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Steve Bagnall Homes Pty Ltd v Foley[2021] QCATA 123

Steve Bagnall Homes Pty Ltd v Foley[2021] QCATA 123

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Steve Bagnall Homes Pty Ltd v Foley [2021] QCATA 123

PARTIES:

STEVE BAGNALL HOMES PTY LTD

 

(applicant/appellant)

 

v

 

IAN FOLEY AND BERNADETTE FOLEY

 

(respondents)

APPLICATION NO:

APL342-18

ORIGINATING APPLICATION, NO:

BDL090-15

MATTER TYPE:

Appeals

DELIVERED ON:

29 September 2021

HEARING DATE:

25 February 2020

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

Member King-Scott

ORDERS:

  1. Leave to appeal is refused
  2. The appeal is dismissed.
  3. The parties are to file in the Tribunal two (2) copies and exchange one (1) copy of submissions on costs within fourteen (14) days of the date of this decision.
  4. The parties are to file in the Tribunal two (2) copies and exchange one (1) copy of submissions in reply within twenty one (21) days of the date of this decision.
  5. Costs of the appeal will be determined on the papers. 

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – DAMAGES

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – where applicant undertook building work – where building work found to be defective – where applicant ordered to pay damages to respondents – where applicant sought to appeal on grounds raising questions of law, questions of mixed law and fact and questions of fact – whether expert evidence required to interpret the Building Code of Australia – whether findings of fact available on the evidence – whether Tribunal erred in preferring one expert opinion – whether Tribunal erred in interpreting the contract.

Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), s 142, s 146, s 147

Cachia v Grech [2009] NSWCA 232

Ericson v Queensland Building Services Authority [2013] QCA 39

Foley v Steve Bagnall Homes Pty Ltd [2018] QCAT 458, [739]

Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388

Harrison & Anor v Meehan [2017] QCA 315

McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577

QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41

APPEARANCES & REPRESENTATION:

 

Applicant:

Mr C Matthews instructed by Construct Law Group Pty Ltd

Respondent:

Mr S Kelly instructed by Active Law

REASONS FOR DECISION

  1. [1]
    In 2010 Mr and Mrs Foley entered into a contract with Steve Bagnall Homes Pty Ltd (SBH) to build a home. After the parties fell into dispute, Mr and Mrs Foley commenced proceedings in the Tribunal. On 31 October 2018 the Tribunal ordered SBH to pay to Mr and Mrs Foley $167,232.89. SBH has appealed the decision.

The background to the dispute

  1. [2]
    The Foley’s home was to be built at Toogoom, a seaside town near Hervey Bay. The building works commenced in August 2010. In December 2010, by agreement between the parties, the Foleys were given permission to occupy the house. On the same date, SBH issued to the Foleys an invoice for the practical completion stage. Thereafter, communications ensued between the parties in relation to, inter alia, adjustments in respect of the final payment. In September 2011 the Foleys complained to the QBCC about defective building work. In May 2015 the Foleys gave notice terminating the contract.

The tribunal proceedings

  1. [3]
    The Foleys commenced the proceedings below in May 2015. SBH filed a response and counter application in June 2015. The hearing took place over five days in October and December 2016. The Tribunal was reconstituted after the hearing had concluded. With the consent of the parties, the proceeding was thereafter determined on the papers.
  2. [4]
    SBH was ordered to pay the Foleys $167,232.89[1] which was calculated as follows:

Total contract price:     $590,642.49

Less amount paid by the Foleys to SBH:  $593,846.33

Less cost of rectification and completion work : $166,689.00

        $169,892.84

Add SBH entitlement for variation works:  $    2,659.95

Amount payable by SBH to the Foleys :  $167,232.89

The grounds of appeal

  1. [5]
    SBH originally relied upon twenty-two grounds of appeal. Grounds of appeal 1, 2, and 18 were subsequently abandoned. The remaining grounds can be conveniently grouped as follows:
    1. (a)
      Findings about variations – ground of appeal 19;
    2. (b)
      Findings about defective and incomplete building work – grounds of appeal 3 to 17; and
    3. (c)
      Findings about the calculation of the builder’s margin and GST – grounds of appeal 20 and 21.
  2. [6]
    The grounds of appeal raise questions of law, questions of fact and questions of mixed law and fact.

Appeals – the statutory framework

  1. [7]
    An appeal to the Appeal Tribunal on a question of law is as of right.[2] An appeal on a question of fact or mixed law and fact requires the leave of the Appeal Tribunal.[3]
  2. [8]
    In deciding an appeal on a question of law only, the Appeal Tribunal may confirm or amend the decision, set aside the decision and substitute its own decision or set aside the decision and return the matter to the tribunal (either as originally constituted or differently constituted) for reconsideration.[4]
  3. [9]
    Subject to leave to appeal being granted, if an appeal is against a decision on a question of fact only or a question of mixed law and fact, the appeal must be decided by way of rehearing, with or without the hearing of additional evidence as decided by the Appeal Tribunal.[5] In deciding the appeal, the Appeal Tribunal may confirm or amend the decision, set aside the decision and substitute its own decision, or set aside the decision and return the matter to the tribunal (either as originally constituted or differently constituted) for reconsideration.[6]
  4. [10]
    The relevant principles to be applied in determining whether to grant leave to appeal are:
    1. (a)
      Is there a reasonably arguable case of error in the primary decision?;[7]
    2. (b)
      Is there a reasonable prospect that the applicant will obtain substantive relief?;[8]
    3. (c)
      Is leave necessary to correct a substantial injustice to the applicant caused by some error?;[9]
    4. (d)
      Is there a question of general importance upon which further argument, and a decision of the appellate court or tribunal, would be to the public advantage?[10]
  5. [11]
    If an appeal involves a question of law, unless the determination of the error of law decides the matter in its entirety in the appellant’s favour, the proceeding must be returned to the tribunal for reconsideration.[11]
  6. [12]
    If different grounds of appeal raise questions of law and questions of fact or mixed law and fact, it is appropriate to address first those grounds involving questions of fact or mixed law and fact. If leave to appeal is granted then the appeal must be decided by way of rehearing and all of the matters the subject of the grounds of appeal should be dealt with in the rehearing, although the Appeal Tribunal is not required to address distinctly each question raised by an appellant.[12] It is sufficient that the reasons of the Appeal Tribunal explain how its conclusion is reached.[13]

Consideration

Ground of appeal relating to variations

  1. [13]
    Ground of appeal 19 relates to variation 034. This variation formed part of SBH’s counter application. The learned member found:

[189] Variation V034 is dated 29 March 2011 and was converted to invoice 790 dated 29 March 2011.

[190] The authority for variation to contract document describes the variation work as follows: Extra plumbing PC items supplied above our allowance as per Tradelink and Sandy Strait invoices: Credit 2 x shower heads (returned) Debit 2 x shower heads Debit 1 x grab rail Debit 1 x set of spa taps

[191] The authority for variation to contract document is not signed by the Foleys and relates to an amount of $253.49.

[192] This variation forms part of SBH’s counterclaim regarding variations which are not compliant with s 80 of the DBC Act and will be dealt with separately.

  1. [14]
    In dealing with the claim for the variation the learned member found:

[712] Variation V034 relates to extra plumbing work which included a credit for two shower heads and payment for other items including two showerheads, a grab rail and a set of spa taps in accordance with invoices from Tradelink and Sandy Straits relied upon by SBH.

[713] The Specifications allow for the supply of two showerheads. There is no evidence that there has been a change in the scope of works.

[714] Further the specifications provide for ‘hand shower rail’ and ‘sundeck to have hot and cold taps for spa’.

[715] I have formed the view that the items claimed are not variations to the scope of works and therefore no payment is allowed.

  1. [15]
    SBH does not cavil with the learned member’s finding that the specifications allowed for the supply of two showerheads. SBH says, however, that the learned member erred in finding that there was no evidence that the scope of works changed.
  1. [16]
    The specifications provided for the installation of two shower heads described as ‘Olympic Shower arm and rose’. The contract did not specify that any of the items in variation 034 were prime cost items. Mr Bagnall’s evidence at the hearing was that Mr Foley requested variation 034. The evidence of Mr Foley was that the Foleys did not request the variation[14] and that the change in the type of showerheads was the result of an issue arising out of the manner in which the plumbing work had been undertaken.[15]
  2. [17]
    Although not expressly stated thus, it is apparent that the learned member preferred the evidence of Mr Foley over Mr Bagnall. If the requirement to change the showerheads was necessitated by the builder’s failure to properly undertake the building works, the cost was one the builder was required to bear.
  3. [18]
    Variation 034 also included claims for the cost of a grab rail and spa taps. These items are not specifically addressed in the submissions by SBH. Even if there was an identified error in respect of failing to make an allowance in favour of SBH for these items, the amount is clearly so modest that it does not warrant granting leave to appeal.  

Grounds of appeal relating to defective and incomplete works

  1. [19]
    The grounds of appeal in relation to defective and incomplete works relate to the following items:
    1. (a)
      Fascia and beam deterioration to the north elevation of the dwelling;
    2. (b)
      Incorrectly installed gutter and downpipes causing overflow in heavy rain;
    3. (c)
      Supply and installation of security screen to front entrance door;
    4. (d)
      Failure to fit windows with grey glass;
    5. (e)
      Drain for lift not installed as designed;
    6. (f)
      Use of incorrect roofing material

Fascia and beam deterioration to the north elevation of the dwelling

  1. [20]
    The learned member found:

[303] Mr Carpenter describes the defect in the joint report as one required to ‘refix securely all loose trim boards to the balcony areas of the house at first and ground levels’.

[304] Mr Carpenter states that the following works are required: prepare, fill all gaps and repaint all fascia boards and beams to the deck areas at first and ground floor areas.

[305] Mr Thompson assessed the cost of rectification at $4,648.60.

[306] Mr Browning gave evidence that any defect in this regard was very minor and considered the condition of the fascia boards and beams as consistent with normal weathering over time. He conceded that the cost would be in the vicinity of $100.00 for the repainting and re-fixing of the fascia board. During cross-examination, Mr Browning reconsidered whether he would apply the same fix as he suggested in the joint report.

[307] I accept the evidence of Mr Carpenter that the fascia boards require re-fixing and repainting, and the rectification cost would be $4,648.60.

  1. [21]
    Mr Carpenter was the building expert for the Foleys. Mr Browning was the Foleys’ quantity surveyor. Mr Browning was SBH’s building expert.
  2. [22]
    SBH says that the learned member erred in accepting the evidence of Mr Carpenter as to the cause of the defect and in misconstruing the evidence of Mr Browning. The grounds of appeal relating to this issue assert that the learned member erred in finding that Mr Browning reconsidered his evidence at the hearing. The grounds of appeal do not assert error by the learned member in preferring the evidence of Mr Carpenter.
  3. [23]
    The Foleys say that SBH should not be permitted to expand upon the ground of appeal as originally framed.
  1. [24]
    In the absence of any identified prejudice to the Foleys, we are prepared to consider the expanded ground of appeal.
  2. [25]
    In his report[16] Mr Carpenter identified the issue with the facias and beams by reference to a number of photographs appended to the report. Mr Carpenter opined that deterioration was occurring to the facias and beams of the decks generally, and more so to the north elevation exposed to the open water. Mr Carpenter stated:

In my opinion the questionable waterproof sealing of the handrail posts cannot be ruled out as a contributing cause of the deterioration of the facias and beams.

  1. [26]
    It is not contentious that SBH was not responsible for the installation of the waterproof membrane on the decks.
  2. [27]
    The parties’ experts attended a conclave. A joint report was prepared.[17] In the joint report, Mr Carpenter identified the fascia/beam issue as a defect but offered no opinion as to the cause of the defect.
  3. [28]
    In his evidence at the hearing, Mr Carpenter agreed that the issues relating to the fascia and beam deterioration were limited to the north elevation of the dwelling.[18] Mr Carpenter agreed that there would be more severe weathering to the north elevation of the dwelling.[19] Mr Carpenter’s evidence was that he could not rule out damage to the facias a result of the defect in the membrane.[20]
  4. [29]
    Mr Carpenter stated: ‘…something’s causing the damage to the facias… and the beads.’[21] Mr Carpenter’s evidence was that there were areas where the beading and plaster and fascia boards were moving.[22]
  5. [30]
    Mr Carpenter disagreed with the opinion of Mr Browning that the condition of the facias and beams was consistent with normal weathering over time.[23]  Mr Carpenter’s evidence was that the deterioration in the fascia was more than would be expected for a house of that age and in those circumstances.[24]
  6. [31]
    The solicitor for SBH spent considerable time at the hearing cross examining Mr Carpenter about the issue of the membrane and water penetration. It is fair to say that Mr Carpenter did not exclude a connection between water ingress issues relating to the membrane and the issues relating to the fascia and beams, nor did his evidence go so far as to attribute those issues to water ingress through the membrane. 
  7. [32]
    It was suggested by SBH’s solicitor to Mr Carpenter during cross examination that his evidence regarding the possible connection between the membrane and the fascia issue was a ‘fresh opinion’. However, as has been observed, Mr Carpenter in his initial report stated that he could not rule out the questionable waterproof sealing of the handrail posts as a contributing cause of the deterioration of the facias and beams.
  8. [33]
    The submissions by SBH emphasise that Mr Carpenter offered no opinion as to why the manner in which SBH undertook the building work was defective by reference to the facias and beams of the decks.
  9. [34]
    In response, the Foleys say that identifying the cause of the defect was not a matter in issue.
  10. [35]
    The learned member found that, during cross-examination, Mr Browning reconsidered whether he would apply the same method of rectification as he suggested in the joint report. SBH says that the inference from this finding was that Mr Browning agreed with the opinion of Mr Carpenter. We disagree. Mr Browning gave evidence that rectifying the fascia required the insertion of several long screws to secure the fascia.[25] Under cross examination Mr Browning accepted that he had changed his opinion from what he recommended in the joint report and offered an alternative method of rectification.[26] SBH says that the learned member misconstrued Mr Browning’s evidence. We do not think so.
  11. [36]
    There was no error by the learned member.

Incorrectly installed gutter and downpipes

  1. [37]
    Grounds 5 and 6 relate to this issue. Counsel says that there is a threshold question to be determined which was not determined by the learned member. The learned member allowed the sum of $14,720.00 damages for rectification work to correct defects. Item 10 in the joint expert report is as follows:

10  Incorrectly installed gutter and downpipes causing overflow in heavy rain.

10.1 Street stormwater outlet position.

10.2 River stormwater outlet position.

10.3 East side downpipes not in correct positions.

10.4 East upper roof discharge flooding lower roof gutter at front door area.

  1. [38]
    The learned member found in relation to these items:
    1. (a)
      The alleged defects arose out of non-compliance with the approved plans.
    2. (b)
      The approved plans required stormwater on the western side of the house to terminate at the road drain.
    3. (c)
      There was no road drain as there was no kerb or channelling.
    4. (d)
      The defect was considered under four separate items and the Foleys’ claim for all items was $14,720.
    5. (e)
      SBH conceded that there was a defect in the downpipe adjacent to the garage as it was too close to the façade, causing weathering.
    6. (f)
      There was no evidence that certification of the works had been sought or rejected.
    7. (g)
      There was compliance with the rainwater design in respect of Item10.1 – Street stormwater outlet position.
    8. (h)
      There was non-compliance in relation to Item 10.2 – River stormwater outlet position, as water discharged at an illegal point into the creek contrary to local authority and building application requirements.
    9. (i)
      Rectification involved taking up sections of the footpath and driveway to redirect the drains.
    10. (j)
      There was an issue with Items 10.3 and 10.4 concerning the east side down pipes and upper roof discharge flooding the lower roof gutter.
    11. (k)
      The experts were divided on the methodology of rectification and no alternative estimate to $14,720 was provided.
    12. (l)
      Rectification was necessary because of the on-going problems resulting from non-compliance with the approved plans. Because defects of that type (Item 10) could be a catalyst for further problems it was reasonable and necessary that the rectification works proposed by Mr Carpenter be carried out, rather than a patch up job as proposed by Mr Browning.
  1. [39]
    Counsel for SBH argued that there was a threshold issue that had not been determined by the learned member, namely, that the Foleys had failed to discharge the burden of proof that the installation of the stormwater outlets were certified as non-compliant. He submitted that all the experts proceeded upon the basis of the assumption and that the assessment of $14,720 for rectification costs by the quantity surveyor, Mr Thompson, should not be allowed unless and until the works were deemed non-compliant. Further, he argued that the learned member should have allowed a lesser sum than $14,720.00 for rectifying all 4 items when she had found one of the items to be compliant.
  2. [40]
    The failure to certify is, in our opinion, irrelevant. What was relevant was that the work was defective in that the storm water drains were not installed in accordance with the plans. This resulted in water discharging illegally into the creek, and other down pipes discharging water which overshot the gutters and ran onto lower roofs above the front door causing damage to the facias.
  3. [41]
    There is some merit in the argument regarding the appropriateness of awarding the sum of $14,720.00 for all 4 items when Item 1 was found to be compliant. There was no evidence of the individual costs of rectifying each item. SBH argue that Item 1 was the least expensive to rectify and that Items 3 and 4 were likely to be the most expensive in that the rectification work involved the digging up of the concrete driveway. We note that the cross-examination on this Item was limited and there was no challenge to Mr Thompson, the quantity surveyor, as to the cost.[27] It was apparent from Mr Carpenter’s evidence that the substantial part of the cost was cutting up the concrete driveway and reinstating it.[28] It was apparent from the evidence of Mr Browning that the driveway would have to be cut up to direct water from both outlets to the street.[29] Even though it was not necessary to cut up the driveway for Item 1, it was necessary for Item 2 so the substantial cost would have been incurred.
  4. [42]
    We are of the opinion that it was open to the member to find the work was defective and to accept the sum allowed as the reasonable cost of rectifying. We see no error in the decision.

Supply and install security screen to front door

  1. [43]
    The complaint was that that SBH did not supply and install a security screen to the front door. The Foleys claimed reimbursement of $1,052.73.
  2. [44]
    The basis of this ground of appeal was that the Tribunal should have made a finding based on an objective interpretation of the contract, alternatively, the failure to install the screen door was caused by Mr Foley changing the door style.
  3. [45]
    The learned member observed that Mr Bagnall did not deny that the front door was to be screened in accordance with the specifications, but that Mr Foley changed the style of door as a result of which Mr Bagnall asserted it was inappropriate to fit a screen door. The learned member accepted Mr Foley’s evidence that a screen door was required and allowed the sum of $1,052.73.
  4. [46]
    SBH did not argue at the hearing that the contract did not require him to install a security screen at the front entrance door, but rather the requirement for the installation under the Specifications was deleted as a consequence of the owners changing the style of door which prevented a screen door being fixed. It is further argued that the tribunal fell into error in accepting the evidence of Mr Foley that a screen door was required to be installed rather than finding what was required objectively by construing the terms of the Contract and Specifications and the evidence of the parties to the change of the scope of work.
  5. [47]
    There was evidence from Mr Browning that a screen door could be fitted to accommodate the pivot door, but it would require the installation of a wooden frame.[30]
  6. [48]
    Further, it was argued that the Foleys cannot take advantage of the non-fulfillment of a condition or obligation under the contract, the performance of which, the Foleys themselves hindered. The front door was a Prime Cost item.[31] The Foleys were entitled to select the front door that they did. If its installation involved additional work then it should have been the subject of a variation of the contract, as would the omission of the requirement for a front door screen. There was no such variation. It follows that they did not hinder SBH in the performance of the contract.
  7. [49]
    Counsel for the Foleys submits that Mr Foley at no time expressed subjectively what the contract should be interpreted as meaning. SBH does not refer to any evidence given by Mr Foley in that regard. We do not consider that the reference in SBH’s Submissions in Reply to Mr Foley’s evidence in chief[32] to the failure to key all the door locks alike can be so interpreted.
  8. [50]
    Counsel for Mr Foley says that it was a misnomer by the learned Member when she referred to ‘the evidence of Mr Foley’, and that the learned member had merely adopted a submission by the Foleys as to how the contract should be interpreted.
  9. [51]
    We find no error in the learned member’s reasoning on this issue.

Failure to fit windows with grey glass

  1. [52]
    SBH installed clear glass in all windows and doors. The Foleys say that the contract provided that all glass in windows and doors was to be tinted. SBH says that the reference to ‘grey’ was never intended and was the result of an error being a description from another job. The learned member referred to the Specifications which provided ‘Glazing – Grey/Obscure (WC)’. The learned member also noted that there was no dispute that the glass installed was clear glass and no variation had been issued to change the glass from grey to clear. The cost of rectification was $14,522.20.
  2. [53]
    The issue involved the interpretation of the Specification which was whether the words “grey-obscure (WC)” were a reference to just making the glass in the toilet grey or whether they were a reference to making the glass in the house grey and the toilet obscure. The learned member’s finding that ‘grey’ referred to the house and ‘obscure’ referred to the water closet seems a perfectly reasonable interpretation on the proper reading of the Specifications. We see no error in the learned member’s reasoning.

Drain for lift not installed as designed

  1. [54]
    Mr Carpenter observed that the drain located at the base of the lift was observed not to allow water to drain freely. He thought it needed rectification. That involved the removal of a section of concrete path, excavation to locate the end of the pipe and extend it to drain the trench and then reinstate the path. The cost was $1,452.80. SBH argues that the cause of the blockage was not investigated, and it could have resulted through no error of SBH but as a consequence of other causes, as the Foleys had been living in the premises for 3 or 4 years before it became apparent. It was argued that the Foleys had not proved that the defect was a consequence of any breach of contract by SBH.
  1. [55]
    The Foleys say that SBH’s submissions ignore the fact the experts agreed on the proposed fix and costs. Their own expert agreed to rectification. It was not an issue at the hearing.
  2. [56]
    We see no error in the learned member’s finding.

Roofing material

  1. [57]
    Mr Foley claimed that the roofing material installed was inappropriate for the marine environment in which the dwelling was situated and did not comply with the Building Code of Australia or the BlueScope Technical Bulletin. At the time of hearing there appeared to be no defect in the roofing other than some minor rust spots.
  2. [58]
    The learned member accepted the evidence of the Foleys and found that the dwelling was located on the shoreline of a body of water directly in front of the property and 50 metres from the sheltered bay.[33] Based on that finding, the learned member categorized the property as being in a ‘high’ environment, requiring roof sheeting of AZ200.
  1. [59]
    SBH submits that the Tribunal fell into error because, inter alia:
  1. The Tribunal relied upon the subjective opinion of Mr Bagnall[34] that the property fell within the high environment category instead of making an objective determination of the requirements of the BCA together with other objective evidence.
  1. The owners failed to meet the burden of proof by failing to adduce expert evidence to opine on the various requirements in Table 3.5.1.1a of the BCA such as:
  1. (a)
    The meaning of ‘sheltered bay’;
  1. (b)
    Whether the property fell within 50m thereof; and
  1. (c)
    The requisite factors set out therein including wind, wave action and topography; or
  1. In the alternative, the property was not within 50m distance from a sheltered bay.
  1. [60]
    Table 3.5.1.1a, relevantly, is as follows:

Medium

 

(Mild steel corrosion rate 25 to 50 um/y)

Typically more than 1 km from breaking surf or aggressive industrial areas

Z450

galvanised

or

AZ150

aluminium/zinc

Z275

Galvanised

or

AZ150 aluminium/zinc

 

Typically more than 50m from sheltered bays

 

 

High

 

(Mild steel corrosion rate 50 to 80 um/y)

Typically more than 200m from breaking surf or aggressive industrial areas

AZ150 aluminium/zinc

AZ150 aluminium/zinc

 

Typically within

50 m from sheltered bays

AZ200 aluminium/zinc

AZ200 aluminium/zinc

Notes:

2. Medium – urban inland, coastal or industrial typically coastal areas with low salinity around sheltered bays, such as Port Phillip Bay. This extends from about 50 m from the shoreline to a distance of about 1 km inland but seasonally or in semi-sheltered bays extends 3 to 6 km inland. Along ocean front areas with breaking surf and significant salt spray, it extends from 1 km inland to about 10 to 50 km depending on wind direction and topography. Much of the metropolitan areas of Wollongong, Sydney, Newcastle, Perth and the Gold Coast are in this category. This also includes urban and industrial areas with low pollution and for several kilometres around large industries such as steel works and smelters.

3. High typically occurs on the coast around sheltered bays. Category high  extends up to 50 m inland from the shoreline. In areas of rough seas and surf it extends from several hundred metres to about 1 km inland. As with other categories the extent depends on wind, wave action and topography. The category will also be found inside industrial plants and can influence a distance of 1.5 km down wind of the plant.

5. All locations described in the table contain variations of greater corrosion severity. If significant, this must be addressed by designing for the most severe environment.

  1. [61]
    Counsel for SBH argued that the notes to the categories do not expressly define the category, whereas the corrosion rates in micro metres are expressly defined for those categories. In lieu of having expert evidence on that corrosion rate, it was submitted that one had to speculate as to what the relevant conditions may be and how they affect the property to determine whether the property falls within the medium or high category. It was further submitted that applying Note 5 in assessing whether environment is severe or whether the higher environment ought to apply required some degree of measurement by an expert who could give an opinion on which corrosion rate the property fell within.
  2. [62]
    Counsel for SBH took issue with the finding of the learned member that the property was within 50 metres of the shoreline, submitting that she should have considered the distance from the sheltered bay. SBH’s argument, in essence, was that the shoreline of the dwelling was on Beelbi Creek, which intervened between the dwelling and the sheltered bay which was more than 50m away.
  3. [63]
    Developing the argument, Counsel for SBH submitted nowhere in the medium or high category, on a proper reading of those two corresponding notes in conjunction with the table, does it say that the test is to find out where the property was located – whether it was on a shoreline of a body of water in front of the property. The test, if one looked in the table at medium category, is “typically more than 50 metres from sheltered bays”, and in the high category, “typically within 50 metres from sheltered bays”. Counsel’s submission was that, when reading the table together with the medium and the high category notes, one cannot read the sentence ‘Category “high” extends up to 50 metres inland from the shoreline’ in isolation to simply mean any shoreline. It was submitted that the sentence must be read in conjunction with ‘sheltered bays’.
  4. [64]
    The Foleys argue that the house is built right on the shoreline and that it is not located somewhere from a point that is 50m back from the shoreline. Photographs of the foreshore taken from the house depict no land mass in front of the house, but merely an open body of water that conforms with a description of sheltered bay.[35]
  5. [65]
    It seems tolerably clear to us and is apparent from the photographs referred to in the previous paragraph and the Google images being Exhibit 34, that the dwelling is on the shoreline and that the property faces out to the Coral Sea. Although the Google images depict deeper water in front of the dwelling, which we understand to be Beelbi Creek, there is no interruption to the body of water that extends from the boundary of the dwelling all the way out to the Coral Sea. Other than some submerged sand banks, there is no other topographical feature, other than water, that intervenes. We find it difficult to reach any conclusion other than the dwelling is within 50 metres from a sheltered bay.
  6. [66]
    We do not consider that expert evidence of the corrosion rates described by SBH was necessary to interpret Table 3.5.1.1a. Mr Bagnall, as a registered and qualified builder experienced in building in the area, would be expected to have the necessary expertise to be able to interpret the Table, as indeed he did. His evidence was that the property fell within the high environment for the purpose of the BCA[36], and the original plans allowed for Colorbond Ultra[37] (AZ200), but that Mr Foley wanted standard Colorbond (AZ150) which was the cheaper product.
  7. [67]
    We do not consider that the authors of the Building Code of Australia had in mind that experts would be required to interpret the Code in the manner described by Counsel for the Appellant.
  8. [68]
    There was no error by the learned member. 

Builders Margin

  1. [69]
    The learned member allowed 20% on the damages assessed as being the builder’s margin. This amounted to $27,781.50.[38]
  2. [70]
    The ground of appeal is as follows:

They Tribunal erred in law and/or made an unsustainable inference of fact without sufficient evidential foundation (paragraph [779] of the reasons) in applying builder’s margin at all or in the alternative at 20%, such finding or conclusion being erroneous because:

  1. (a)
    builder’s margin was not required to be applied upon the Respondents claim for damages for breach of contract at all;
  1. (b)
    there was evidence that builder’s margin need not be applied at all; or

(c) in the alternative, there was evidence that build is margin may be applied at 10%.

  1. [71]
    Item 6 of the contract stipulated the builder’s margin at 20% which was for Prime Cost Items and Provisional Sums. The learned member allowed the margin on the total sum, including the GST component.
  2. [72]
    The comment in the joint expert report was that:

All values priced are exclusive of margins and GST. Each accepted item above will require a margin and GST to be added.

  1. [73]
    Mr Browning in a separate comment added:

Outside the Joint comment for this item my costing allows for a 10% contingency and other costs totalling the amount shown in the General Items as $3,806.40. In order to be compatible with GT (Mr Thompson) costing totals the General items need to be added to the calculated total of my costings to achieve a grand total without margin and GST.

  1. [74]
    The experts’ evidence varied, Mr Browning allowed 0% and Mr Thompson allowed 10%. It was explained that the 0% margin was based on the owners co-ordinating all of the trades themselves whereas the 10% margin was based on a builder being engaged to rectify the defects and that builder would have to co-ordinate the various trades.
  2. [75]
    It was submitted by SBH that 20% was inapplicable as it was not supported by the evidence. The rate of 20% was contractual and applied to Prime Cost Items and Provisional Sums at the time of the contract was entered into. The relevant time is the time the assessment of damages was made, and the evidence then was Mr Thompson’s evidence and that was that the relevant rate should be 10%. He said he had allowed 10% for GST but had also allowed for a margin by having a contingent value in his rates.[39]
  3. [76]
    Mr Browning’s evidence was that there would be several discreet contracts and the owner should be able to organise those contracts, and therefore, a builder’s margin would not apply.[40]
  4. [77]
    Counsel submitted on behalf of the Foleys that the 20% could be justified on the basis that the place where the house was built, Toogoom, was a regional area some 20 minutes’ drive from Hervey Bay. The parties saw fit to apply a 20% margin at the time of contracting (for provisional sums and Prime Cost items) which took account of such issues.
  5. [78]
    Mr Kelly, counsel for the Foleys, submitted that the amount involved being the difference between 10% and 20% was $14,000 and there would be no substantial injustice to warrant leave to appeal. It is noted that the learned member calculated the builder’s margin on the amount allowed after GST had been applied, which led to an error of $2,525.59. However, the amount is not significant.
  6. [79]
    We are of the opinion that a margin should have been allowed, the only issue being whether it should be 10% or 20%. As observed by Mr Browning, rectification work would entail the owner letting a number of discreet contracts. The alternative would be to appoint a builder to supervise all work. The rate of 20% for the builder’s margin was the allowance in the contract for Provisional Sums and Prime Cost Items. We see no reason why it should not apply to the rectification costs. The learned member was not in error.

Conclusion

  1. [80]
    SBH has failed to make out any of the grounds of appeal. Leave to appeal is refused. The appeal is dismissed. We order accordingly. We will make orders for the parties to file and exchange submissions on costs.

Footnotes

[1] Foley v Steve Bagnall Homes Pty Ltd [2018] QCAT 458.

[2] Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), s 142(1).

[3]  Ibid, s 142(3)(b).

[4]  QCAT Act, s 146.

[5]  Ibid, ss 147(1), (2).

[6]  Ibid, s 147(3).

[7] QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.

[8] Cachia v Grech [2009] NSWCA 232, [13].

[9]  Op cit 6.

[10] 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, 580.

[11] Ericson v Queensland Building Services Authority [2013] QCA 391.

[12] Harrison & Anor v Meehan [2017] QCA 315.

[13]  Ibid, per McMurdo JA at [50].

[14]  Transcript T2-41 lines 42-45, T2-42 lines 1-8.

[15]  Transcript T2-35 lines 5-15.

[16]  Report Gary Carpenter dated 27 November 2015, Appeal Book page 1272.

[17]  Appeal Book, page 1028.

[18]  T2-96, line 14.

[19]  T2-96, line 26.

[20]  T2-86 lines 17-18.

[21]  T2-86 lines 17-20.

[22]  T2-91 lines 1-2.

[23]  T2-96 lines 42-43.

[24]  T2-135 line 21.

[25]  T5-12 lines 43-45.

[26]  T5-77 lines 28-32.

[27]  Transcript T3-62.

[28]  Transcript T2-104 lines 1 – 5.

[29]  Transcript T5-24 lines 43 – 46 and T5 – 25 lines 1 – 11.

[30]  Transcript T5-37 Line 40 – T5-38 line 5.

[31]  Part A to Appendix to Contract AAB 647.

[32]  Transcript T1-32 lines 20-31.

[33] Foley v Steve Bagnall Homes Pty Ltd [2018] QCAT 458, [580].

[34] Foley v Steve Bagnall Homes Pty Ltd [2018] QCAT 458, [570], [571]. Mr Bagnall’s defence was that the Foleys specifically requested the cheaper AZ150 sheeting, and he complied with their request.

[35]  Volume 1 AAB at pp 328- 329.

[36]  Transcript T4-81 line 30.

[37]  Transcript T4-90 line 40.

[38] Foley v Steve Bagnall Homes Pty Ltd [2018] QCAT 458, [739].

[39]  Transcript 3-95 lines 15 – 25.

[40]  Transcript 5-53 lines 26 – 34.

Close

Editorial Notes

  • Published Case Name:

    Steve Bagnall Homes Pty Ltd v Foley

  • Shortened Case Name:

    Steve Bagnall Homes Pty Ltd v Foley

  • MNC:

    [2021] QCATA 123

  • Court:

    QCATA

  • Judge(s):

    Member Brown, Member King-Scott

  • Date:

    29 Sep 2021

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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