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- Unreported Judgment
Jeffrey Tucker v Queensland Building and Construction Commission QCAT 102
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Jeffrey Tucker v Queensland Building and Construction Commission  QCAT 102
Queensland Building and construction commission
General administrative review matters
10 April 2019
8 March 2018; 11 February 2019
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – STATUTORY WARRANTIES FOR RESIDENTIAL BUILDING WORK Queensland – Queensland home warranty scheme – whether jurisdiction to review – whether insurance claim disallowed in part – where liability accepted – where decision to pay for loss in value rather than rectification as claimed – meaning of ‘‘disallow a claim under the statutory insurance scheme wholly or in part’
Queensland Building and Construction Commission Act 1991 (Qld,), s 86(1)(h)
Queensland Civil and Administrative Tribunal Act 2009 (Qld,), s 24
APPEARANCES & REPRESENTATION:
Represented by S Tabaiwalu, In House Lawyer for the Queensland Building and Construction Commission
REASONS FOR DECISION
- In 2006, Mr Tucker entered into a contract for the construction of a residence on his land at Willowvale in Queensland.
- On 29 August 2011, Mr Tucker, being dissatisfied with various aspects of the construction, made a complaint to the Commission.
- The items covered by the complaint included defects relating to misalignment and other issues with the brickwork. The defects affect the whole of the external brickwork of the home.
- The Commission treated the complaint as a claim under the statutory insurance scheme.
- On 9 April 2015, the Commission issued a scope of works for remediation of the defective work.
- Mr Tucker sought an internal review of the scope of works.
- The internal review by the Commission determined on 13 July 2015 that the original scope of works did not fully address the extent of the brickwork defects and substituted a new scope of works in these terms:
Allow to suitably conceal (render/cladding or other agreed method as approved) defective face brickwork as a result of misaligned bricks and inconsistent pointing to all external walls of the dwelling. (approx. 190 sqm).
- Because remedying the defects would involve removing and replacing the whole of the brickwork, Mr Tucker advised that, as a compromise, he would accept sandstone cladding.
- The Commission’s external service provider, described by the Commission as the rectifying builder, provided a revised scope of works on 25 August 2015, as follows:
External face brickwork. Allow to suitably conceal defective brickwork with Sandstone Wall Façade from Sandstone Works to all external walls of the dwelling.
- However, when providing its quote dated 4 November 2015, the builder included a notation:
Sealing of sandstone not included I have concerns if the existing brickwork is strong enough to clad.
- Because of various concerns raised by three cladding companies, Mr Tucker advised the Commission by email dated 1 December 2015 that cladding would not be suitable and asserted that it would be necessary to return to rectification by replacing the faulty brickwork.
- He also provided an email from a sandstone cladding installer quoting the cost of sandstone cladding at $94,326.00 plus necessary associated works at $25,000, plus GST in both cases, making a total of $131,259.
- Mr Tucker does not accept that a suggested alternative of rendering and painting is suitable in the context of the design and location of the residence and has produced advice from an architect confirming this view.
- Based on the advice received about the impact of sandstone cladding on the structural integrity of the residence, the Commission formed the opinion that undertaking remedial work would be unreasonable.
- The Commission therefore determined that, in accordance with the terms of the insurance policy, the payment to Mr Tucker under the policy would be based on the loss in value of Mr Tucker’s residence as a result of the faulty brickwork.
- A valuer engaged by the Commission quantified the loss in value at $65,000.
- The Commission advised Mr Tucker on 21 March 2016 that it had determined to finalise the insurance claim by paying Mr Tucker the amount of $65,000.
- Mr Tucker sought an internal review of this decision. The decision was confirmed under that review.
- Mr Tucker seeks a review of this decision.
- So far, the facts stated are agreed between the parties. There is no evidence before me to indicate that I should depart from these agreed facts.
- The Commission's records indicate that the Applicant has been paid two previous compensation amounts rounded and totalling $56,702. As the total liability available to Mr Tucker under the statutory scheme is $200,000, the Commission’s remaining potential liability is rounded at $143,293.
- Mr Tucker now seeks a further cash payment. He says that the Commission has partly disallowed his claim, as it has not rectified the faulty work or paid him an amount sufficient to rectify it. Rather, the Commission decided to pay an amount it considers to be the difference between what would be the value of Mr Tucker’s residence, but for the faults, and its actual value. Upon a further cash payment, Mr Tucker says he will rectify any defects himself.
- The Commission says that it wholly allowed the claim when it accepted that it is liable under the insurance scheme. Once liability for a claim is accepted, the amount to be paid is for the Commission to determine in accordance with the terms of the policy.
- This determination has been found to be reviewable previously by this tribunal.
- 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.
- 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.
- At the first oral hearing of this matter, two experts appeared to give concurrent evidence. The question that had been posed to these experts was ‘Whether sandstone cladding is a viable method of rectifying the defective building work identified at the applicant’s property’.
- A joint report was prepared. The report was “joint” in name only. The experts agreed on very little and their conflicting evidence only assisted the Tribunal to be very wary of directing sandstone cladding as a viable method of rectifying the defective building work on the outside of Mr Tucker’s home.
- Part 5 of the QBCC Act provides for the statutory insurance scheme, known as the Queensland Home Warranty Scheme.
- However, clause 2.2(c) provides that:
Where, in the opinion of the [Commission], the undertaking of remedial works is unnecessary or unreasonable, the payment will be limited to the loss in value, if any, in the residential construction work, produced by the departure from the plans or specifications or by the defective workmanship or materials.
- Because the Commission formed the opinion that undertaking remedial work would be unreasonable, the decision was to use clause 2.2(c) of the policy to pay based on the loss in value of Mr Tucker’s residence as a result of the faulty brickwork.
- Mr Tucker also urges me to make a cash payment to him. However he would want the payment based on the sandstone cladding installer quote of $94,326.00 plus necessary associated works at $25,000, plus GST, making a total of $131,259. This figure is still within his remaining compensation limit.
- Mr Tucker wishes to finally end any current litigation and to make decisions concerning the nature and extent of rectification himself.
- The Commission is also seeking to have a cash amount of $65,000 paid to Mr Tucker but submits this should be based on clause 2.2(c) of the policy being the loss in value of Mr Tucker’s residence as a result of the faulty brickwork.
- Before I consider any compensation amount, I must first decide the basis for any calculation.
- Mr Tucker does not accept rendering and painting his home as a suitable rectification method. In the context of the design and location of the residence and he produced advice from an architect confirming this view.
- The Commission abandoned this process as a potential rectification method in its decision making process and does not press this process at this de novo hearing.
- Neither party presented any evidence as to the costings of this method.
- I considered very carefully the conflicting evidence of the two experts, both written and orally, concerning the sandstone cladding. The evidence given was starkly contrasting and I have formed the view that recladding the home in sandstone is an inherently risky process that could potentially cause further defects that would require further litigation if not remediated.
- I therefore do not accept basing the cash payment urged by Mr Tucker on this remediation method.
- I accept the submission of the Commission that the correct and preferable method in the circumstances of this matter is to consider a cash payment to Mr Tucker based on the methodology found in clause 2.2(c) of the policy, which is based on the loss in value of Mr Tucker’s residence because of the faulty brickwork.
- At the hearing, the valuation the basis for the cash payment of the Commission to
Mr Tucker, was a property valuation dated 1 March 2016. Neither party had filed further updated valuations.
- As this is a de novo hearing, directions were made for the filing of updated valuations of the home indicating clearly the difference between what would be the current value of Mr Tucker’s residence, but for the faults, and its actual current value.
- The matter was adjourned to a final determination on the papers when these valuations were received but not before 4 June 2018.
- After further directions from this Tribunal, both parties produced updated valuations on the residence.
- Neither new expert could agree on the current valuation of the home nor what it should have been worth defect free at a conclave of experts held by the Tribunal. It became apparent that both experts were provided with different instructions as to the basis of their valuations.
- A conclave of experts was convened by the Tribunal but no agreement was reached by the experts on any aspect of the valuations.
- A further oral hearing day was held on 11 February 2019 to take evidence from the experts as to value.
- At this hearing, after concurrent evidence from both experts was adduced before this Tribunal, the experts agreed that the defect free value for this building (which is described as a good quality home) is $475.00. I accept this value.
- Both valuers further agreed then the diminution in the value of the home could be calculated at a set rate per square metre for the total accepted square meterage of 263.9 sqm minus 10% for profit and risk. This could represent the amount to be paid to
- The last determination by this Tribunal then is the type of finish to be used in this calculation. The choice came down to two finishes. The lower cost would be to calculate base on rendering and repainting the home. This was favoured by one expert, although he admitted to a personal bias towards render.
- The second expert said that a calculation based on the cost of sandstone cladding was more appropriate, in keeping with the quality of the home and a “like for like” rectification. He also deposed that rendering itself has inherent application problems and would have to be maintained every 10 years.
- Mr Tucker submitted that sandstone cladding was the appropriate costing method for the reasons given above and to reflect the choices he originally made in the construction of the home.
- The Commission submitted that clause 2.2(c) of the applicable Insurance Policy conditions requires that where the undertaking of remedial works is unnecessary or unreasonable, the payment will be limited to the loss in value, if any, in the residential construction work, produced by the departure from the plans or specifications or by the defective workmanship or materials,
- On the plain and ordinary meaning of these words, the remediation is necessary. Rendering is the lowest remediation process and therefore necessary. Is sandstone cladding unnecessary in the circumstances of this matter and under the policy and the QBCC Act?
- This becomes a balancing act between the lowest priced process and allowing that the statutory scheme is public monies, whether it is, on balance, appropriate to award a higher valued remediation process in these circumstances.
- Having considered the submissions discussed above, I am satisfied that on balance, Mr Tucker should be awarded the render value but with no deduction for profit and risk. The render rate adopted by the valuers I accept at $95.00 per square metre. Multiplied by 263.9 sqm, is set at $25,070.00 (rounded).
- Using the figures supplied by the valuers, the calculation of the “as is” value of the home is as follows:
Value defect free 475,000
Less render costs 25,070
Less 10% profit and risk 47,500
Assessed “as is” Value 402,430
Adopted value by experts 400,000
- I agree with this methodology and this final adopted value and will accept the current value rounded to $400,000.
- The quantified the loss in value is therefore $75,000.
- The decision of the Commission dated 21 March 2016 to settle part of the Mr Tucker's claim under the Statutory Insurance Scheme for the amount of $65,000.00 is set aside.
- I determine the amount to be paid to settle that part of the Mt Tucker's claim the subject of these proceedings under the Statutory Insurance Scheme to be $75,000.00.
- Published Case Name:
Jeffrey Tucker v Queensland Building and Construction Commission
- Shortened Case Name:
Jeffrey Tucker v Queensland Building and Construction Commission
 QCAT 102
10 Apr 2019