A & L Builders Pty Ltd v Porter [2026] QCAT 118

Queensland Building and Construction Commission Act 1991 (Qld) s 108D, Schedule 1B s 34(1)

Eko Investments Pty Limited v Austruc Constructions Limited & Ors; The Owners Strata Plan No 64970 v Austruc Constructions Limited & Ors [2009] NSWSC 208 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7

Nissen and Anor v Jarotech Pty Ltd [2012] QCAT 307 Pullen & Anor v Gutteridge Haskins and Davey Pty Ltd [1993] VicRp 4; [1993] 1 VR 27

Surfstone Pty Ltd & Anor v Morgan Consulting Engineers Pty Ltd [2016] QCA 213

[1] The applicant contractor ('the builder') and respondent owner ('Mr Porter') entered into a Master Builders Residential Building Contract Level 2 on 7 September 2018 for the construction of a three-level detached dwelling at the Gold Coast for a price of $654,000 (incl GST).

[2] In course of the build, water seepage into the lower floor area was observed and the builder responded by re-applying waterproofing coatings and sealants.

[3] The builder claimed practical completion was achieved on 30 August 2019 and issued a final claim for payment. The owner had moved into the building prior to that on 18 August 2019.

[4] Mr Porter did not pay the final claim but asked for a 'reconciliation' of the amount due.

[5] On 13 December 2019 there was major flooding at the Gold Coast and significant water entry occurred at the subject premises. Mr Porter claimed the water entry problems were caused by the builder's failure to comply with plumbing standards and statutory requirements and poor waterproofing work.

[6] Mr Porter refusing to pay the builder's final claim, the builder commenced proceedings against Mr Porter in the Magistrates Court on 27 August 2020 claiming payment of $83,542.05 representing the amount due on practical completion. The proceedings were dismissed in part because of the failure to comply with the requirements for attempted dispute resolution before commencement of litigation required by s 77(2) of the Queensland Building and Construction Commission Act 1991 (Qld) ('the Act').

[7] Subsequently the builder commenced the within proceedings in the Tribunal again claiming payment of the practical completion stage of work in the sum of $83,542.05 plus interest.

[8] Mr Porter filed a counter application claiming payment of $191,000 as the cost of rectification of defects principally associated with the water entry problem.

[9] Mr Porter maintained the standard form general conditions of the Master Builders Residential Building Contract Level 2 signed by the parties did not form part of the contract between them. Mr Porter claimed he was never given a copy of the general conditions and therefore he maintained he was not bound by them because he had not signed a copy of the general conditions.

[10] The schedule to the contract makes extensive reference to the clauses of the general conditions of the Master Builders Residential Building Level 2 contract. There is little sense to be made of many of the schedule items without the benefit of reference to the general conditions.

[11] The general conditions were clearly intended to be incorporated into the contract. At page 8 of the schedule, beneath the signatures of Mr Haley, an employee representing the builder, and Mr Porter, there is the following notice: WARNING - Do Not Sign If the owner has not been provided with the general conditions.

[12] At hearing Mr Haley said when they printed out the Master Builders contract the general conditions always printed out "with it" but when completing the contract the general conditions were not always signed.

[13] It is not in dispute that a Scope of Works document formed part of the contract. Mr Porter was responsible for various aspects of the job as noted in that document. At page 4 of the Scope of Works it is clearly stated "THIS SCOPE OF WORKS overrides the Building Contract Conditions."[1]

[14] As stated in Surfstone Pty Ltd & Anor v Morgan Consulting Engineers Pty Ltd [2016] QCA 213:

[39] The central question on this issue is one of construction of the proposal letter. Guidance is given by the decision in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd:[52]

"This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe."

[40] In examining that issue an objective approach is taken, rather than looking at any subjective opinion or expression by the parties. Further, the Court should adopt a commercial approach in resolving any uncertainties in the language, and give a meaning to words where that is possible, without being unduly pedantic or narrow.[53]

[15] This was a commercial arrangement between the parties and should be approached as such. The High Court said in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7:

... this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean.[2]

[16] Mr Porter described himself as a business owner in one statement of evidence and the builder necessarily entered into the contract as part of its general business activity. On objective interpretation, the general conditions were incorporated into the contract between the parties.

[17] Mr Porter maintains practical completion was never achieved because the building was left with a continuing water entry problem.

[18] Construction started on about 11 September 2018 and according to Mr Haley, practical completion was achieved on 30 August 2019.

[19] As the build progressed, water seepage into the building became evident.

[20] Mr Porter put into evidence numerous emails he sent to Mr Haley during the build.[3] From an email of 3 February 2019 Mr Porter appears to have first noticed a water entry issue at about that time writing to Mr Haley "Pics of ground floor water after last nights rain." He attached four photographs captioned respectively Ground floor bathroom toilet wall close-up; Under stairs; Ground floor bathroom toilet wall; and ground floor bathroom kitchen.

[21] Then on 9 February 2019 he wrote "Pics from this morning showing a lot of water seepage into ground floor, from under internal ground to level 1 staircase." He attached three photographs.

[22] On 3 March 2019 he wrote "Attached pic from the downstairs kitchen area waste, which shows water still seeping up. And this weekend the under front stairs area also filled up and overflowed onto carport area."

[23] On 17 March 2018 Mr Porter wrote an email saying he was very concerned about more rain and water getting into the ground floor.

[24] The next email about water entry was not until 16 June 2019 when Mr Porter reminds Mr Haley about waterproofing under the front stairs and notes "water seeping in garage block wall".

[25] In an email of 19 June 2019 Mr Porter identified the water seepage as a major concern "...and the simple silicon job is just not working".

[26] There are no more emails about water or water seepage before Mr Porter asked Mr Haley on Wednesday 21 August 2019 to prepare a final account by the end of that week.

[27] Mr Haley forwarded an invoice for final payment on 30 August 2019, the builder's claimed date of practical completion, but Mr Porter did not pay. Mr Porter had occupied the building before that.

[28] There are no further comments about water entry in emails between the parties until 13 December 2019 when there was a major weather event at the Gold Coast with the bottom floor of the dwelling being inundated with above ground flooding water. That was the subject of an email from Mr Porter to Mr Haley dated 16 December 2019.

[29] On 15 January 2020 Mr Porter wrote to Mr Haley saying "When all building works have been completed to comply with Qld Regs. With absolutely no chance of a repeat of the 13th Dec ground floor flooding funds will be available to settle the reconciled account balance."

[30] An email from Mr Porter to Mr Haley on 23 January 2019 suggests both parties believed the problem concerned the waterproofing products used by the builder or how it was being applied or both and that water was entering by seeping through the Eastern side block wall.

[31] In an email to Mr Haley on 30 March 2020 Mr Porter discussed the waterproofing. He referred to further waterproofing work performed by the builder on 23 March 2020. Mr Porter said he had consulted with his own waterproofing expert (the third of such). He had concluded that the issue was the builder's failure to properly apply waterproofing and the correct waterproofing material during the build.

[32] Additionally, Mr Porter linked the problem to missing "ag" pipe[4] or other drainage outside the Eastern wall, failing to take the water away.

[33] The contract scope of works document provided:

Placement of 100mm Aggi pipe around ground floor East, West and North slab perimeter; including sock & gravel. With run off according to GCCC requirements with North and West wall Aggi run off to the Western Side.

[34] The parties agree the problem of water penetration was finally remedied in about November or December 2024.

[35] According to Mr Porter at hearing, the problem of water entry has always been attributable to the builder's failure to install the agricultural pipe correctly in accordance with the requirements of the contract.

[36] That was not the position he adopted until well after the work had been completed however. Through the construction he blamed the waterproofing work as inadequate and the waterproofing products being substandard.

[37] Mr Haley giving evidence at hearing said at about the time of the end of the building work he considered the problem was probably a latent condition caused by water lying or flowing under the building. He said he continued to return trying to stop the water penetration through further waterproofing efforts on the walls, both interior and exterior.

[38] In 2024 Mr Porter engaged another builder to fix the problem. That other builder in turn engaged Mr Haley to do the work.

[39] Mr Haley engaged a hydrologist who attended the site and suggested the problem was caused by water wicking up from under the foundations through the concrete and drawing up into the walls. The hydrologist suggested digging new agricultural pipe ('ag pipe') down to a depth of at least 400 mm along the Eastern side of the building, below the foundations then cutting a trench across the front driveway (Southern side) and connecting the ag pipe to a pit on the Western side of the house. From there to the road.

[40] That was done and the result has been no water entry into the dwelling. The new work has proven itself by withstanding the significant deluge of rain caused by Cyclone Alfred which struck on 6 March 2025.

[41] Mr Porter claims that the builder was required to do that under the scope of work. But the scope of work simply required the builder to lay agricultural pipe around the ground floor slab perimeter.

[42] Mr Haley pointed out that the drainage area on the Eastern side was small, and though the scope of works specified use of 100 mm ag pipe the builder used 50 mm instead which was adequate.

[43] Mr Reeves gave evidence. He was a plumber who did work on site. He also described the drainage area on the Eastern side of the building as small, perhaps no more than 14 square metres. He also thought the drainage installed there, which included the 50 mm ag pipe, should have been sufficient to take away any rainfall water.

[44] Mr Porter claimed the 50 mm agricultural pipe laid around the slab was too small. It should have been 100 mm as specified and with a sock covering. Mr Haley said a sock was only used if the ag pipe was laid in sand but if laid in metal or stone as it was here, a sock was not necessary.

MR PORTER: I'm now going to address the issue that Alan, A&L, failed to build in accordance with the scope of works that created other problems that compounded. We never weren't into practical completion because he wouldn't fix it. I have to address those issues. There is one issue that's created all these photographs - that's the ag pipe. I'm addressing the issue of ag pipe not installed as per scope of works - meaning, wasn't a hundred ml, wasn't covered in a sock and wasn't put lower than the footing. Those three things combined created a nightmare down that eastern side, which thankfully has now been rectified. If it was done four years and 10 months earlier, we wouldn't be here today.[5]

[46] Mr Haley challenged that statement. He said the scope of work simply required ag pipe laid around the ground floor slab perimeter. There was no depth specified.

[47] Mr Haley said it was not normal to lay ag pipe as was done here but the builder had laid the pipe exactly where Mr Porter's engineer had asked him to place it, that is, down the outside of the block wall. It was only when Mr Haley engaged the hydraulic engineer in November 2024 that the idea of laying ag pipe under the level of the footings was raised. It had never been mentioned before that.

[48] The following exchange occurred between Mr Haley in cross-examination by Mr Porter which sets out the case for Mr Haley:

MR PORTER: While I'm composing myself, Mr Haley, when we moved into the property, in August '18, are you saying that the property had no defects, no problems?‑‑‑Yes. That's why you moved in. We'd been over everything and we did the final clean - ah - and then I left the property. So - um - other than we - we did have that problem with the - um - the water which we were trying to address, which I was telling you was latent conditions, and I was not going - I wasn't prepared to pay for it, I'd paid for too much other stuff, and - ah - you wouldn't agree to help me with that, so we left the property.

You just said latent conditions?‑‑‑Yes.

When were you aware of latent conditions?‑‑‑Well, it was - it was after that job was finished. I think you and I discussed it.

Are you - I have correspondence from you which says that you were aware of latent conditions when you poured the first floor?‑‑‑Mmm.

Which would be four to six weeks after we first did the dig. I have the correspondence from you?‑‑‑Not - it wouldn't have been in relation to what we found out in the end because we eventually found out that water was flowing underneath your house constantly. I didn't really find that out until the job was just about complete, that the water could not get out. Yeah. Your house - your section was like a bathtub. The road was - the road was above the - um - the height of egress for the water and so the water could not get out.

So the works you did in November and December '24, how did that miraculously fix all the water under the slab?‑‑‑Because - because that - that's what I was - when - when - when we had the problem, I got hold of a hydraulic engineer, I paid a hydraulic engineer to come and check the job out for me. Okay. He came up with a suggestion, as I thought it was, we had to get rid of the water lower down, that was the below the foundations. So the - the standard water that you get rid of on the job is up on the top of the - you know, the - um - right up on top of - ah - ground level, but the problem with your place is that the water - ah - the whole place has got an RL that brings the water right up to the top of the foundations. The water used to constantly sit at the top of the foundations in the end, and so that's what we needed to get rid of. So we had to drop an ag pipe down 400 down lower, and put metal in, which we did eventually, after you paid someone else to do it, and that completely fixed the whole problem, which is what the hydraulic engineer suggested. But I was ‑ ‑

Are you saying ‑ ‑ ‑?‑‑‑ ‑ ‑ ‑ saying that that wasn't my cost because we never knew that there was going to be a water problem on your - your house. You didn't know. None of the bores picked up the - the problem. It was only 'til when we were building it, we ran into it at the beginning with Paul, the waterproofer - as you remember the water came through the bottom of the ‑ ‑ ‑

Let me get my notes and let me get your quotations, please?‑‑‑So most of these photos you've got here relate to the fact that that water was up so high and was wicking up it actually rotted out timber, et cetera, et cetera, and it was just because that water wasn't dropped down, and that had to be done.[6]

[49] I found Mr Haley to be a truthful witness. He seemed to me to have a reliable memory and I found him consistent in his testimony, which he gave openly and without exaggeration or obfuscation. I accept his evidence that he took the advice of a hydrologist in November 2024 and the hydrologist either advised him or confirmed to him as follows; that there was water beneath the foundations of the house; that the cause of the water problem was the water wicking up though the foundations of the house; that to remedy the problem ag pipe on the Eastern side should be installed at a depth lower than the foundations; and that the ag pipe should continue round to the front of the house to empty into a pit on the Western side of the house from which it could be pumped out into the street.

[50] The parties agree that there was no further water problem after the work was done in November 2024.

[52] The cause of the water problem was water pooling or flowing beneath the slab and wicking up through concrete into the interior of the dwelling.

[53] The presence of water pooling or flowing beneath the slab was unknown to the parties at time of contract and during the construction.

[54] The scope of work merely required ag pipe to be "placed" around the ground floor East, West and North slab perimeter. There was no requirement to lay the ag pipe below the level of the footings.

[55] Ag pipe placed around the perimeter of the slab regardless of diameter or sock covering would not have remedied the water problem.

[56] Under the scope of work the ag pipe on the North and West sides were to run to the West side. The scope of works made no similar provision for run off for the ag pipe placed on the Eastern side of the house.

[57] The work done in November 2024 followed the suggestion of the hydrologist and was outside the scope of work of the contract.

[58] Throughout the construction the parties believed the water problem was due to poor waterproofing done by the builder or its subcontractors, which was wrong.

[59] Under the contract Mr Porter, not the builder, was responsible for providing both foundation data and levelling the site. The foundation data failed to reveal the presence of underground water.

[60] The water pooling or flowing under the slab was a latent condition unknown to the parties at time of contract. Under the general conditions latent condition was defined as:

... any physical condition, including artificial things, on or around the land, including surface and subsurface conditions, which differ materially from the physical conditions reasonably expected by the Contractor at the time of formation of this contract.

[61] The latent condition was not the water affected interior of the dwelling, but the presence of water immediately below the slab. The damage caused by the water wicking up from below was evidence of the latent condition but not the latent condition itself.[7]

[62] The difference between visible damage and knowledge of a latent defect or condition was addressed in Nissen and Anor v Jarotech Pty Ltd [2012] QCAT 307 where it was said:

[75] ... A defect may be different from a physical thing which may be observed. A knowledge of some cracking or settlement does not amount to knowledge of the inadequacy or the defect being manifest.

[63] In Eko Investments Pty Limited v Austruc Constructions Limited & Ors; The Owners Strata Plan No 64970 v Austruc Constructions Limited & Ors [2009] NSWSC 208 concerning when a latent defect was known and time limitations for legal proceedings commenced to run, Bergin CJ in Eq said this:

[73] ... The present case is not dissimilar to the facts in Pullen. In Pullen there were observable physical symptoms or defects such as a large horizontal gap, which had opened up in the north wall about one metre above the ground. However the latent defect was the inadequacy or unsuitability of the footings. Although the physical defect was observable, the latent defect of inadequacy of the footings was not discovered until a later time. In this case the physical defect, the cracking in the walls and ingress of water was observable, but the latent defects, the faulty design of the windows and the inappropriate rendering over the control joints inconsistently with the design as specified in the Handbook, the specifications and the drawings were not identified until after 8 February 2002.

[74] ... the defect, not merely the presence of physical damage, had to be known or manifest.

[64] In the case at hand, the latent condition remained unknown until after the construction work was finished. It was not until some four years had passed that what the latent condition was was finally known. The latent condition was not apparent or manifest in the sense of becoming discoverable by reasonable diligence[8] during the construction.

[65] The builder exercised reasonable diligence during construction engaging qualified tradespeople to investigate and remedy what was thought to be the problem. He turned to his waterproofer for advice and engaged him to do additional waterproofing work and Mr Porter said in his email of 30 March 2020 that he had also contacted his own waterproofing expert for advice about the waterproofing.

[66] None of the contractors identified the true cause of the problem until the hydrologist was engaged years after the construction was finished.

[67] The latent condition was not known until after the contract work was completed and therefore the obligation of the builder under clause 14.1 to notify the owner on becoming aware of a latent condition was never triggered.

[68] Mr Porter was not entitled to withhold final payment on the basis that the construction work was never finished because he was left with a defective building with significant water entry problems.

[69] The builder commenced proceedings claiming an amount of $83,542.05 representing the final payment due under the contract, but at hearing reduced its claim to $77,792.05 as addressed below.

[70] By clauses 17.7 and 17.10 of the general conditions:

17.7 No Possession of the Works before payment

Unless the owner has obtained the contractor's prior written consent, the owner must not take possession of the Works, nor is the owner entitled to the keys to the works, prior to making full payment to the contractor of the contract price.

...

17.10 Consequences of owner taking possession of the Works when not entitled to do so

If the owner takes possession of the Works when not entitled to do so under this contract, the works are deemed to have reached practical completion without any defects or omissions on the day that the owner takes possession, and the owner is liable to the contractor for any loss or damage that the contractor may incur or suffer as a result.

[71] Mr Haley's evidence is that Mr Porter took possession of the site without permission on 18 August 2019. Mr Porter admits early occupation in August 2019 but denies it was without permission.

[72] Mr Porter is unable to hand up any document in writing evidencing permission granted as required by clause 17.7. I accept Mr Haley's evidence that Mr Porter took occupation without the builder's permission.

[73] Indeed clause 17.7 granted the builder a method of inducing final payment by keeping the owner out of the property until payment was made. That useful provision is set at nought by allowing an owner into possession before final payment is made. Indeed, that is what occurred here, with Mr Porter making no attempt to pay any part of the final payment, even any part which was not disputed, before the rain event of 13 December 2020 occurred. After that, Mr Porter refused to pay anything until he was satisfied the builder had fixed the water problem.

[74] Accordingly, given Mr Porter entered into possession of the property early without permission, clause 17.10 applies and the works were deemed to have reached practical completion without any defects or omissions on the day of entry, Sunday 18 August 2019.

[75] The effect of practical completion being deemed to have been reached is broader than entitling the builder to claim loss and damage against the owner pursuant to clause 17.10. The notices required by clause 17.1 were not necessary for one thing. For another, there were deemed to be no defects or omissions in the work.

[76] By clause 11.6, Method C progress payments had been agreed to be utilised by the parties. By clause 11.6(b)(ii) a claim could be made for practical completion stage on or after the date of practical completion.

[77] Mr Haley issued a progress claim for practical completion on Friday 30 August 2019 in the amount of $83,542.05. By clause 11.7 payment of that claim became due within the period set by item 20 of the schedule to the contract, namely five business days. Payment was therefore due on Friday 6 September 2019.

[78] I note that the practical completion stage work was effectively finished at or about the time of Mr Porter's occupation of the property in any case. Mr Porter sent an email to Mr Haley on Wednesday 21 August 2019 asking Mr Haley to prepare his final account and to email it by the end of that week.

[79] Had the final work not been completed, then whilst practical completion might be deemed to have occurred, the builder's claim would arguably have been limited to loss or damage suffered as provided for by clause 17.10.[9]

[80] At hearing Mr Haley advised that the builder's claim was reduced to the amount of $77,792.05 after allowing a credit of $750 for gas not supplied during construction and acknowledging a payment of $5,000 made by Mr Porter on 29 August 2019.

[81] Mr Haley exhibits a copy of what he describes as the invoice for final payment to a statement of evidence. The invoice exhibited however is dated 30 June 2020 and includes a claim for interest to that date $7,436.96.

[82] Ignoring the interest ($7,436.96) the invoice sets out details of the final claim. It shows "extras" totalling $56,469.15; "credits" of $57,977.10; and a further credit for a payment of $10,000 (made by Mr Porter presumably).

[83] The amount outstanding is therefore as follows:

Practical Completion claim (balance contract amount) $95,050.00

Less credits allowed $57,977.10

Plus extras $56,469.15

Less payment made $10,000.00

Less interest claimed but not then accrued $ 7,436.96

Subtotal $76,105.09

Plus GST 10% $ 7,610.50

Total $83,715.59

[84] Mr Haley says the claim for practical completion (final) was $83,542.05. That is less than the calculations derived from the invoice, but it is appropriate to adopt his figure which is less. From that the builder conceded at hearing that further credit for gas not supplied and a further payment of $5,000 reduces its claim to $77,792.05.

[85] Throughout the hearing Mr Porter referred to the final monies due the builder needed to be 'reconciled'. Despite that claim Mr Porter failed to lead any evidence identifying items claimed by Mr Haley that were either incorrect or inaccurate as to amount or further credits due Mr Porter not included in Mr Haley's final invoice. In result there is only the invoice evidence tendered by the builder available for consideration.

[86] I determine that the amount outstanding to the builder at completion was $77,792.05.

[87] Mr Porter initially claimed an amount of $191,000 by way of counter application for the cost of remedying defective work. The claim was based in large part on Mr Porter's argument that the water entry problem was due to poor waterproofing work done by Mr Haley, which I have found was not the cause.

[88] Mr Porter offered no supporting evidence. Evidence from a quantity surveyor based in large part on the erroneous view that the water problem was caused by poor waterproofing work performed by Mr Haley was not led at hearing.

[89] On the close of the final day of hearing Mr Porter advised the Tribunal in any case that he was no longer pursuing his counter application.

[90] Mr Haley claims interest on the amount due. By clause 11.9 if an owner fails to make any payment to the contractor within the times for payment under the contract the contractor is entitled to interest on the outstanding amount at the rate stated in item 19 of the schedule, payable from the day after the date that payment was due until the date of payment.

[91] Item 19 of the schedule makes provision for payment of interest at the rate of 10 per cent per annum.

[92] The final payment was due for payment on Friday 6 September 2019. The amount outstanding was. Allowing interest at 10 per cent per annum from 7 September 2019 on that amount the interest outstanding totals $50,564.83 to date of judgment.

[93] Mr Porter must pay the builder the amount of $77,792.05 for the outstanding final claim plus interest at the rate of 10 per cent per annum on that amount from 7 September 2019 until payment.

[1] What was intended by that statement is not entirely clear, but one notes the order of precedence of documents listed in clause 3.3 of the general conditions normally gives precedence to the general conditions over specifications, and it seems the scope of works document intended to reverse that order.

[4] Agricultural pipe used in sub-surface drainage.

[7] Pullen & Anor v Gutteridge Haskins and Davey Pty Ltd [1993] VicRp 4; [1993] 1 VR 27.

[9] In Queensland the strictures associated with s 34(1) of Schedule 1B of the Act (any claim for payment must be proportionate to the value of the work relating to the claim) and s 108D of the Act (prohibition on contracting out of the provisions of the Act) must be followed.