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- Unreported Judgment
Hansen v Street QCAT 430
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Hansen v Street  QCAT 430
PIA FORBES HANSEN
20 December 2018
13 December 2018
Member Dr Collier
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – GENERALLY – addition to a private dwelling – level 1 regulated contract – failure to have a written contract – unlicensed contractor – defective work performed by contractor
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – GENERAL – failure to carry out work in an appropriate and skilful way and with reasonable care and skill – defective work performed by the contractor – demolition of a structural addition – appropriate remedy
Queensland Building and Construction Commission Act 1991 (Qld), s 4(1), s 42, Schedule 1B: s 1, s 5, s 6, s 10,
s 13, s 13(5), s 21, s 22,
APPEARANCES & REPRESENTATION:
REASONS FOR DECISION
- This matter commenced life as an application in the Minor Civil Disputes (‘MCD’) division of the Tribunal in which Mr Street made a claim against Ms Hansen for a minor debt arising from an alleged unpaid invoice relating to building work. In response Ms Hansen made a counter-application for alleged defects in the building work performed by Mr Street. When the matter came before the learned Adjudicator at Noosa, the Adjudicator deemed the matter one that should be heard in the Building division of the Tribunal, not MCD. As a result, the earlier application was dismissed and the matter here involves all issues now in dispute between the parties.
- This dispute concerns an extension built on Ms Hansen’s residence at 112 Don Napier Road Eumundi, Qld 4562 by Mr Street. Ms Hansen’s residence is a high-set Queenslander. Ms Hansen testified that the house is located on a hillside and can be subject to quite severe rainstorms.
- During January 2017 Mr Street did some work on Ms Hansen’s residence involving removing an internal wall in the house to open-up space, and Ms Hansen was satisfied with the result of this work.
- In February 2017 Ms Hansen had the floor of the undercroft of a portion of the house concreted for the purpose of providing a hard stand for vehicles to be parked. Soon afterwards she wished to have the undercroft enclosed for the purpose of creating a habitable space.
- Based on her earlier happy experience, about mid-March 2017 Ms Hansen invited Mr Street to discuss with her what she planned. Ms Hansen wished to have walls, ceiling, doors and windows built in order to enclose the undercroft. Some of the materials were to be supplied by Ms Hansen, in particular she purchased complete windows and frames for installation.
- In addition to constructing the new habitable space, the parties agreed that Mr Street would construct a veranda on the upper level of the house above the undercroft at the same time (the whole of the work called here the ‘structural addition’).
- Between them it was agreed that Mr Street would prepare a list of materials needed to complete the structural addition and recommend an electrician to complete the wiring needed. Ms Hansen would pay the material supplier directly in order to obtain the benefit of the trade discount on Mr Street’s account, and pay the electrician directly, presumably so that there would be no mark-up by Mr Hansen on the electrician’s price.
- While there was some difference between the parties as to whether the structural addition was intended to result in a rumpus room or a gymnasium, the parties understood that the structural addition was intended to form part of the habitable space of the residence.
- The parties did not enter into a written contract for this work. Nor did either of the parties apply for a building permit for the proposed work. In his testimony Mr Street asserted that Ms Hansen had emphasised to him that she wished the job to be done at the lowest cost possible. Ms Hansen, on the other hand, testified that she relied on Mr Street’s knowledge and experience in building to ensure that the job was completed competently and would be compliant with regulations. Mr Street stated in testimony that he understood before the job commenced that the cost of the materials and labour needed to complete the job would cost Ms Hansen in excess of $3,300.
- All amounts mentioned in this decision include GST unless otherwise noted.
- There is no controversy that Mr Street estimated to Ms Hansen that the work would involve himself and two other carpenters, who he would engage and pay. Mr Street estimated that the job involved ‘…10-12 days of labour with 2 to 3 carpenters, with a labour rate of $45 per hour…’ Based on 8-hour days, the cost of the carpenters’ labour over 12 days would be around $4,700.
- Mr Street commenced the job on or about 24 April 2017, while Ms Hansen was overseas.
As the events unfolded
- Materials in the amount of $4,237.80 were purchased for the job on 13 April 2017 from Bunnings, and Ms Hansen paid the invoice.
- Mr Street commenced work on the structural addition and had it substantially completed by approximately 6 May 2017.
- Mr Street rendered his first invoice, for $3,323.65, on Ms Hansen that she paid on
3 May 2017. The work to which this invoice related was stated in the invoice as including:
Remove deck and lay scyon sheeting, seal all joints and waterproof.
Build frames under house and fit windows
- Ms Hansen also received and paid an invoice dated 6 May 2017 (although the invoice said 6 May 2016) for $1,188 for the electrician’s services.
- On 8 May 2017 Ms Hansen testified that a storm occurred that led to water entering the structural addition; she said ‘…there was a storm and the entire room flooded. Water ran down the walls, through the light fittings, under the wall etc.’
- Mr Street returned to attempt to plug the source of the leaks that were causing the ingress of the water to the structural addition, principally by using sealing products and installing some angle moulding.
- But, even after this, on each subsequent occasion when there was significant rainfall the structural addition would endure water entering from above the ceiling and from under the bottom of the walls.
- Mr Street rendered an invoice on Ms Hansen for the work completed according to their agreement on 27 May 2017 in the amount of $4,844.02. The work claimed in this invoice related to:
Building works to above rental property.
Completion payment 28th–5th
Cover frame work with sarking all cladding, inside and out all finishing works,
All material and labour including termite barrier
- On the basis of the concerns she had about the quality of the work completed by Mr Street, Ms Hansen refused to pay this last invoice.
- As a result of the concerns held by Ms Hansen that the work completed by Mr Street was defective, and believing that negotiations with Mr Street were not advancing, on 23 June 2017 Ms Hansen’s partner, Tiffany Lee, submitted a complaint to the Queensland Building and Construction Commission (‘QBCC’). The QBCC advised Mrs Lee that they would conduct an inspection of the premises on 2 August 2017. The QBCC attended the site on 2 August 2017 for the inspection but Mr Street did not attend because, as he testified, he had not been made aware of the site inspection. In the absence of Mr Street the QBCC was unable to assist in resolving the matter and provided a certificate of participation in a dispute resolution process and closed the case.
- On 17 July 2017 Mr Street made an Application for Minor Civil Dispute – Minor Debt to the Tribunal, claiming payment of his last invoice for $4,844.02 plus his filing fee. Ms Hansen lodged a Response to the application and made a counterclaim. This matter was heard at Noosa on 13 October 2017 where the learned Adjudicator dismissed the application and counterclaim on the basis that the issues disclosed a building dispute, not a minor civil dispute.
- Ms Hansen lodged her Application for domestic building dispute on 19 March 2018. In her claim she sought to be relieved from the demand by Mr Street to pay him his claim of $4,844.02, and to claim damages from Mr Street amounting to $14,899.45, comprising the following:
- $4,237.80 being the money paid to Bunnings for materials;
- $3,323.65 being the money paid for Mr Street’s first invoice;
- $1,188.00 being the money paid for the electrical invoice;
- $2,000.00 being the estimated cost of demolishing the structural addition built by Mr Street;
- $2,000.00 being an estimate of the cost to rectify/repair the existing structure;
- $2,000.00 being the estimated value of the damage done to the gymnasium equipment and furniture stored in the new room; and
- $150.00 for paint and putty she has expended on the new room.
- Ms Hansen also seeks costs in the matter amounting to $901.80 comprising:
- $575.00 for a building report; and
- $326.80 filing fee.
- Mr Street seeks to have his last invoice of $4,844.02 paid by Ms Hansen. He has no present claim for any costs.
The quality of the structural addition
- There is no real doubt that the structural addition built by Mr Street is not waterproof. The evidence disclosed that after Mr Street had completed his work rainwater entered the structural addition from above the ceiling and from the bottom of the wall cladding. Ms Hansen gave cogent evidence and examples of the leaks and the presence of leaks was not denied by Mr Street.
- Evidence of the problems and their cause was found in the evidence of Mr Paul Bloomer who prepared a report on the structural addition and gave testimony at the hearing. Mr Bloomer works for Coastal Home & Building Inspections and claims to hold an open builder’s licence and be a building inspector licensed by the QBCC. Based on Mr Bloomer’s report and his testimony at the hearing he appears to be a reliable and truthful witness.
- Mr Bloomer’s report dated 4 August 2017, concerning the structural addition built by Mr Street, made 40 observations where the construction was deficient and 6 adverse observations on documentation and regulatory matters. There is no merit in detailing each of the deficiencies he found, but his summary included the following comments:
The standard of workmanship is not adequate…
Various construction techniques and building elements are not designed or suitable for the purposes they have [been] used for or in the works conducted.
Various elements of modifications do not meet required building standards NCC Volume 2, AS3660.3 2000 and require remedial works in multiple areas to ensure it complies.
Addition has serious structural issue as defined under QBCC legislation.
Addition has multiple structural defects (moisture ingress) as defined by QBCC legislation.
- Mr Street made some attempt to remedy the leaks, as noted above, but there remain a slew of deficiencies in the work he has completed that could not be fixed by remedial work. Some essential changes appear only to be feasible by removing the structural addition entirely, while they are so numerous that the cost of remediation may end up being higher than required for an entire re-build. For example:
- The failure to allow for overhang or drip moulding on the external edges of the upper veranda;
- No waterproofing between the scyon sheets and floor joists;
- Failure to install the scyon sheets according to the manufacturer’s recommendation;
- Failure to provide sufficient waterproofing at floor level: the construction of a plinth (or hob), as well as failing to waterproof walls and column joints prior to framing;
- No flashing around some windows and defective flashing on the other; and
- Stud spacings and fixings exceed manufacturer’s recommendation.
- In his testimony Mr Street said that he has not had the opportunity to remedy the leaks complained of by Ms Hansen because he has not been permitted to return to site. Mr Street being refused permission to re-enter the site is confirmed by Anthony Moran who worked with Mr Street on the structural addition. However, Mr Moran’s witness statement is not very helpful to Mr Street because Mr Moran catalogues a number of problems that were evident to him at the beginning of the job, problems that should have been resolved by a competent builder. For example, Mr Moran notes, on page 1 of his statement:
The existing slab had not been poured in a way that was ideal for a room to be built on – ie. it was not raised above the outside level
The use of very old second hand windows that were in very poor condition, did not have fins or revels [sic: reveals]. Windows like this are very difficult to water proof.
Recognising a large incline above the house, my biggest concern was that there were no drains at the rear of the room. Also, there was no drain at the rear of the house above this area. There is a substantial rise to the rear of the house which would generate a significant amount of overland stormwater flow…
- On the basis of the evidence I am satisfied on the balance of probabilities that the structural addition built by Mr Street contains defects that are so significant that the structural addition, as it is, could not practically and economically be made habitable and conformant with the National Construction Code. It needs to be demolished and removed. The issue now becomes: what is the appropriate remedy available to Ms Hansen?
- Ms Hansen obtained a quote from Smith & Sons, builders, dated 29 September 2017 to undertake removal of the structural addition and the construction of a compliant addition in the amount of $38,889. In testimony Ms Hansen conceded that the Smith & Sons quote was higher than would seem reasonable, but has relied on it to identify some of the costs that she may incur in making good the extant work.
The relevant law
- The work that Mr Street contracted to perform was domestic building work within the meaning of that term in Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’). Section 4(1) of Schedule 1B of the QBCC Act says that domestic building work is each of:
- (a)the erection or construction of a detached dwelling;
- (b)the renovation, alteration, extension, improvement or repair of a home;
- (c)removal or resiting work for a detached dwelling;
- (d)the installation of a kit home at a building site.
There is no doubt that Mr Street was involved in domestic building work in this case because he was engaged in renovating, altering, extending, or improving a home. This means that he is a building contractor as that term is defined in s 1 of Schedule 1B of the QBCC Act.
- The work that Mr Street undertook involved work that was going to cost in excess of $3,300. As a result of this, the agreement between Ms Hansen and Mr Street was a regulated contract within the meaning of that term in s 5 of Schedule 1B of the QBCC Act. The ultimate value of the contract could have exceeded $20,000, in which case it would have been a level 2 regulated contract but, given the uncertainty as to the final value of the contract, and given that it was certainly for an amount greater than $3,300, I conclude that is was certainly a level 1 regulated contract as defined in s 6 of the QBCC Act.
- The money paid by Ms Hansen directly for the materials for the project and to the electrician are provisional sums within the meaning of s 10 of Schedule 1B of the QBCC Act, meaning that they form part of the contract value between the parties whether or not it is paid to the builder, in this case Mr Street.
- The requirements concerning a level 1 regulated contract are set out in s 13 of Schedule 1B of the QBCC Act, and include the following:
- (2)The contract must be in a written form, dated and signed by or on behalf of each of the parties to it.
- (3)The contract must contain all of the following—
- (a)the names of the parties to it, including the name of the building contractor as it appears on the contractor’s licence;
- (b)the building contractor’s licence number as it appears on the building contractor’s licence;
- (c)a description of the subject work;
- (d)any plans and specifications for the subject work;
- (e)the contract price or the method for calculating it, including the building contractor’s reasonable estimate;
- (f)a provision that states the date for practical completion or how the date is to be determined;
- (g)a conspicuous notice advising the building owner of the right the owner may have to withdraw from the contract under schedule section 35.
- (4)The contract must also comply with all other requirements prescribed by regulation.
- (5)The contract has effect only if it complies with subsection (2).
- Because the contract was not in writing, the contract between the parties is deemed by s 13(5) to be of no effect. This does not mean that there is no contract between the parties, rather, that any contract that fails to comply with the obligations set out is not enforceable by the contractor. There is, however, an agreement between the parties in this case, although the terms were agreed orally and not in writing.
- Mr Street, being a building contractor for a level 1 regulated contract, has a number of statutory warranties incorporated into his agreement with Ms Hansen. The first of these is that he warrants that his work will be carried out in accordance with all relevant laws and legal requirements. Among other things, this means that, where a building permit is required, Mr Street has the obligation to obtain it. He has not done so in this case.
- Under the terms of the QBCC Act Mr Street has also warranted his work will be carried out in an appropriate and skilful way and with reasonable care and skill. Mr Street has not carried out the work in anything like an appropriate and skilful way nor with reasonable care and skill.
- At all relevant times Mr Street was the holder of a QBCC trade contractor licence in the class: carpentry. At no time was Mr Street the holder of a builder’s licence.
- Section 42 of the QBCC Act provides as follows:
- (1)A person must not carry out, or undertake to carry out, building work unless the person holds a contractor’s licence of the appropriate class under this Act.
Maximum penalty—250 penalty units.
- (3)Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.
- (4)A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed—
- (a)is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
- (b)does not include allowance for any of the following—
- (i)the supply of the person’s own labour;
- (ii)the making of a profit by the person for carrying out the building work;
- (iii)costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and
- (c)is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
- (d)does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.
- Applying s 42, Mr Street is not entitled to be paid for the building work he has undertaken, subject to reasonable remuneration on the basis prescribed in s 42(4). However, for the reasons stated in the conclusions below, he is not entitled to recover any money pursuant to s 42(4) of the QBCC Act.
- Arguments raised in the hearing concerning Ms Hansen wishing to have the job completed for the lowest cost possible and her willingness to avoid regulatory obligations such as building permits are not relevant to the decision in this matter. Parliament has determined that, as a matter of consumer protection, people who undertake building and construction work must be appropriately licensed and must comply with the law and perform their job with an appropriate degree of skill and competence. For this reason, a building contractor must comply with the requirements prescribed by law, and the failure to do so will fall largely on the shoulders of the building contractor who fails in his statutory responsibilities.
- Mr Street was at no time licensed for the building work that he performed for Ms Hansen.
- Mr Street failed to carry out the building work in an appropriate and skilful way and with reasonable care and skill.
- The work performed by Mr Street was so poor and defective that I conclude that it could not be remedied other than by demolition of the structural addition and a new structure built. The materials recovered once the structural addition has been demolished will not be fit for re-use and therefore I conclude that they have no residual value, indeed, they are a liability and will have to be removed from site.
- Because of this I am satisfied that Ms Hansen has obtained no benefit from the work completed or arranged by Mr Street and that she should be restored, as far as money will allow, to the position she was in had the work not commenced. On that basis Mr Street is to pay to Ms Hansen $10,899.45 made up of the following:
- $4,237.80 being the money paid to Bunnings for materials;
- $3,323.65 being the money paid for Mr Street’s first invoice;
- $1,188.00 being the money paid for the electrical invoice;
- $2,000.00 being the estimated cost of demolishing the structural addition built by Mr Street; and
- $150.00 for paint and putty she has expended on the structural addition.
- The $2,000 to demolish and remove the existing structure is based on Ms Hansen’s testimony. The amount of $2,000 she claimed as an estimate to rectify/repair the existing structure appears unnecessary if the additional structure is to be demolished and, in any event, has not been sufficiently particularised. The amount of $2,000 claimed as the estimated value of the damage done to the gymnasium equipment and furniture stored in the new room is not supported by evidence and is not allowed; in any event she was obliged to mitigate her loss by removing those goods to an area where they would not be subject to damage, and failed to do so.
- Mr Street is not entitled to his claim for $4,844.02.
- The Respondent is to pay the Applicant damages of $10,899.45.
- I am satisfied that Ms Hansen had to obtain the expert evidence from Mr Bloomer and is entitled to be recompensed by Mr Street for the $575.00 cost involved. In my discretion I allow Ms Hansen her filing fee in the amount of $326.80.
- In total, the Respondent is to pay the Applicant $11,801.25 within 30 days.
- Ms Hansen is relieved of the claim by Mr Street to pay him $4,844.02.
Witness statement of Jason Street dated 15 October 2018, 3.
Witness statement of Jason Street dated 24 July 2018, 1.
Witness statement of Pia Hansen filed 25 June 2018, .
From the report of Paul Bloomer, dated 4 August 2017.
Witness statement of Anthony Moran, undated, but filed 16 November 2018.
QBCC Act, Schedule 1B, s 21.
QBCC Act, Schedule 1B, s 22.
- Published Case Name:
Pia Forbes Hansen v Jason Street
- Shortened Case Name:
Hansen v Street
 QCAT 430
Member Dr Collier
20 Dec 2018