Sorrentino v Queensland Building and Construction Commission
[2015] QCAT 313
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- Unreported Judgment
- Sorrentino v Queensland Building and Construction Commission[2015] QCAT 313
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Sorrentino v Queensland Building and Construction Commission[2015] QCAT 313
Sorrentino v Queensland Building and Construction Commission[2015] QCAT 313
CITATION: | Sorrentino v Queensland Building and Construction Commission [2015] QCAT 313 |
PARTIES: | Marc Louis Sorrentino (Applicant) v Queensland Building and Construction Commission (Respondent) |
APPLICATION NUMBER: | GAR096-14 |
MATTER TYPE: | General administrative review matters |
HEARING DATE: | 13 July 2014 |
HEARD AT: | Brisbane |
DECISION OF: | Member Howe |
DELIVERED ON: | 7 August 2015 |
DELIVERED AT: | Brisbane |
ORDERS MADE: | The decision of the Commission to disallow the Applicant’s claim under the statutory insurance scheme is confirmed. |
CATCHWORDS: | General administrative review matters - statutory insurance scheme – evident defect – what objective standard – pre-purchase inspection – delay in complaint – reasonable explanation – inadequate explanation |
APPEARANCES and REPRESENTATION (if any): | |
APPLICANT: | Marc Louis Sorrentino represented himself |
RESPONDENT: | Mr Formby, In-house Counsel for the Queensland Building and Construction Commission |
REASONS FOR DECISION
Background
- [1]Mr Sorrentino purchased and moved into a home at Lota in November 2011. The house was built to the stage of practical completion approximately 3 years before that.
- [2]Mr Sorrentino first noticed water entry problems with the house on 7 March 2012. Water was coming through window areas when they were closed and was running down the walls inside the house. He contacted the builder the following day and asked him to look at the problem. He didn’t follow that up and the bubbling effect with the wall paint disappeared.
- [3]On 28 April 2012 there was another heavy rainfall. Mr Sorrentino noticed water coming into the house at the window areas again. He phoned for the builder and left messages. The builder finally contacted him on 3 May 2012. The builder suggested the guttering may have been full of leaves and suggested he empty the gutters. Mr Sorrentino did that.
- [4]The next heavy rain occurred on 17 November 2012 and water entered through the roof and window areas. Mr Sorrentino contacted the builder again 2 days later. The builder said he was working in Townsville at the time but would be back in Brisbane before Christmas and he would then look at the problem. Mr Sorrentino contacted him again on 23 December 2012 since he had not heard from the builder.
- [5]On 27 January 2013 there was an another large storm and water again entered at various parts of the house. Mr Sorrentino spoke to the builder again and the builder said he would send somebody out to fix the problem. On 1 March 2013 Mr Sorrentino says he contacted the builder again and the builder said he had sent somebody out. His man had found the problem and screwed down roof sheets and siliconed the area where water was coming in.
- [6]Mr Sorrentino experienced no further problems. In September 2013 he was advised the builder’s company had gone into liquidation. Mr Sorrentino tried but was unable to contact the builder. Mr Sorrentino contacted the Queensland Building and Construction Commission. He says he was told to write to the builder which he did on 1 October 2013. He heard nothing back and on 24 October 2013 he made formal complaint to the Commission in relation to the water entry problems.
- [7]A Commission building inspector inspected the property on 19 December 2013. He discovered sill and head flashings to windows and doors were missing. There was also problems with the parapet flashing and an air vent seal on the roof.
- [8]On 12 February 2014 the Commission rejected Mr Sorrentino’s claim under the statutory insurance scheme for the costs of rectification. Mr Sorrentino now seeks review of that decision by this application in the Tribunal.
The Policy
- [9]By clause 2.4 of the policy[1] the Commission is only liable to pay for loss for a category 1 defect where the defect first became evident within 6 years and 6 months after payment of the insurance premium or entering into the construction contract. Water penetration into a house is a category 1 defect.
- [10]Additionally by clause 2.5 the Commission is not liable for payment of loss unless:
“… in the case of a category one defect, the claim is made within 3 months of that defect first becoming evident (in the opinion of the BSA/Commission) ... or within such further time as the BSA/Commission may allow.”
- [11]Further clause 5.2 provides
“Where the insured purchased the land on which residential construction work has been performed, the insured is NOT ENTITLED to payment for loss … where such defect … was, in the opinion of the BSA/Commission, evident prior to completing the contract to purchase the land.”
The Issues
- [12]The following issues fall for determination:
1. Is Mr Sorrentino precluded from claiming under the policy because the construction defects were evident prior to completion of his purchase?
2. Should the discretion to extend the 3 month period of claim under the policy of insurance be exercised in the circumstances?
Construction Defects Evident Prior To Purchase
- [13]Mr Sorrentino purchased the home from the original owner. The Commission submits the absence of head and sill flashings over windows and head flashing over doors was a defect evident prior to Mr Sorrentino completing his purchase. Therefore he is not entitled to a claim under the policy applying clause 5.2.
- [14]Mr Yates, a building inspector for the Commission, said in his opinion the absence of flashing over windows and doors would have been evident to any builder inspecting the property before settlement of the contract. He said any cladded building has potential waterproofing issues. Every opening needs flashing. He had attended the property after a complaint about water entry, but he said even if he had had no knowledge of any water damage and was asked to inspect and report generally he would have looked for and checked the flashing.
- [15]Mr Sorrentino did not have a building inspection done before purchasing his house. He is a real estate agent, not a builder. He did not personally look for or understand the significance of missing flashing. Mr Sorrentino maintains however a pre-purchase inspection would not have helped because the defects identified by Mr Yates were not evident. The house is very high, 3 storeys, something over 7 metres from the ground. Most of the defects Mr Yates found and reported on could only be seen from the roof. Mr Sorrentino referred to Australian Safety Standard AS4349.1 which deals with safe building inspections. The Standard limits inspections to only those areas where safe and reasonable access is available. Safe access to roofs is limited to access using no more than a 3.6m ladder placed at ground level. So a builder would not have accessed the roof and therefore would not have noticed the flashing missing.
- [16]Mr Yates agreed a builder performing a pre-purchase inspection would probably not have got up on the roof. It was too high. But, said Mr Yates, he could have seen that there was no head flashing above a main entry doorway and a window on the ground floor. That would have prompted him to recommend further inspection of flashing to all windows.
- [17]Mr Sorrentino suggested to Mr Yates he had the benefit of hind-sight in his examination. He only saw missing flashing because Mr Sorrentino complained about water leaks to the Commission. Mr Yates claimed any builder performing a pre-purchase inspection on a cladded house should know to check for flashing. It was a common problem with cladded dwellings.
- [18]The Commission’s submission is as follows. The test whether a defect is evident for the purpose of clause 5.2 of the policy is an objective one. The issue is whether the defect was evident. Here the defects were clearly discernible at roof height and that would have been the case prior to purchase. Therefore the defects were objectively ‘evident’ within the meaning of clause 5.2. Whether a builder was engaged to provide a pre-purchase report is irrelevant. The defects were there and objectively evident at the time of purchase. Defects may also be evident if a building inspection is done and the builder doesn’t note them. Therefore whether there was a pre-purchase inspection conducted or not is a red herring and irrelevant to the issue for determination, namely, whether the defect was ‘evident’.
- [19]The Commission relies on Reuter & Anor v QBSA[2] where it was said the test is objective as opposed to the subjective belief or knowledge of the purchaser. But neither that case nor others cited[3] propose a pre-purchase building inspection is irrelevant because the only issue to be decided is whether the defect is ‘evident’. The problem with that simplistic approach is interpreting what is an objectively ‘evident’ defect. There is no guidance in the policy about it. Statements about the meaning of the similar word “apparent” used in decisions dealing with earlier versions of the policy of insurance being interpreted to mean “apparent to the reasonable observer”[4] doesn’t take the matter very far.
- [20]Reuter is an interesting case. The facts in that matter bear striking similarity to many of the circumstances of the present, as too the issues and arguments raised. It concerned water entry at windows caused primarily by a lack of flashing around doors and windows and whether that should have been evident.[5] The decision in Reuter cannot be of much comfort to the Commission. There the purchaser did engage a builder for a pre-purchase inspection, and the Tribunal accepted his evidence that the defect was not evident to him at the time of inspection though the Authority’s inspector suggested, as here, that it should have been. The Tribunal found “… Mr Stuart to be an experienced and knowledgeable builder. He demonstrated understanding of design principles, construction methods and the requirements of the Australian Standards in respect of pre-purchase inspections. I find that if the defect was not evident to Mr Stuart it was not objectively evident.”[6] The objective standard set there was therefore that of defects reasonably observable by an experienced and knowledgeable builder.
- [21]Reuter is also interesting because the Tribunal in that matter also canvassed the possibility of architecturally designed homes without readily visible flashing around windows.[7] Interestingly the inspecting builder in that matter took the view that the issue of flashing was really something that should have been considered at the stage of final inspection by the local Council.[8] In Reuter the Authority’s inspector didn’t seem to think much of that final inspection process. He described a Council’s final inspection as general and minimal.[9]
- [22]In the matter at hand a certifier gave a final inspection certificate on 23 August 2011. He missed the lack of flashing. Though he was not called to give evidence I assume he gave the certificate after an inspection of the property. That was his obligation as certifier and there is no suggestion that an actual inspection did not take place. The primary function of a certifier’s inspections and certification is to confirm the construction work complies with the approved plans and the Building Code of Australia (BCA).
- [23]There were no plans tendered depicting the flashing design. Mr Sorrentino suggested to Mr Yates a moulded head flashing is sometimes used and that sort of flashing would be difficult to see, suggesting by that I take it the absence of flashing would not be obvious as stated by Mr Yates. Mr Yates agreed he had seen that used and it was fairly hard to detect but in his opinion that sort of flashing breached the BCA. Mr Yates himself also mentioned the use of hidden flashing between timber windows which could not be observed externally. Harking back to Reuter, the possibility of an architecturally designed non-visible external flashing system was also raised there.
- [24]At Mr Sorrentino’s house, from ground level there was only one window and one doorway (or two windows – neither Mr Sorrentino nor Mr Yates was quite clear on this point) where flashing, or its absence, could be seen. It was only from the vantage point of the roof, accessed by Mr Yates in breach, apparently, of AS 4349.1, that he was able to observe there was no flashing looking down on the other windows.
- [25]I accept water entry would be an important issue for any builder performing a pre-purchase inspection. However here, unlike Reuter, there was no evidence of water damage at the time of contract.
- [26]I conclude most reasonable builders engaged to inspect and provide a pre-purchase inspection report for this purchase would not have accessed the roof. Accordingly the only flashing areas drawing attention would have been the one door and window (or two windows) visible from the ground floor.
- [27]I conclude I should also take into account that when Mr Yates attended the property he came armed with knowledge of and intending to seek out the point or points of water entry causing water damage. He came looking for the source of that problem. No reasonable builder engaged to provide a pre-purchase report would have had that lead information.
- [28]The possibility of hidden flashing canvassed here between Mr Sorrentino and Mr Yates and the fact that similar issues about missing flashing and the use by some builders of hidden or disguised flashing were raised in Reuter, coupled with the failure here of the certifier to note its absence leads me to conclude that Mr Yates assertion that the lack of flashing would have been evident to all builders performing an inspection for the purpose of a pre-purchase report goes too far. I think the absence of flashing may well have been missed by a reasonably competent inspecting builder engaged to provide a report as to condition at the time of purchase.
- [29]By s 3 of the Queensland Building and Construction Commission Act 1991 (Qld) amongst other things the object of the legislation is to achieve a reasonable balance between building contractors and consumers and to provide remedies for defective building work. The home insurance policy is subordinate legislation designed to implement and further those objects. The word ‘evident’ used in the policy should be interpreted with the object scope and purpose of the Act in mind. To that end ‘evident’ defects referred to in clause 5.2 which exclude a home owner from the benefits of the insurance policy that should otherwise pass with the house on a sale should, I determine, be limited to defects a reasonably competent expert such as a builder inspecting the property would observe constrained by adherence to any relevant safety standards limiting the extent of his investigations.
- [30]I therefore conclude in the matter at hand that the missing flashing and other points of water entry in the roof were not evident defects for the purpose of clause 5.2 of the policy when Mr Sorrentino purchased the house. Therefore clause 5.2 does not apply to exclude him from a claim.
Discretion To Extend Period Of Claim
- [31]By clause 2.5 of the policy an insured is not entitled to payment for loss if in the case of a category 1 defect the claim is made within 3 months of the defect becoming evident, or within such further time as the Commission may allow.
- [32]Any extension of time in that regard requires the insured to offer a reasonable explanation as to why the time limit of 3 months should not apply.[10] The Commission says the insured, Mr Sorrentino, is out of time. The Commission argued that the defects the subject of the claim were evident at the time he purchased the property. I have concluded otherwise.
- [33]Mr Sorrentino took possession of the house on 4 November 2011. He first noticed water entry when water caused the paint to bubble around the windows in the entrance way. That occurred on 7 March 2012 following heavy rain. It was of sufficient significance to make him try to contact the builder. The builder didn’t return his call.
- [34]Then on 28 April 2012 there was further heavy rain and this time he noticed water coming into the house through the windows. I understand him to mean water entered near or at the closed windows. Mr Sorrentino had paid $921,000 for the home, a large sum of money. To my mind “bubbling” paint work after rain would be of concern to most home owners. Even more clear and obvious and worrying however would be visible water entry at closed windows. I conclude that taken together, as from 28 April 2012 the defects the subject of his claim under the home warranty insurance became evident in terms of clause 2.5 of the policy.
- [35]Mr Sorrentino only made complaint to the Commission and therefore made a claim under the policy of insurance on 29 October 2013, some 18 months later. He is therefore out of time in respect of his claim unless it is appropriate that an extension of time to apply for cover be granted. The question is should Mr Sorrentino be allowed further time, and if so, how much further time is reasonable?
- [36]The Commission says an extension of time to make claim requires the Commission to be satisfied first that there is a reasonable explanation for delay and if satisfied of that, then whether the Commission is prejudiced by the delay. Here the Commission maintains Mr Sorrentino has offered no reasonable explanation for his delay in making his claim. The Commission points out he made no free search concerning the builder on the QBCC website. He contacted the builder on numerous occasions over an 18 month period until he was informed the builder was in liquidation. During this period a number of promises by the builder were made and not fulfilled despite further damage being caused to the premises. After he found the builder in liquidation it still took a month to contact the QBCC. The Commission says Mr Sorrentino is a real estate agent with experience in negotiations and land contracts and is not a naive and inexperienced homeowner. Therefore there is no reasonable explanation for his delay.
- [37]Mr Sorrentino’s position is that after the incident of the bubbling paint on 7 March 2012 he contacted the builder, Mr Steenland, the next day. He left a message asking him to come over to have a look at the problem. That message went unanswered.
- [38]After the incident of 28 April 2012 he contacted the builder on 29 April 2012 and then again on 1 May 2012 leaving messages on both occasions. On 3 May 2012 the builder returned his calls but said he was working in Townsville and wouldn’t be back until August. He suggested the problem was probably leaves in the gutters blocking the downpipes. Mr Sorrentino was told to inspect the roof and empty the gutters. He did that on 8 May 2012.
- [39]There were apparently no further problems with water entry until the next heavy rains on 17 November 2012. Water came in through the roof and windows and there was general flooding in the area associated with heavy rainfall and heavy winds. Mr Sorrentino said a neighbour’s entire ground floor was flooded and claims the neighbour had a similar problem with water coming in from the wind.
- [40]Two days later on 19 November 2012 he again contacted the builder and told him about the water entry and that he had followed his advice and emptied the gutters but that the incident on 17 November was even worse than the one in April. The builder’s response was that perhaps one of the sheets on the roof had lifted and caused the water entry. The builder said he was still in Townsville but would attend to it on his return. Mr Sorrentino suggested he would engage another roof plumber but the builder said the warranty was the builder’s problem and perhaps could be fixed simply by applying waterproof silicone. Mr Steenland the builder said he’d be back before Christmas and would “sort out the problem” then.
- [41]The following month, on 23 December 2012, Mr Sorrentino again telephoned the builder and left him a message to come and fix the problem.
- [42]On 27 January 2013 there was another large storm in the area with high winds and heavy downpours. Water came into the house again. Mr Sorrentino said his whole street was affected with flooding or rain coming through roofs. Mr Sorrentino tried to contact the builder on 27 and 28 January 2013 and finally managed to speak to him on 30 January 2013. He was told that the builder acknowledged Mr Sorrentino had a problem and said roofers were very busy but he promised to fix the problem that week.
- [43]On 7 February 2013 Mr Sorrentino again called and spoke to the builder who expressed surprise given he had instructed one of his workers to attend and fix the problem. Mr Sorrentino had not seen any workers. On 21 February he again tried to speak to the builder but had to leave another message.
- [44]On 1 March 2013 he managed to speak to the builder by phone. The builder said his worker had found the problem and screwed down some roof sheets and applied silicone where water was entering. Mr Sorrentino was surprised because he hadn’t seen the fellow come round and his gates were locked. Mr Sorrentino put the builder on notice that if he had any more problems he would contact the Commission.
- [45]By August 2013 there had not been any further issues. It is not clear by Mr Sorrentino’s evidence whether there were any further heavy rain events between March and August 2013. In August 2013 he was advised the builder was in liquidation. He tried to contact the builder but the telephone number was disconnected. He became worried that the builder might not have fixed the problem. He telephoned the Commission to tell them of the problems he had had with the builder and was told he had to write to the builder. He did that on 1 October 2013. Having received no response he made the complaint to the Commission on 24 October 2013.
- [46]Mr Yates the building inspector said he had observed fresh silicone applied to barge capping on the roof and other areas of the timber window frames. Mr Sorrentino suggested this indicated the builder had returned and performed some work.
- [47]There have been a number of decisions in the Tribunal where reliance on a builder to return and rectify defects has been accepted as a reasonable explanation for delay.[11] I found as much in O'Brien v Queensland Building Services Authority[12] which, surprisingly enough, involved defective building work, namely water entry, attributable to the same builder responsible for the problems here. There I concluded the owners explained their delay in making claim under the insurance. But there the builder returned 3 or 4 times after the contract completion to perform remedial work as requested and assured the owners the water leaks involved there were not serious and persuaded them there was no reason to notify the Authority. The owners also had significant personal issues in their lives to deal with at that time.
- [48]Here the Tribunal has the benefit of Mr Yates inspection report[13] made on 19 December 2013. He observed severe damage and deterioration to wall linings and he exhibits to his report a number of photographs which show significant damage to the internal linings, particularly around window openings. The damage is clearly visible. I cannot accept most reasonable home owners would not have been put on notice that there was a major problem with the house with water coming in around windows, regardless of neighbours experiencing problems.
- [49]Further his claim to have rectified the problem by an employee attending was not initially believed by Mr Sorrentino. But Mr Sorrentino did nothing following disbelief. When Mr Sorrentino was told the builder was in liquidation in September 2013, some 18 months after making initial complaint to the builder, Mr Sorrentino suspected he still had a problem with the house.
- [50]In both Holmes v QBSA[14] and Vandenhoven v QBSA[15] the builders returned on a number of occasions and rectified problems as they were discovered. In both cases the owners persisted in making the builders attend and rectify defects. It was clear in those cases the builders were actively carrying out rectification work. Here the builder, Steenland, was generally unavailable, made excuses to avoid attendance and those excuses would, in my opinion, not have been accepted by most reasonable homeowners but treated as delaying tactics.
- [51]In Holmes the builder cooperatively returned and actively carried out rectification work which the Tribunal suggested saved the insurance fund some costs of rectification.[16]
- [52]In my opinion it was unreasonable for Mr Sorrentino to accept the excuses of Mr Steenland and to wait so long before acting on the water entry problems and complaining to the Commission.
- [53]Mr Sorrentino said he was an experienced real estate agent who had sold hundreds of homes and had gained a great deal of experience and knowledge in attending many pest and building inspections.[17] In all the circumstances I am unable to conclude that Mr Sorrentino has offered a reasonable explanation for his delay in making a claim under the home warranty insurance.
- [54]Given that finding the decision of the Commission not to extend the 3 month time limit and accept his claim out of time was appropriate.
Footnotes
[1]Edition 7 effective on or after 29 September 2006.
[2][2004] QCCTB 5 at [98].
[3]Ackermann v QBSA [2006] QCCTB 4; Orlanski v QBSA [2011] QCAT 35.
[4]Lund v QBSA [2004] CCT Q578-03 at [52].
[5]Ibid at [51-52].
[6]Ibid at [98].
[7]Ibid at [37].
[8]Ibid at [37].
[9]Ibid at [59].
[10]Mansoor & Rezaee v QBSA [2011] QCAT 53 at [47].
[11]Holmes v QBSA [2010] QCAT 197 and Vandenhoven v QBSA [2011] QCAT 673.
[12][2013] QCAT 542.
[13]Ex 8.
[14][2010] QCAT 197.
[15][2011] QCAT 673.
[16]At [31].
[17]Ex 1 at [8-11].