American Banking Corporation [1984] QB 713

Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514

Winnote Pty Ltd (in liq) v Page (2006) NSWLR 531

APPEARANCES:

APPLICANT:

Mr A Wallace of Counsel instructed by Construct Law Group on 10 March 2016

Mr C Sawford Solicitor, Construct Law Group, on 20 June 2016

RESPONDENT:

Mr L Watt, Solicitor, Doyles Construction Lawyers

REASONS FOR DECISION

What is this application about?

  1. [1]
    Bundaberg Homes Pty Ltd built a home for Mr and Mrs Felstead. They have filed an application for a domestic building dispute. They say that the building works are defective. The Felsteads say that Bundaberg Homes, in breach of the building contract, failed to perform the building works with appropriate skill and care. They also say that Bundaberg Homes owed them a duty of care to carry out the building work with the care and skill of a reasonably competent building contractor and that Bundaberg Homes breached their duty of care. Bundaberg Homes says that the claim by the Felsteads is statute barred. Bundaberg Homes has filed an application to dismiss the proceeding.

A short history of the dispute

  1. [2]
    In 2008 the Felsteads entered into a contract with Bundaberg Homes for the construction of a house. A soil test, performed prior to the commencement of building works, identified the soil upon which the home was to be constructed as being ‘H’ highly reactive.[1]
  2. [3]
    The building works were completed in December 2008. When the Felsteads took possession of the property there were no floor coverings in the dwelling apart from tiling in the wet areas. The Felsteads observed at this time that at various positions around the dwelling concrete and plastic connected to the foundations was exposed.[2]
  3. [4]
    In about January 2009 the Felsteads noticed some dampness and efflorescence along the inside perimeter of the dwelling. They decided to ask Bundaberg Homes about the issue at the time of the six month maintenance check.[3]
  4. [5]
    In or about February 2009, the Felsteads observed a wet patch along the wall in the kitchen pantry.[4] An email was sent by Mrs Felstead to Bundaberg Homes advising that the:[5]

Inside wall in the kitchen has a wet patch at the base of the wall. It runs almost the whole length of the wall. We are concerned that there is a leak somewhere and we have water leaking into the walls and onto the concrete floor.

  1. [6]
    That month, the Felsteads attended a meeting with the nominee and building supervisor for Bundaberg Homes, Mr John Zande. At that meeting, the Felsteads raised the dampness issues. The Felsteads say that Mr Zande told them that the cause of the dampness was water rising through the slab and that it would stop as the slab dried out over time. The Felsteads say that based upon Mr Zande’s assurances they were satisfied that the dampness and efflorescence was nothing to be concerned about.[6]
  2. [7]
    In September 2009, a further meeting took place on site attended by the Felsteads, Mr Zande and Mrs Debra Randall, the Operations Manager for Bundaberg Homes. The issue of the dampness and efflorescence was again discussed. The Felsteads says that they were advised by Mr Zande that the slab was drying out, that the dampness and efflorescence were not defects and that tiling laid on the concrete would prevent the damp coming through.[7]
  3. [8]
    Between 2009 and 2015 the Felsteads carried out various improvements to the property, both internal and external, including the laying of tiles and carpets, the construction of concrete paths, the installation of drainage works and landscaping work.
  4. [9]
    In April 2014, the Felsteads met with Mr Zande on site after wet carpet, damp skirting boards and wet underlay was identified in one of the bedrooms. The Felsteads say that Mr Zande informed them that ‘water had been reaching the footing via the expansion foam which could be seen as the bricks below the damp course were visibly darker.[8]
  5. [10]
    In June 2015 Mr Felstead, after lifting the carpet in the childrens’ bedrooms noted that the slab was visibly wet.[9] Following this, Mr Zande again attended at the property together with Mr Randall. Mr Felstead says that Mr Zande and Mr Randall were unable to explain the ongoing moisture issues. Following this, the Felsteads lodged a complaint with the Queensland Building and Construction Commission (QBCC) regarding the ongoing damp problem.[10]
  6. [11]
    The Felsteads filed an application for a domestic building dispute in the Tribunal in July 2015. An amended application was subsequently filed in November 2015 (the Amended Application).

The building work and the alleged representations by Bundaberg Homes

  1. [12]
    The Felsteads say that they noticed a ‘salty like appearance’ build up in January 2009 which they now know to be efflorescence.[11] In February 2009, a wet patch on the wall in the kitchen pantry was observed.[12] The Felsteads say that in February 2009, following an inspection of the property by Bundaberg Homes, they were told that the efflorescence and dampness were the result of the slab drying out which would gradually cease over time. They say that they were told by a representative of Bundaberg Homes to install concrete paths around the perimeter of the dwelling to keep water away from the footings.
  2. [13]
    By August 2009, the Felsteads say they were becoming impatient with what they saw as the failure by Bundaberg Homes to address maintenance concerns regarding the property including the internal dampness issues. The Felsteads were of the view by this time that it was not plausible that the cause of these issues was the slab drying out.[13]
  3. [14]
    The Felsteads complained to the (then) Queensland Building Services Authority (QBSA) who advised them to contact Bundaberg Homes and request that they return to rectify, or discuss the rectification of, the defects. They say that when Bundaberg Homes returned to the property in September 2009 they (the Felsteads) were advised to tile the slab to prevent the damp rising up through the slab. This was carried out in September 2009. In July 2010, carpet was laid in a number of rooms in the dwelling. The concrete paths, which the Felsteads say had been recommended by Bundaberg Homes, were laid between September 2011 and August 2014.
  4. [15]
    In April 2014, over 4 years after the tiling was performed and almost 4 years after the carpet was laid, the Felsteads discovered rotting carpet and underlay and damp skirting boards. Again, Bundaberg Homes inspected the property and, according to the Felsteads, advised the Felsteads that the cause of the damp was water having reached the footing via the expanding foam installed between the concrete paths and the brickwork.[14] Bundaberg Homes recommended the removal of the expanding foam and the application of a polyurethane product. Between April 2014 and January 2015 this work was undertaken. By June 2015 the Felsteads say that the problem with the wet underlay remained.
  5. [16]
    Again, say the Felsteads, they contacted Bundaberg Homes who expressed bafflement at the cause of the ongoing problems. It was suggested that an agricultural drain be installed. Bundaberg Homes also advised that they intended involving the HIA to better understand the problem.[15]

The application by Bundaberg Homes

  1. [17]
    Bundaberg Homes, relying upon s 47(1) of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act), seeks to have the Felsteads’ application dismissed on the basis that it is frivolous, vexatious or misconceived or is otherwise an abuse of process. Bundaberg Homes says that the Felsteads’ failed to commence the proceeding within the six (6) year limitation period applicable to actions for negligence and breach of contract and thus the cause of action is statute barred.[16]
  2. [18]
    Alternatively, Bundaberg Homes seeks to have a number of paragraphs in the Amended Application struck out as an abuse of process on the basis that they do not enliven s 77(1) of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).
  3. [19]
    Further, or in the alternative, Bundaberg Homes seeks to have the Felsteads’ application struck out as an abuse of process on the basis that s 77(2) QBCC Act has not been enlivened.
  4. [20]
    Bundaberg Homes seeks a final decision in its favour including an order for costs.

What do the parties say?

  1. [21]
    Bundaberg Homes says that the Felsteads’ cause of action arose on or prior to 15 December 2008, being the date construction of the dwelling was completed.[17] Bundaberg Homes does not make clear in its submission whether the cause of action being referred to is that in contract or the claim in negligence. It says that the Felsteads were aware of the cause of action on or before 1 January 2009 when they lodged an online complaint with the QBCC. As a result, says Bundaberg Homes, the Felsteads’ cause of action was statute barred at the time they filed their application on 25 June 2015.
  2. [22]
    Bundaberg Homes says that there is no material fact of a decisive character upon which the Felsteads can rely to seek an extension of the limitation period.
  3. [23]
    Bundaberg Homes says that the Tribunal’s jurisdiction is enlivened when an enabling Act, in this instance the QBCC Act, confers jurisdiction on the Tribunal. Bundaberg Homes says that the claim by the Felsteads, insofar as it relates to allegations of representations said to have been made by Bundaberg Homes to the Felsteads, is not a ‘building dispute’ and that in the absence of a building dispute the Tribunal does not have jurisdiction in respect of the application by the Felsteads.
  4. [24]
    Bundaberg Homes says that the Felsteads have not complied with s 77(2) of the QBCC Act which requires a party to comply with a process established by the QBCC to attempt to resolve the dispute prior to applying to the Tribunal.
  5. [25]
    The Felsteads say that the cause of action in negligence did not arise until the defect in the dwelling became manifest and they became aware of the connection between the defect and the building work performed by Bundaberg Homes. They say that Bundaberg Homes concealed the cause of the defect and that by operation of s 38(1) Limitation of Actions Act 1974 (Qld) (LAA), the limitation period in respect of both the claim in negligence and the claim in contract did not begin to run until they discovered the fraud.
  6. [26]
    The Felsteads say that they have complied with the requirements of the QBCC Act and that the Tribunal has jurisdiction to hear and determine their claim.
  7. [27]
    The Felsteads say that the reliance by Bundaberg Homes on the date of 1 January 2009 (as being the date of discovery of the defect) referred to in the complaint form lodged by the Felsteads with the QBCC is misconceived. They refer to the numerous interactions with Bundaberg Homes after the problems were first identified in January 2009 and say that they relied upon ‘the numerous representations given to them by representatives of the respondent that the damp issue was not a problem and more specifically, that it was not caused through the fault of the Respondent’.[18]
  8. [28]
    The Felsteads say that, at best, Bundaberg Homes was ignorant as to the true cause of the problems. At worst, they say, Bundaberg Homes was complicit in the concealment of the significance of the defect and thereby fraudulently concealed the cause of action. The Felsteads say that Bundaberg Homes was aware of the problems associated with slab edge dampness having had similar problems with dwellings constructed during the same period as the Felsteads’ home.[19]
  9. [29]
    The Felsteads say that the limitation period in respect of the claim for breach of contract is extended by reason of the fraudulent concealment of the defect by Bundaberg Homes.[20] They say that the limitation period in respect of their claim in negligence began to run when the latent defect, being the negligent construction of the concrete slab and footing, first became known or manifest in the sense of being discoverable by due diligence. The Felsteads say that they really only became properly appraised of the defect after engaging their expert, Mr Wright, and the receipt of his draft report in October 2015.
  10. [30]
    The Felsteads say that their cause of action is not based upon misrepresentation. They say that the representations referred to in the Amended Application go to the reliance placed by the Felsteads on the advices of Bundaberg Homes which is relevant to when the cause of action arose and the limitation period began to run.
  11. [31]
    Finally, in relation to the issue of compliance with s 77(2) of the QBCC Act, the Felsteads say that there was no dispute resolution process with which they could comply or if there was, then they complied with it prior to filing their application.
  12. [32]
    In response, Bundaberg Homes says that s 38(1)(b) LAA requires concealment of the right of action by a respondent or the respondent’s agent being the right of action to commence the application in the Tribunal. Bundaberg Homes says it is not submitted that they concealed the right of action and that the Amended Application does not plead fraud at all.
  13. [33]
    Bundaberg Homes says that the alleged fraudulent representations by its representative relied upon by the Felsteads were made after the conclusion of the consideration and performance of the contract. It follows, says Bundaberg Homes, that the Tribunal does not have jurisdiction to find fraudulent misrepresentation when the alleged misrepresentation is not part of the performance of the contract.
  14. [34]
    Bundaberg Homes says that it is unclear when the Felsteads claim that they discovered the fraud. It says that the question of when the fraud was discovered is entirely different to the question of when the cause of action arose.
  15. [35]
    Finally, Bundaberg Homes says that had the Felsteads exercised reasonable diligence they would have been aware of all the facts now known at an earlier time. 

The issues for determination on the application

  1. [36]
    The application by Bundaberg Homes calls for the determination of the following issues:
    1. has the claim by the Felsteads been commenced within the relevant limitation period?
    2. Does the Tribunal have jurisdiction to hear and determine the claim by the Felsteads as presently framed in the Amended Application?
    3. Did the Felsteads comply with the requirements of the QBCC Act before commencing the proceeding?

Section 47(1) QCAT Act

  1. [37]
    The application by Bundaberg Homes is, essentially, an application for summary judgement. Bundaberg Homes relies upon s 47(1) QCAT Act:

47 Dismissing, striking out or deciding if unjustified proceeding or part

  1. (1)
    This section applies if the tribunal considers a proceeding or a part of a proceeding is—
  1. (a)
    frivolous, vexatious or misconceived; or
  1. (b)
    lacking in substance; or
  1. (c)
    otherwise an abuse of process.
  1. (2)
    The tribunal may—
  1. (a)
    if the party who brought the proceeding or part before the tribunal is the applicant for the proceeding, order the proceeding or part be dismissed or struck out; or
  1. (b)
    for a part of a proceeding brought before the tribunal by a party other than the applicant for the proceeding—
  1. (i)
    make its final decision in the proceeding in the applicant’s favour; or
  1. (ii)
    order that the party who brought the part before the tribunal be removed from the proceeding; or
  1. (c)
    make a costs order against the party who brought the proceeding or part before the tribunal to compensate another party for any reasonable costs, expenses, loss, inconvenience and embarrassment resulting from the proceeding or part.

...

  1. (3)
    The tribunal may act under subsection (2) on the application of a party to the proceeding or on the tribunal’s own initiative.
  1. (4)
    The tribunal’s power to act under subsection (2) is exercisable only by—
  1. (a)
    the tribunal as constituted for the proceeding; or
  1. (b)
    if the tribunal has not been constituted for the proceeding—a legally qualified member or an adjudicator.
  1. [38]
    A proceeding means a proceeding before the Tribunal.[21] A final decision of the Tribunal in a proceeding means the Tribunal’s decision that finally decides the matters the subject of the proceeding.[22]
  2. [39]
    Section 47(2)(a) empowers the tribunal to strike out or dismiss a proceeding or part of a proceeding brought by an applicant. It requires the exercise of a discretion by the tribunal. In exercising the discretion it is necessary to consider whether it is either necessary or appropriate to do so in the circumstances.[23]

The expert evidence

  1. [40]
    Mr Peter Wright, an engineer, has provided a report to the Felsteads.  Mr Wright inspected the property in September 2015. Mr Wright identified dampness in the slab in a number of rooms in the house. Mr Wright expressed the opinion that the damage and mould he identified were caused by external moisture entering the building through the edge of the floor slab by capillary suction.  The cause of the entry of the moisture was identified by Mr Wright as:
    • the edge of the floor slab not being constructed in a manner to prevent external moisture entering the building;
    • the external ground surface surrounding the slab has not been graded so as to drain and move surface water away from the building.
  2. [41]
    Mr Wright expresses the opinion that the ‘available evidence points to the water source being surface water that lied [sic] on top of the footing for periods of time’ and that the existence of a damp proof membrane ‘would tend to eliminate the possibility that the water supply is from beneath the slab’. Mr Wright says that the surface water could be entering the concrete through the top of the footing; the vertical face of the slab; or the vertical face of the footing.
  3. [42]
    Mr Wright opines that following heavy rain, water accumulates on top of the footing and that the surface water would percolate through the porous silty sand subsoil and the crusher dust bedding beneath the concrete paths constructed by the Felsteads around the dwelling thus exposing all three surfaces (referred to at [6.5] of his report) to free water.
  4. [43]
    Mr Wright refers to a number of issues relating to the building works and the non-compliance by Bundaberg Homes with the Building Code of Australia. Mr Wright identifies the cause of the damage to the dwelling as the result of external moisture entering the building through the edge of the floor slab by capillary suction.
  5. [44]
    Mr Rob Marshman, an engineer, has provided a report to Bundaberg Homes.[24] Mr Marshman identified damage consisting of timber rot and mould in carpets and timber framing and degradation of concrete and brick-work through moisture ingress and salt attack[25] caused by moisture ingress to the slab as a result of poor workmanship.[26] Mr Marshman says that the moisture has been provided access to the slab via a layer of permeable gravel material laid under the concrete paths. These concrete paths were installed by the Felsteads. Mr Marshman says that the permeable gravel material, combined with the raising of ground surface levels around the concrete paths and also combined with a continual supply of water around the house (by the Felsteads) has ensured the material under the paths is generally wet. He says that if it was not possible to construct the perimeter paths and patio level with the footings, the filling of the cavity should have been undertaken, in addition to the work to the pathways, to facilitate drainage of the cavity when the surrounding surface levels had been raised.[27]

Consideration and discussion

  1. [45]
    The cause of action for breach of contract arises upon the breach. The time for commencing proceedings for breach of contract may be extended in appropriate cases by operation of s 38(1) LAA.
  2. [46]
    Ordinarily, a cause of action in negligence arises when a plaintiff first suffers material damage or relevant loss, providing the damage is more than negligible and the loss measurable.[28]  Both parties refer to the decision of the Court of Appeal in Melisavon Pty Ltd v Springfield Land Development Corporation Pty Limited.[29]
  3. [47]
    Melisavon involved an appeal from a decision to refuse an application for summary judgment in circumstances where the plaintiff (Springfield) asserted that Melisavon had negligently performed structural engineering consulting or design work. At first instance, the learned primary judge refused the application for summary judgment relying upon Cyril Smith & Associates Pty Ltd v The Owners – Strata Title Plan No 64970[30] and Pullen v Gutteridge Haskins & Davey Pty Ltd,[31] finding that a factual investigation was required as to when the plaintiff first became aware, or ought to have become aware, that it had sustained loss because of the alleged defective work. The learned primary judge held that a factual determination was not one amenable to determination on a summary judgment application.[32] Melisavon appealed the decision.
  4. [48]
    In her judgment dismissing the appeal, the President of the Court of Appeal undertook a detailed examination of the relevant authorities finding:[33]

Ordinarily, a cause of action for tortious negligence is complete when there is any manifestation of damage which is ultimately found to be connected to the alleged negligence. But it is at least arguable that this is a case of pure economic loss where in Australia that principle has been modified. The incremental development in Pullen of the legal principles established in Hawkins v Clayton has been followed in a number of jurisdictions. Until the High Court says otherwise, the cause of action in the present case was complete when the respondent suffered economic loss, that is, when the respondent had actual knowledge of the appellant's faulty engineering design or when the faulty design itself became manifest or could be discovered by reasonable diligence.

  1. [49]
    Holmes JA (as she then was) reached a different conclusion in finding that the action was commenced outside the limitation period. Her Honour considered that the issue for determination was whether, in a claim for pure economic loss emanating from a latent building defect, the cause of action accrues on the appearance of the damage or only once the damage is traceable to its source by the application of reasonable diligence.[34]
  2. [50]
    Contrary to the view taken by the President, Holmes JA disagreed that Pullen is authority for the proposition that the cause of action does not accrue until the link between the physical manifestation and the underlying defect is known or ought to be known. Her Honour found that Pullen adopts the conventional approach that the cause of action accrues where actual damage caused by a latent defect is manifested or the existence of the underlying defect is known or ought to be known.[35]
  3. [51]
    As to statements made by Melisavon to the plaintiff that the defects were caused by factors other than Melisavon’s design, Her Honour found that it was:[36]

…not to the point that the respondent was misled as to the cause of the cracking. It was the product of the defect and was plainly not so minimal as not to produce economic loss...

  1. [52]
    Ann Lyons J in agreeing with the comments by President McMurdo held:[37]

… this is an area of Australian law which is indeed developing incrementally as courts apply the principles established in Heyman and Hawkins v Clayton to the various factual circumstances which inevitably arise.

  1. [53]
    Her Honour expressed no concluded view as to the correctness or otherwise of the differing approaches taken by the President and Holmes JA to the central issue of when the cause of action arose, finding that there was a factual controversy which required the making of findings of fact at a trial.
  2. [54]
    Until the Court of Appeal conclusively rules on the issue, the state of the law in Queensland is unclear as to when the cause of action arises in a claim for negligence for pure economic loss involving defective building or related work.
  3. [55]
    However, for the reasons which follow, it is not necessary for me to determine the issue of when the causes of action arose in order to dispose of the application by Bundaberg Homes.
  4. [56]
    The Amended Application refers to a number of representations made by Bundaberg Homes (“the representations”) and pleads that, by operation of the LAA, Bundaberg Homes is estopped from relying upon the limitations defence.[38]
  5. [57]
    Bundaberg Homes, in its response to the Amended Application, asserts that the Felsteads were required to make an application to extend the limitation period under s 31(2)(a) LAA. Bundaberg Homes subsequently expanded upon this argument in their submissions in support of the present application.
  6. [58]
    Section 31 LAA is concerned with the extension of the limitation period in circumstances where a material fact of a decisive character was not within the means of knowledge of an applicant until the last 12 months of the limitation period or thereafter.[39] The section has application in claims for damages for personal injury or damages in respect of injury resulting from death.[40] Section 31 LAA has no application in this proceeding and the submission by Bundaberg Homes is misconceived.
  7. [59]
    In the Amended Application, the Felsteads say:[41]

To the extent that the Respondent relies on Limitation of Actions Act 1974 (Qld) (LOA Act), the Applicants says (sic) by reason of their reliance on the … Representations and the provision of the Remedial Advice that the Works were not defective, … the Respondent is estopped from relying on the LOA Act as a defence to these proceedings.

  1. [60]
    Whilst the amended application does not expressly refer to the particular section, the Felsteads in their submissions rely upon s 38(1) LAA:[42]

38 Postponement in cases of fraud or mistake

  1. (1)
    Where in an action for which a period of limitation is prescribed by this Act—
  1. (a)
    the action is based upon the fraud of the defendant or the defendant’s agent or of a person through whom he or she claims or his or her agent; or
  1. (b)
    the right of action is concealed by the fraud of a person referred to in paragraph (a); or
  1. (c)
    the action is for relief from the consequences of mistake;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud or, as the case may be, mistake or could with reasonable diligence have discovered it.

  1. [61]
    The phrase ‘is concealed by the fraud’ in s 38(1)(b) does not confine fraud to its common law sense. The term ‘fraud’ has been construed as including conduct which was ‘unconscionable having regard to the relationship between the parties’.[43] The section applies where the circumstances supporting the cause of action have been concealed.[44]
  2. [62]
    Bundaberg Homes says that the Tribunal does not have jurisdiction to make findings in relation to the alleged fraudulent misrepresentations when the misrepresentation is not part of the performance of the contract.[45] The Tribunal is a creature of statute, its powers being derived from various Acts of the Queensland Parliament including, in this instance relevant to the contract entered into between the parties in 2008, the QBCC Act and the Domestic Building Contracts Act 2000 (Qld) (DBC Act).
  3. [63]
    A person may apply to the tribunal to have the tribunal decide a building dispute.[46] A building dispute includes a domestic building dispute.[47] A domestic building dispute includes a claim or dispute arising between a building owner and a building contractor relating to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work or a claim or dispute in negligence, nuisance or trespass related to the performance of reviewable domestic work other than a claim for personal injuries.[48] Reviewable domestic work is defined.[49]
  4. [64]
    The dispute between the Felsteads and Bundaberg Homes arises out of the performance of, or otherwise relates to, reviewable domestic work. The tribunal has jurisdiction to hear and determine contractual and tortious claims relating to reviewable domestic work. Depending upon the applicable factual circumstances, the tribunal may be required to consider and determine whether a particular proceeding has been commenced within the relevant limitation period.
  5. [65]
    Section 77(2) of the QBCC Act (as it applies to this dispute) gives the Tribunal a wide range of powers to resolve a building dispute. Those powers are prefaced by the words ‘Without limiting the tribunal’s powers to resolve the dispute…’. The powers conferred upon the Tribunal by the QBCC Act are extremely broad. The list of powers in s 77(2) is not an exhaustive one. It is indicative only and does not limit the orders the Tribunal may make.[50]
  6. [66]
    Similarly, s 77(2) does not operate to limit the findings the Tribunal may make necessary to resolve a building dispute. A finding by the Tribunal relevant to determining the relevant period of limitation and the application of s 38(1) LAA, is not limited in any way by s 77(2) QBCC Act. In any event, such a finding would not necessarily of itself “resolve” a dispute and could not be captured by s 77(2) even if the very restricted interpretation contended for by Bundaberg Homes is accepted. The Tribunal has jurisdiction to make findings relating to the representations relied upon by the Felsteads in the Amended Application. The representations go to matters concerning the concealment of the circumstances supporting their cause of action.
  7. [67]
    There is clearly a factual controversy concerning what was said, by whom, and when, which will require the tribunal to make findings of fact following the hearing. As the evidence presently stands, the Felsteads face some challenges in establishing that the representations amount to fraud within the meaning of s 38(1) LAA, however it could not be said that they have no real prospects of successfully arguing the point. Whether the representations relied upon by the Felsteads amount to fraud within the meaning of s 38(1) is not a matter to be determined on an application for summary judgment. 
  8. [68]
    The evidence is unclear as to when damage was first sustained to the Felsteads’ home. The evidence is also unclear as to the connection between the efflorescence identified in January 2009 and the defect alleged by the Felsteads. The Felsteads say that the appearance of the efflorescence in January 2009 is not evidence of damage. They say that no damage was sustained at that time and that they were not aware of the existence of actual damage until June 2015 when the carpet in the childrens’ bedrooms was lifted.
  9. [69]
    The expert reports do not address the issue of the nature and extent of the problem that became manifest in January 2009.  There is a factual dispute about when damage, not negligible, was first sustained and whether the appearance of the efflorescence was connected with the defect identified by the Felsteads’ expert.
  10. [70]
    There is a factual dispute as to the cause of the damage to the Felsteads’ home. The expert for Bundaberg Homes identifies the cause of the damage as the construction, by the Felsteads, of the concrete paths around the house.  The paths, say the Felsteads, were constructed by them at the suggestion of Bundaberg Homes. These are matters which are properly the subject of evidence and findings at a hearing.
  11. [71]
    The parties will be required to file further evidence which may include further expert evidence. A conclave of the experts will be required which may further clarify the issues. Factual issues relevant to the expert evidence will need to be explored at the hearing and findings made.
  12. [72]
    An application for summary judgment should only succeed in cases where it is clear that the plaintiff has no real prospects of success and there is no need for a trial.
  13. [73]
    In Melisavon Ann Lyons J observed:

…when an application for summary judgment is based on a statute of limitations defence then it should only succeed if the evidence about the nature of the alleged damage which has been sustained is such that a trial is not required to settle any controversy in relation to the facts. It would seem to me that in this regard a high degree of certainty is required and it is only in the clearest of cases that an application for summary judgment should succeed.

  1. [74]
    Given the controversy in relation to the facts as outlined in these reasons, this is not one of those ‘clearest of cases’ in which an application for summary judgement should be granted.
  2. [75]
    Bundaberg Homes seeks an order striking out parts of the Amended Application. The Tribunal may, at any time in a proceeding, make an order requiring that a relevant document be amended.[51] This relief is analogous to the relief sought on an application under r 171 Uniform Civil Procedure Rules.[52]
  3. [76]
    The power to order an amendment found in s 64 QCAT Act includes striking out all or part of a relevant document. The Amended Application is a relevant document. The exercise of the discretion to strike out requires a consideration of the factors relevant in an application under UCPR r 171: ensuring that relevant documents filed in the Tribunal disclose a reasonable cause of action or defence, do not prejudice or delay the fair trial of the proceeding, are not unnecessary or scandalous, frivolous or vexatious or otherwise an abuse of process.[53]
  4. [77]
    The grounds relied upon by the Felsteads in relation to their claims in contract and tort are not so clearly untenable that they cannot possibly succeed.[54] It would not be appropriate to order the striking out of the parts of the amended application as sought by Bundaberg Homes.
  5. [78]
    Section 77(2) of the QBCC Act requires a person applying to the Tribunal in respect of a building dispute to first comply with a process established by the QBCC to attempt to resolve the dispute.
  6. [79]
    As I observed in Leyden v NJ Tierney Constructions Pty Ltd,[55] any consideration of the application of s 77(2) requires two questions to be addressed:
    1. Is there a process established by the QBCC to attempt to resolve the dispute?; and
    2. If so, did the applicant comply with the process?
  7. [80]
    Bundaberg Homes relies upon the letter from the QBCC to the Felsteads attached to the application which reads in part:

I refer to your complaint about building work performed by Bundaberg Homes Pty Ltd at the above property.

QBCC cannot issue a Direction to Rectify to Bundaberg Homes Pty Ltd as more than 6 years and 3 months has passed since the work was completed.

This correspondence serves as notification that you have participated in the QBCC’s dispute resolution process as prescribed by legislation and your case has now been finalised.

  1. [81]
    In Leyden, the applicant was advised by the QBCC that ‘there is no dispute resolution process within the QBCC that applies to this dispute’.[56] These facts are to be distinguished from the present case where the QBCC has advised the Felsteads that they have participated in the ‘QBCC’s dispute resolution process.
  2. [82]
    Bundaberg Homes says that a ‘process’ is something more than a decision by the QBCC to reject a complaint without any further communication. This submission however would be to mischaracterise the advice from the QBCC to the Felsteads. The QBCC advised the Felsteads of two things: firstly, that a direction to rectify could not be issued as more than 6 years and 3 months had elapsed since the building work was completed; and secondly, that the Felsteads had participated in the QBCC’s dispute resolution process as prescribed by legislation.
  3. [83]
    Section 19 QBCC Act provides that the QBCC board may make a policy governing the administration of the Act. Bundaberg Homes says that the QBCC has not utilised a process established by the QBCC ‘further to s 19 of the QBCC Act’ and that there was no QBCC process that dealt with the Felsteads’ building dispute enlivening s 77(2) QBCC Act. If accepted, the effect of the submission by Bundaberg Homes is firstly that a dispute resolution process should be the subject of a policy under s 19 QBCC Act; and/or if there is no QBCC dispute resolution process dealing with a particular building dispute, a claimant cannot apply to the tribunal and must commence a proceeding in another jurisdiction. I do not accept the submission.
  4. [84]
    The matter of the formulation and implementation of administration policies is a matter entirely for the QBCC. Section 77(2) does not require the relevant QBCC dispute resolution process to be one the subject of a policy governing the administration of the Act pursuant to s 19 QBCC Act.
  5. [85]
    Does the absence of a ‘process’ applicable to a building dispute close the door to the Tribunal to a prospective applicant? If the submission by Bundaberg Homes is correct, and is advanced to its logical (or illogical) conclusion, the QBCC could conceivably have no processes in place to resolve building disputes which would mean that the jurisdiction of the Tribunal is never enlivened under s 77(1) QBCC Act. In interpreting a statute, the context of the words used and the purpose of the statutory provisions must be borne in mind.[57] It is also necessary to look to the mischief the provision is intended to overcome which may result in the provision wearing a very different appearance.[58]
  6. [86]
    In the second reading speech for the Queensland Building and Construction Commission and Other Legislation Amendment Bill which introduced (the now) s 77(2) of the Act, the Minister said:[59]

The bill introduces an early dispute intervention process. This free service will allow the QBCC to mediate disputes within 28 days of them being lodged. In the past, disputes could drag on for months or sometimes years. This gives people peace of mind that any disputes that arise could be resolved quickly and that they can get on with their renovation or construction project quickly without having to resort to QCAT.

  1. [87]
    The explanatory notes to the Bill refer to:[60]

introducing an early dispute intervention process to allow the QBCC to conciliate/mediate disputes between consumers and contractors at no cost.

  1. [88]
    The section in the QBCC Act was introduced to address the issue of parties embarking upon protracted litigation without first engaging in an alternative dispute resolution process. The QBCC Early Dispute Resolution process (EDR) is such a process. As was observed in Leyden, the EDR applies to domestic building disputes between a homeowner and a principal contractor, where the contract value is more than $3,300 and in circumstances where the contract remains on foot. It does not apply where, as here, the contract has been terminated or completed.[61]
  2. [89]
    Whether and what processes, including the EDR, are implemented by the QBCC to attempt to resolve building disputes in a timely manner and without the need to resort to potentially protracted and expensive litigation is a matter for the QBCC. Any such process should be clearly identified and the requirements for compliance with the process equally clear. The rights of prospective applicants to the tribunal should not be adversely affected by any perceived failure by the regulator to clearly articulate its processes. 
  3. [90]
    The intention of the legislature could not have been to create a bar to an applicant accessing the tribunal if the QBCC did not have in place a dispute resolution process applicable to a particular dispute. Such an interpretation would effectively defeat the fundamental purpose of the section.
  4. [91]
    It is not however necessary for me to consider further whether there is a QBCC process which the Felsteads could, and should, have complied with in order to satisfy s 77(2). This is because the QBCC has advised the Felsteads that they have ‘participated in the QBCC’s dispute resolution process as prescribed by legislation’. There is nothing before me to contradict the advice of the QBCC to the Felsteads. It is not necessary for me to determine what the dispute resolution process was. The QBCC was satisfied that its dispute resolution process had been complied with. This is all that s 77(2) requires.

Conclusion

  1. [92]
    For the reasons outlined, it is not appropriate that Bundaberg Homes be granted summary judgement nor is it appropriate that any part of the amended application be struck out. The application by Bundaberg Homes is refused.
  2. [93]
    There are no pleadings in the tribunal. In building disputes and other complex civil litigation conducted in the tribunal it is preferable for the parties to articulate their respective cases in a cogent manner. It is important for the efficient conduct of litigation, and to ensure procedural fairness, that parties understand the issues in dispute and the case they are required to meet.
  3. [94]
    Bundaberg Homes complains that the Amended Application does not specifically refer to, nor assert, fraud on the part of Bundaberg Homes.  Rule 150(1) of the Uniform Civil Procedure Rules 1999 (Qld) requires certain matters to be specifically pleaded including fraud and misrepresentation. Acknowledging that the tribunal is not a pleadings jurisdiction, the documents filed by the parties should nevertheless clearly identify and articulate the issues. If, as they assert in their submissions, the Felsteads seek to rely upon s 38(1) of the LAA, the Amended Application should reflect this. The Felsteads will be given an opportunity to further amend their application to address the issues raised in the application by Bundaberg Homes.
  4. [95]
    I order as follows:
    1. The application for miscellaneous matters is dismissed
    2. David Nigel Felstead and Kim Felstead must file in the Tribunal two (2) copies and give to Bundaberg Homes Pty Ltd one (1) copy of a further amended application by;

4:00pm on 19 July 2016

  1. Bundaberg Homes Pty Ltd must file in the Tribunal two (2) copies and give to David Nigel Felstead and Kim Felstead one (1) copy of an amended response to the further amended application by;

4:00pm on 2 August 2016

  1. David Nigel Felstead and Kim Felstead must file in the Tribunal two (2) copies and give to Bundaberg Homes Pty Ltd one (1) copy of a reply to the amended response by:

4:00pm on 16 August 2016

  1. David Nigel Felstead and Kim Felstead must file in the Tribunal two (2) copies and given to Bundaberg Homes Pty Ltd one (1) copy of any further statements of evidence upon which they intend to rely by:

4:00pm on 30 August 2016

  1. Bundaberg Homes Pty Ltd must file in the Tribunal two (2) copies and give to David Nigel Felstead and Kim Felstead one (1) copy of any further statements of evidence upon which they intend to rely by:

4:00pm on 13 September 2016

  1. The application is listed for an Experts’ Conclave to commence in Brisbane at 9:30am on 10 October 2016.
  2. The member of the Tribunal convening the conclave shall have such powers, including making directions or other orders, as are required:
    1. for the conduct of the conclave; and
    2. for the conduct of the proceeding.
  3. The parties must file in the Tribunal two (2) copies of:
    1. The name, specialisation and contact details of the experts to participate in the Conclave; and
    2. An agreed list of issues to be considered by the experts at the Conclave; and
    3. A list of documents provided to their experts by:

4:00pm on 19 September 2016

  1. If the parties are unable to agree on a set of issues, each party must file in the Tribunal two (2) copies and give to each other one (1) copy of a list of issues they propose to be considered by the experts at the Conclave, by:

4:00pm on 26 September 2016

  1. In either case the Tribunal will settle the list of issues to be considered by the experts at the Conclave and will provide the settled list to each party and to the experts, by:

4:00pm on 3 October 2016

  1. The Registrar must provide a copy of the experts’ joint report to the parties within seven (7) days of receipt by the Tribunal.
  2. If the experts prepare a joint report, that report will be the experts’ evidence in chief.  An expert may only submit a further report on issues of disagreement recorded in the joint report.
  3. Except with the Tribunal’s leave, a party may not:
    1. raise a matter not already mentioned in the joint report.
    2. submit evidence from an expert (whether or not they participated in the conclave) that contradicts, departs from or qualifies an opinion about an issue the subject of agreement in the joint report.
    3. submit evidence from any other expert about matters mentioned in the joint report.
  4. The application is listed for a Directions Hearing on a date to be advised.
  5. The parties must file in the Tribunal two (2) copies and exchange one (1) copy of submissions as to the costs of the application which will include any submissions on fixing the costs by:

4:00pm on 25 July 2016.

  1. The costs of the application will be determined on the papers by written submissions from the parties, and without an oral hearing not before 4:00pm on 25 July 2016.

Footnotes

[1]Affidavit of David Felstead filed 15 January 2016 – Exhibit DNF-3 – Engineering Specification and Certification.

[2]Ibid at [13].

[3]Ibid at [25].

[4]Ibid at [26].

[5]Affidavit of Debra Suzanne Randall sworn 17 February 2016, exhibit “DR-1”.

[6]Affidavit of Debra Suzanne Randall sworn 17 February 2016, exhibit “DR-1” at [27].

[7]Affidavit of David Nigel Felstead filed 15 January 2016 at [37].

[8]Ibid at [113].

[9]Ibid at [117].

[10]Ibid at [125].

[11]Applicants’ submissions, [16]

[12]Ibid at [17]

[13]Applicants’ submissions at [22]

[14]Ibid at [33].

[15]Ibid at [39].

[16]Limitation of Actions Act 1974 (Qld) (LAA), s 10(1)(a).

[17]Respondent’s submissions, [17]

[18]Applicants’ submissions at [48].

[19]Ibid at [49].

[20]LAA, s 38(1).

[21]QCAT Act, Schedule 3.

[22]Ibid, Schedule 3.

[23]Moreton Island Development Group v Smith Development Pty Ltd [2012] QCATA 15.

[24]Report, Rob Marshman dated 17 February 2016.

[25]Ibid at 6.3.

[26]Ibid at 6.4.

[27]Ibid at 6.5 and 6.6.

[28]Melisavon Pty Ltd v Springfield Land Development Corporation Pty Limited [2015] 1  Qd R 476, citing Cartledge v E Jopling & Sons Ltd [1963] AC 758; Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514; Winnote Pty Ltd (in liq) v Page (2006) NSWLR 531.

[29]Ibid.

[30][2011] NSWCA 181.

[31][1993] 1 VR 27.

[32]Springfield Land Development Corporation v Melisavon Pty Ltd [2013] QSC 228.

[33]Op cit 28 at [53].

[34]Ibid at [57].

[35]Ibid at [65].

[36]Ibid at [66].

[37]Ibid at [70].

[38]Ibid at [21].

[39]LAA, s 31(2)(b).

[40]LAA, s 31(1).

[41]Amended application at [21].

[42]Applicants’ submissions at [49].

[43]Menegazzo v Pricewaterhousecoopers (A Firm) & Ors [2016] QSC 94 citing Tito v Waddell [1977] 1 Ch 106 at 245; Lewin on Trusts 19th ed Thomson Reuters, 2015, [44-141]; Bartlett v Barclay’s Bank Trust Co Ltd [1980] Ch 515 at 537; UBAF Ltd v European American Banking Corporation [1984] QB 713; Newgate Stud Co v Penfolds [2004] EWHC 2993 Ch at [253] – [255].

[44]Mantonella Pty Ltd v Grancroft Pty Ltd & Ors [2015] QSC 191 at [36]

[45]Respondent’s supplementary submission at [18]

[46]Queensland Building and Construction Commission Act 1991(Qld) – reprint 8F.

[47]Ibid, Schedule 2

[48]Ibid, Schedule 2

[49]Ibid, schedule 2 and s 8(1), Domestic Building Contracts Act 2000 (Qld) – reprint no. 2

[50]Baldwin v Von Knorring [2015] QCATA 107.

[51]QCAT Act, s 64(1).

[52]The Sands Gold Coast Pty Ltd v Body Corporate for the Sands [2016] QCAT 069.

[53]Ibid

[54]Dey v Victorian Railways Commissioners (1949) 78 CLR 62.

[55][2015] QCAT 483.

[56]Leyden v NJ Tierney Constructions Pty Ltd [2015] QCAT 483 at [5]

[57]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.

[58]Isherwood v Butler Pollnow Pty Ltd (1986) 6 NSWLR 363 at 388

[59]Hansard, 7 August 2014 at 2553.

[60]Explanatory Notes, Queensland Building and Construction Commission and Other Legislation Amendment Bill 2014.

[61]Op cit 56 at [21].

Close

Editorial Notes

  • Published Case Name:

    Felstead v Bundaberg Homes Pty Ltd

  • Shortened Case Name:

    Felstead v Bundaberg Homes Pty Ltd

  • MNC:

    [2016] QCAT 294

  • Court:

    QCAT

  • Judge(s):

    Senior Member Brown

  • Date:

    11 Jul 2016

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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