Instyle Homes Qld Pty Ltd v Queensland Building and Construction Commission
[2018] QCAT 289
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- Unreported Judgment
- Instyle Homes Qld Pty Ltd v Queensland Building and Construction Commission[2018] QCAT 289
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Instyle Homes Qld Pty Ltd v Queensland Building and Construction Commission[2018] QCAT 289
Instyle Homes Qld Pty Ltd v Queensland Building and Construction Commission[2018] QCAT 289
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION: | Instyle Homes Qld Pty Ltd v Queensland Building and Construction Commission [2018] QCAT 289 |
PARTIES: | INSTYLE HOMES QLD PTY LTD (applicant) |
| v |
| QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (respondent) |
APPLICATION NO/S: | GAR256-17 |
MATTER TYPE: | Building matters |
DELIVERED ON: | 30 August 2018 |
HEARING DATE: | 12 April 2018; 1 June 2018 |
HEARD AT: | Brisbane |
DECISION OF: | Member Gardiner |
ORDERS: | The decision of the Queensland Building and Construction Commission made on 4 August 2017 to issue direction to rectify to Instyle Homes Qld Pty Ltd is confirmed. |
CATCHWORDS: | PROFESSIONS AND TRADES – BUILDERS – STATUTORY POWER TO REQUIRE RECTIFICATION OF DEFECTIVE OR INCOMPLETE BUILDING WORK – where new owner claims defective building work – where Queensland Building and Construction Commission makes a decision to issue a direction to rectify to the contractor, the brother of the seller – where contractor accepts he is responsible for work but says unfair to issue notice – where contractor says work is not defective because there was a reduction of the sale price and the purchaser was buying the property “as is” – whether decision to issue a notice to rectify defects was unreasonable Queensland Building and Construction Commission Act 1991 (Qld), s 3, s 72, s 72A Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 24 ACN 149 351 413 Pty Ltd ACN 149 351 413 (in liquidation) (formerly known as Enviren Constructions Pty Ltd v Browning [2015] QDC 269 Glen Williams Pty Ltd v QBSA [2012] QCAT 127 |
APPEARANCES & REPRESENTATION: |
|
Applicant: | Self-represented |
Respondent: | N Thirumoorthi, legal counsel of the Queensland Building and Construction Commission |
REASONS FOR DECISION
- [1]Ms Elizabeth Frangieh owed a home in a suburb of Brisbane. Her brother Mr Joseph Frangieh is a licensed builder and director of Instyle Homes Qld Pty Ltd.
- [2]On 1 June 2016, Mr Zeb Foster entered into a contract with Ms Frangieh to purchase the property. It is not disputed that Mr Frangieh had previously carried out building work at the Property.
- [3]On 8 June 2016, Mr Foster obtained a building and pest inspection report on the home revealing various defects including problems with the drainage and leaking of the upper level balcony. Mr Foster obtained an estimate of $22,000 to rectify the defects in the upper balcony.
- [4]On 9 June 2016, the selling agent notified Mr Frangieh of the defects highlighted by the Building Report.
- [5]On 10 June 2016, Mr Frangieh responded that the property was sold on an "as is" basis and that the defects in the upper balcony had been rectified approximately 9 months earlier. He denied there could be any leaking.
- [6]On the same day, the selling agent again raised the concerns of Mr Foster about the drainage issues.
- [7]Mr Frangieh says Mr Foster was aware of the defects in the early stages of the negotiation to buy the property and that the price had been reduced by his sister to allow for these issues.
- [8]On 14 June 2016 and after receipt of the building report, the selling agent notified Mr Frangieh that the ‘deal will fall over’ if the defects were not attended to and requested a written statement that the outstanding issues would be fixed, as the report said there was still pooling of water on each of the balconies, which could potentially cause damage in the future.
- [9]On the same day Mr Frangieh provided a written undertaking saying ‘I’ll give him an undertaking that if a problem occurs I will fix it... If it's not broken what is there to fix’.[1]
- [10]Mr Frangieh says the selling agent then told them that the buyer would proceed unconditionally on an “as is” basis if there was a further small reduction in the price. Mr Frangieh says the agent took a reduction in his commission and on 20 June 2016, a further reduction in the purchase price of $5,000 was offered by Ms Frangieh to Mr Foster.
- [11]The purchase was then completed.
- [12]On 9 May 2017 Mr Foster lodged a complaint with the Commission, about defective building work at the property. This complaint included items relating to the upper balcony at the property.
- [13]The Commission's building inspector, inspected the complaint items in July 2017 and on 4 August 2017, issued a direction to rectify defective building work to Instyle Homes.
- [14]Mr Frangieh agrees with the Commission that as the builder, he is responsible for the building work and at the time of the contract of sale, the statutory period of 6 years and 6 months under the Queensland Building and Construction Commission Act 1991 (Qld) (the ‘QBCC Act’) had not expired.[2]
- [15]However, Mr Frangieh says is in his opinion:
…this unfair to other home owners who have genuine claims for this homeowner to be able to get work remedied via the building insurance fund knowing they had purchased a home at a substantially reduced price with the issues outlines (sic) in a Pre Inspection Building report.[3]
- [16]Mr Foster told this tribunal that there was a long history of price negotiations before there was final agreement but at no point before the completion of the building and pest report, either in writing or verbally, was there any form of disclosure in relation to the problems with the upstairs bedroom balcony or other less significant issues. Mr Foster says these report issues did not contribute to the final agreed contract price as they were not disclosed before the contract was signed on 1 June 2016.[4]
- [17]Mr Foster says he accepted the $5000 reduction proposed by Ms Frangieh on the understanding that it was only in relation to the less significant building defects that a quote had been obtained for and that the price reduction was combined with the written assurances and undertaking by Mr Frangieh in relation to the upstairs balcony that had been excluded from the written quote.
- [18]Mr Frangieh seeks to review the Direction to rectify.
- [19]Section 24 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) sets out the function of this tribunal on review. The tribunal may confirm or amend the decision, set aside the decision and substitute its own, or set aside the decision and return the matter for reconsideration to the decision maker with directions if appropriate.[5]
- [20]The purpose of the review is to produce the correct and preferable decision and is heard and determined by way of a fresh hearing on the merits.[6]
- [21]The power to require rectification of defective building work is contained in section 72 of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’). This section of the QBCC Act requires the tribunal to determine the following issues:[7]
- (a)Is the building work defective?
- (b)Is Mr Frangieh responsible for the building work?
- (c)Is it fair, in all of the circumstances, for the tribunal (standing in the shoes of the Commission) to exercise the discretion to issue the Direction to Rectify to
Mr Frangieh?
- (a)
- [22]Mr Frangieh agreed at the hearing that there is a defect with the waterproofing of the balcony.
- [23]On the evidence of the report of the Building Inspector, I accept that the building work – here the waterproofing of the balcony – is defective.
- [24]Mr Frangieh also accepted at the hearing that he, as the builder, is responsible for all the building work the subject of the rectification notice.
- [25]However Mr Frangieh says in all of the circumstances it is not fair for this tribunal to exercise the discretion to issue the direction to him to rectify any outstanding defects as he says Mr Foster bought the property “as is”.
- [26]The issue before the Tribunal then is whether in is it fair, in all of the circumstances, for the tribunal (standing in the shoes of the Commission) to exercise the discretion to issue the direction to rectify to Instyle Homes - Mr Frangieh’s company.
- [27]The contract for the sale of the property was between Ms Frangieh and Mr Foster. Mr Frangieh was not a party to that contract. He did act as an agent for his sister in the negotiations but that is the extent of his involvement in that transaction.
- [28]Mr Foster inherited the responsibility Mr Frangieh has a builder for the statutory period. In his capacity as builder, Mr Frangieh also offered Mr Foster an undertaking concerning any balcony waterproofing defects.
- [29]Mr Frangieh says that there was no defect that he is responsible for because at the time of the purchase the defect was cured by the reduction in the purchase price offered by his sister. He says it is therefore unfair to now direct him to rectify the balcony waterproofing.
- [30]The Commission agrees there was a defect but says Mr Frangieh is not relieved from responsibility by a price reduction in a contract he is not a party to.
- [31]The Commission also argues this for two reasons:
- (a)The QBCC Act in section 108D does not allow a builder to contract out of the defect responsibility within the statutory period; and
- (b)even if he could be absolved by a price reduction, the price reduction in this matter did not relate to the defect in the balcony waterproofing.
- (a)
- [32]Section 108D of the QBCC Act mandates that a person cannot contract out of the provisions of the QBCC Act. It says an agreement is void to the extent it seeks to exclude, change or restrict a right conferred under the Act.[8]
- [33]This section is clear on its plain reading and I am satisfied that any agreement between Ms Frangieh and Mr Foster (which Mr Foster denies) intended to circumvent Mr Frangieh’s ongoing responsibilities under the QBCC Act must fail.
- [34]I am satisfied that Mr Frangieh’s obligations under the QBCC Act continued forward to the purchase by Mr Foster as the statutory time period had not expired.
- [35]Section 71J of the QBCC Act allows a consumer to ask the Commission to give a direction to rectify building work the consumer considers is defective or incomplete. A consumer, is defined in Schedule 2 of the QBCC Act as generally meaning a person for whom building work is carried out, but does not include a building contractor for whom building work is carried out by a subcontractor.
- [36]The Commission submits that the tribunal should take a broad interpretation of section 71J and the term ‘consumer’ should be adopted, in light of the objects of the QBCC Act which is to provide, amongst other objects, remedies for defective building work.[9]
- [37]Should the Tribunal accept the QBCC's submissions in relation to section 108D(3) of the QBCC Act, then any agreement between Ms Frangieh and Mr Foster for a reduction in the purchase price of the property to encompass all defects at the property would be a restriction on the Mr Foster's right in section 71J of the QBCC Act.
- [38]The Commission submits that section 71J has a consumer protection focus and the effect of any separate agreement that an Owner give up rights arising under that section would be to make the separate agreement void.
- [39]I accept this submission.
- [40]Sections 72 and 72A of the QBCC Act allow this Tribunal (standing in the shoes of the Commission) to exercise a discretion as to whether it is appropriate to issue a Notice to Rectify. This tribunal can take into account all the circumstances the tribunal considers reasonably relevant.[10]
- [41]Mr Foster says the estimate of the cost of repairs to the upstairs balcony given to him was $22,000. Mr Foster denies the contract price reduction of $5,000 encompassed the upstairs balcony repairs. He says this amount only referred to other less significant issues. He says this was so because he relied on the ‘strong’ representations by Mr Frangieh that any problems with the balcony waterproofing had been fixed and on the undertaking given by Mr Frangieh if there were any further issues.[11]
- [42]The Commission submitted that even if it can be established that the $5,000 reduction is for the upper balcony defects, it does not fetter the tribunal’s power to issue a direction to rectify pursuant to section 72 of the QBCC Act, as Instyle Homes cannot contract out of its liability for defective building works.
- [43]Mr Frangieh submitted that the undertaking was a suggestion, not an undertaking. A plain reading of the words of the statement belie this submission and I do not accept it. It does not read as a suggestion from Mr Frangieh, even if he thought it was that, and I am satisfied that it was reasonable for Mr Foster to read it as an undertaking offered by Mr Frangieh on which he could reasonable rely.
- [44]Mr Frangieh says he did not also understand the process in Queensland for the purchase of land and was confused as to when the contract became unconditional. He was used to the system in New South Wales. I place no weight on this submission.
- [45]Mr Frangieh just characterises the whole process as double jeopardy for the builder.
- [46]Mr Frangieh misunderstands his obligations as the builder and in my view, has confused his role as builder with brother of and agent for the owner of the property.
- [47]If the seller had not been his sister, he would have stood at arm’s length from this sale and his obligations under the QBCC Act would have remained clear to him. As it was, he mixed all of his roles and in so do confused himself as to his obligations as a builder.
- [48]I accept both submissions of the Commission. I am satisfied that the QBCC Act in section 108D does not allow a builder to contract out of the defect responsibility within the statutory period.
- [49]I am further satisfied in all the circumstances that Mr Foster did not include the cost of repairs of the upstairs balcony in his negotiations with Ms Frangieh and that he reasonably relied on the assurances and undertaking provided by Mr Frangieh as the builder.
- [50]I am satisfied that it is appropriate in all the circumstances to issue a notice to rectify.
- [51]The Decision of the Commission date 4 August 2017 to issue a direction to rectify is confirmed.
Footnotes
[1] Exhibit 4, paragraph 9.
[2] QBCC Act, s 72A94; Exhibit 2, paragraph 2, where Mr Frangieh agrees with paragraphs 1-62 of the Statement of Reasons, dated 16 October 2017 (Exhibit 7), paragraph 62, and oral admissions at the hearing of the matter.
[3] Exhibit 4, paragraph 14.
[4] Exhibit 5, paragraph 31-31.
[5] QCAT Act, s 24(1).
[6] Ibid s 20.
[7] Glen Williams Pty Ltd v QBSA [2012] QCAT 127, [5].
[8] ACN 149 351 413 Pty Ltd ACN 149 351 413 (in liquidation) (formerly known as Enviren Constructions Pty Ltd v Browning [2015] QDC 269.
[9] QBCC Act, s 3(b).
[10] QBCC Act, s 72(3).
[11] Exhibit 5, paragraphs 28, 42.