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  4. EH Holden Pty Ltd v Queensland Building and Construction Commission - [2022] QCAT 13

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EH Holden Pty Ltd v Queensland Building and Construction Commission[2022] QCAT 13

EH Holden Pty Ltd v Queensland Building and Construction Commission[2022] QCAT 13

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

EH Holden Pty Ltd v Queensland Building and Construction Commission [2022] QCAT 13

PARTIES:

eh holden pty ltd atf the eh holden trust

(applicant)

v

queensland building and construction commission

(respondent)

APPLICATION NO/S:

GAR100-20

MATTER TYPE:

General administrative review matters

DELIVERED ON:

11 January 2022

HEARING DATE:

29 September 2021

HEARD AT:

Brisbane

DECISION OF:

Member Deane

ORDERS:

The Queensland Building and Construction Commission decision dated 17 February 2020 to wholly disallow a claim under the Statutory Insurance Scheme is confirmed.

CATCHWORDS:

PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – review of decision to disallow homeowner’s claim against scheme – whether primary building work – whether exclusion for painting should only apply where it is for cosmetic or decorative purposes 

Queensland Building and Construction Commission Act 1991 (Qld), s 3, s 19, s 69, s 69A, s 86, s 87, Schedule 1 s 66

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20, s 24

Queensland Building and Construction Commission Regulation 2003 (Qld), s 9, s 10, s 11

Jones v Queensland Building Services Authority [2010] QCAT 563

Kehl v Board of Professional Engineers of Queensland [2010] QCATA 58

Rajagopal v Queensland Building and Construction Commission [2020] QCAT 154

Rezaee and Anor v Queensland Building Services Authority [2011] QCATA 335

Vignarajah v Queensland Building and Construction Commission [2021] QCAT 255

APPEARANCES &

REPRESENTATION:

Applicant:

A Gardner

Respondent:

S Tabaiwalu, in house lawyer

REASONS FOR DECISION

  1. [1]
    In September 2019 EH Holden Pty Ltd ATF the EH Holden Trust (the Homeowner) made a complaint to the Queensland Building and Construction Commission (QBCC) about work performed by a builder as part of a house extension and renovation it engaged the builder to undertake in 2013.  The complaint identified 16 items of alleged defective work. 
  2. [2]
    The QBCC decided that it would not issue a direction to rectify and rejected a claim against the statutory insurance scheme (the SIS).  By this time the builder was in liquidation.  The Homeowner applied for an internal review of the decision.[1] The Homeowner did not specifically limit its request to a review of the decision to reject the claim against the SIS although the QBCC considered it in this way.  On the internal review the QBCC confirmed the decision to reject the claim against the SIS (the Decision).[2]
  3. [3]
    The Homeowner sought review of the Decision.[3]  A person aggrieved by a decision to disallow a claim against the SIS may apply to the Tribunal to review such a decision.[4] 
  4. [4]
    Following the oral hearing, written submissions have been received as contemplated by directions made after the evidence and oral submissions concluded.[5]  The Homeowner makes numerous criticisms of the QBCC for failing to act as a model litigant both during the proceeding and in respect of the submissions.  Much of the criticism is misguided.  The purpose of the final submissions is to summarise the evidence and outline the parties’ contentions in respect of any relevant legislation, regulations and caselaw.  If the Homeowner had insufficient time to respond to the quite lengthy submissions it ought to have applied to the Tribunal for an extension of time within which to do so.  I note that much of the QBCC’s submissions were previously set out in the Statement of Reasons[6] or made during closing oral submissions and therefore those matters ought not to have taken the Homeowner by surprise. 
  5. [5]
    In summary, the Homeowner contends that its claim falls within the principal and intent of the SIS, which is to protect consumers against losses from substantial defects for a reasonable period of time and that the following orders should be made:
    1. (a)
      the QBCC to pay the Homeowner $65,000 ($35,000 for rectification costs and $30,000 for costs); or
    2. (b)
      the QBCC to procure and effect rectification works to complaint items 2, 3, 4, 6, 7, 8, 10, 15 and 16 and pay $30,000 for legal costs.
  6. [6]
    The Homeowner’s submissions purports to give additional evidence including as to rectification costs not previously in evidence. The purpose of the submissions is not to provide further evidence, unless expressly permitted by the directions.[7] 
  7. [7]
    On a review, the Tribunal has power to confirm or amend the decision, set aside the decision and substitute its own or set aside the decision and return it for reconsideration.[8] The Tribunal’s function is to reach the correct and preferable decision after a fresh hearing on the merits.[9]  The Tribunal must decide the review in accordance with the Queensland Civil and Administrative Tribunal Act 2009 (Qld), (QCAT Act) and the enabling Act under which the decision was made.  In this case the relevant enabling Act is the Queensland Building and Construction Commission Act 1991(Qld) (the Act).  There is no presumption that the decision under review is correct.[10]
  8. [8]
    A copy of the contract between the Homeowner and the builder was not in evidence before me.  The parties accept that the contract was entered into on 13 March 2013.  The evidence is that practical completion was achieved in November 2013.  During the hearing the QBCC informed me that its records showed that the certificate of insurance was issued on 25 March 2013.
  9. [9]
    The Homeowner confirmed during the hearing that the only defects in issue related to external painting.  It says that premature failure of external painting to its timber house is a category 1 defect.  It points to water penetration, health and safety and structural performance issues. 
  10. [10]
    It says the external painting constitutes a category 1 defect/structural defect to which the SIS responds because the paint system provides durability to structural elements of the house and prevents water penetration.  It relies upon evidence from a registered builder, façade engineer and structural engineer, who all gave evidence of the importance of the external paint system to timber houses, particularly to the envelope of the house (in particular the weatherboards) in preventing premature maintenance and replacement, preventing undue dampness, which may lead to mould growth and associated health issues and increased likelihood of termite infestation.  There is evidence before me that paint to external timber is flaking and has delaminated exposing timber to the weather.
  11. [11]
    The evidence is that there was no invasive testing performed by any of the witnesses to confirm actual rather than potential issues.  The Homeowner relies upon the expertise and experience of these witnesses.
  12. [12]
    The QBCC says that:
    1. (a)
      the Homeowner is impermissibly attempting to review the decision not to issue a direction to rectify, which ought to have been the subject of a separate review application;
    2. (b)
      the evidence is insufficient to establish that the alleged defect is a category 1 defect for which it has suffered loss;
    3. (c)
      in any event, the circumstances do not fall within the terms of the relevant policy under the SIS.

What are the relevant terms of the policy?

  1. [13]
    I find that the relevant terms of the policy are set out in the Policy Conditions effective 1 July 2009, known as Edition 8 (the Policy).[11]
  1. [14]
    The QBCC Act current as at the time of the hearing[12] provides:
    1. (a)
      a policy of insurance that came into force under former part 5 continues in force on the terms stated in the board’s policies for that purpose.[13]
    2. (b)
      ‘board’s policies’ is defined to mean the policies of the board made for the purposes of section 19 of the QBCC Act and relating to the SIS.[14]
    3. (c)
      despite the replacement of part 5, the former part 5 continues to apply to a contract for residential construction work if the contract was entered into before the replacement day.[15]
    4. (d)
      ‘replacement day’ is defined to mean the day the former part 5 was replaced under the Queensland Building and Construction Commission and Other Legislation Amendment Act 2014 (Qld).[16]
  2. [15]
    The ‘replacement day’ clearly occurred after the contract was signed.
  3. [16]
    As at the date the contract was signed the relevant reprint of the QBCC Act (as it is now known) was that current as at 1 January 2011.
  4. [17]
    Part 5[17] set out provisions in respect of the SIS. It provided that the statutory policy of insurance comes into force in the terms stated in the board’s policies if a consumer enters into a contract for the performance of residential construction work with a licensed contractor.[18] Insurance cover commences on the earliest of the following: (i) when the contractor pays the premium; (ii) on the date the contract between the contractor and consumer is entered into; or (iii) when the contractor commences the work.[19]
  5. [18]
    Based on the limited evidence before me I find that the policy of insurance came into force on or about 13 March 2013 and the relevant board policy in force at that time was the Policy Conditions effective 1 July 2009, known as Edition 8 (the Policy).[20]
  6. [19]
    Clause 4.1 of the Policy provides that the QBCC agrees to pay the cost of rectifying defects in the residential construction work that is primary building work other than for defects from subsidence or settlement referred to in Part 5. The Homeowner does not contend the items of alleged defective work relate to subsidence or settlement.
  7. [20]
    Clause 4.6 of the Policy provides that the QBCC is not liable under this Part for that part of residential construction work that is associated building work.
  8. [21]
    Clause 11.1 of the Policy sets out definitions of certain terms used in the Policy.  The terms ‘residential construction work’, ‘primary building work’ and ‘associated building work’ all have the meanings as defined in sections 10, 11 and 12 of the Regulations.
  9. [22]
    ‘Category 1 defect’ means building work that is faulty or unsatisfactory because it either: (a) adversely affects the structural performance of a building; (b) adversely affects the health or safety of persons residing in or occupying a building; (c) adversely affects the functional use of the building; or (d) allows water penetration into a building.
  10. [23]
    Clause 11.2(a) provides that terms used in the Policy which are defined by the Act or the Regulation have the meaning in the Act or Regulation when the policy came into force. 
  11. [24]
    As at the date the Policy came into force the relevant reprint of the Queensland Building and Construction Commission Regulation 2003 (Qld) (as it is now known)[21] was that current as at 28 September 2012 (‘the Regulations’).
  12. [25]
    The Regulations provided relevant definitions:
    1. (a)
      ‘residential construction work’ was defined as ‘primary building work’ and ‘associated building work’.[22]
    2. (b)
      ‘primary building work’ was set out in section 11.
    3. (c)
      ‘associated building work’ was set out in section 12.
  13. [26]
    The Regulations provided at section 11:
  1. (1)
    Subject to subsection (3), for section 10(a), building work mentioned in subsection (2) is primary building work if it is—
    1. carried out by a building contractor; and
    2. for a residence or a related roofed building; and of a value of more than $3300.
  2. (2)
    For subsection (1), the following is the building work—
    1. construction of the residence or related roofed building;
    2. building work that affects the structural performance of the residence or related roofed building;
    3. building work for relocation or replacement of a roof, wall, internal partition, floor or foundation;
    4. building work for replacement or refitting of fixtures or fittings in a bathroom or kitchen in the residence or related roofed building; 
    5. building work for an unenclosed, elevated platform or verandah, including a deck, attached to a residence;
    6. building work that increases the covered floor area of the residence or related roofed building;
    7. building work for installation or repair of the primary water supply to, or sewerage or drainage for, the residence or related roofed building.
  3. (3)
    The following is not primary building work, but may be associated building work—
    1. fencing;
    2. landscaping;
    3. painting;
    4. installation, renovation, repair or replacement of any of the following—
      1. airconditioning;
      2. driveways, paths or roads;
      3. units for heating water regardless of the source of energy for heating, and including units for heating swimming pools;
      4. refrigeration;
      5. roller shades and shutter screens;
      6. security doors and grills;
      7. solar power units and associated electrical components;
      8. swimming pools, or spas that are not part of a bathroom;
      9. water tanks that are not part of a primary water supply for the residence or related roofed building.
  1. [27]
    Section 11(1) of the Regulations provides a definition of primary building work expressly subject to the exceptions in section 11(3). Section 11(3) of the Regulations specifically excludes painting from the definition of ‘primary building work’. It provides that painting may be associated building work.
  2. [28]
    Section 12(1) of the Regulations relevantly provides that:

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)—

  1. (a)
    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;
  1. [29]
    As noted earlier in these reasons the contract with the builder was not in evidence before me.  The QBCC has proceeded on the basis that the painting work was associated building work.  It is uncontroversial that the work performed under the contract was on the site of a residence.  There is insufficient evidence before me to make findings as to whether the other requirements are satisfied.
  2. [30]
    I note that the term category 1 defect is not used in clause 4.1 of the Policy.  The relevant term is primary building work.

Is the claimed defective work ‘primary building work’? 

  1. [31]
    I find that the claimed defective building work is not primary building work as it falls within the ordinary meaning of the term ‘painting’ which is expressly excluded.
  2. [32]
    The Homeowner contends that painting for the purposes of section 11(3) of the Regulations should be confined to cosmetic or decorative painting but not painting that performs a structural role as a waterproof/weatherproof membrane, which should be regarded as primary building work under section 11(1) and 11(2)(b) of the Regulations.
  3. [33]
    The Homeowner points to the nature of the other items of work excluded in section 11(3) of the Regulations none of which relate to the health and safety of habitable rooms or structural performance of a house.  It also points to subsequent amendments to the SIS, which now includes painting to external walls as primary insurable work.[23]
  4. [34]
    It also relies upon a copy of a recent extract from the QBCC website, which includes information about the SIS responding to defective painting work claims.
  5. [35]
    It submits this is evidence that supports its contention that when, as in its case, the painting forms weatherproofing/waterproofing to the building envelope that it should not be regarded as just painting but rather it should be regarded as primary building work.
  6. [36]
    I am required to construe the terms of the Policy which came into force in March 2013. I am not satisfied that recent statements on the QBCC website are relevant considerations.  
  7. [37]
    The relevant terms of the Policy and Regulations are not particularly ambiguous.  
  8. [38]
    It is not in dispute that the purpose of the SIS is to provide consumer protection. However, this is to be construed having regard to the objects of the QBCC Act, which include to regulate the building industry to ensure the maintenance of proper standards and to achieve a reasonable balance between the interests of building contractors and consumers.[24]  In balancing the interests, I am satisfied that the SIS does not provide unlimited consumer protection.[25]
  9. [39]
    The clear purpose of section 11(3) of the Regulations is to exclude certain types of work from the definition of primary building work. The words in the Policy and in the Regulations ‘ought to be given their ordinary and natural meaning unless the context signifies otherwise.’[26]
  10. [40]
    It is not a strained interpretation of the term painting for it to refer to all painting unlike the circumstances in Jones v Queensland Building Services Authority[27] which related to the term ‘path’. The construction contended for by the Homeowner is, with respect, in contrast quite convoluted.
  11. [41]
    In relation to the amended SIS and definitions, they demonstrate that where coverage is intended to apply to painting as weatherproofing/waterproofing it can be done so expressly.  It was not so provided in the terms of the Policy. 
  12. [42]
    There is no basis for me to effectively imply that the exclusion only applies where the painting is cosmetic or decorative.
  13. [43]
    In view of this finding, it is not necessary to consider whether the evidence is sufficient to support findings that the alleged defective work or some of the items of complaint fall within the definition of category 1 defect or fall within section 11(2) of the Regulations or whether the Homeowner is impermissibly attempting to review an earlier decision of the QBCC. 
  14. [44]
    Even if I accepted the somewhat limited evidence that:
    1. (a)
      Wattyl paint was used by the builder;
    2. (b)
      Wattyl or similar quality paint properly applied would be serviceable for a period well in excess of six years;
    3. (c)
      the external paint was flaking and had failed prematurely because of inadequate preparation such that more extensive maintenance will be required to rectify the defects and found that it constituted work that affects the structural performance of the residence,

the unambiguous exclusion for painting requires me to find that the defective work is not primary building work. 

  1. [45]
    Part 4 of the Policy only responds where the defective work is primary building work and expressly does not respond where the defective work is associated building work.

Summary

  1. [46]
    For the reasons set out, the correct and preferable decision is to confirm the Decision.

Footnotes

[1]  Exhibit 7, SOR7, Letter dated 20 January 2020.

[2]  Exhibit 7, SOR 9, Letter dated 18 February 2020.

[3]  Application to review a decision filed 18 March 2020, Exhibit 1.

[4] Queensland Building and Construction Commission Act 1991(Qld) (QBCC Act), s 86(1)(h), s 87.

[5]  Directions made 29 September 2021. QBCC’s submissions filed 15 October 2021 and 12 November 2021 and the Homeowner’s submissions filed 28 October 2021.

[6]  Exhibit 7.

[7]  Direction 4 made 29 September 2021 contemplated the provision of the NCC Damp and Weatherproofing clause applicable at the time of the work.

[8] Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 24 (QCAT Act).

[9]  Ibid, s 20.

[10] Kehl v Board of Professional Engineers of Queensland [2010] QCATA 58, [9].

[11]  Exhibit 7, SOR1.

[12]  29 September 2021. QBCC Act, Reprint 1 May 2021.

[13]  Ibid, Schedule 1, s 66(1).

[14]  Ibid, s 66(5).

[15]  Ibid, s 66(2).

[16]  Ibid, s 66(5); 27 October 2014.

[17]  QBCC Act, Reprint 1 January 2011, s 67X to s 71AA (inclusive).

[18]  Ibid, s 69(2).

[19]  Ibid, s 69A(2).

[20]  Exhibit 7, SOR1.

[21]  Previously Queensland Building Services Authority Regulation 2003 (Qld) (‘the Regulations’).

[22]  Ibid, s 10.

[23]  Queensland Building and Construction Commission Regulation 2018 (Qld), s 27 (QBCC Regulation 2018).

[24]  QBCC Act, s 3(a).

[25] Rajagopal v Queensland Building and Construction Commission [2020] QCAT 154; Vignarajah v Queensland Building and Construction Commission [2021] QCAT 255.

[26] Jones v Queensland Building Services Authority [2010] QCAT 563, [30]; Rezaee and Anor v Queensland Building Services Authority [2011] QCATA 335, [23].

[27]  [2010] QCAT 563.

Close

Editorial Notes

  • Published Case Name:

    EH Holden Pty Ltd v Queensland Building and Construction Commission

  • Shortened Case Name:

    EH Holden Pty Ltd v Queensland Building and Construction Commission

  • MNC:

    [2022] QCAT 13

  • Court:

    QCAT

  • Judge(s):

    Member Deane

  • Date:

    11 Jan 2022

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
Jones v Queensland Building Services Authority [2010] QCAT 563
3 citations
Jump To
Cite 1 - [2010] QCAT 563
Cite 2 - [2010] QCAT 563
Cite 3 - [2010] QCAT 563
Kehl v Board of Professional Engineers of Queensland [2010] QCATA 58
2 citations
Jump To
Cite 1 - [2010] QCATA 58
Cite 2 - [2010] QCATA 58
Rajagopal v Queensland Building and Construction Commission [2020] QCAT 154
2 citations
Jump To
Cite 1 - [2020] QCAT 154
Cite 2 - [2020] QCAT 154
Rezaee and Anor v Queensland Building Services Authority [2011] QCATA 335
2 citations
Jump To
Cite 1 - [2011] QCATA 335
Cite 2 - [2011] QCATA 335
Vignarajah v Queensland Building and Construction Commission [2021] QCAT 255
2 citations
Jump To
Cite 1 - [2021] QCAT 255
Cite 2 - [2021] QCAT 255

Cases Citing

Case NameFull CitationFrequency
Danial James Moore v Queensland Building and Construction Commission [2023] QCAT 4862 citations
1

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