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  4. The Body Corporate for Rosegum Villas CTS37755 v Queensland Building and Construction Commission - [2016] QCATA 187

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The Body Corporate for Rosegum Villas CTS37755 v Queensland Building and Construction Commission[2016] QCATA 187

The Body Corporate for Rosegum Villas CTS37755 v Queensland Building and Construction Commission[2016] QCATA 187

CITATION:

The Body Corporate for Rosegum Villas CTS37755 v Queensland Building and Construction Commission [2016] QCATA 187

PARTIES:

The Body Corporate for Rosegum Villas CTS37755

(Appellant)

v

Queensland Building and Construction Commission

(Respondent)

APPLICATION NUMBER:

APL 039-16

MATTER TYPE:

Appeals

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Stilgoe AM

Member SM Burke

DELIVERED ON:

25 November 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The appeal is dismissed.

CATCHWORDS:

APPEAL – whether errors of law – statutory insurance scheme – principles relating to interpretation where statutory instrument – meaning of “subsidence and settlement”

APPEAL – No application for leave to appeal – whether errors of mixed law and fact – application of facts to interpretation of insurance policy

Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 142, 146

Queensland Building and Construction Commission Act 1991 (Qld) ss 3, 86 (1)(h)

Acts Interpretation Act 1954 (Qld) s 14A

Statutory Instruments Act 1992 (Qld) s 14(1)

Ericson v Queensland Building Services Authority [2013] QCA 391; [2014] QCA 297

Lange v Queensland Building Services Authority [2012] 2 Qd R 457

CIC insurance v Bankstown Football Club Ltd (1997) 187 CLR 384

Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748

Lida Build Pty ltd v Miller and Anor [2011] QCATA 219

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) [QCAT Act].

REASONS FOR DECISION

  1. [1]
    On 26 November 2012, the Queensland Building and Construction Commission [QBCC] affirmed an earlier decision to reject a claim by the Appellant for indemnity under the statutory insurance scheme in relation to alleged subsidence and settlement [the QBCC revised decision]. [1]
  2. [2]
    Review proceedings in relation to the QBCC revised decision were commenced pursuant to s 87 of the Queensland Building and Construction Commission Act 1991 [QBCC Act] and in accordance with Part 1 Division 3 of the QCAT Act.[2]
  3. [3]
    The first decision arising from those review proceedings was delivered by the Tribunal on 18 November 2014 [the first decision]. The Tribunal Member confirmed the decision of the QBCC refusing the Appellant’s claim for indemnity under the QBCC Home Warranty Insurance Scheme.
  4. [4]
    On appeal of the first decision, the matter was remitted to the Tribunal Member pursuant to s 146(c) of the QCAT Act for further consideration. Reasons for the Appeal Tribunal’s decision were delivered on 25 August 2015.
  5. [5]
    This appeal arises from the decision delivered by the learned Tribunal Member on 23 December 2015 [the second decision] after a rehearing of the matter on the papers.

Background

  1. [6]
    The Appellant is the Body Corporate of the Rosegum Villas complex which comprises 16 single storey residential type buildings (16 blocks) each containing 3 to 5 individual units located at 8 Rosegum Place, Redbank Plains, Queensland.
  2. [7]
    On or about 6 August 2009, the Appellant became aware of defects in both the internal and external walls of the various blocks which were alleged to have been caused by subsidence in the foundations.
  3. [8]
    On 18 August 2009 and 12 October 2009, complaints were lodged with the QBCC by both the lots owners and the Appellant respectively. Claims were made under the QBCC’s Home Warranty Insurance Policy [the QBCC insurance policy].
  4. [9]
    On 19 September 2011, the QBCC refused all the claims [QBCC original decision]. This decision was reconfirmed on 26 November 2012 [the QBCC revised decision].
  5. [10]
    On 17 October 2011, the Appellant applied to the Tribunal for a review of the QBCC revised decision.
  6. [11]
    Between 21 August 2013 and 16 April 2014, the QBCC accepted liability for 11 of the 16 blocks.[3]
  7. [12]
    Five of the 16 blocks were not accepted by the QBCC under the QBCC insurance policy. Those blocks were blocks 2, 3, 7, 12 and 14 [the 5 trial blocks].
  8. [13]
    The 5 trial blocks have been the subject of the hearings before the Tribunal Member and now on this Appeal.

Findings in the Second Decision

  1. [14]
    The Member’s second decision concluded, on acceptance of the expert evidence provided on behalf of the Respondent, that the 5 trial blocks were structurally adequate and that the footings would continue to be sufficient to provide for reliable enjoyment of the buildings as to their serviceability, performance or functional use. The Member further concluded that the enjoyment of the 5 trial blocks would not be adversely affected by movement in the foundations.[4]
  2. [15]
    The Member’s second decision was based on an analysis of Part 3 of the QBCC insurance policy (Edition 7) which provides:

“3.1 Payment for Subsidence and Settlement

  1. (a)
    Subject to the terms of this policy, [QBCC] agrees to pay for the cost of remedying subsidence or settlement damage to the residential construction work that is primary building work.
  2. (b)
    For the purposes of this policy, “subsidence or settlement” means movement in the foundations of the residential construction work which adversely affects the structural adequacy or serviceability, performance or functional use of that work.”
  1. [16]
    The Member concluded that there was no entitlement to indemnity under cl 3.1 as, on the evidence accepted by the Member, there was no adverse effect on the structural adequacy or serviceability, performance or functional use of the building work.
  2. [17]
    The learned Member confirmed the decision of the QBCC made on 19 September 2011 in relation to the 5 trial blocks.
  3. [18]
    As a consequence of that decision, the Member then addressed two further issues submitted to be the subject of declarations sought by the Appellant.
  4. [19]
    In the event of a finding that the 5 trial blocks were not indemnified under the QBCC insurance policy, the Appellant sought the following declarations:
    1. that the footings for the disallowed blocks have not been designed or built in accordance with engineering principles as permitted in the Australian Standard 2870-1996; and
    2. the statutory insurance scheme is enlivened when the footings of the disallowed blocks are no longer found to be complying with Australian Standard 2870-1996; and
    3. the lot owners are entitled to rely on the Letter of Comfort from the Respondent to the Appellant dated 17 March 2014, on providing the Respondent with an expert report which finds that any or all of the disallowed blocks are no longer complying with the Australian Standard 2870-1996, without the need to attend to any owner maintenance issues identified therein.
  5. [20]
    The learned Member accepted that the footings of the trial blocks were of a poor design but concluded that the footings are structurally adequate for their purpose and will continue to be effective without further resultant subsidence damage provided recommended maintenance is undertaken. The Tribunal Member concluded that there was no necessity to make the declarations sought, as those declarations would not add to the determination made based on a proper interpretation of cl 3.1 of the QBCC insurance policy.

Appellant’s Grounds of Appeal

  1. [21]
    The Appellant’s grounds of appeal are formulated in terms of errors of law in the Member’s second decision. The Appellant has not sought leave to appeal in relation to any of the grounds of appeal on the basis that each ground relates to errors of law only.
  2. [22]
    The appeal is to be determined in accordance with s 146 of the QCAT Act.
  3. [23]
    Section 146 of the QCAT Act provides:

“146 Deciding appeal on question of law only

In deciding an appeal against a decision on a question of law only, the appeal tribunal may -

  1. confirm or amend the decision; or
  2. set aside the decision and substitute its own decision; or
  3. set aside the decision and return the matter to the tribunal or other entity who made the decision for reconsideration –
  1. with or without the hearing of additional evidence as directed by the appeal tribunal; and
  2. with the other directions the appeal tribunal consider appropriate; or
  1. make any other order it considers appropriate, whether or not in combination with an order made under paragraph (a), (b) or (c).”
  1. [24]
    This Appeal Tribunal is bound by the decision of the Court of Appeal in Ericson v Queensland Building Services Authority [2013] QCA 391 which provides that the Appeal Tribunal has no power under s 146 to conduct a re-hearing so as to reach its own conclusions on the evidence and that it is only if the determination of the question of law is capable of resolving the whole matter in the appellant’s favour that the Appeal Tribunal will be in a position to substitute its own decision.[5]
  2. [25]
    There are 3 grounds of appeal relied upon by the Appellant and set out in its written submissions:[6]
  1. At [85] and [86], of the reasons of the second decision, the Member erred and/or misdirected himself that the Statutory Home Warranty Insurance Scheme (Policy) was a commercial document that has to be interpreted and applied accordingly, and no basis for the exercise of discretion in favour of the consumer arose in that:
  1. the Policy is a statutory instrument, not a commercial document;
  2. a purposive construction which best achieves the consumer protection objects of the QBCC Act must be preferred to any other;
  3. the Policy had to be interpreted and applied inter alia to:
  1. ensure the maintenance and proper standards in the industry;
  2. achieve a reasonable balance between interests of building contractors and consumers such as the Appellant; and
  3. to provide remedies for defective building work, which on the agreed facts of this proceeding, included a defective footing system.
  1. At [120] of the reasons for the second decision, the Member erred in holding that no entitlement arises under the Policy, as there was no present adverse effect on the structural adequacy or serviceability, performance or functional use, in that:
  1. at [69] to [74] the Member applied an unduly narrow and restrictive construction of the Policy, rather than a purposive construction that best achieves the consumer protection objects of the QBCC Act;
  2. the member failed to address, or sufficiently address in his reasons the proximate relationship between the costs attributable to the “owner maintenance issues” and “moisture control measures”, and the common finding that engaged  indemnity under the Policy across 11 of 16 blocks, was also the common finding for the remaining blocks, namely the defective footing system, which was accepted by Mr Wright in his evidence as a latent defect;
  3. the Member erred in holding that the costs of the “owner maintenance issues” and “moisture control measures”, on a proper construction of the Policy, were not caught by the indemnity under the Policy; and
  4. at [75] – [84] of the reasons for the second decision, the member failed to properly construe AS2780-1996, and Table C thereof, in the construction of the Policy in reaching the conclusion at para. [63] of the second decision.
  1. The Member erred in his findings at [102] – [106] of the reasons for the second decision in that:
  1. in terms of the proper construction of the Policy, the costs of subsoil moisture control measures were costs to be covered under the Policy;
  2. at [103] of the reasons for the second decision, the Member relied upon paragraphs of the joint expert report dated 6 May 2013, which subsequently became irrelevant when the QBCC expressly abandoned the exclusions under cl 5.4 of the Policy; and
  3. the Member at [106] of the reasons for the second decision, gave impermissible significance to the matters that Mr Wright did not say in evidence and which was contrary to the agreed position of all experts in their report of 6 May 2013 in the following terms:

“All experts agree that, had the footing designs been equivalent to deemed to comply designs given in AS2870-1996 then the distress and damage would have been much less severe.”

  1. [26]
    The Appellant seeks orders that the second decision affirming the QBCC revised decision to refuse the Appellant’s indemnity under the QBCC insurance policy in relation to blocks 2, 3, 7, 12 and 14 be set aside and that the Appeal Tribunal substitute its own decision allowing the Appellant’s claim under the QBCC insurance policy.

The Statutory Insurance Scheme

  1. [27]
    The QBCC insurance policy is a statutory instrument. The interpretation of cl 3.1 which will best achieve the purpose of the QBCC Act is to be preferred to any other.[7]
  2. [28]
    The objects of the QBCC Act are set out in s 3:

“3Objects of the Act

The objects of this Act are –

  1. to regulate the building industry –
  1. to ensure the maintenance of proper standards in the industry; and
  2. to achieve a reasonable balance between the interests of building contractors and consumers; and
  1. to provide remedies for defective building work; and
  2. to provide support, education and advice for those who undertake building work and consumers.”[8]
  1. [29]
    Part 5 of the QBCC Act establishes the statutory insurance scheme and outlines the functions of the QBCC in managing that scheme. The purpose of Pt 5 of the QBCC Act is consumer protection and thus the policy is to be construed in a way which will best achieve that purpose.[9]
  2. [30]
    The purpose of the statutory insurance scheme is to provide protection to the consumer in the event that any loss is suffered as a result of defective building work. Bearing that in mind, in interpreting cl 3.1 of the QBCC insurance policy it is essential to identify whether a loss has been suffered as a result of damage arising specifically from subsidence and settlement as a result of defective building work. The evidence relied upon by the Member suggests that the damage suffered to the 5 trial blocks is not sufficient for it to qualify as damage from “subsidence or settlement” as defined in cl 3.1.
  3. [31]
    We accept that the Member erred in labelling the policy as a commercial document rather than a statutory instrument given the genesis of the policy under the statutory insurance scheme.
  4. [32]
    We do not accept however that the Member’s conclusion was tainted by an error in labelling the policy as a commercial document.

Purposive Approach to Interpretation of the Policy

  1. [33]
    The basic principles governing statutory interpretation, including statutory instruments, have been considered in many High Court decisions which involve deriving meaning from close consideration of the text, context and purpose of the many provisions. Statements of principle referred to as the modern approach to statutory interpretation are set out in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 in the joint judgement of Brennan CJ, Dawson, Toohey and Gummow JJ:[10]

“…..the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses ‘context’ in its widest sense to include such things as the existing state of the law and the mischief with which, by legitimate means such as [reference to reports of law reform bodies], one may discern what the statute was intended to remedy: Attorney-General v Prince Ernest Augustus of Hanover, cited in K&S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd. Instances of general words in a statute being so construed by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd, if the apparently plain words of a provision are read in the light of the mischief which the statue was designed to overcome and of the objects of the legislation, they may wear a different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent: Cooper Brookes (Wollongong) Pty Ltd v FCT.”[11]

  1. [34]
    Both the underlying purpose or object and context are now to be considered initially, rather than after it has been concluded that the provision in question is ambiguous or unclear.
  2. [35]
    The fundamental task is to identify the meaning of the text. For the purposes of cl 3.1 of the QBCC insurance policy, this task involves exploring whether, on the evidence, subsidence or settlement damage has occurred to the residential construction work. That task involves assessing whether there has been movement in the foundations which adversely affects the structural adequacy or serviceability, performance or functional use of the work.
  3. [36]
    The importation of considerations of context and purpose, whilst co-existing with the interpretation of the meaning of the words, should not cause the interpretation to stray from the ordinary meaning of the text.
  4. [37]
    Liability under cl 3.1 is triggered by the existence of “subsidence or settlement” damage to the residential construction work.[12]
  5. [38]
    “Subsidence and settlement” is defined in cl 3.1 as “movement in the foundations of the residential construction work, which adversely affects the structural adequacy or serviceability, performance or functional use of that work.” No definition is given for the meaning of the words “structural adequacy” or “serviceability”, or “performance” or “functional use” in the QBCC insurance policy or in the Act.
  6. [39]
    The Member relied upon various meanings provided by the parties in relation to each of these words.
  7. [40]
    The Appellant relied upon the dictionary meaning for “adequacy” as the “state or quality of being adequate as in commensurate in fitness; sufficient; satisfactory”.[13] Further, the meaning of “serviceable” as “being of service, useful or capable of doing good service” and “serviceability” as defined as “readiness for service, usefulness or the capacity of a machine to be maintained or repaired”.
  8. [41]
    The Respondent submitted that the terms were to be defined as follows:[14]
    1. Structural adequacy may be considered as the sufficiency of the elements or parts of the building to carry or transfer load. That is, the sufficiency of those elements of the building that play a part in holding the weight of the building up, or in layman’s terms, stop the building from falling down.
    2. Serviceability is the ability of a building to perform in the manner required of that building.
    3. Performance is the way in which that building fulfils its intended purpose.
    4. Functional use of a building is the activities and services properly associated with that building. In other words what the building is used for.
  9. [42]
    The Member concluded that the words were not to be considered disjunctively given that the grammar in cl 3.1 did not provide for just one or other of the requirements using the disjunctive “or” between all terms. Rather, all the elements were to be considered in deciding whether the requisite level of subsidence and settlement had occurred. The Member therefore formed the view, based on an analysis of the wording of the clause and Mr Wright’s evidence, that the footings are and will continue to be sufficient to provide for reliable enjoyment of the building and that enjoyment is not, and will not be, adversely affected by the movement of the foundations.[15]
  10. [43]
    A proper interpretation of cl 3.1 must first start with a connection between movement in the foundations and an adverse effect on the structural adequacy or serviceability, performance or functional use of the residential construction work.
  11. [44]
    There must therefore be a consideration of the following matters:
    1. has there been movement in the foundations either caused by the defective slab and footing system or other causes;
    2. has the movement in the foundations adversely affected the following:
    1. the structural adequacy of the residential construction work;
    2. the serviceability, performance or functional use of the residential construction work.
  12. [45]
    Clause 3.1 of the QBCC insurance policy seeks to provide a remedy in circumstances where there is a connection between the movement in the foundations and an adverse effect on the structural adequacy or serviceability, performance or functional use of the residential construction work.
  13. [46]
    The consumer protection purpose of the policy must be one directed to a loss suffered by the Appellant. It does not relate to future loss or to potential or probable loss. It does not attach to a hypothetical scenario, even if it may seem a threat in the circumstances of the whole complex.
  14. [47]
    If the legislature intended that the policy would apply to future damage from subsidence or settlement it would have been a relatively simple task for that to be incorporated into cl 3.1.
  15. [48]
    The Member accepted the evidence of the geotechnical engineering expert, Mr Wright, who provided extensive evidence on behalf of the QBCC.[16] Considered reasoning was given for this preference. It is not for this forum to interfere with those findings given that it was open to the Member to accept one expert’s evidence in preference to another.[17]
  16. [49]
    Mr Wright formed the view that the current performance of all the 5 trial blocks was within acceptable limits of the relevant Australian Standard. Mr Bishop, who gave expert engineering evidence on behalf of the Appellant, agreed with this conclusion, except in relation to 2 of the trial blocks, namely blocks 12 and 14.[18]
  17. [50]
    The Member accepted the evidence of Mr Wright that the buildings could not be said to be affected in relation to structural adequacy, serviceability, performance and functional use of the 5 trial blocks. The conclusion was reached despite the agreement of the experts that the footings were of a poor design.
  18. [51]
    We accept the submissions of the Appellant that the approach taken by the Member in analysing the meaning of cl 3.1 was too narrow and failed to consider the context and purpose of the policy.
  19. [52]
    We do not accept however that the conclusion of the Member was affected by the erroneous approach and conclude that a proper interpretation of cl 3.1 of the QBCC insurance policy was reached, based on the Member’s acceptance of the expert evidence which concluded that the minimal movement of the foundations did not adversely affect the structural adequacy or serviceability, performance or functional use of the 5 trial blocks.
  20. [53]
    We are therefore of the view that had the Member taken into account the purposive approach proposed by the Appellant and analysed cl 3.1 with reference to the text, context and purpose of the QBCC insurance policy, the same conclusion would have been reached.

Appeal Ground 2

  1. [54]
    The Appellant’s second ground of appeal addresses the following errors:
    1. the Member erred in that he relied upon the damage tolerances in Table C of AS2870-1996 to solely determine whether there was any liability under cl 3.1 of the QBCC insurance policy rather than consider the serviceability of the building over its design life, its ongoing amenity and adverse effect on the capital value of the buildings;
    2. the Member erred in failing to take into account when interpreting cl 3.1 that there was a proximate relationship between the recommended maintenance costs and moisture control costs for the 5 trial blocks and the common finding that all 16 blocks had a defective footing system which was a latent defect in both the 11 blocks caught by the indemnity and the 5 blocks which have been rejected.

Application of AS 2870-1996

  1. [55]
    AS2870-1996, Residential Slabs and Footings at cl 1.3.1 relevantly provides:

The footing systems complying with this Standard are intended to achieve acceptable probabilities of serviceability and safety of the building during its design life. Buildings supported by footing systems designed and constructed in accordance with this Standard on a normal site (see Cl 1.3.2) which is –

  1. (a)
    not subject to abnormal conditions; and
  2. (b)
    maintained such that the original site classification remains valid and abnormal moisture conditions do not develop (see Note 1)

are expected to experience usually no damage, a low incidence of damage category 1 and an occasional incidence of damage category 2 (see Note 2). Damage categories are defined in Appendix C.[19]

  1. [56]
    AS2870-1996 was heavily relied upon by both experts in determining the level of damage at each of the 5 trial blocks. Movement in the foundations, which is a pre-requisite to determining whether there is subsidence or settlement, manifests as damage as categorised by AS2870-1996. Other factors were also considered by the Member such as those outlined in the Respondent’s written submissions:[20]
    1. the differential movement and maximum floor slope, based on detailed contour surveys;
    2. surrounding site features;
    3. the amount of change in heave of the footings and other damage between 2012 and 2013 inspections;
    4. the amount of separation between the screw piers and the underside of the floor slab.
  2. [57]
    The learned Member addressed the issues of both serviceability and the vulnerability of each trial block to potential future movement in the reasons for the second decision. From paragraphs [75] to [94], the Member turned his mind to the future problems with the defective slab and footing system together with the present condition of the buildings resulting from the defective slab and footing system.
  3. [58]
    The Appellant argued that cl 3.1 refers to future structural adequacy or serviceability, performance or functional use of the residential construction work and that the Member failed to consider issues other than the present state of the buildings. The learned Member did not discount the Appellant’s approach to the interpretation of cl 3.1 and relied upon the evidence of Mr Wright, who addressed the future prognosis of the 5 trial blocks.[21]
  4. [59]
    Neither expert was able to conclusively identify why the trial blocks were behaving differently from the 11 blocks which were accepted under the QBCC insurance policy. A variety of reasons were explored but no plausible conclusion could be reached.
  5. [60]
    The ground relied upon by the Appellant is formulated as a question of law and thus a determination on appeal, without leave to appeal, is warranted.[22]
  6. [61]
    It would appear however that the real issues for determination in relation to ground 2 raise matters of mixed law and fact.[23] In those circumstances, leave is required. Leave to appeal has not been sought; nor has the Respondent challenged the Appellant’s appeal on that basis.
  7. [62]
    The distinction between questions of law and fact is not always clear but a concise summary appears in a passage from the Supreme Court of Canada:[24]

Briefly stated, questions of law are question about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.

  1. [63]
    The basis upon which leave to appeal is granted has been considered in many decisions and succinctly summarised in Lida Build Pty Ltd v Miller and Anor [2011] QCATA 219 at [7] to [9]:

[7]Finality in litigation is highly desirable because any further action beyond the hearing can be costly, and unnecessarily burdensome on the parties. [Fox v Percy (2003) 214 CLR 18, 128 per Gleeson CJ, Gummow and Kirby JJ]. A finding of fact will generally not be disturbed on appeal if the evidence before the tribunal supports the inferences drawn and the facts found. [Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 355 per Mason CJ] It is not the Appeal Tribunal’s task to decide where the truth lay as between the competing versions given by parties. [Fox v Percy (2003) 214 CLR 118 at 129 per Gleeson CJ, Gummow and Kirby JJ]

[8]Whether a decision is based on findings of fact which are open on the available evidence is a question of law. [Kostas v HIA Insurance Services Pty Ltd t/a Home Owners Warranty (2010) 241 CLR 390]

[9]Leave to appeal will ordinarily only be granted when a question of general importance upon which further argument and a decision of the Appeal Tribunal is to public advantage [Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388, 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577, 578 and 580]; there is a reasonably arguable case that the primary decision-maker made an error [QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41] and there are reasonable prospects that the applicant would be granted orders in its favour [Cachia v Grech [2009] NSWCA 232, [13]]; or to correct a substantial injustice to the applicant caused by error [QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 QD R 41].

  1. [64]
    An appeal to the Appeal Tribunal on a question of fact or mixed law and fact is by way of rehearing.[25] The Appeal Tribunal must consider whether it is demonstrated by an appellant that there has been some legal, factual or discretionary error obvious on the record.[26]
  2. [65]
    Ground 2, whilst proposed as a question of law, obviously attempts to raise questions of fact to be determined as satisfying the legal tests.
  3. [66]
    Given that we have formed the view that the learned Member did consider the matters the subject of ground 2 in the reasons for the second decision, there is no need to consider whether any leave to appeal should be entertained nor should any appeal on a question of law only be considered in the Appellant’s favour.
  4. [67]
    Finally in relation to ground 2, the Appellant’s submission that there was an adverse effect on the capital value of the buildings is not a matter which may appropriately be considered on appeal. It was not raised at the original hearing nor was it the subject of the second decision.

Appeal Ground 3

  1. [68]
    Ground 3 challenges the reasoning and findings in the Member’s second decision at [102] – [106].
  2. [69]
    At [102] to [206] the learned Member stated:

“[102]Therefore whilst it might be asked why the owners should have to pay for maintenance measures that could be said to be required to cope with the poor design of the footings, there is a counter-argument that these problems are arising because of the nature of the location, and that such measures are maintenance measures that have arisen in practice having regard to the actual waterflows and vegetation experience of the complex, and are not solely related to the design of the footings

[103]The experts agreed in the joint report of 6 May 2013 that there were maintenance issues that led to variations in the subsoil moisture:

  1. It is agreed that poor maintenance issues relate to uncontrolled vegetation, drainage to and from the tanks and elevated gully pits.

…………

  1. The poor surface drainage, both on and off the site, raised gully pits, overflowing tanks, open path joints and vegetation have all contributed to variations in the subsoil moisture and hence variations in the swelling of the subsoil.

[104]If the buildings were not performing satisfactorily at the present time, then it would likely follow that the moisture control measures could be seen as consequent necessary rectification works if they were still seen as appropriate in the circumstance. However, where the buildings are preforming satisfactorily, then the moisture control measures can be seen as prudent steps to avoid a situation developing in the future, and steps that the owners should take to maintain and protect from possible danger of which they have become aware.

[105]A parallel may be drawn with a home-owner who becomes aware that water is accumulating against the outside wall of a building through overland flow that is not currently causing a problem, but would do so if allowed to continue and to accumulate, and is advised to install agricultural piping as drainage along the base of the wall to intercept, collect and divert the water to a remote discharge point. That work would be seen as prudent preventative maintenance, and a home-owner would be foolhardy to ignore such advice.

[106]Significantly, Mr Wight does not say that if the footings had been better designed and complied with the Standard, that the heave would not have occurred, or that the owner maintenance he outlines, would not be required. Indeed he points to other factors, unrelated to the footing design, which have contributed to the heave. He says this as to the cause of damage in cl 6.7 of his mentioned reports (as to unit 6 in this instance, but he makes similar comments as to other units):

6.7Cause of Damage

  1. (a)
    We are in little doubt that the distortion in the building has been caused by an uptake of moisture in the subsoil which w e anticipate was variable in reactivity and moisture state at the time of construction.
  1. (b)
    it is possible the heave in the left hand of Unit 6 is a result from poor site drainage at the end of the unit combined with a large uptake of moisture into highly reactive subsoil desiccated by a tree now removed from the neighbours site.
  1. (c)
    The footing and slab system has much less strength and stiffness, and hence much less able to resist localised distortion from subsoil heave, than a footing and slab system complied with the requirement of AS2870-1996.”

Paragraphs [102] to [106] of the Second Decision

  1. [70]
    The discussion at paragraphs [102] – [106] of the Member’s second decision arose out of the Appellant’s request that declarations be made in the event that the Member rejected the Appellant’s claim for indemnity under cl 3.1 of the QBCC insurance policy.
  2. [71]
    The learned Member was obliged to respond to the Appellant’s application for such declarations. The issues raised were not considered by the Member to be issues relevant to the interpretation of cl 3.1 of the QBCC insurance policy but were, in any event quite properly, dealt with in the Member’s second decision.
  3. [72]
    The issues arise out of Mr Wright’s recommendations for sub-soil moisture control as provided in his reports and explained in evidence by both Mr Wright and Mr Bishop. The options discussed by both experts related to solutions to ensure that there is no further movement of the slab from the poorly designed footing system and to ensure stabilization of the moisture content under the building. In addition, Mr Wright recommended that the likelihood of further movement in the foundations would be abated if the owners carried out certain works which he labelled as maintenance works.[27]
  4. [73]
    The Member formed the view that there was no evidence, either from Mr Wright or Mr Bishop, that the 5 trial blocks were going to deteriorate further.
  5. [74]
    The Appellant challenged that statement on the basis that the works recommended by Mr Wright were similar to, if not the same as, the rectification works required to remedy the subsidence and settlement damage experienced by the 11 blocks which had been indemnified.
  6. [75]
    It must be born in mind that the Member’s decision arose out of a review of the QBCC revised decision. It was a review under s 186(1)(h) of the QBCC Act and focused on whether a claim fell within the parameters of allowable claims under the statutory insurance scheme. It was not a review about the scope of works to be undertaken under the statutory insurance scheme.[28]
  7. [76]
    Thus it was not within the scope of the review for the Member to consider the scope of remedial works.
  8. [77]
    The Appellant seeks to enliven cl 3.1 of the QBCC insurance policy by directing a focus on recommended maintenance work which, in the Appellant’s view, is totally due to the defective slab and footing system. The learned Member formed the view, based on the evidence of Mr Wright, that there were a number of contributing factors leading to the necessity for prudent steps to be taken as maintenance recommendations. Mr Bishop agreed with Mr Wright that recommendations to stabilize the moisture content of the site were necessary.[29]
  9. [78]
    Both experts agree that maintenance of the site is necessary for a number of reasons:
    1. to resolve possible risks because of the inadequate foundations;
    2. to reduce the risk of further heaving; and
    3. to minimize future possible damage.
  10. [79]
    The main concern is the control of surface run-off and evaporation which may be achieved by the removal of shrubs. This is a standard maintenance obligation contained in published guidelines for sites with reactive soils.
  11. [80]
    It is noted that Mr Wright conceded that some of his recommendations (for example, the 2.4 metre concrete apron around the house) would be regarded as beyond the reasonable expectation of maintenance by an owner. [30]
  12. [81]
    The matters considered by Mr Wright regarding maintenance recommendations were of serious concern to the owners and the Appellant. Whilst they were not matters which are properly the subject matter of a proper interpretation of cl 3.1 of the QBCC insurance policy, the Member addressed them in response to the Appellant’s application for further declarations.
  13. [82]
    In similar circumstances to ground 2, the Appellant has raised issues of mixed law and fact, for which no application for leave to appeal has been sought.
  14. [83]
    We have formed the view that the matters raised in ground 3 do not affect the Member’s determination in relation to the interpretation of cl 3.1 of the QBCC insurance policy and therefore dismiss ground 3.
  15. [84]
    By way of commentary, we note that there is an apprehension of some unfairness in the claim relating to the 5 trial blocks compared with the successful claims in relation to the other 11 blocks in the complex. The present advantage of the owners of the 5 trial blocks is the circumstance that their blocks have not suffered the severe damage evident in the other 11 blocks. It is with caution, however, we express the view that in the event of any further movement in the foundations of the 5 trial blocks, a claim by the owners for indemnity under cl 3.1 of the QBCC insurance policy should be considered with urgency by the QBCC. Given that the recommendations for maintenance by the owners relied upon by the QBCC in Mr Wright’s reports extend beyond that which would reasonably be expected of an owner, one can only assume that any future claim will not be excluded on the basis that the owners have failed in their maintenance obligations.

Conclusion

  1. [85]
    In relation to ground 1, despite an error in labelling the policy as a commercial document and the application of a restrictive interpretation of cl 3.1 of the QBCC insurance policy, the Tribunal’s conclusion that the claim should be rejected was a proper conclusion based on the expert evidence accepted by the Member.
  2. [86]
    In relation to ground 2:
    1. it was unnecessary as part of the review process for the Tribunal to make any further declarations sought by the Appellant;
    2. the Member gave proper consideration to AS2870-1996 in reaching a proper interpretation of cl 3.1 of the QBCC insurance policy;
    3. the Member addressed all relevant evidence in reaching a proper interpretation of cl 3.1 of the QBCC insurance policy.
  3. [87]
    In relation to ground 3, it was unnecessary as part of the review process for the Tribunal to make any further declarations sought by the Appellant and the Member’s consideration of the issues raised did not affect the proper interpretation of cl 3.1 of the QBCC insurance policy.

Orders

  1. [88]
    This Appeal Tribunal dismisses the appeal and, to the extent necessary, an application for leave to appeal.

Footnotes

[1] The original decision of the QBCC was given on 19 September 2011.

[2] Reviewable decision pursuant to s 86(1)(h) of the QBCC Act.

[3] 21 August 2013 QBCC accepted liability for Block 5; 19 February 2014 QBCC accepted liability for Blocks 4, 8, 9, 10, 11, 13, 15 and 16; 16 April 2014 QBCC accepted liability for Blocks 1 and 6.

[4] [119] to [121] of the reasons for the second decision.

[5] Ericson v Queensland Building Services Authority [2013] QCA 391 at [25]; Ericson v Queensland Building Services Authority [2014] QCA 297 at [13] – [15].

[6] Appellant’s written submissions on appeal.

[7] Statutory Instruments Act 1992 (Qld) s 14(1), Schedule 1; Acts Interpretation Act 1954 (Qld) s 14A; See also Lange v Queensland Building Services Authority [2012] 2 Qd R 457.

[8] An amendment to s 3 in the Queensland Building and Construction Commission and Other Legislation Amendment Act 2014 (Qld) has added “(d) to regulate domestic building contracts to achieve a reasonable balance between the interests of building contractors and building owners.”

[9] Lange v Queensland Building Services Authority [2012] 2 Qd R 457 at 463.

[10] At p.408.

[11] See also Project Blue Sky Inc v Australian Broadcasting Authority (1997) 194 CLR 355 at 381.

[12] As defined in s 10 of the Queensland Building Services Authority Regulation 2003 (Qld).

[13] New Shorter Oxford English Dictionary.

 

[15] Applying [83] of reasons of the second decision.

[16] Mr Wright provided expert evidence on behalf of the Respondent. Mr Bishop provided expert evidence on behalf of the Appellant. The experts were in general agreement except in relation to blocks 12 and 14 and in relation to the works required to maintain the site. Refer to T1-37 to T1 – 39.

[17] [18] – [28] of the second decision.

[18] Both experts were of the opinion that the footing system was not operating as expected by a structural engineer. The present lifting of the slab from the screw piers in the realm of 10 to 15mm was not a problem as long as it settles down. Both agreed that the structural adequacy and serviceability of the footing system were adequate and functioning within the limits of AS2870-1996: T1-37 at 14 to T1-40 at 20.

[19] A description of the standard categories of damage in relation to walls is set out in Table C1 and in the notes thereto as set out in [34] to [36] of the Member’s second decision.

[20] [24] – [25] of the Respondent’s written submissions on appeal

[21] Mr Wright’s evidence at T1-40 at 8-19.

[22] Section 142 of the QCAT Act.

[23] Section 142(3)(b) of the QCAT Act.

[24] Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748 at [35] per Iacobucci J.

[25] Section 147(2) QCAT Act.

[26] Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203-204 [14]; Allesch v Maunz (2000) 203 CLR 172 at 180 [23]. CJJ v VAJ (1998) 197 CLR 172 at 202 [111].

[27] Part 7.1 and 7.2 of the Wright report dated 9 January 2014; See also the Bishop report dated 6 August 2014 at [19].

[28] Section 86(1)(h) of the QBCC Act.

[29] T1-41; T1-42 at 30-46; T1-45.

[30] T1-81 at 30-45 to 1-82 at 1-10.

Close

Editorial Notes

  • Published Case Name:

    The Body Corporate for Rosegum Villas CTS37755 v Queensland Building and Construction Commission

  • Shortened Case Name:

    The Body Corporate for Rosegum Villas CTS37755 v Queensland Building and Construction Commission

  • MNC:

    [2016] QCATA 187

  • Court:

    QCATA

  • Judge(s):

    Senior Member Stilgoe AM, Member SM Burke

  • Date:

    25 Nov 2016

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
Allesch v Maunz (2000) 203 CLR 172
1 citation
Jump To
Cite 1 - (2000) 203 CLR 172
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
1 citation
Jump To
Cite 1 - (1990) 170 CLR 321
Cachia v Grech [2009] NSW CA 232
1 citation
Jump To
Cite 1 - [2009] NSW CA 232
Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748
2 citations
Jump To
Cite 1 - [1997] 1 SCR 748
Cite 2 - [1997] 1 SCR 748
CDJ v VAJ (1998) 197 CLR 172
1 citation
Jump To
Cite 1 - (1998) 197 CLR 172
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
2 citations
Jump To
Cite 1 - (1997) 187 CLR 384
Cite 2 - (1997) 187 CLR 384
Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194
1 citation
Jump To
Cite 1 - (2000) 203 CLR 194
Ericson v Queensland Building and Construction Commission [2014] QCA 297
2 citations
Jump To
Cite 1 - [2014] QCA 297
Cite 2 - [2014] QCA 297
Ericson v Queensland Building Services Authority [2013] QCA 391
3 citations
Jump To
Cite 1 - [2013] QCA 391
Cite 2 - [2013] QCA 391
Cite 3 - [2013] QCA 391
Fox v Percy (2003) 214 CLR 118
1 citation
Jump To
Cite 1 - (2003) 214 CLR 118
Fox v Percy (2003) 214 CLR 18
1 citation
Jump To
Cite 1 - (2003) 214 CLR 18
Glenwood Properties Pty Ltd v Delmoss Pty Ltd[1986] 2 Qd R 388; [1986] QSC 221
1 citation
Jump To
Cite 1 - [1986] 2 Qd R 388
Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390
1 citation
Jump To
Cite 1 - (2010) 241 CLR 390
Lange v Queensland Building Services Authority[2012] 2 Qd R 457; [2011] QCA 58
3 citations
Jump To
Cite 1 - [2012] 2 Qd R 457
Cite 2 - [2012] 2 Qd R 457
Cite 3 - [2012] 2 Qd R 457
Lida Build Pty Ltd v Miller and Anor [2011] QCATA 219
2 citations
Jump To
Cite 1 - [2011] QCATA 219
Cite 2 - [2011] QCATA 219
McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd[1989] 2 Qd R 577; [1989] QSCFC 53
1 citation
Jump To
Cite 1 - [1989] 2 Qd R 577
Project Blue Sky Inc v Australian Broadcasting Authority (1997) 194 CLR 355
1 citation
Jump To
Cite 1 - (1997) 194 CLR 355
QUYD Pty Ltd v Marvass Pty Ltd[2009] 1 Qd R 41; [2008] QCA 257
2 citations
Jump To
Cite 1 - [2009] 1 Qd R 41
Cite 2 - [2009] 1 Qd R 41

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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