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Macdonald v Queensland Building and Construction Commission[2016] QCAT 465

Macdonald v Queensland Building and Construction Commission[2016] QCAT 465

CITATION:

Macdonald v Queensland Building and Construction Commission [2016] QCAT 465

PARTIES:

Michael Macdonald

(Applicant)

 

v

 

Queensland Building and Construction Commission

(Respondent)

APPLICATION NUMBER:

GAR052-16

MATTER TYPE:

General administrative review matters

HEARING DATE:

25 August 2016, Further submissions 2 and 8 September

HEARD AT:

Brisbane

DECISION OF:

Member Favell

DELIVERED ON:

25 November 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. Application allowed.
  2. The QBCC pay to the applicant $7737.
  3. The parties may file any submissions as to costs by 4pm 16 December.

CATCHWORDS:

ADMINISTRATIVE LAW –General Administrative Review

INSURANCE-THE POLICY-PRINCIPLES OF CONSTRUCTION –where policy contained a discretion to refuse payment of claim if the insured had rectification work carried out with out the written prior approval of the Queensland Building and Construction Commission- where rectification work was carried out without prior written approval- where the Commission exercised the discretion to reject the claim-whether discretion properly exercised- whether good faith required in the exercise of discretion-whether urgency or prejudice relevant to exercise of discretion -whether defective work- whether urgency to have rectification done- whether prejudice suffered by Commission

Queensland Building and Construction Commission Insurance Policy Conditions Edition 8 Clause 7.1

Rezaee and Anor v Queensland Building Services Authority [2012] QCATA

R v ABC (1979) 144 CLR 45 

Gallo v Dawson (1990) HCA 30

R v Australian Broadcasting Tribunal; ex parte 2HD Pty Ltd [1979] 144 CLR 45

Laidlaw v QBSA [2010]QCAT 70 at [22]-[25] Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, 263–8  Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151, 191–3; South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611

 Far Horizons Pty Ltd v McDonald’s Australia Ltd [2000] VSC 310 (Unreported, Byrne J, 18 August 2000)

CBFC Ltd v Edwards [2001] SADC 40 (Unreported, Lee J, 28 March 2001)

 Central Exchange Ltd v Anaconda Nickel Ltd (2002) 26 WAR 33 [16], [55]

 Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160 (Unreported, Steytler, Miller and Hasluck JJ, 19 June 2002)

Laurelmont Pty Ltd v Stockdale & Leggo (Queensland) Pty Ltd [2001] QCA 212 (Unreported, McPherson, Williams JJA and Dutney J, 5 June 2001)

Royal Botanic Gardens v South Sydney City Council (2002) 186 ALR 289

APPEARANCES:

APPLICANT:

Michael Macdonald

RESPONDENT:

Queensland building and Construction Commission

REPRESENTATIVES:

APPLICANT:

represented by Michael Macdonald

RESPONDENT:

represented by Kristie Joyce in house Senior Lawyer QBCC

REASONS FOR DECISION

  1. [1]
    Mr Macdonald purchased a house in Woolloongabba when he and his wife moved from Canberra. They decided to renovate and as part of the renovation there was to be a rear deck.
  2. [2]
    On or about 12 October 2013 a licensed builder Nathan Williams was contracted to build the deck. The contract was lacking in detail and did not include specifications. It was made up of a quote[1] a number of emails[2] and a plan drawn by the father of Nathan Williams under the logo “Williams Engineering Designers”[3]. Mr Macdonald gave evidence that he was assured everything would be “ok” and the deck would be approved by the Council.
  3. [3]
    Mr Williams began work and was paid progress payments as requested by him. After the work was completed Mr Macdonald asked for the Council approval. Such approval was not supplied.
  4. [4]
    When no approval was provided Mr Macdonald engaged MRP Projects to carry out a site evaluation and report.
  5. [5]
    On 3 April 2014 MRP Projects reported that there were areas of major concern about the structural integrity of the deck and recommended demolition of the deck and reconstruction.
  6. [6]
    On 8 April MRP Projects reported after a site inspection and soil test that the soil was “H2” class indicating that it is highly reactive and accordingly the footing for the deck posts needed to be 1200-1500mm deep instead of the existing 600mm. Further, they advised a new structural parallel flange channel (PFC) steel beam was required to support the roof load of the deck and cyclone rods were required to tie down the PFC to the bearer supporting the upper floor and engineered brackets were required to replace the home made ones used.
  7. [7]
    Mr Macdonald contacted the builder Williams on a number of occasions about the quality of the work on the deck.
  8. [8]
    Mr Macdonald had heard reports of decks collapsing and people being injured and was concerned about the adequacy of the construction of the deck. He contracted with MRP Projects on 8 May 2014 to carry out building works to the deck which included Town planning approval and BSA certification. It involved replacing a veranda beam and providing adequate bracing to support the structure. That work cost $7737.
  9. [9]
    After the rectification work had been completed Mr Macdonald contacted the Queensland Building and Construction Commission (QBCC) and lodged a complaint form on 2 June 2014. The complaint related to five defective items on the deck.
  10. [10]
    On 24 June 2014 the QBCC file was closed because the works had been rectified.
  11. [11]
    On 28 January 2015 QCAT awarded a default judgement in favour of Mr Macdonald against the builder Mr Williams. The amount was $7737 plus costs of $147.50.
  12. [12]
    On 3 March 2015 Mr Macdonald lodged a complaint form to QBCC seeking reimbursement of the amount ordered by QCAT.
  13. [13]
    On 13 April 2015 an Internal Review Officer within the QBCC wrote to Mr Macdonald and after advising that his request for a review regarding a ‘declinature’ (sic) of an insurance claim was premature because a decision had not yet been made, said “once your legal rights have been exhausted you may reapply for consideration of insurance entitlement under the Statutory Insurance Scheme”.
  14. [14]
    On 30 April 2015 Mr Macdonald sought to enforce the amount awarded as a judgement debt in the Holland Park Magistrates Court.
  15. [15]
    The builder became a bankrupt on 23 July 2015.
  16. [16]
    On 8 October 2015 an insurance officer with the QBCC wholly disallowed an insurance claim by Mr Macdonald with respect to the alleged defective work.
  17. [17]
    On 13 October 2015 Mr Macdonald made a review application about the decision to disallow the claim.
  18. [18]
    On 3 February 2016 after a review (Section 86D Queensland Building and Construction Commission Act 1991) the QBCC disallowed the insurance claim under the statutory insurance scheme in whole.
  19. [19]
    The decision maker in the Review Notice gave reasons for the decision.  She reasoned that because the QBCC had been prejudiced for reasons including those set out below the claim should be refused under clause 7.1 of the relevant policy which allows the QBCC to refuse to make a payment for loss under the policy where residential construction work has been rectified without prior written approval of the QBCC.
  20. [20]
    The Policy is a statutory instrument that is subordinate legislation[4].
  21. [21]
    Clause 7.1 of the Policy states “The QBCC may refuse to make a payment for loss under this policy where residential construction work has been completed or rectified (as applicable) without the prior written approval of the QBCC.”
  22. [22]
    The term “residential construction work” is defined in the policy document[5] as “residential construction work as defined in Section 10 of the regulation”. The regulation is defined as the Queensland Building and Construction Regulation 2003.
  23. [23]
    The term “residential construction work” is defined in the QBCC Act as building work classified by regulation as residential construction work.  The regulations provide that “primary building work” and “associated building work” is classified as “residential construction work”[6]
  24. [24]
    Subject to subsection (3) of section 11 of the regulations, for section 10(a), building work mentioned in subsection (2) is primary building work if it is— carried out by a building contractor; and for a residence or a related roofed building; and of a value of more than $3300.
  25. [25]
    Building work for an unenclosed, elevated platform or verandah, including a deck, attached to a residence or building work that increases the covered floor area of the residence or related roofed building is primary building work.[7]
  26. [26]
    For section 10(b), associated building work is the following building work that is not primary building work, but is other building work carried out under a contract that includes primary building work (the other building work)[8]—
    1. if the primary building work under the contract is for a residence, other building work for anything on the site of the residence, but only if the other building work is for residential purposes;
    2. if the primary building work is for a related roofed building, other building work on the site of the residence or proposed residence for which the related roofed building is to be used, but only if the other building work is for residential purposes.
    3. Despite section 5, work mentioned in schedule 1AA, section 2, 20, 21, 26, 29, 30, 32, 36 or 40 is building work that is associated building work if it is other building work.
  27. [27]
    “Building work” under the policy is as defined in Schedule 2 of the Act which includes the preparation of plans or specifications for the performance of building work; or contract administration carried out by a person in relation to the construction of a building designed by the person; or carrying out site testing and classification in preparation for the erection or construction of a building on the site; or carrying out a completed building inspection; or but does not include work of a kind excluded by regulation from the ambit of this definition.
  28. [28]
    The QBCC argues that because schedule 1AA of the regulations includes work performed by an architect, work performed by an engineer in the engineer’s professional practice, work performed by a licensed surveyor and work performed by a local government as work that is not building work the applicant has no entitlement to make a claim under the Home Warranty Scheme for “$1775 Total for soil test, drawings and BCC approval”.
  29. [29]
    The tax invoice from MRP Projects is for building works in the sum of $7033.64 plus GST.[9] In the invoice under the words ”Building –Works” the following were listed “Town Planning approval, BSA certification to rear deck, under pin rear deck posts, replace veranda beam above door opening, provide adequate bracing to support structure and additional site inspection by engineer”.
  30. [30]
    In the statutory declaration by Darryl Wilkie[10] the costs are broken down. Darryl Wilkie gave evidence of the work that was carried out by MPR Projects to rectify the deck and the need for the work of the previous builder to be rectified. In a statutory declaration he set out the costs of posts underpinning as $3456, tie down for roof and replacing steel beam as $1424, replacing support brackets as $540, soil test, drawings and  approvals as $1775. With GST of $542 the total was $7737.
  31. [31]
    There is no evidence of any architect involved in the work done.
  32. [32]
    There is no evidence of any Local Government approval. Exhibits 12, 13, 14 and 15 are certificates completed by private certifiers.
  33. [33]
    There is no evidence of work done by a licensed surveyor.
  34. [34]
    The cost of soil testing and drawings was incurred with Qld Soil Testing Pty Ltd. The site investigation and footing system design report was provided to MRP Projects under the hand of David Hardy an engineer “for and on behalf of” Qld Soil Testing on 14 April 2014. The relevant question then is whether Mr Harding was doing so in his professional practice. The evidence is that the work of the site investigation and design was done not in Mr Hardy’s professional practice but “for and on behalf of” the corporation supplying the report and designs.
  35. [35]
    The reasons given for the prejudice said to have been suffered by the QBCC included:
    1. QBCC was prevented from inspecting the complaint items;
    2. There was no evidence of the state of the works at the time the review applicant contracted with Fogridge Pty Ltd (MRP Projects) to do the works;
    3. It was impossible for the QBCC to determine whether the work completed without approval was “residential construction work” covered by the Insurance Policy Conditions;
    4. It was impossible for the QBCC to assess the costs reasonable and necessary to complete the works and test those costs in a competitive tendering process with independent licensed contractors;
    5. The QBCC has lost the opportunity to have imput into the scope of works necessary to complete the works, to engage a licensed contractor to complete those works and to negotiate the cost of completion.
  36. [36]
    The decision maker accepted that the insurance policy provides insurance cover under part 4 of the insurance policy for rectification of defective building works of the residential construction work that is primary building work. She accepted that Mr Macdonald was entitled to insurance for defective works that are primary building work. She said that under clause 2.1 of the policy conditions, only the cost of rectifying defects in the residential construction work that is primary building work is payable.
  37. [37]
    Mr Macdonald now seeks a review in QCAT of that decision to wholly disallow the insurance claim.
  38. [38]
    In answer to the reasons set out in paragraph [35] a) above Mr Macdonald contends that the QBCC was provided with a huge paper trail which included over 40 pages of emails between him and the builder, contracts and photographs of the work completed.
  39. [39]
    In answer to the reason set out in paragraph [35] b) above Mr Macdonald contends that he provided photographs of the home welded brackets used by the original builder, evidence of the lack of a soil test, evidence that  1200-1500mm  footings were required when only 600mm footings were built. He says there was evidence that Mr Williams did not get a soil test done, used sub-standard brackets and did not obtain necessary council approvals. He says there was evidence that the deck was 24 square metres attached to his house that was 10 metres high with a solid iron roof.
  40. [40]
    In answer to the reason set out in paragraph [35] c) above Mr Macdonald contends that the QBCC had the council approval, the results of site inspections, the plans and relevant certificates.
  41. [41]
    In answer to the reason set out in paragraph [35] d) above Mr Macdonald contends that the QBCC had the plans and the scope of rectification work along with the invoice for the rectification work carried out. He says that the cost was reasonable and could easily be assessed.
  42. [42]
    In answer to the reason set out in paragraph [35] e) above Mr Macdonald contends that once he found out that the deck as first constructed was dangerous he needed to have it fixed as soon as possible and the QBCC process with regard to defective works claims takes 39 working days before any rectification work could start.
  43. [43]
    Stephen Ferguson, a senior technical internal review officer with the QBCC prepared an Internal Review Unit desktop review report on 4 April 2016. In a statement filed in the tribunal he concluded that based on the report he was not satisfied that the alleged items of defective work were defective or that the rectification work undertaken by MRP Projects was reasonable or necessary in the circumstances.
  44. [44]
    Arnold Fisher, a Subsidence Claims Manager employed by the QBCC reviewed the decision of the decision maker and found “on the basis of Mr Wilkies Statutory Declaration and the Applicant’s statement dated 8 June 2016 and for the reasons outlined above I cannot be satisfied that any of the rectification works undertaken by MPR was necessary or reasonable in the circumstances”. In written submissions provided by the QBCC the tribunal was advised that the Commission did not intend to rely upon the statement.
  45. [45]
    This application for review is made pursuant to sections 86(1)(h) and 87 of the QBCC Act.
  46. [46]
    A decision to disallow a claim under the statutory insurance scheme wholly or in part is a reviewable decision.
  47. [47]
    A person affected by a reviewable decision of the commission may apply, as provided under the QCAT Act, to the tribunal for a review of the decision. Mr Macdonald is such a person.
  48. [48]
    Part 5 of the QBCC Act establishes the statutory insurance scheme administered by the Authority and it operates under the name “Queensland Home Warranty Scheme”.
  49. [49]
    Section 69(2) of the QBCC Act relevantly provides: “A policy of insurance comes into force in the terms stated in the board’s policies for the purpose— if a consumer enters into a contract for the performance of residential construction work, and— (i) the contract bears the licence number of a licensed contractor and, under the licensed contractor’s licence, the licensed contractor may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme; or (ii)  the contract is with a licensed contractor and, under the licensed contractor’s licence, the licensed contractor may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme; or (iii)  the contract is with a person fraudulently claiming to hold a licence under which the person may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme.”
  50. [50]
    Whether there was a policy of insurance in force at the material time was not in issue.
  51. [51]
    In exercising its review jurisdiction, the tribunal must decide the review in accordance with the QCAT Act and the QBCC Act under which the reviewable decision being reviewed was made; and may perform the functions conferred on the tribunal by the QCAT Act or the QBCC Act under which the reviewable decision being reviewed was made; and has all the functions of the decision-maker for the reviewable decision being reviewed[11].
  52. [52]
    The purpose of the review of a reviewable decision is to produce the correct and preferable decision[12].
  53. [53]
    The tribunal must hear and decide a review of a reviewable decision by way of a fresh hearing on the merits[13].
  54. [54]
    Section 24(1) of the Queensland Civil and Administrative Tribunal Act 2009 allows the tribunal to 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 for the decision with directions the tribunal considers appropriate.
  55. [55]
    The QBCC in its written submissions compiled before the hearing said that the evidence provided by the Applicant and Mr Wilkie did not demonstrate that the work completed by Mr Williams was in fact defective or that the as constructed deck was not performing in accordance with the building Code of Australia or that the nature of the rectification work undertaken was reasonable or necessary in the circumstances.
  56. [56]
    The QBCC submitted that Mr Wilkie did not state in his Statutory Declaration that he measured the footings/concrete stumps or that he had tested the footings or that they were not performing to a standard sufficient to satisfy the BCA.
  57. [57]
    I note that in evidence at the hearing Mr Wilkie and Mr Macdonald gave evidence that they observed the depth of the footings. I also note that the observed depth of the footing was the depth Mr Williams indicated they would be and was usual.[14] I also note the observed depth was not the depth of 800mm noted on the Williams plans.[15]
  58. [58]
    Although the Williams plans required 16 ROD bracing with turnbuckles, none were used.
  59. [59]
    Further, evidence given at the hearing demonstrated that the brackets used by Mr Williams were 3 mm plate and not 6mm as indicated on the Williams plans.
  60. [60]
    Mr Wilkie gave evidence that no tie downs were used by Mr Williams.
  61. [61]
    The evidence is that the soil type at the site was “H2” class and highly reactive.  The classification was done by an RPEQ engineer on behalf of Queensland Soil Testing. The footing system design for Queensland Soil Testing complies with the relevant Australian Standards. The design dated 9 April 2014 required PAD footings to be “450 Diameter x 1500 Deep (min) and founded onto firm natural ground”.
  62. [62]
    In my opinion the positive requirement and the use of the abbreviation for the word “minimum” above means that footings which are less than those requirements are a defect.
  63. [63]
    QBCC seems to have required an engineer to state that the footings were defective rather than drawing a reasonable inference.
  64. [64]
    Further, the QBCC does not accept that evidence from the second builder and Mr Macdonald could be acted upon.
  65. [65]
    In my view if the evidence is credible and within their expertise then it can be acted upon.
  66. [66]
    I note that the QBCC were of the view that tie downs had been used when they had not. They were also of the view that all of the work done by Mr Williams had been demolished when that was not so.
  67. [67]
    The Policy is a statutory instrument created pursuant to subordinate legislation. Accordingly in interpreting the statutory instrument it is appropriate to consider the purpose and object of the empowering legislation, namely the QBCC Act.
  68. [68]
    In any case, the discretion under the Policy is at large and accordingly “the general rule is that a discretion expressed without any qualification is unconfined except in so far as it is affected by limitations to be derived from the context and scope and purpose of the statute.”[16]
  69. [69]
    By s 3 of the QBCC Act, the objects of the legislation include, amongst other things, regulation of the building industry to achieve a reasonable balance between the interests of building contractors and consumers and to provide remedies for defective building work.
  70. [70]
    These factors must be considered when exercising the discretion granted the Authority under consideration.
  71. [71]
    There may be a commercial consideration brought to bear in running the scheme, but the appropriate exercise of discretion will require more than that. It will require a balancing between commercial considerations and the stated objects and purposes of the legislation. That will include an acknowledgment that the scheme exists as a safety net for consumers. In practical terms this will generally mean an exercise of the discretion in favour of claimants where after the circumstances of the rectification work and the conduct of the claimant outweighs any corresponding disadvantage to the Authority caused by a claim made after rectification work was done without written permission.
  72. [72]
     As stated, it is a matter of balance. As pointed out in Rezaee and Anor v QBSA, it is instructive in considering the exercise of discretion in a case like this to consider the similar discretion to extend time under rules of court where, say, a party applies for an extension of time to file an appeal. His Honour Justice McHugh said in Gallo v Dawson[17]: “The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties.”
  73. [73]
    It is not a legitimate approach to interpretation to compare a statutory discretion which is expressed in unlimited terms as to one subject with another discretion in the same statute which is confined to specified considerations with reference to a different subject and thereby conclude that the first discretion necessarily excludes the considerations specified in relation to the second discretion. The general rule is that a discretion expressed without any qualification is unconfined except in so far as it is affected by limitations to be derived from the context and scope and purpose of the statute. The fact that a discretion relating to a different subject matter is confined to a particular consideration provides no rational reason for saying that another discretion expressed without qualification does not embrace that particular consideration. Applied to the criterion of public interest, the argument is even less attractive. It would bring about the result, if accepted, that a discretion generally expressed may extend to any factor except public interest merely because another discretion directed to a very different subject matter is limited to the exclusive criterion of public interest. (at p50)[18]
  74. [74]
    The QBCC, in further written submissions filed after the hearing submitted that the exercise of the discretion to refuse to make a payment was warranted where the Commission had no evidence of defective construction for which the Statutory Insurance Scheme could respond, where the Commission had been prevented from inspecting the work alleged to be defective by its prior destruction or removal and the Commission had been prevented from directing rectification by Mr Williams.
  75. [75]
    Because the reasons given by the QBCC for the refusal implied that unless the reasoning in the above paragraph and paragraphs 19 and 35 could be overcome the discretion to refuse the claim should be exercised to refuse the claim I allowed the QBCC and Mr Macdonald to file further submissions.
  76. [76]
    The QBCC submits that the QCAT Act does not place an onus of proof on a party to establish facts or make out a case in an administrative review proceeding. In my view that is correct.[19] There is what has sometimes been described as an evidentiary burden and practically a party will want to adduce evidence which supports a party’s case.
  77. [77]
    It submits that the discretion to approve or decline a claim is governed by the Insurance policy Conditions applying to the claim and not by any internal policy of the Commission. It says it must demonstrate that a reason existed to exercise the discretion to decline a claim. It submits the exercise (of the discretion) is governed by whether there is any demonstrated urgency in the performance of the rectification and whether there is any prejudice the Commission has suffered by reason of matters I have set out in paragraph 74 herein.
  78. [78]
    It further submits that to allow an insurance claim the Commission and the Tribunal must be satisfied that work was defective and urgent work without prior approval of the Commission was called for.[20] There is no identification of a basis for that later assertion.
  79. [79]
    It should be noted that the decision under review is the decision to exercise a discretion to decline cover because of prejudice to the Commission.
  80. [80]
    It submits that there is no evidence of defective work. In my opinion, for reasons which follow, that is not correct.
  81. [81]
    Mr Macdonald in his further submissions filed on 8 September accepted the tests submitted by the Commission and contended that “the work was defective and it had departed from the BCA and Australian Standards with regard to the procedures to be used in doing the building work.”
  82. [82]
    He relies on the following evidence:
    1. A statement by Mr Ferguson, a senior Technical Review Officer at the QBCC, that it would be unusual for the subject deck to be built without conducting a soil test;
    2. A statement by Mr Ferguson that “the BCA Part 2.1 Structural Stability prescribes the performance requirements for a building or structure to be constructed. The footing design for this type of deck structure is required to be designed by an RPEQ engineer. The engineer would design the footing for this type of structure against the Australian Standard 2870: Residential Footing and Slabs (AS 2870);[21]
    3. A statement by Mr Ferguson that “AS 2870 prescribes that a soil test be carried out within the footprint of the structure to ascertain the founding soil characteristics and values for the engineer to calculate the loads footing design is to be founded in”;[22]
    4. Mr Williams did not carry out a soil test nor use an RPEQ engineer;
    5. Mr Wilkie said the footings were 600 deep when they should have been 1500 deep;
    6. Mr Macdonald measured the footings before the concrete was poured as 600 deep;
    7. Mr Wilkie said the roof of the deck was not tied down;
    8. The contract with Mr Williams required the footings to be 800 deep;
    9. Mr Williams owes the Commission $58,000 and was declared a bankrupt on 23 July 2015 but was not working as a builder in March 2014;
    10. Mr Wilkie said if a storm occurred the roof of the deck could have lifted the house roof and blown into neighbours properties.
  83. [83]
    Exhibit 10, the drawings for Mr Macdonald’s house done by the Design Studio on sheet 3 show in the top left corner changes required for the rectification work.
  84. [84]
    Exhibit 12 is the Final inspection certificate provided by a certifier covering in part the rear.
  85. [85]
    Mr Wilkie is the builder who carried out the rectification work. He gave evidence orally[23] and swore a declaration.[24] He gave evidence that the deck was not demolished but rather he did rectification work which was “purely the structural works which were well built under standards for building practice”.[25] He said the brackets were not an engineered bracket, there was “no tying down through the building itself to lock the beam down and the footings were only a maximum of 600 mil deep.[26]” He said he replaced a beam and tied that beam through the building. He took weatherboards off to tie the beam through the frame and then reinstated the weatherboards. Underneath the rear of the deck steel lintels were placed to support the end of the deck because the bearer that was in place was not strong enough to support the load.[27] He followed the timber loadings done through the Design Studio and the standard so as to submit to a certifier for approval.[28]
  86. [86]
    Exhibit 10 is a set of plans done by The Design Studio which shows the existing deck and what was required to be installed after Mr Wilkie engaged an engineer from Queensland Soil Testing to determine the appropriate standards.[29] Mr Wilkie said that the brackets used to support the deck were poorly installed.
  87. [87]
    He confirmed that the posts installed by Mr Williams were “ a maximum of 600 millimetres into the ground”.[30]
  88. [88]
    He said that he compared what Mr Williams constructed with plans drawn by Newman Williams and found there was “no structural”.[31] He said that because the beam was not bolted down to the floor bearing there was a danger that “its going to blow off”.[32]
  89. [89]
    He said that the steel used by Mr Williams was “three mm plate” and not six mm plate as required by the original plans.[33]The plan also required “16 rod bracing with turnbuckles” but they were not put up.[34]
  90. [90]
    Mr Macdonald produced a statutory declaration[35] and gave evidence orally. He makes the point that Mr Williams did not obtain any soil testing or an engineering design as Mr Ferguson said was necessary. He gave evidence that he saw the foundations were only dug to 600mm and not to the depth required by the Australian Standards.[36]
  91. [91]
    He said that Mr Williams did not put in the rod bracing required by the original plans and Mr Wilkie put them in.[37]
  92. [92]
    Mr Macdonald was concerned that the deck as built by Mr Williams was “inherently dangerous”[38] because of the problems identified by Mr Wilkie. He was concerned that the QBCC would take too long to progress his complaint and he regarded it was important to have the deck rectified as soon as possible. He knew Mr Williams was bankrupt.[39]
  93. [93]
    Mr Williams gave evidence that the brackets used by Mr Williams were welded on site.[40]
  94. [94]
    Mr Ferguson provided two statements[41] and gave oral evidence. He said that the roof would have to be tied down.[42] Mr Ferguson was not aware of missing braces.[43] He was not sure the brackets were defective.[44] He would have expected a soil test to be done.[45] He said “ the footings would be defective because they did not comply with an Act or regulation.[46]  He said that the soil tests are required to allow the builder and an engineer to be satisfied the structure will withstand forces. He said that he believed 450 by 400 by 600 concrete piers is not standard.[47]
  95. [95]
    He said he could not say the original work was defective or that there was evidence of a failure.[48]
  96. [96]
    Mr Ferguson when asked about the additional evidence given during the hearing said he could not comment or was not qualified to comment or the evidence was not sufficient. On occasions he would not accept the evidence without seeing the alleged defect namely the lack of tie down.[49]
  97. [97]
    He accepted that Mr Hardy, the engineer who specified the depth of the footings after a soil test rated the soil as H2 was “very competent” but said that Mr Hardy did not say anything less than what he specified was inadequate. He maintained that he was not satisfied the work by Mr Williams was defective.
  98. [98]
    Mr Williams points to a statement by Mr Hardy that “it need, on the basis of the soil test, it needs to be 1500 millimetres deep” and reasons that if the footings were only 600mm deep then they did not meet the need expressed and hence they work was defective.
  99. [99]
    I will deal with some of the submissions made on behalf of the Commission separately.
  100. [100]
    On the question of the exercise of the discretion under clause 7.1 of the Policy the Commission maintained it has suffered prejudice and the claim was declined because it was prevented from inspecting the complaint items.[50] It submitted “there was no evidence of the state of the works at the time of engaging Mr Wilkie or MRP Projects”.
  101. [101]
    In my view there is now evidence of the state of works at the time of engaging the new builder. The evidence is that the structure was built to the dimensions in the Newman Williams plans without appropriate tie downs, with footings at 600mm deep, without bracing and without the lintels specified in the Design Studio plans.
  102. [102]
    Further it submitted that “it was impossible to determine whether the work … completed without approval was residential construction work under the Queensland Building Construction Commission.”
  103. [103]
    It contends that the Commission has lost the opportunity to test the costs in an independent tendering process.
  104. [104]
    It contends it would be difficult to assess the costs to complete the works.
  105. [105]
    Whist the Commission cannot practically have an independent tender process I do not accept that the costs could not be tested because the Commission may if it chooses have a competent Quantity Surveyor.
  106. [106]
    I note that there has been no attempt to contend by appropriate evidence that the cost of the work carried out is excessive or that it was unnecessary.
  107. [107]
    It contends it has lost the opportunity to have imput into the scope of the works, engage a licenced contractor to complete the work and negotiate the cost to complete.
  108. [108]
    I note the claim to be the loss of an opportunity. I also note that there is no evidence that such a loss or any loss of opportunity has resulted in real detriment to the Commission.
  109. [109]
    It contended it was prevented from directing Mr Williams to rectify the work.
  110. [110]
    The Commission was notified of the defects on 8 April 2014. Mr Williams went bankrupt on 23 July 2015. The rectification work was completed “in about June 2014”.[51]
  111. [111]
    Mr Macdonald contends that Mr Williams had ceased working in the building trade and was working as a security guard by March 2014 and as at 24 October 2014 he had not paid his licence fees and owed the QBCC $58,000.[52]
  112. [112]
    The evidence suggests that because of the circumstances of Mr Williams the Commission had no practical opportunity of successfully directing Mr Williams to rectify.
  113. [113]
    The Commission contends it can no longer recover from Mr Williams.
  114. [114]
    The evidence suggests that practically the circumstances meant that the Commission would have had poor prospects of recovering from Mr Williams. There is no evidence that the Commission claimed in Mr Williams bankruptcy.
  115. [115]
    The Commission submits that for the Tribunal to allow an insurance claim the Tribunal must be satisfied that the work was defective “and urgent work without prior approval of the Commission was called for”.
  116. [116]
    The Commission referred me to a number of decisions of the Commercial and Consumer Tribunal and this Tribunal.  Those decisions proceeded on the basis that prejudice and urgency were relevant matters in the exercise of a similar discretion.
  117. [117]
    In my view, the submission that a finding of urgency is necessary is not necessarily correct. It can only be relevant to the exercise of the discretion reposed in clause 7.1 of the Policy. However, in any event, if Mr Macdonald had the belief set out in paragraph 41 herein then there is evidence of urgency. I accept that Mr Macdonald had the belief and concerns about the safety of the deck and wanted it repaired as soon as possible.
  118. [118]
    The discretion is at large and as I have said it is unconfined except if it is affected by limitations to be derived from the context and scope and purpose of the policy/statute. I have not been directed to any limitation of urgency to be so derived. The QBCC Act and the Policy makes no mention of any limitation of urgency.
  119. [119]
    Even though the discretion afforded by clause 7.1 of the policy is unconfined, the exercise of the discretion is fettered by a requirement, if it is exercised to refuse cover, to act in good faith for a proper purpose. It should be exercised reasonably and impartially.
  120. [120]
    The general duty of good faith is consistent with the intended purpose of the power and reasonableness. Courts have been prepared to fetter discretions such as the discretion in clause 7.1 by precluding the use of the discretion for extraneous or improper purposes and requiring the exercise to be reasonable[53]. The High Court in Royal Botanic Gardens v South Sydney City Council[54] left open the issue whether Australian law should recognise a duty of good faith in contractual performance.
  121. [121]
    To assess whether there is any improper purpose it may be necessary to determine the legitimate purpose of the power by examining the policy.
  122. [122]
    The policy covers loss suffered by the insured in the event of the contractor failing to complete the contract for residential construction work, or for loss because of acts of vandalism or forcible removal, or loss in the event of damage to or destruction of standing work or defective construction or subsidence or settlement. It has a process for assessment of claims. In the general exclusion section only clause 7.1 provides for a discretion to refuse to make a payment for loss. The other exclusions do not involve the exercise of a discretion.
  123. [123]
    The policy requires the QBCC before admitting a claim to determine whether a direction should be made requiring the contractor to rectify. It imposes a duty of good faith on the insured.
  124. [124]
    I do not see any provision in the policy for the QBCC to recover costs of rectification from the contractor. Nor can I see any provision allowing for the QBCC to assess the scope of works necessary to rectify any defective works. Nor do I see any provision requiring the QBCC to carry out an inspection of the property. The QBCC Act allows for those matters.
  125. [125]
    There is a limit on liability where the insured unreasonably refuses access to a contractor to undertake rectification or when the QBCC is satisfied a contactor who has been issued a direction will not comply with the direction.
  126. [126]
    The examination of the policy does not disclose that the matters listed under the claim of prejudice to the QBCC are matters for consideration in administering the policy.
  127. [127]
    The administration of the policy does require the QBCC to be satisfied that there is defective work where a claim is made on that basis.
  128. [128]
    The policy provides for payments when the QBCC admits a claim under the policy not for rectification work. The ability of the QBCC to rectify or issue a direction is not given to the QBCC by the policy but by the legislation.
  129. [129]
    The QBCC submits that “there is no evidence that the work performed by Mr Wilkie was necessary”. I disagree. In my view the evidence that the Standards required a soil test and then engineered specifications which required rectification work meant that the work performed by Mr Wilkie was necessary. As an example, the lack of tie downs indicates necessary work as does the need for bracing.
  130. [130]
    The Commission submits that the applicant has presented no photographic or other evidence that the footings, brackets and a roof beam of the deck were not compliant with the plans for the performance of Mr Williams work or that they were not performing. It says that no engineer gave evidence that the items were defective and there is no basis for finding that the applicant is entitled to claim upon the Statutory Insurance Scheme for defective construction.
  131. [131]
    In my view there is evidence of defective work.
  132. [132]
    The footings were 600mm deep. Both Mr Macdonald and Mr Wilkie gave that evidence. The plans from Newman Williams required a depth of 800mm. Even assuming the 800mm requirement was in the circumstances an appropriate requirement the work of Mr Williams was defective in that regard.
  133. [133]
    There is evidence Mr Williams did not obtain a soil test. A soil test was required to engineer the footings. A soil test was carried out before the rectification work was carried out.  The foundations were then specified at a depth of 1500mm.  In my view the evidence that an engineer specified that depth as a minimum allows the inference to be drawn that in his opinion anything less would be a defect.
  134. [134]
    There is clear evidence that Mr Williams did not build the bracing specified in the Newman Williams plans. The absence of bracing in my view is a defect.
  135. [135]
    There is clear evidence that the deck structure was not tied down. In my view that absence is a defect.
  136. [136]
    The Design Studio plans specified further structural construction. In my view such a specification after the soil test classified the soil as H2 allows an inference that in the opinion of the designer an absence of such structural requirements was a defect.
  137. [137]
    In my view, if such inferences are open they can be relied upon to draw a conclusion that there was a defect.
  138. [138]
    I am comfortably satisfied on the evidence before me that the construction of the deck was defective.
  139. [139]
    Although I do not necessarily agree that it is necessary for urgency to be shown or that it is relevant to the exercise of discretion I find that Mr Macdonald regarded the rectification as urgent and he was not prepared to wait what he saw as the period the commission process would take.
  140. [140]
    Further, in circumstance where there is evidence that an engineer required more than double the depth of the footings that were built and where there is evidence that the roof had not been tied down and that braces had not been built it is reasonable to conclude that the construction was dangerous and required urgent rectification.
  141. [141]
    Because of the findings I have made concerning each of the items of claimed prejudice and because of my finding that there was urgency in having the work rectified and because of my finding of defective work it is not necessary to determine if the discretion was appropriately exercised.
  142. [142]
    In my view it is not appropriate in the circumstance of this application to exercise the discretion and an order should be made that the Commission pay to the applicant the amount of $7737.
  143. [143]
    The applicant in the application has sought costs related to an earlier application and the filing costs of this application. The parties have not addressed that issue. The parties may file any submissions concerning costs by 4pm 16 December. If no submissions are filed there is no order as to costs.

Footnotes

[1]  Exhibit 4, attachment A.

[2]  Exhibit 4, attachment B.

[3]  Statement of Reasons, page 150.

[4]  Statutory Instruments Act sections 7 and 9.

[5]  SOR1, page 59.

[6]  QBCC Regulation 2003, section 10.

[7]  QBCC Regulation 2003, section 11(2)(e) and (f).

[8]  QBCC Regulation 2003, Section 12.

[9]  SOR page 208.

[10]  Exhibit 1.

[11]  QCAT Act, section 19.

[12]  QCAT Act, section 20(1).

[13]  QCAT Act, section 20(2).

[14]  SOR page 97.

[15]  SOR page 150.

[16] Rezaee and Anor v Queensland Building Services Authority [2012] QCATA 147; R v ABC (1979) 144 CLR 45.

[17]  (1990) HCA 30.

[18] R v Australian Broadcasting Tribunal; ex parte 2HD Pty Ltd [1979] 144 CLR 45.

[19] Laidlaw v QBSA [2010]QCAT 70 at [22]-[25].

[20]  Commissions Further Submissions filed 2 September 2016 paragraph 12.

[21]  Exhibit 7, attachment B, page 3 of 5.

[22]  Exhibit 7, attachment B, page 3 of 5.

[23]  Transcript 1-19 to 1-36.

[24]  Exhibit 1.

[25]  Transcript 1-23 Line 17.

[26]  Transcript 1-23 Line 28.

[27]  Transcript 1-23 Line 35.

[28]  Transcript 1-23 Line 40-45.

[29]  Transcript 1-27 Line 20.

[30]  Transcript 1-27 Line 43, Transcript 1-28 Line 1-15 and Exhibit 1.

[31]  Transcript 1-29 Line 27.

[32]  Transcript 1-30.

[33]  Transcript 1-35.

[34]  Transcript 1-36.

[35]  Exhibit 2.

[36]  Transcript 1-70 Line 25.

[37]  Transcript 1-54, 1-55.

[38]  Transcript 1-59 Line 30.

[39]  Transcript 1-64 to 1-68.

[40]  Transcript 1-75.

[41]  Exhibit s 7 and 9.

[42]  Transcript 1-85 Line 32: 1-88 .

[43]  Transcript1-86 Line 13.

[44]  Transcript 1-87 Line 12.

[45]  Transcript 1-89 Line 5.

[46]  Transcript 1-89 Line 9.

[47]  Transcript 1-91 Line 11.

[48]  Transcript 1-91.

[49]  Transcript 1-92.

[50]  Transcript 1-101 Line 17.

[51]  Transcript 1-20 Line 33.

[52]  Transcript 1-109.

[53]  Article “Implied fetters on the exercise of discretionary contractual powers” Monash University Law Review (vol 35 No 1);  Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, 263–8; Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151, 191–3; South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611; Far Horizons Pty Ltd v McDonald’s Australia Ltd [2000] VSC 310 (Unreported, Byrne J, 18 August 2000); CBFC Ltd v Edwards [2001] SADC 40 (Unreported, Lee J, 28 March 2001); Central Exchange Ltd v Anaconda Nickel Ltd (2002) 26 WAR 33 [16], [55]; Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160 (Unreported, Steytler, Miller and Hasluck JJ, 19 June 2002). See also Laurelmont Pty Ltd v Stockdale & Leggo (Queensland) Pty Ltd [2001] QCA 212 (Unreported, McPherson, Williams JJA and Dutney J, 5 June 2001) (‘Laurelmont’). Cf Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84, 91–8.

[54]  (2002) 186 ALR 289.

Close

Editorial Notes

  • Published Case Name:

    Michel Macdonald v Queensland Building and Construction Commission

  • Shortened Case Name:

    Macdonald v Queensland Building and Construction Commission

  • MNC:

    [2016] QCAT 465

  • Court:

    QCAT

  • Judge(s):

    Member Favell

  • Date:

    25 Nov 2016

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
CBFC Ltd v Edwards [2001] SADC 40
2 citations
Jump To
Cite 1 - [2001] SADC 40
Cite 2 - [2001] SADC 40
Central Exchange Limited v Anaconda Nicholl Limited (2002) 26 WAR 33
2 citations
Jump To
Cite 1 - (2002) 26 WAR 33
Cite 2 - (2002) 26 WAR 33
Expectation Pty. Ltd. v Pinnocle VRB Ltd. [2002] WASCA 160
2 citations
Jump To
Cite 1 - [2002] WASCA 160
Cite 2 - [2002] WASCA 160
Far Horizons Pty Ltd v McDonald's Australia Ltd [2000] VSC 310
2 citations
Jump To
Cite 1 - [2000] VSC 310
Cite 2 - [2000] VSC 310
Gallo v Dawson (1990) HCA 30
2 citations
Jump To
Cite 1 - (1990) HCA 30
Cite 2 - (1990) HCA 30
Hughes Aircraft Systems International v Air Services Australia (1997) 76 FCR 151
2 citations
Jump To
Cite 1 - (1997) 76 FCR 151
Cite 2 - (1997) 76 FCR 151
Laidlaw v Queensland Building Services Authority [2010] QCAT 70
2 citations
Jump To
Cite 1 - [2010] QCAT 70
Cite 2 - [2010] QCAT 70
Laurelmont Pty Ltd v Stockdale & Leggo (Queensland) Pty Ltd [2001] QCA 212
2 citations
Jump To
Cite 1 - [2001] QCA 212
Cite 2 - [2001] QCA 212
R. v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45
4 citations
Jump To
Cite 1 - (1979) 144 CLR 45
Cite 2 - (1979) 144 CLR 45
Cite 3 - (1979) 144 CLR 45
Cite 4 - (1979) 144 CLR 45
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
2 citations
Jump To
Cite 1 - (1992) 26 NSWLR 234
Cite 2 - (1992) 26 NSWLR 234
Rezaee and Anor v Queensland Building Services Authority [2012] QCATA 147
2 citations
Jump To
Cite 1 - [2012] QCATA 147
Cite 2 - [2012] QCATA 147
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289
2 citations
Jump To
Cite 1 - (2002) 186 ALR 289
Cite 2 - (2002) 186 ALR 289
Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84
1 citation
Jump To
Cite 1 - (1993) 45 FCR 84
South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611
2 citations
Jump To
Cite 1 - (2000) 177 ALR 611
Cite 2 - (2000) 177 ALR 611

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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