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Goldfield Projects Pty Ltd v Queensland Building and Construction Commission  QCAT 362
Goldfield Projects Pty Ltd
Queensland Building and Construction Commission
General administrative review matters
2 June 2016
4 October 2016
APPLICATION TO REVIEW - DIRECTION TO RECTIFY – whether building work defective – whether category 1 defect – whether Direction invalid – whether Direction unfair.
Statutory Instruments Act 1992 (Qld), s 7
Queensland Civil and Administrative Tribunal Act 2009 (Qld), ss 20, 24
Queensland Building and Construction Commission Act 1991 (Qld), ss 72, 86, 87
Queensland Building and Construction Commission Regulation 2003 (Qld) s 5
R v His Honour Judge Miller and Builder’s Registration Board, ex parte Graham Evans and Co (Qld) Pty Ltd  2 Qd R 446
Ramke Constructions Pty Ltd v Queensland Building Services Authority (No 2)  QCAT 575
Ms Cheriden Farthing for the QBCC
McKays solicitors for the applicant
REASONS FOR DECISION
- Goldfield Projects Pty Ltd (Goldfield) seek to review a decision by the Queensland Building and Construction Commission (QBCC) on 11 February 2014 to issue a Direction to Rectify to it in relation to a leaking toilet. The direction was issued to Goldfield under cover of a letter dated 13 February 2014.
- The toilet was installed in a new home constructed by Goldfield and completed on 17 December 2012. The owner of the property, Teresa Yang, took possession on 18 December 2012.
- Goldfield was first notified that the toilet was leaking almost a year later, on 11 December 2013. On 3 January 2014, Teresa Yang lodged a complaint with the QBCC regarding the toilet. On 20 January 2014, the QBCC wrote to Goldfield requesting that it rectify the problem prior to their inspection of the property on 11 February 2014. The property was inspected by the QBCC on 11 February, following which a direction to rectify was issued giving Goldfield 14 days from the date of service to rectify the problem.
- The Direction was in the following terms:
DIRECTION TO RECTIFY AND/OR COMPLETE No. 39818
Time period for Completion – (14) days from the date of service of this decision.
You are directed to rectify the following defective or incomplete building work within the Time Period for Completion.
The installation of the Toilet Suite to the upstairs bathroom does not comply with the Building Code of Australia 2011 Volume 2 Clause 2.4.1 Wet Areas as water is leaking from within the close coupled Toilet Suite penetrating behind the tiling and emanating at the junction between the skirting tiles and the floor tiles to the right hand side of the toilet suite – Pertains to Item 1 on the BSA complaint form.
- The review filed by Goldfield pursuant to sections 86(1)(e) and 87 of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) raised the following grounds:
- The Direction does not comply with s 72(3) of the QBCC Act;
- The Direction is incorrect;
- The alleged defect is not a category 1 defect;
- The QBCC did not consider all relevant matters;
- It would be unfair in the circumstances to issue the direction.
The review framework
- The Tribunal is required to stand in the shoes of the QBCC in the exercise of its discretion as to whether a builder should be directed to rectify defective building work. The Tribunal, on review, is required to produce the correct and preferable decision and to proceed by way of a fresh hearing on the merits. The Tribunal can confirm or amend the decision, set aside the decision and substitute its own decision, or set aside the decision and return the matter for reconsideration to the decision-maker.
The statutory framework
- The parties agreed that the relevant reprint of the QBCC Act was that which was current at the time the direction to rectify was issued on 13 February 2014. This is reprint “current as at 1 December 2013”.
- The discretionary power to issue a direction to rectify derives from s 72 of the QBCC Act. Section 72(1) provides:
If the commission is of the opinion that building work is defective or incomplete, the commission may direct the person who carried out the building work to rectify the building work within the period stated in the direction.
- Before exercising the discretion to issue a direction in relation to certain work, the following pre-conditions must be satisfied:
- the work is “building work”;
- it was defective or incomplete; and
- the person to whom the direction was issued, carried out the work.
- Once the pre-conditions are met, the Tribunal has the power to decide whether to issue a direction. In exercising the discretion, the Tribunal can take all circumstances it considers reasonably relevant into account and, in particular, is not limited to a consideration of the terms of the contract for carrying out the building work.
- Further, s 72(14) provides that:
The commission is not required to give a direction under this section to a person who carried out building work for the rectification of the building work if the commission is satisfied that, in the circumstances, it would be unfair to the person to give the direction.
- The Queensland Building Services Board (Board) made a Rectification of Building Work Policy (the Rectification Policy) which sets out when it may be unfair or unreasonable to issue a direction. The Rectification Policy is a statutory instrument which must be applied by the Tribunal in reaching its decision. The relevant policy is the one that was current at the time the direction was issued. This is the policy approved by the Board on 12 May 2010 and which took effect on 1 July 2010. Under the Rectification Policy, defects are categorised according to whether they are category 1 or category 2 defects. The categorisation affects the issue of whether a delay by an owner in making an application for a direction is considered unfair or unreasonable in the circumstances.
- In particular, clause 3(2) of the Rectification Policy provides:
For section (1), it may be unfair or unreasonable, for example, to issue a direction if any of the following apply:
(a) for category 1 defective building work or residential construction work causing subsidence, the delay exceeds 3 months after the defective work became apparent; or
(b) for category 2 defective building work, the delay exceeds:
(i) 6 months after the building work was completed or left incomplete; or
(ii) 7 months, if the owner notified the contractor of the defect within 6 months after the building work was completed or left incomplete.
- “Defective building work” is defined in the Rectification Policy to mean:
Building work that is faulty or unsatisfactory, and includes, for example, work that:
(a) does not comply with the Building Act 1975, Building Code of Australia or an applicable Australian Standard
(b) involves the use of a manufactured product, and that product has been used, constructed or installed in a way that does not comply with the product manufacturer’s instructions.
- “Category 1 defective building work” is defined in the Rectification Policy to mean:
…defective building work (other than residential construction work causing subsidence) that is faulty or unsatisfactory because it does one or more of the following:
(a) adversely affects the structural performance of a building;
(b) adversely affects the health or safety of persons residing in or occupying a building;
(c) adversely affects the functional use of a building;
(d) allows water penetration into a building.
- “Category 2 defective building work” is defined in the Rectification Policy to mean:
Defective building work (other than category 1 defective building work or residential construction work causing subsidence) that is faulty or unsatisfactory because:
(a) it does not meet a reasonable standard of construction or finish expected of a competent holder of a contractor’s licence of the relevant class; or
(b) it has caused a settling in period defect in a new building.
- Under s 72(3), the direction must give the builder at least 28 days to rectify the building work unless the decision-maker is satisfied that, unless a shorter period applies:
- a substantial loss will be incurred by, or a significant hazard would be caused to the health or safety of, a person because of the defective building work; or
- the defective building work will cause a significant hazard to public safety or the environment generally.
- Further, s 72(4) provides that, subject to subsection (3), the period given must be a period the decision-maker considers appropriate in the circumstances.
- Generally, a direction to rectify must be given within 6 years and 3 months of the building work having been completed.
- A failure to comply with a direction is an offence and can have serious consequences in terms of a builder’s licence.
Was the work “building work”?
- “Building work” is defined in Schedule 2 of the QBCC Act. The definition goes from the broad to the specific and provides:
Building work means-
(a) the erection or construction of a building; or
(b) the renovation, alteration, extension, improvement or repair of a building; or
(c) the provision of lighting, heating, ventilation, airconditioning, water supply, sewerage or drainage in connection with a building; or
(d) any site work (including the construction of retaining structures) related to work of a kind referred to above;
- Section 5 of the Queensland Building and Construction Commission Regulation 2003 (Qld) (the Regulations) provides that, for the Act, schedule 2, definition of building work, work stated in schedule 1AA is not building work. Work excluded by Schedule 1AA of the Regulations includes, relevantly:
11. Work for a water reticulation system, sewerage system or stormwater drain
(1) Construction, extension, repair or replacement of a water reticulation system, sewerage system or stormwater drain, other than works connecting a particular building to a main of the system or drain.
(2) In this section –
building includes a proposed building.
- In my view, the intention of the Act and Regulations was to exclude construction of the sewerage or drainage infrastructure but to include work involved in connecting the building to that infrastructure and any site work associated with that. Building work within the meaning of the Act includes, in my opinion, the installation of a toilet suite and any associated plumbing and drainage.
- Accordingly, I find that the installation of the toilet suite comes within the meaning of “building work” for the purposes of s 72 and is not excluded by regulation.
Was the work defective?
- The term “defective” is defined in Schedule 2 of the QBCC Act to mean “in relation to building work, includes faulty or unsatisfactory.”
- This definition is applied in the Rectification Policy, which gives as examples of “faulty or unsatisfactory” work, work that does not comply with the Building Act 1975, Building Code of Australia or an applicable Australian Standard.
- Whether or not work is defective is to be ascertained objectively.
- The applicant completed construction of the building on 9 November 2012. The owner made a complaint to the QBCC regarding a leaking toilet on 9 January 2014. In that complaint, the owner says she first became aware of the problem on 11 December 2013.
- The complaint by the owner described the defect as follows:
"When flushing water the toilet water is leaking from the back of the toilet badly."
- The complaint item was inspected on 11 February 2014 by Mr Pullar, a building inspector with the QBCC.
- During that inspection, the toilet did not leak from the back of the toilet but, after 20-30 minutes, from the join between the tiles and the skirting board of the wall to the left of the toilet, some 2 metres from the toilet suite.
- The inspection report dated 11 February 2014 states that “It was not possible to determine if the water was from the cistern or the waste.”
- The issue is whether, on the available evidence, I am satisfied on balance that the work was “defective”. The report of the Inspector did not identify the cause of the problem. The owner complained of water leaking from the toilet approximately one year after she took possession of the property. The applicant gave evidence that the leak was remedied after the applicant replaced a rubber seal at the back of the toilet. The applicant gave evidence, which I accept, that the relevant seal is a part that can become misaligned or which may require replacement.
- It also became apparent that the owners had, prior to the direction being issued, called a plumber out to the property. No evidence was given as to what the plumber did. In these circumstances, I cannot be satisfied that the leak was not caused by something that plumber did.
- In these circumstances, I am not satisfied, on the balance of probabilities, that the cause of the leak was defective building work.
- The power to issue a direction depends upon the Tribunal being of the opinion that the building work, when carried out, was defective. Further, a direction to rectify can only be issued to a person who carried out defective building work.
- I find, on the available evidence, there was insufficient evidence that any work done in relation to the toilet or the plumbing associated with the toilet was defective. The fact that there was a small leak some distance away from the toilet more than a year after it was installed is not a sufficient basis, in my view, on which to form that opinion and issue a direction.
- The reasoning above also applies to the arguments raised by the respondent in relation to an alleged breach of the Building Code of Australia, in particular of P2.4.1 titled Wet Areas. The argument that the work was defective because it allowed water to penetrate into concealed spaces and behind linings in a bathroom does not address the issue of when and how the relevant leak occurred. These issues are prerequisites to the exercise of a discretion to issue a direction to rectify.
- In these circumstances, I am not satisfied there was defective building work by the applicant.
- Although this finding is sufficient for the Tribunal to set aside the decision to issue a direction, I note, for completeness that the applicant was a person who carried out the building work within the meaning of s 72(5) of the QBCC Act.
- Although I have concluded that the relevant pre-conditions for the exercise of the discretion to issue the direction have not been met, I note that s 72(14) gives the decision-maker an overriding discretion not to issue a direction where, in the circumstances, it would be unfair.
Is it unfair or unreasonable to issue a direction in the circumstances?
- There is no requirement to issue a direction if the decision-maker is satisfied that, in the circumstances, it would be unfair to give the direction to the person who carried out the building work.
- In considering whether it would, in the circumstances of this case, be unfair to issue a direction, it is relevant to consider the objects of the legislation. The objects, relevantly, include “to achieve a reasonable balance between the interests of building contractors and consumers”.
- The applicant gave evidence which suggested that the owner was under a misunderstanding of the nature and purpose of the rectification provisions under the QBCC Act. The evidence was that the owner had contacted the builder on several occasions prior to the issue of the direction, requiring that the applicant attend the property to fix trivial items such as a flashing light on her oven, blocked plumbing and her comments to the effect that the applicant should come to fix her leaking toilet on the basis that “the house is still under warranty”.
- In my view, even if I was to find that the work was defective and that, therefore, the pre-conditions to the exercise of the discretion to issue the direction had been met, I would consider it unfair to issue a direction in these circumstances.
- In my view to issue a direction would be unfair because:
- There was insufficient evidence as to the cause of the leak;
- The direction was issued on the basis there was a leak;
- The leak occurred approximately one year after the building work was completed;
- The leak was treated by the QBCC as defective building work which required a period of less than the standard 28 day period to apply, notwithstanding that there was no evidence as to whether the water was clear or contaminated;
- The leak was fixed by what would ordinarily be regarded as “maintenance work”;
- The owner had engaged a plumber to attend the property but there was no evidence as to what that plumber did;
- It was accepted by both parties that the owner had an unusually large amount of debris and sewer waste in the drains associated with the relevant bathroom, indicating a lack of maintenance which may, directly or indirectly, have caused the leak.
- In terms of the Rectification Policy, where there was reasonable doubt as to whether the work, assuming it was defective, was category 1 or 2, the delay by the owner in making an application for a direction exceeded 7 months.
- While an important object of the legislation is to maintain building standards, an equally important objective is to achieve a reasonable balance between the interests of building contractors and consumers. In my view, the objective of the maintenance of building standards is not compromised by not issuing a direction in these circumstances. Conversely, issuing a direction would not be striking a reasonable balance between the owner and the applicant.
- The application for review is upheld. I order that the decision of the QBCC made on 13 February 2014 to issue direction No 39818 be set aside.
 Current as at 1 December 2013.
 QBCC Act s 86(1)(e).
 QBCC Act s 87.
 QCAT Act s 20.
 QCAT Act s 24.
 QBCC Act s 72(2).
 Statutory Instruments Act 1992 (Qld) s 7; Ramke Constructions Pty Ltd v Queensland Building Services Authority (No 2)  QCAT 575.
 QBCC Act s 72(3).
 QBCC Act s 72(8).
 Queensland Building and Construction Commission Regulation 2003 (Qld), Clause 11, Schedule 1AA.
 R v His Honour Judge Miller and Builder’s Registration Board, ex parte Graham Evans and Co (Qld) Pty Ltd  2 Qd R 446 at 458.
 QBCC Act s 72(14).
 QBCC Act s 3(a)(ii).
 QBCC Act s 3.
- Published Case Name:
Goldfield Projects Pty. Ltd. v Queensland Building and Construction Commission
- Shortened Case Name:
Goldfield Projects Pty. Ltd. v Queensland Building and Construction Commission
 QCAT 362
04 Oct 2016