Review of decision of Building Disputes Tribunal - Order to remedy issued - Remedial work required to retaining wall not part of the building work undertaken - Whether order competent

Builders' Registration Act 1939 (WA), s 12A, s 12A(1a), s 12A(1a)(b)(ii), s 41

Trade Practices Act 1974 (Cth), s 82, s 87

D Galambos and Son Pty Ltd v McIntyre (1974) 5 ACTR 10

Frith v Gold Coast Mineral Springs Pty Ltd [1983] FCA 28; (1983) 65 FLR 213

1 The applicant applied to set aside an order made by the Building Disputes Tribunal (Disputes Tribunal) requiring the applicant to remedy damage to a retaining wall.

2 The retaining wall was not part of the building works carried out by the applicant. The Disputes Tribunal found that a reasonably competent and experienced builder could have carried out the building work without causing such damage.

3 The Tribunal found that under s 12A(1a) of the Builders' Registration Act 1939 (WA) (BR Act), it was not open to the Disputes Tribunal to issue an order which involved repairs to a retaining wall which was not part of the building work carried out by the applicant. The appropriate remedy was compensation for the failure to carry out the building work in a proper and workmanlike manner, and in this instance, the proper measure of compensation was the cost of repairing the damage to the retaining wall to the extent for which the applicant was responsible.

4 The Tribunal accordingly varied the decision by setting aside the order to remedy and referred the matter back to the Disputes Tribunal for assessment of the compensation to be paid by the applicant.

5 Pursuant to leave granted by the Tribunal on 28 June 2005, the applicant applies for the review of a decision of the Disputes Tribunal reflected in an order to remedy dated 5 May 2004.

6 The order to remedy no 304/2003-04 requires the applicant to remedy "the damage to the front section of the retaining wall to and including 10m north from the position adjacent to the commencement of the carport previously on 21 Scalby Street, Scarborough as depicted on exhibit 1, within 21 days of the date of this order".

7 The parties' submissions raise the following issues for determination:

1. Is there any building work not carried out by the applicant in a proper and workmanlike manner that can be the subject of an order to remedy?

2. If not, could compensation be awarded based on the cost of repair of the retaining wall?

3. In any event, are the respondents estopped from claiming compensation?

8 On or about 2 October 2001, the parties entered into a written building contract in terms of which the applicant undertook to construct for the respondents a house on the land now described as 21A Scalby Street, Scarborough in the State of Western Australia (the Works). The Works were to be constructed on Lot 2 of a two lot strata plan. Lot 2 is at the rear of Lot 1 and is a battleaxe shape with a driveway running the full length of the western side of Lot 1. There was an existing house constructed on the land to the west of the driveway which was supported by a retaining wall running its full length on the western side. The retaining wall is of a particular design known as a twinside system. A feature of the twinside design is that significant loads cannot be placed within 600 millimetres of the retaining wall.

9 The respondents' complaint before the Disputes Tribunal was based on damage having occurred to most of the retaining wall and to the need to repair a fence running along the top of the wall which was left leaning over after the concrete delivery.

10 The Disputes Tribunal found that a cement delivery truck had veered off the pre-existing driveway and had driven into a garden bed adjacent to the driveway, between the driveway and the dividing fence at the top of the retaining wall. The truck concerned was approximately 3.6 metres in height and 3 metres wide and, without a load, weighed 23 tonnes. The gap between the dividing fence and the eave of the existing house is 2.8 metres. The respondent gave evidence that he had observed tyre marks near the top of the retaining wall which indicated to him that the truck had driven close to the edge of the retaining wall to try to pass the eave of the older home. The Disputes Tribunal found that, on a balance of probabilities, the truck had driven onto the site and had driven to the top of the retaining wall. In the complaint form, the respondents describe the damage to the driveway fence and retaining wall, which was said to be cracked, and claimed an amount of $6500 to rectify.

11 The Disputes Tribunal found that the applicant was not responsible for all of the damage which had occurred. It had been alleged that the damage occurring to the north of the eaves of the existing dwelling was due to the driveway and garage being constructed too close to the retaining wall. In relation to that, the Disputes Tribunal found that, under the building contract, the applicant was "obliged to ensure that the site for construction was capable of supporting the construction including the extra material required for the driveway".

12 However, in relation to the section of driveway running from near the roadway to the eaves of the existing house, the Disputes Tribunal accepted the view expressed in an engineering report that nearly all of the wall movement occurred before the paving was constructed to its current condition; that it appeared that the wheel loads had been applied before the paving was constructed to its current level and only a small amount of additional movement had since occurred. The Disputes Tribunal found that a reasonably competent and experienced builder would have ascertained that the twinside retaining wall was not capable of bearing the load imposed by a 23 tonne truck plus its load. Accordingly, the Disputes Tribunal found that the applicant was responsible for the damage to the wall from near the road, that is, adjacent to the commencement of the carport previously on 21 Scalby Street, for a distance of 10 metres.

13 The Disputes Tribunal noted that although the remedy sought by the respondents in these proceedings was referable to a sum of money, the matter had proceeded on the basis that the respondents were prepared to accept an order to remedy rather than an order to pay.

14 The Disputes Tribunal found that the work, in respect of which the applicant was engaged, was building work for the purposes of s 12A of the BR Act and that by causing damage to property "by undertaking construction work which a reasonably competent and experienced builder would have not have done" amounted to a failure to undertake building work in a proper and workmanlike manner for the purposes of s 12A(1a) of the BR Act.

Is there any building work not carried out by the applicant in a proper and workmanlike manner that can be the subject of an order to remedy?

15 Section 12A(1a) of the Act provides as follows:

"(1a) Where, on complaint being made to it by a person for whom building work has been carried out, the Disputes Tribunal is satisfied that in some respect (other than its being faulty or unsatisfactory) the building work has not been carried out in a proper and workmanlike manner the Disputes Tribunal may, having regard to the extent of the failure to carry out the building work in a proper and workmanlike manner in relation to the whole of the building work, by order in writing served on the person who carried out the building work order him to -

(a) remedy the building work that has not been carried out in a proper and workmanlike manner within such reasonable time as is specified in the order; or

(b) pay to the person for whom the building work was carried out -

(i) such costs of remedying the building work that has not been carried out in a proper and workmanlike manner as the Disputes Tribunal considers is reasonable; or

(ii) such sum of money as the Disputes Tribunal considers reasonable to compensate him for the failure to carry out the building work in a proper and workmanlike manner,

and any costs or sum of money so ordered to be paid constitutes a debt due to the person to whom it is so ordered to be paid and is recoverable by him in a court of competent jurisdiction."

16 The above subsection follows subsection (1) which provides, in effect, that if the Disputes Tribunal is satisfied that any building work has not been carried out in a proper and workmanlike manner by reason that the building work is faulty or unsatisfactory, the Disputes Tribunal may order either that the faulty or unsatisfactory building work be remedied or that the owner of the building be paid such costs of remedying the building work that is faulty or unsatisfactory. It clearly addresses only the building work which is, in itself, faulty or unsatisfactory.

17 Subsection (1a) specifically does not cover faulty or unsatisfactory work. It is intended to provide a remedy in circumstances where, although the work carried out is, in itself, not defective, it has nevertheless not been carried out in a proper and workmanlike manner. An example might be where a room is constructed to the incorrect dimensions as shown on a plan. If it is capable of being remedied by demolishing and rebuilding a wall, then an order to remedy could issue. On the other hand, the work may have progressed to a point where that is no longer practicable, and in that event, compensation might be awarded.

18 It is plain that by subsection 12A(1a)(b)(i), the order to remedy must concern building work that has not been carried out in a proper and workmanlike manner.

19 In this case, the work that was not carried out in a proper and workmanlike manner was the pouring of the floor slab by making use of a 23 tonne truck and load in a manner which a reasonably competent and experienced builder would have realised would cause damage to the retaining wall. The damage could have been avoided if the cement truck had been left in the road and if the cement had been pumped the entire distance to the worksite. In this situation, we find that there is no building work which is capable of being remedied.

20 We accordingly accept the applicant's submissions that it was not competent for the Disputes Tribunal to issue the order to remedy in the terms which it did.

Could compensation be awarded based on the cost of repair of the retaining wall?

21 The extent of any compensation and how it might be determined is dependent upon the construction of the statute and, in particular, a determination of what is meant in subsection 12A(1a)(b)(ii) by the reference to such sum of money as the Disputes Tribunal considers reasonable to compensate for the failure to carry out the building work in a proper and workmanlike manner.

22 In our view, no justification exists for confining the compensation prescribed by statute by reference to common law tests. As was held in Frith v Gold Coast Mineral Springs Pty Ltd [1983] FCA 28; (1983) 65 FLR 213 at 232, in considering the assessment of damages under s 82 and s 87 of the Trade Practices Act 1974 (Cth):

"Whilst common law rules as to the measure of damages in tort may, in appropriate circumstances, provide a useful guide, no justification exists for confining the damages which are recoverable under sections 82 and 87 by reference to common law tests. The only limitations which exist in proceedings under the Act are those expressed or inherent in the statutory provisions themselves."

23 The Disputes Tribunal may award such compensation as it considers reasonable. No doubt, in doing so the Disputes Tribunal should be guided, but not bound, by common law principles for the assessment of damages either in contract, or in tort, as may be appropriate having regard to the circumstances of each case.

24 In our view, the applicants are entitled to that amount of compensation as will put them as near as possible in the position they would have been in had the failure to carry out the work in a proper and workmanlike manner not occurred. That can be achieved by the necessary repairs being carried out to the retaining wall to the extent that the Disputes Tribunal found the applicant responsible for the damage which resulted from the use of the cement truck in the above manner.

25 The applicant has submitted that "compensation" must mean something other than the cost to remedy. We do not accept that submission. There is no logical reason to limit the compensation which may be awarded in this way. In some cases, the cost to remedy will be the appropriate measure, as we consider it to be in this case. In other circumstances, the cost to remedy may be inappropriate, for example, where the cost of repair would be disproportionate but in such instances the appropriate measure of damage may be diminution in value or even loss of enjoyment and inconvenience: D Galambos and Son Pty Ltd v McIntyre (1974) 5 ACTR 10.

Are the respondents estopped from claiming compensation?

26 The applicant submitted that the respondents should be estopped from claiming compensation because they had elected to seek an order to remedy.

27 We are unable to accept that the respondents should be so estopped. The complaint form submitted by the respondents clearly sets out that the redress they required was payment of compensation. The Disputes Tribunal's reasons for decision reflect that, although that remedy was sought, "the complainants were prepared to accept" an order to remedy rather than an order to pay. Neither Mr Marsh, who appeared for the applicant, nor Mr Austin, who appeared in person, who were both present during the Disputes Tribunal hearing, could clarify precisely what had occurred during the hearing which resulted in the applicants indicating a willingness to accept an order to pay. Mr Austin informed the Tribunal that, while he could not be sure, because of the time which had elapsed since the hearing, he believed that it was probably a member of the Disputes Tribunal who raised the issue of an order to remedy as opposed to an order to pay.

28 The reasons for decision support a conclusion that the change in remedy sought was not at the initiative of the respondents. If the suggestion did not come from the applicant, which is unlikely, it probably came from the Disputes Tribunal as stated by Mr Austin. In those circumstances, there would be nothing unconscionable in allowing the respondents to revert to the relief which they originally required.

29 The applicant is entitled to an order setting aside the order of the Building Disputes Tribunal, but it submits further that the respondents' complaint before the Disputes Tribunal should be dismissed and that the respondents should be ordered to pay the applicant's costs of the review and of the hearing before the Disputes Tribunal.

30 For the reasons given above, we consider that to arrive at the correct and preferable decision in the matter, there needs to be an assessment of the compensation to which the respondents are entitled, and an order for payment of such compensation should issue. As further evidence will be required to establish how the cost estimate for repairs of the whole wall and fence is to be broken down, we consider it is appropriate that the matter be referred back to the Disputes Tribunal for that purpose.

31 The applicant was represented at the hearing by Mr Marsh, who is an employee of the applicant and is not a solicitor. It is therefore not clear to us as to what costs, if any, the applicant may wish to claim particularly as the applicant has failed to obtain an order that the complaint be dismissed. The Tribunal will need to be persuaded that any cost should be awarded. In the circumstances, we shall provide the applicant with an opportunity to apply for costs within a limited time.

32 We accordingly order as follows:

1. The decision of the Building Disputes Tribunal is varied by setting aside order to remedy no 304/2003-04.

2. The matter is referred back to the Building Disputes Tribunal for the purposes of establishing the reasonable compensation payable to the respondents pursuant to s 12A(1a)(b)(ii) of the Builders' Registration Act 1939 (WA).

3. In the event that the applicant wishes to apply for costs, the applicant shall have liberty to do so provided that on or before 30 November 2005 the applicant files and serves:

(a) an affidavit detailing the amount of costs claimed, the basis upon which such costs have been calculated and setting out fully any factual basis relied upon to support the application;

and in that event the respondents shall file and serve any affidavit evidence on which they wish to rely in opposition together with an outline of written submissions on or before 14 December 2005.

I certify that this and the preceding [32] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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MR C RAYMOND, SENIOR MEMBER