Castro v Queensland Building and Construction Commission [2025] QCAT 119

• [2] Mr Castro made four complaints to the Commission on 8 August 2022. They were.

1 Extensive waterproofing issues with the construction of the basement.

2 Extensive waterproofing issues to the construction of the foundations and basement structure. Which we understand this is the subject of a prior QBCC investigation.

3 Consequential damage to wall linings, ceilings, timber wall panelling cellar and lift, lift metalwork in the base of the lift shaft and tiling of the basement due to water ingress, corrosion, and mould.

4 Water builds up behind the aqua check plasterboard wall linings of the basement.

• [3] At the outset for clarity a chronology of events is listed.

21 August 2017 Master Builders Commercial Building Contract executed between Crosland Constructions and Rockwell.

18 January 2018 Rockwell issued a breach notice with respect to basement waterproofing.

23 February 2018 Rockwell claimed to have re -waterproofed the basement.

28 March 2018 first quantity surveying report by Accurate Estimating Services (AES) (Mr Ray).

5 June 2018 contract between Crosland Constructions and Rockwell terminated.

13 June 2018 second quantity surveying report by Accurate Estimating Services (AES) (Mr Ray).

18 June 2018 second contract between Crosland Constructions and Steve P Carpentry Pty Ltd (SPC) (Mr Purcell) to complete construction

2 July 2018 preparation for start of works under second contract between Crosland Constructions and Steve P Carpentry Pty Ltd (SPC) (Mr Purcell) to complete construction.

4 July 2018 SPC commence construction works.

27 November 2018 Rockwell's progress claim number seven for final accounting.

12 February 2019 Form 21 final inspection certificate.

14 February 2019 adjudication decision between Crosland Constructions and Rockwell assessing sum owed for works partially completed by Rockwell.

10 June 2019 Deed of settlement between Crosland Constructions and Rockwell agreeing on/acceptance of sum owed.

9 December 2019 Mr Castro purchases the subject property.

19 December 2021 Crosland Constructions Pty Ltd deregistered.

8 August 2022 Mr Castro lodges a complaint with the Commission.

March and April 2023 Commission's inspector conducts inspections.

24 July 2023 initial inspection report produced by Commission.

26 July 2023 Commission issues its review decision declining to issue a direction to rectify to Rockwell.

22 August 2023 Mr Castro applies to the Tribunal for review of the Commission's decision.

11 December 2023 Commission's statement of reasons.

• [4] Consequent on inspections in March and April 2023 by a Commission Senior Building Inspector and the initial inspection report dated 24 July 2023 that followed the Commission was satisfied that complaint items one to four were structural defective building work as defined in its rectification policy. In deciding whether to issue a direction to rectify the Commission considered all relevant circumstances and declined to issue a direction to rectify because it was satisfied, considering all those circumstances, that it would be unfair to issue any such direction.
• [5] In concluding that it would be unfair to give Rockwell as initial builder a direction to rectify the Commission considered the following.

a) Rockwell Group was originally contracted to complete the dwelling, but the contract was terminated during construction. > > b) Two quantity surveying reports completed by Accurate Estimating Services earlier in the course of construction and then at contract termination identified that approximately, respectively 70% and 85% of the waterproofing to the basement was completed, at those points in time. > > c) An adjudication decision (No 468849), that concluded that the percentages shown in the Construction Progress Valuation Report (AES) were agreed between the original contracting parties. and > > d) The adjudication decision awarded Rockwell Group $247,835.20 for monies owed by the original owner/developer, which remained unpaid.

• [6] Mr Castro considered the Commission's decision not to issue a direction to rectify centred around reasoning on three points. Firstly, responsibility for basement waterproofing could not be apportioned to Rockwell based on evidence that Rockwell completed and was therefore only responsible for 85% of waterproofing at the time the Rockwell contract was terminated. Secondly, the contractual dispute between Rockwell and Crosland Constructions rendering Rockwell unable to complete works leading to termination and adjudication (access issue). Thirdly, the significant amount owing to Rockwell under the adjudication decision (outstanding sum issue).
• [7] Regarding the first point the Tribunal ought to consider all circumstances in the light of the best and most current information available not just that which was available at the time the Commission made its decision. That would include documents produced to the Tribunal in response to notice to produce directions issued by the Tribunal to Rockwell, Crosland Constructions and Steve P Carpentry Pty Ltd ('SPC') the builder that took over and completed residence construction.
• [8] The notice to produce directed to Rockwell called for production of documents recording the status of waterproofing works to the basement of the property at relevant times and documents recording the scope of basement waterproofing works completed or to be completed by Rockwell. There was no response from Rockwell.
• [9] The notice to produce directed to Crosland Constructions called for copies of any contracts for the carrying out of construction works at the property, documents recording the status of waterproofing works to the basement of the property (including as carried out by Rockwell, SPC, or any other person) and documents recording payment of monies to Rockwell in relation to construction works at the property, including any agreement reached in relation to non-payment of those monies.
• [10] The notice to produce to SPC called for production of documents recording the status of waterproofing works to the basement of the property at or prior to construction works being commenced by SPC, documents recording the scope of works to be completed by SPC and a copy of the relevant contract.
• [11] It was asserted that both Crosland Constructions and SPC produced documentation conclusively confirming basement waterproofing works were carried out by Rockwell and that SPC as the latter builder was not involved in carrying out waterproofing works to the basement. Such included correspondence from Crosland Constructions to Rockwell dated 18 January 2018 wherein Crosland Constructions identified that waterproofing had begun to deteriorate and flake off with Rockwell refusing to remedy the defective work.
• [12] In an email to Mr Castro's legal representative on 26 February 2024 Nicholas Crosland sole director of Crosland Constructions stated that Rockwell was issued with a breach notice on the 18 January 2018 relating to basement waterproofing. Rockwell claimed to have fixed basement waterproofing in February 2018 attaching photos of work being done on 23 February 2018. In a further email of 26 February 2024 Mr Crosland stated Rockwell dug up the basement and re-waterproofed but he was not aware who carried out the works. A waterproofing report obtained by Crosland Constructions in February 2018 criticised the unacceptable initial waterproofing. The Crosland Constructions/Rockwell contract was terminated on the 5 June 2018 partway during construction. It was apparent that construction had progressed so slowly that Rockwell had no prospect of completing works in any reasonable timeframe.
• [13] On 27 November 2018 Rockwell presented its progress claim 7 and tax invoice for $592,546.06 (a final accounting as between Crosland Constructions and Rockwell). Annexure C - variations to that progress claim at item 9 recorded "Waterproofing for basement, agg pipe, gravel and backfill - variation amount $39,526.96 percentage complete 100%".
• [14] On 18 June 2018 Crosland Constructions and SPC entered into a construction contract for the continuation to completion of building works. SPC got started on about 2 July 2018 some five months after rectification of waterproofing works in February 2018. SPC's scope of works provided for deposit, frame, roof, lock up, plaster, and fit off. There was no mention of the basement and waterproofing. Mr Crosland in his email of 26 February 2024 stated "Steve (Steve Purcell of SPC) came in at frame stage and I don't believe had anything to do with basement construction or waterproofing".
• [15] In an email to the Commission dated 13 October 2023 Mr Purcell stated he was led to believe the basement was waterproofed prior to his company commencing site work. Backfilling was already completed. He produced photos confirming that. His contractual waterproofing allowance was for bathrooms/balconies/entry steps and did not include the basement.
• [16] With respect to the second and third points about access and outstanding sum Mr Castro contended that whilst it was not in dispute that the contract was terminated prior to construction completion the adjudication decision subsequently made 14 February 2019 pursuant to the then Building and Construction Industry Payments Act 2004 (Qld) was not a document to be relied on when determining the extent to which Rockwell had completed basement waterproofing works at time of termination. Rockwell's payment claim of $592,546.06 including GST was assessed by the adjudicator at $247,835.20 including GST.
• [17] The construction progress valuation reports by Accurate Estimating Services were utilised in determining the adjudication assessment. In tables contained in those reports basement level structural - waterproofing was listed as initially 70% and then as 85% complete. By contrast Rockwell's progress claim 7 records "waterproofing for basement, agg pipe, gravel and backfill" as being 100% complete. Subsequently Crosland Constructions and Rockwell were parties to a deed of settlement dated 10 June 2019 whereby the adjudication assessment was settled on reduced monetary terms. Rockwell released Crosland Constructions from any claims it might have against Crosland Constructions. That finalised monetary matters as between the two.
• [18] The adjudication assessment considered basement waterproofing in the context of progress claim 7 variation 9 in some detail. AES was unable to make sense of the bundle of documents provided by Rockwell in support of its claim for $39,526.96. The adjudicator found that Rockwell had failed to discharge the onus of proof with regard to the quantum of its entitlement.

• [19] The Commission based its decision to not give a decision to rectify on the conclusion that Rockwell did not complete the basement waterproofing. It relied on the first AES report dated 28 March 2018 identifying basement waterproofing as 70% complete and the second AES report dated 13 June 2018 identifying basement waterproofing as 85% complete.
• [20] The AES report dated 28 March 2018 was produced after inspection of the site by AES on 22 March 2018, after the rectification of the waterproof basements by Rockwell in February 2018. The AES report dated 13 June 2018 was produced by AES after Rockwell ceased work on the 5 June 2018.
• [21] In the course of its enquiries the Commission accessed Gold Coast City Council records. Though several certified forms 16 were identified none specifically addressed basement waterproofing or certified that basement waterproofing was completed or inspected. The only waterproofing certificate issued was that dated 8 January 2018 to SPC signing off on "waterproofing system installed to all internal wet areas, balconies, roof level planter boxes, entry ways and ground level deck between buildings". SPC was not involved in basement waterproofing. Nonetheless, a form 21 final inspection certificate dated 12 February 2019 was issued by a licensed certifier in the absence of a form 16 for the period 21 August 2017 (date of original construction contract) to 12 February 2019 (the date of issue of the final inspection certificate) certifying completion or inspection of basement waterproofing.
• [22] Rockwell's own progress claim number 7 dated 27 November 2018 states at annexure B that waterproofing to the basement was 85% complete the same percentage agreed as between Crosland Constructions and Rockwell in the adjudication proceeding. In his determination the adjudicator said

The short point is that the Respondent (Crosland) must be deemed to have fully understood the content of the May 2018 progress claim (effectively 5 June 2018 because no works were undertaken in the period 31 May 2018 to 5 June 2018) in relation to both the contract works and the claims for variations because its quantity surveyor had agreed those quantities, percentages and amounts with the claimant (Rockwell) and that agreement was recorded in the document entitled progress report dated 13 June 2018 (second AES report), which was relevantly identical to the progress claims of 31 May 2018.......because I have concluded the claimant (Rockwell) and the banks quantity surveyor (Crosland Constructions) have agreed upon the scheduled percentages of work completed on or about 31 May 2018, and that the claimant did no further work between that date and its termination. I will assume prima facie that the percentages shown in the construction progress report (of 13 June 2018) were agreed and should be preferred.

• [23] The Commission submitted Mr Castro's interpretation of annexure C variations to progress claim 7 at item 9 was erroneous in asserting basement waterproofing was 100% complete because that annexure referred to variations only not completion of basement waterproofing as a whole. Basement waterproofing was stated in annexure B as 85% complete. Annexure A set out the summary of what progress claim 7 contained which noted that annexure B contained details of contract works completed to date.
• [24] Nor did the Commission consider its decision amounted to speculatively attributing fault to an unspecified builder but rather that Rockwell was not responsible for work not completed under its contract. That said it could not be determined that Rockwell was at fault for defective building work. The Commission submitted that the "whole factual matrix in its entirety" ought to be considered as enunciated in Wright v Duke Building Pty Ltd.[1]
• [25] In further submissions Mr Castro asserted that the Commission sought to rely on the percentage completions apropos basement waterproofing in the AES reports whereas the AES reports were obtained to value the cost of works completed and ascertain whether Rockwell had been overpaid or otherwise. It was further asserted that the AES reports noted limitations on Mr Ray's ability to opine on the quality of workmanship, accuracy or design which was consistent with Mr Ray's focus being on valuing work completed to assist Crosland Constructions payment certification process.
• [26] It was further submitted that even if the 85% complete figure in the second AES report was accepted that percentage did not refer to the extent of physical completion of basement waterproofing but rather to the consumption of a provisional sum component allowed for by Rockwell for completion of the basement waterproofing. It was contended that the 85% "percent complete" referred to in the second AES report indicated that at the time Rockwell ceased works only 85% of the provisional sum (i.e., $17,000.00 of $20,000.00 as recorded) allowed for had been consumed. There was no indication about physical works completed.
• [27] It was further submitted that the Commission's position was inconsistent with the second AES report which stated that as at 8 June 2018 that "basement structures completed" and "blocked walls to first floor completed"; that there was a structural engineers plan regarding "defects rectification required to the structure" and that the quote attached to the second AES report "to fix waterproofing" noted that to fix the waterproofing "we will need to demolish the existing block fence and dig out the earth to gain access to the wall". Also referred to was Mr Purcell's (SPC's) description that "between the houses it is backfilled prior to us starting on site" together with photos depicting the entirety of the basement structures as complete.
• [28] Mr Castro took issue with the Commissions interpretation that annexure C variation item 9 for "waterproofing for basement, agg pipe, gravel and backfill-variation amount $39,526.96 percentage complete 100%" referred only to a variation to basement waterproofing works citing the breakdown of costs dated 28 February 2018 attached to variation 9 which included waterproofing quotation $44,793.66, backfill $2,640.00, gravel $4,800.00, aggy pipe $1,500.00, admin $1,000.00, and labour $1,200.00 less waterproofing allowance $20,000.00 a net sum of $39,526.96. That together with Mr Crosland's email statement that Rockwell was required to dig up the basement and waterproof indicated a reworking of the basement waterproofing in its entirety in February 2018. It was suggested it would be unusual for a contractor to claim a subsequent variation where the initial work the subject of the variation was not complete. Additionally, the completion of variation works subsequently would logically be premised on completion of such initially contracted works prior or at least at the same time as completion of variation works.
• [29] It was asserted that the Commission ought not be able to sidestep holding somebody/some entity to account for the structurally defective basement waterproofing works. That did nothing to maintain proper standards in the building industry nor provide a remedy for defective building work.
• [30] Turning to the deed of settlement between Crosland Constructions and Rockwell the Commissions position so it was asserted, was that it had the effect of releasing Rockwell from completion of contract works including basement waterproofing and compensating Crosland Constructions for non-completion. But that did not affect Mr Castro's right to seek rectification nor the Commission's ability to issue a direction to rectify. Nor should the sum of money payable under the deed of settlement be categorised as compensation because no compensation was paid to Crosland Constructions. Additionally, the absence of a form 16 was not indicative of whether or not Rockwell completed the defective basement waterproofing.
• [31] Mr Castro sought in the alternative that a direction to rectify be issued to Nicholas Crosland on the basis that he could be categorised as a "person who carried out the building work" as defined in section 71I(1) of the Queensland Building and Construction Commission Act 1991 (Qld) ('QBCC Act'). It was contended that section 71I(1) listing who is taken to carry out building work was intended to be broad and ought to be interpreted as such. It was asserted section 71I(1)(i)[2] ought not be constrained citing J M Kelly (Project Builders) Pty Ltd v Queensland Building Services Authority[3] and Waddell v Queensland Building and Construction Commission[4] as examples of where it was determined that the entity and person involved as developer and a person building for reward fell within (the now) section 71I(1)(i) of the QBCC Act.
• [32] It was further contended that statements made by Mr Crosland amounted to evidence of his personal involvement in the design and construction of the residence. He was the sole director, sole shareholder, and sole secretary of Crosland Constructions.
• [33] It was put to the Tribunal that the Tribunal's decision in Taouk v Queensland Building Services Authority[5] supported it submission that Crosland Constructions deregistered status ought not preclude the issue of a direction to rectify. The developer company there could have been reinstated. That being so it was submitted that Mr Crosland as the directing mind and will of Crosland Constructions could be issued with a direction to rectify.
• [34] The Tribunal's decision in Maldes v Queensland Building and Construction Commission[6] was proffered in support of the proposition that Mr Crosland would be included in the definition of "the person who carried out the building work" in section 71I(1)(i) and who was a person to whom a direction to rectify could be given because he took an active part in the operations of the company.

• [35] There is no formal onus of proof in a merits review of this nature. However, the applicant Mr Castro is still required to adduce evidence and arguments to support his case such as to enable the Tribunal to make the decision sought by him. It was not disputed that basement waterproofing at the subject property was structurally defective building work as complained of by Mr Castro. Both parties seemed to agree at least that the "whole factual matrix in its entirety" ought to be considered.
• [36] The Tribunal accepts the evidence provided to it by Crosland Constructions, though deregistered, through Mr Crosland its former sole director that it issued a breach notice to Rockwell on 18 January 2018 about defective basement waterproofing deteriorating and flaking off. Rockwell purported to remedy the defective work categorising it as a variation. Crosland Constructions did not agree categorising it as rectification work. But either way it did not matter because in its cost breakdown of 28 February 2018 attached to variation 9 of progress claim 7 Rockwell (after supposed completion of basement waterproofing) made its position abundantly clear. It allocated sums of money to its waterproofing quotation $44,793.66, backfill $2,640.00 gravel $4,800.00, aggy pipe $1,500.00, admin $1,000.00, and labour $1,200.00 less (crucially) the contractual waterproofing allowance $20,000.00 arriving at a net figure it considered payable of $39,526.96. The calculation indicates value of works (asserted by Rockwell) as against the contractually allowed provisional sum. Crucially the breakdown of costs is dated 28 February 2018 immediately after Rockwell stated the variation to basement waterproofing was complete (as opposed to rectification as asserted by Mr Crosland).
• [37] The fact that AES was unable to make sense of the bundle of documents provided by Rockwell in support of its claim for $39,526.96 in the adjudication process was never the point. Rockwell in making the claim made it clear that as far as it was concerned the basement waterproofing was complete. That its supporting documentation fell short was its own lookout.
• [38] It was suggested that it would be unusual for a contractor to claim a subsequent variation where the initial work the subject of the variation was not complete. The completion of variation works subsequently would logically be premised on completion of such initially contracted works prior or at least at the same time as completion of variation works.
• [39] Construction continued up until at least 31 May 2018 followed by termination on 5 June 2018. It seems extraordinary that construction would have continued for some four months (albeit it seems at a slow pace) from the ground up so to speak in circumstances where one would still have to revisit basement waterproofing to complete it. That scenario is entirely illogical. Mr Purcell's observations of backfilling together with photos depicting exactly that are supportive of the view of completion basement waterproofing.
• [40] Nor are the two AES reports helpful with respect to physical completion. Mr Ray must have observed or at least been aware of the extent of backfilling in June 2018. The AES reports do not address the extent of physical completion of basement waterproofing rather produce tables. There was never any evidence about exactly what it was that was not complete. The site was backfilled. There was no invasive inspection. That is not surprising as AES own letterhead describes that entity as "quantity surveyors and construction cost consultants". Those tables refer to the cost (provisional sum or allowance) set against the certified value based on percentage complete of that cost (not against any invasive physical inspection of basement waterproofing). Those tables were there to determine the value of work completed not to delve into whether work was or was not completed. From the train of events in January/February 2018 it can be readily accepted that Mr Crosland considered the basement waterproofing complete as of 5 June 2018. That is supported by Mr Purcell's observations of backfilling at about the same time.
• [41] Nor is there any contradiction apparent when referring to the adjudication decision. The adjudicator simply assumed prima facie that the percentages shown in the AES report of 13 June 2018 were agreed and should be preferred (for the purpose of valuing works completed by Rockwell).
• [42] The adjudicator's decision was about how each of Rockwell's and Crosland Constructions claims "stacked up" when viewed by an impartial decision maker. Acceptance of the adjudicator's decision enabled each to know exactly where they stood financially. The deed of settlement that followed was clearly a further compromise in the light of their respective financial positions. Put alternatively it was not so much about the rights and wrongs of the historical engagement between them but rather how each could extricate themselves on best possible monetary terms given the longwinded messy engagement between the two. Obviously, Rockwell had done some work and was entitled to some payment which was made. It was never a case of compensation. The quantum of any payment made is not a relevant factor here in determining whether it is fair to issue a direction to rectify.
• [43] The absence of a form 16 for basement waterproofing is of no particular significance. It was more than likely lost sight of along the way (August 2017 to February 2019), a perhaps understandable but not excusable omission on the part of the responsible certifier at the finish.
• [44] Mr Castro is a member of the public, a consumer and a person entitled to the benefit of the QBCC legislation. There is no reason here why Mr Castro as the purchaser of a dwelling ought not be entitled to have Rockwell's defective building work rectified.
• [45] As for Mr Crosland whilst it is the case that a direction to rectify could be issued to Mr Crosland in lieu of or as well as Rockwell the Tribunal considers there is no tangible or some other compelling or otherwise extenuating circumstance justifying the exercise of its discretion to include him. Quite the contrary Mr Crosland through his company identified defective basement waterproofing work early in construction, issued a breach notice, had Rockwell fix it (he thought) and finally had an argument so it seems with Rockwell about what was rectification and variation. Without going into a detailed examination of the QBCC legislation the purport of the legislation is to make it possible to hold more than one person responsible for defective building work (in unusual circumstances). It was never a case of opening the door for a "splatter gun" effect to impose liability on at least one and probably more.
• [46] If the legislature had intended that company directors/officers were to be included as persons carrying out building work (as well as the corporations, they serve) it would have said so. There is nothing in or about section 72 l that provides for a director (or for that matter any other person in authority) of a company to simply be superimposed/overlaid to impose liability on an individual in lieu of a contracting corporation or in addition to a contracting corporation.
• [47] Apart from that the basis of the relationship was the initial commercial building contract between two commercial enterprises/companies there to make money. Someone had to speak and that is usually a director. Maldes' case was cited in support of holding a director liable for defective building work where the company had since been deregistered (as here). But that was a case involving a since deregistered licensed building company Sandhu Homes Pty Ltd in respect of which for the purpose of QBCC registration Mr Sandhu was its nominee. That is not the case here. There is no reasonable basis to issue a direction to rectify to Mr Crosland.
• [48] The Tribunal is of the view that the preponderance of evidence favours a finding that Rockwell did complete basement waterproofing and that a direction to rectify ought to have been issued to Rockwell. The Commission's decision of 26 July 2023 ought to be set aside and a direction to rectify be issued for the defective works identified to Rockwell Group Construction Pty Ltd.

[1] Wright v Duke Building Pty Ltd [2017] QCATA 35 at [62].

[2] Section 71I(1)(i) states that for the purposes of section 71 that a person who carries out building work is taken to include "a person who, for profit or reward, carried out the building work".

[3] J M Kelly (Project Builders) Pty Ltd [2015] QCAT 66.

[4] Waddell v Queensland Building and Construction Commission [2023] QCAT 159.

[5] Taouk v Queensland Building Services Authority [2013] QCAT 508.

[6] Maldes v Queensland Building and Construction Commission [2022] QCAT 359