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Queensland Building and Construction Commission v Group Kildey Pty Ltd; Queensland Building and Construction Commission v JM Kelly (Project Builders) Pty Ltd[2016] QCATA 10

Queensland Building and Construction Commission v Group Kildey Pty Ltd; Queensland Building and Construction Commission v JM Kelly (Project Builders) Pty Ltd[2016] QCATA 10

CITATION:

Queensland Building and Construction Commission v Group Kildey Pty Ltd; Queensland Building and Construction Commission v JM Kelly (Project Builders) Pty Ltd [2016] QCATA 10

PARTIES:

Queensland Building and Construction Commission

(Applicant/Appellant)

v

Group Kildey Pty Ltd

(Respondent)

Queensland Building and Construction Commission

(Applicant/Appellant)

v

JM Kelly (Project Builders) Pty Ltd

(Respondent)

APPLICATION NUMBER:

APL066-15; APL068-15

MATTER TYPE:

Appeals

HEARING DATE:

20 October 2015

HEARD AT:

Brisbane 

DECISION OF:

Justice Carmody

DELIVERED ON:

22 January 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

THE APPEAL TRIBUNAL ORDERS THAT:

  1. Leave to appeal is refused.
  2. Appeal is dismissed.

CATCHWORDS:

APPEAL – LEAVE TO APPEAL – APPEAL – PROFESSIONAL DISCIPLINE – BUILDING WORKS – where the applicants were contracted to provide construction services – where the building contract prescribed that the applicants were required to install a particular prefabricated walling system – where the applicants installed the prefabricated walling system in accordance with the terms of the building contract – where the prefabricated walling system was insufficient to prevent the ingress of water – where the Adjudicator found that the installation of the walls in accordance with the building contract did not amount to “defective building work” – where the Adjudicator found, in the alternative, that a direction to rectify should not be issued because it would be “unfair” to give such a direction – whether the decision of the Adjudicator was affected by any factual, legal, mixed or discretionary error. 

Queensland Building and Construction Commission Act 1991 (Qld), s 72

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 146

Gary Norwood Homes Pty Ltd v Queensland Building Services Authority (unreported, District Court Brisbane, Appeal 615/96, 20/6/97)

House v The King (1936) 55 CLR 499

Queensland Building Services Authority v O'Brien & Anor [2002] QDC 329

R v Judge Miller and Builders Registration Board of Queensland; ex parte Graham Evans and Co (Qld) Pty Ltd [1987] 2 Qd R 446

APPEARANCES and REPRESENTATION (if any):

APPLICANT/APPELLANT R Perry QC, instructed by HWL Ebsworth Lawyers

RESPONDENT Group Kildey Pty Ltd represented by A Harding, instructed by M&K Lawyers

APPLICANT/APPELLANT R Perry QC, instructed by HWL Ebsworth Lawyers

RESPONDENT JM Kelly  represented by T Sullivan QC, instructed by Cooper Grace Ward

REASONS FOR DECISION

  1. [1]
    The Queensland Building and Construction Commission (QBCC)[1] appeals against a review tribunal to revoke building rectification directions on six questions of law and applies for leave to appeal on nine questions characterised as mixed law and fact.
  2. [2]
    These are my reasons for refusing leave to appeal and dismissing the appeal.

The context

  1. [3]
    GK is the developer of a seven storey residential complex at Woody Point.  The original building contractor went into liquidation after completing the fourth floor.  Trade contractors engaged and supervised by JMK under a management agreement erected the top three floors using a non-masonry proprietary walling system designed, manufactured and supplied by Rapid Wall.
  2. [4]
    The building suffers from water penetration which is a Category 1 defect. 
  3. [5]
    In 2010-2011 the Authority directed both respondents to rectify ‘cracking in the coating of the panel of the … panel walling system and water entry through window openings and sliding doors’.
  4. [6]
    The review tribunal found at [118], [120] and [121] of its published reasons that, although both respondents carried out building work for profit, neither was responsible for rectifying the defects because the fault lay in the Rapid Wall system which their sub-contractors merely installed in accordance with plans or specifications for the performance of building work, which neither GK or JMK designed or specified.
  5. [7]
    The review tribunal set aside directions to rectify defective building work issued by the former Queensland Building Services Authority (QBSA), now the Queensland Building Construction Commission (QBCC), against the respondents in GAR008-11 and GAR175-11 (Group Kildey Pty Ltd) (‘GK’) and GAR007-11 and GAR183-11 (JM Kelly (Project Builders) Pty Ltd) (‘JMK’).
  6. [8]
    Properly analysed the only real challenge to the finding at [121] is that it was wrong in law because of a reversal of the onus of proof and misapplication of the decision in R v Judge Miller and Builders Registration Board of Queensland; ex parte Graham Evans and Co (Qld) Pty Ltd[2] and factual errors at [72] and [120].
  7. [9]
    The Authority’s discretionary power to issue a rectification notice derives from s 72 of the Queensland Building Services Authority Act 1991 (QBSA Act).[3]  Whether a direction should be given under ss 72(1) of the QBSA Act depends on all the relevant circumstances.  A condition precedent to the exercise of the power is an opinion that defined building work is defective.
  8. [10]
    Even if the Authority is of that opinion, it is not required to give a direction for the rectification of the building work if it is satisfied that in all the circumstances it would be unfair to do so.[4]
  9. [11]
    The Commission complains on appeal that the reviewer made a number of legal errors in determining the respondent’s liability to a rectification direction and miss-exercised the unfairness discretion in relieving them of that liability.
  10. [12]
    Instead of finding that the defective building work was the Rapid Wall design for which neither respondent was liable the Commission contends that on the proper legal test the reviewer should have concluded that they were jointly liable because:
  1. the construction not the Rapid Wall plans were the relevant building work;
  2. the defect in the building work was water penetration irrespective of its cause;
  3. contrary to the finding at [116] of the published reasons JMK carried out the defective building work via trade contractors as GK’s undisclosed agent for the purposes of s 72(5)(d) of the QBSA.  
  1. [13]
    According to the Commission the reviewer’s findings at [72] and [76] that JMK had installed the system consistently with Rapid Wall’s defective specifications was relevant to the question of whether or not a rectification direction would be actually issued by the Authority but not to the respondent’s prima facie liability for carrying out defective building work.
  2. [14]
    Also the Commission contends that it was for JMK not it to persuade the reviewer that it had properly performed the management contract with GK by ensuring that the terms for the trade contracts were met and that in particular the Rapid Wall system was installed strictly in accordance with the plans and specifications.  The reviewer held at [115] that the onus in the proceeding was on the Authority as the party seeking the favourable outcome.
  3. [15]
    The reviewer held that it was for the Commission to establish to his satisfaction that building work carried out by JMK for or on behalf of GK was defective and that simply proving that water was ingressing in the vicinities of the windows and doors was not enough to discharge that obligation.
  4. [16]
    There is no error where the evidence is capable of supporting the required belief or opinion.  The reviewer, contrary to the Commission’s submission, did not fail to properly apply the legislation or decided cases to the facts.  It was open to him to find that the defective building work was not the building itself but “the preparation of plans or specifications for the performance of building work”.  Likewise, the state of the evidence was such that the reviewer was entitled to conclude that he was not satisfied that JMK was liable for carrying out defective building work on the basis of a failure to supervise or that the work was not performed in accordance with the Rapid Wall design as he did at [76] where the evidence was insufficient to conclusively prove that the leaking was due to a construction issue but pointed to the probability of faulty design the reviewer was entitled to choose either or cause and chose the latter.
  5. [17]
    As can be seen the key findings at [120] – [121] have overlapping relevance to the validity of the Commission’s appeal and application for leave.
  6. [18]
    The Commission argues that the reviewer’s exercise of the unfairness discretion does not have the practical effect of curing any preceding legal errors, was not supported by adequate reasons, and is based on mixed errors of law and fact disclosed at [58] and [59] viz., that the probable cause of the leaks was the Rapid Wall design for which JMK and, in turn, GK were not responsible.
  7. [19]
    R v Judge Miller and Builders Registration Board of Queensland; ex parte Graham Evans and Co (Qld) Pty Ltd[5] is the leading authority in this area.  That case concerned the exercise of power analogous to s 72(1) of the QBSA Act now the QBCC Act.  The builder was ordered to remedy faulty or unsatisfactory waterproofing and a retaining wall.  The waterproofing material was specified in the building contract.  The retaining wall problem was caused by defective design to which the builder was not responsible.
  8. [20]
    The issue was whether the builder who met all contractual obligations was nevertheless liable to rectify.
  9. [21]
    Derrington J (with whom McPherson J agreed) said at [458] faulty or unsatisfactory building work in itself does not impose any liability on the builder but merely enlivens the discretion of the board to order him to rectify it.
  10. [22]
    Where adherence to the contract must mean defective work, the answer to the builder’s dilemma is that the legislature has reposed confidence in the Board to determine the specific case as a matter of discretion recognising the builder’s innocent position and affording him protection through a favourable exercise of discretion.
  11. [23]
    In some circumstances there is obvious need for protection of the building owner even though the builder may be able to point to a term of the contract justifying or explaining the unsatisfactory result.  In others, the builder may be perfectly justified in conforming with the specifications and should not be required to remedy the defect.  It is therefore in conformity with the plain and ordinary meaning of the terms in s 72(3)(b) to find that they apply because of the reality of the defect but if the result derives from the builder’s strict compliance with the contract then the Board, pending on the circumstances, has a discretion not to direct rectification.
  12. [24]
    His Honour found that the primary judge had failed to exercise any discretion at all and it was a clear case for favouring the builder.  Not only was it acting properly in conformity with the contract without any fault in his performance of the work, but the owner after expert independent advice deliberately took the risk in his choice of material for the sake of a cheaper price.
  13. [25]
    If a discretion had been exercised below it must have miscarried in the result.
  14. [26]
    In that case the discretion was approached on the basis of whether it was “right” in the circumstances to require the builder to rectify the work.  In Gary Norwood Homes Pty Ltd v QBSA[6] Fomo DCJ referred to the judgment in Miller and noted that whether the builder was at fault or not is not decisive and proceeded to re-exercise the discretion because the tribunal had made a finding of fact not open on the evidence and therefore exercised the discretion on the wrong factual basis.
  15. [27]
    In Queensland Building Services Authority v O'Brien & Anor,[7] McGill DCJ after noted that it was inappropriate to fetter a discretion by any rule or policy it is clear from the decision in Miller that the fault of the builder is irrelevant consideration and it logically follows that whether the defective work amounts to a breach of any contractual obligation of the builder to the owner or breach or duty to take care are aspects of whether the builder is at fault but is not necessarily determinative.  McGill DCJ found an error of principle involved in the exercising of the discretion on the basis that the tribunal member applied “the highest civil standard” which does not exist.[8]
  16. [28]
    In re-exercising the discretion, His Honour found it necessary to decide whether it is appropriate that the particular defective work be rectified and, if so, by whom.
  17. [29]
    If JMK did not carry out the defective building work then the correctness of the finding about whether GK was an undisclosed principal or not is immaterial.
  18. [30]
    Notwithstanding the primary finding that the Commission had failed to establish that JMK and GK were liable for carrying out defective building work, the reviewer went on to decide at [122] that, even if it had, it would be unfair for either of the respondents to be directed to rectify the building leaks in all the circumstances.
  19. [31]
    Even if the legal errors alleged by the Commission, or some of them, were made in reaching the finding at [120] – [121] it seems to me, that they are erased and do not need correction on appeal because of the discretionary exercise at [122].  Implicit in that approach is an assumption that the preconditions for exercising the power to direct rectification under s 72(1) of the QBSA Act was satisfied; that is that the respondents carried out defective building work but that, in all the circumstances, it was nonetheless unfair to direct them to rectify it.
  20. [32]
    Again even if the tribunal misidentified the defective building work, the overriding effect of [122] was that whatever its nature it would be unfair to the respondents to direct either of them to rectify the defective building work.
  21. [33]
    The Commission did not argue that there was anything wrong in the tribunal’s approach in exercising the discretion in subsection 72(14) of the QBSA on the basis of a hypothetical opinion that building work carried out by the respondents was defective as a source of power to direct rectification under subsection 72(2) or decline to do so under subsection 72(14) of the QBSA.  In other words, the Commission did not argue, as it might have, that the unfairness discretion in s 72(14) was beyond power in light of the findings at [120] and [121].
  22. [34]
    The appeal on the six questions of law in grounds 1, 4, 6, 7, 11 and 15 must fail because valid exercise of the fairness discretion at [122] means that there is no longer any question to be decided on appeal.
  23. [35]
    Accordingly, the reviewer’s discretion is unassailable unless it is evident that it was affected by one or other of the errors identified by the High Court in House v The King.[9]
  24. [36]
    The reasons for exercising the unfairness discretion in favour of the respondents was identified as “all the circumstances I have identified as being relevant.”
  25. [37]
    The commission claims that such reasoning is inadequate.
  26. [38]
    It is clear, however, from [57] that at least in respect of JMK the tribunal was referring to the discretionary factors mentioned at [53] – [56][10].  The more specific fairness related considerations are those matters mentioned in [58], which the tribunal accepted at [59] as being relevant to the issue.  Likewise, the tribunal impliedly accepted JMK’s submissions at [60] – [64] and acted on the findings at [57], [58] and [72] all of which in my opinion were open.  The complaint particularised at 14(b) of the Commission’s grounds loses any force because both facts were assumed in the Commission’s favour by the tribunal at [122]. 
  27. [39]
    Accordingly, although there is room for reasonable differences of opinion, the Commission has failed to demonstrate a reasonable argument of specific or implied discretionary error.  On this basis, leave to appeal the tribunal’s decision by way of rehearing for discretionary or mixed errors of law and fact is not warranted.  Thus the application for leave to appeal on the questions characterises being of “fact and law” in grounds 13 and 14 and “mixed fact and law” in grounds 2, 3, 5, 8, 9 and 10 is refused and the decision of the tribunal to set aside the directions to rectify is confirmed under s 146(a) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).

ORDERS

  1. [40]
    It is the decision of the Appeal Tribunal that:
    1. Leave to appeal is refused in APL066-15 and APL068-15;
    2. Appeal is dismissed in APL066-15 and APL068-15.

Footnotes

[1]  Formerly the Queensland Building Service Authority (QBSA).

[2]  [1987] 2 Qd R 446.

[3]  Now the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).

[4] Queensland Building Services Authority Act 1991 (Qld), s 72(14).

[5]  [1987] 2 Qd R 446.

[6]  (unreported, District Court Brisbane, Appeal 615/96, 20/6/97).

[7] Queensland Building Services Authority v O'Brien & Anor [2002] QDC 329.

[8]  Ibid, [43].

[9]  (1936) 55 CLR 499, 504.

[10]  derived from R v Judge Miller and Builders Registration Board of Queensland; ex parte Graham Evans and Co (Qld) Pty Ltd [1987] 2 Qd R 446.

Close

Editorial Notes

  • Published Case Name:

    Queensland Building and Construction Commission v Group Kildey Pty Ltd; Queensland Building and Construction Commission v JM Kelly (Project Builders) Pty Ltd

  • Shortened Case Name:

    Queensland Building and Construction Commission v Group Kildey Pty Ltd; Queensland Building and Construction Commission v JM Kelly (Project Builders) Pty Ltd

  • MNC:

    [2016] QCATA 10

  • Court:

    QCATA

  • Judge(s):

    Carmody J

  • Date:

    22 Jan 2016

Appeal Status

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

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