DIPLOMA CONSTRUCTION (WA) PTY LTD -v- SOUTH CENTRAL WA PTY LTD [2015] WASC 289 (10 August 2015)

4 What follows are my reasons for that decision, edited from the court's record of my oral reasons given on 29 July 2015.

5 The Building Services (Complaint Resolution and Administration) Act 2011 (WA) (Act) relevantly enables a person to make a complaint to the Building Commissioner about a regulated building service not being carried out in a proper and proficient manner or being faulty or unsatisfactory.[1] In the present case the relevant complaint was that the regulated building service is unsatisfactory.

6 A regulated building service includes 'building work' as defined in s 3 of the Building Act 2011 (WA) carried out by a registered building services provider.[2] It is common ground that the appellant is a registered building services provider. 'Building work' includes the construction of a building or an incidental structure (being a structure attached to or incidental to a building).[3]

7 The Commissioner may refer a complaint to the Tribunal.[4] The Tribunal may order the person who carried out a regulated building service which it is satisfied is unsatisfactory to remedy the building service as specified in the order.[5] The Act provides for such an order to be registered and enforced as an order of this court.[6] Failure to comply with such an order without reasonable excuse is an offence.[7]

8 Where a building service complaint is made, the matter to which the complaint relates is not justiciable by a court that would otherwise have jurisdiction to determine the matter, save in limited circumstances.[8]

9 The appellant was engaged by the respondent to design and construct stage 1 of a bulky goods shopping centre in Jandakot. The work, which included the design and construction of a carpark stormwater drainage system, was completed in November 2008. The appellant engaged a firm of engineers, PM White & Partners (Aust) Pty Ltd, to undertake the design of the drainage system. After at least some flooding of the carpark, the respondent complained to the appellant in May 2013. In May and September 2013, the respondent made complaints to the Commissioner under the Act. The complaints were that the appellant carried out unsatisfactory building work in respect of the drainage of the carpark.

10 The complaints were referred to the Tribunal which, on 8 April 2015, made the following order:

By no later than 8 July 2015, the [appellant] must remedy the unsatisfactory building work ... by installing additional below ground stormwater storage to comply with a design certified by a suitably qualified practising engineer prepared in accordance with Australian Rainfall and Runoff 1987 produced by the Institution of Engineers, Australia on the basis of a one in 10 year storm event.

11 The Tribunal found that, although the design of the stormwater drainage system was not 'building work' under the relevant definition, the construction of those works clearly was a regulated building service.[9] The Tribunal noted that the respondent was not contending that the appellant had not constructed the stormwater drainage system in accordance with the design prepared by PM White & Partners.[10]

12 The Tribunal found that the conditions of the development approval issued by the City of Cockburn required the design of the stormwater drainage works to be in accordance with Australian Rainfall and Runoff - A Guide to Flood Estimation[11] (ARR) for a one in 10year storm event. The Tribunal found that the design prepared by PM White & Partners was not in accordance with the ARR, and that the stormwater drainage system had less below ground storage capacity than was required under the ARR. The Tribunal concluded that the construction of the stormwater drainage works pursuant to a design which did not meet the requirements of the City, because it was not in accordance with the ARR, constituted unsatisfactory building work.[12] The Tribunal concluded that:[13]

The Tribunal does not accept the contention of the [appellant] that the Tribunal, having found that there is unsatisfactory building work, should exercise its discretion under s 38(1) of the [Act] to not make a building remedy order. The failure of the respondent to construct the stormwater drainage works in accordance with the requirements of the City is a significant matter which has resulted in there being less below ground stormwater storage capacity than that which is required for a one in 10 year storm event. That failure clearly warrants the making of an order that the [appellant] remedy the unsatisfactory building work.

13 The appellant sought an internal review of that decision, as provided for by the Act.[14] On 15 June 2015 the Tribunal affirmed the order of 8 April 2015, save that the time for compliance was extended to 27 July 2015. The Tribunal also set aside a stay order, which it had made on 25 May 2015 pending the internal review.

14 The reconstituted Tribunal delivered oral reasons for its internal review decision on 15 June 2015. Subject to a number of minor qualifications, the Tribunal accepted the respondent's submissions and found that the building works were unsatisfactory (ts 34).

15 In those submissions the respondent had contended that the Tribunal had previously concluded - and it was not challenged - that the appellant was required to have constructed a drainage system that complied with the ARR. The Tribunal had also concluded - and it was not challenged - that the constructed system did not comply with the ARR. The consequence was that the drainage system did not comply with the requirements of the City and, as a consequence, had less underground stormwater storage capacity than was required. The respondent contended that the finding that this work was unsatisfactory was unremarkable (ts 21).

16 The respondent had also contended in its written submissions to the Tribunal that:[15]

The [original] Tribunal found that the [appellant] had responsibility to construct the stormwater drainage in accordance with the ARR. This is not a finding about design work, it is a finding about building work. The Tribunal also found that construction work that does not meet the requirements of the City of Cockburn, because it is not in accordance with the ARR, is unsatisfactory building work. Again, this is a finding about the quality of the building work. (original emphasis) (citation omitted)

17 Before coming to the qualifications to its acceptance of the above submissions, the Tribunal held in effect that it was not possible to separate the design of the stormwater drainage system from its construction in this case (ts 34 35).

18 The qualifications expressed by the Tribunal to its acceptance of the respondent's submissions concerned the treatment of certain previous decisions.

19 On 3 July 2015, the appellant filed an appeal notice against the Tribunal's internal review decision. Section 105 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) allows for such an appeal, by leave, 'on a question of law'.[16]

20 While the appeal grounds are not happily expressed, in essence the question of law which they seek to raise is whether it was open to the Tribunal to be satisfied that the regulated building service (being the construction of the stormwater drainage system) was unsatisfactory, within the meaning of the Act, by reason only of deficiencies in the design of the system (which the appellant says is not a regulated building service). This was the question of law identified by the appellant in its submissions. The aspect of 'design' to which this question relates is the underground water storage capacity of the system constructed by the appellant.

21 The respondent submits that the grounds of appeal to this court are based on findings that the Tribunal did not make, as were the grounds for seeking internal review of the original decision. The respondent submits that the proposed appeal is from the decision of the Tribunal on review, and the Tribunal on review correctly rejected the grounds on which internal review was sought.

22 While I accept these submissions of the respondent, they do not mean that an appeal on the question of law identified above cannot be taken. The issue raised by the question is jurisdictional. If it was not open to the Tribunal to be satisfied that building work which the appellant carried out was unsatisfactory then the Tribunal lacked power to make or affirm a building remedy order. If the Tribunal lacked power to make the order then the order affirming the review order can be set aside.

23 The identification of the limits of the Tribunal's power is a question of statutory construction.[17] The question of whether the Tribunal exceeded its power by making a building remedy order, when it was not open to the Tribunal to form a state of satisfaction which was a condition for the existence of its power, is necessarily a question of law.

24 I am therefore satisfied that the question of law which the appellant identified as the subject matter of this appeal arises from the Tribunal's decision.

25 The Tribunal only had power to make a building remedy order under s 38(1)(a) of the Act if, relevantly, it was satisfied that 'the regulated building service ... is unsatisfactory'. Substituting the presently relevant parts of the definitions for the defined terms, this required the Tribunal to be satisfied that the construction of a building or an incidental structure carried out by a registered building service provider is unsatisfactory.

26 The appellant accepts that it is a registered building service provider. It accepts that it carried out the construction of the carpark stormwater drainage system. The appellant also accepts that the drainage system was a building or incidental structure for the purposes of the Act and the Building Act. It is therefore uncontentious that the construction of the drainage system carried out by the appellant was a regulated building service for the purposes of the Act.

27 The question of law raised by the appellant is whether it was open to the Tribunal to be satisfied that the construction of the carpark stormwater drainage system 'carried out' by the appellant was 'unsatisfactory'. The respondent's contention and the Tribunal's finding was that the construction carried out by the appellant was unsatisfactory because the drainage system had insufficient below ground stormwater storage when measured against the requirements of the ARR.

28 The first step in the appellant's argument is that the design of the stormwater system does not fall within the definition of a regulated building service.

29 I accept that the preparation of plans for a building, without any implementation of the plans, is not 'building work' within the meaning of the Building Act. If the mere preparation of plans were 'building work' then s 9 of the Building Act would generally require the issue of a building permit for the drawing of the plans. That cannot be the case because s 16(e) and s 16(h) of the Building Act require an application for a building permit to be accompanied by plans. The drawing of plans without more cannot constitute building work, and therefore the drawing of plans without more does not constitute carrying out a regulated building service for the purposes of the Act. If the only activity undertaken is the preparation of plans, then there has been no construction of a building to which the Act could apply.

Work carried out by the appellant was not confined to design

30 However, in the present case the work which the appellant carried out did include the construction of the carpark stormwater drainage system, implementing plans which had been prepared for the appellant by its contractor. The appellant accepts that it carried out a regulated building service. The contentious question before the Tribunal was whether the construction of the carpark stormwater drainage system which the appellant carried out was unsatisfactory.

31 The Act does not expressly limit the reasons why a regulated building service may be regarded as unsatisfactory. Nor is there anything which expressly precludes a finding that the construction of a building is unsatisfactory because it is undertaken in accordance with a design prepared by a contractor of the builder. The phrase 'not been carried out in a proper or proficient manner or is faulty or unsatisfactory' is a broad expression apt to cover a wide range of deficiencies in the construction of a building which can be taken into account.

32 A premise behind the appellant's argument is that the Tribunal found the regulated building service to be unsatisfactory only by reason of the engineers' design of the drainage system. However, the Tribunal's decision was not so confined. In the review decision the Tribunal accepted the respondent's submissions that the issue before the Tribunal as originally constituted was not about design but concerned whether:

1. 'the stormwater drainage works have been constructed to accommodate a one in 10year storm event'; and
2. 'whether there are an adequate number of soakwells in the stormwater drainage works, as constructed, to satisfy the requirement of the City', which required compliance with the ARR.[18]

33 Those issues concerned the construction, rather than merely the design, of the drainage works. The respondent's complaint was not that the appellant designed a carpark stormwater drainage system with inadequate underground water storage. Rather, the respondent's complaint was that the appellant carried out the construction of a carpark stormwater drainage system with insufficient below ground stormwater storage to accommodate a one in 10year storm event.[19]

34 It was, in my view, open to the Tribunal to be satisfied that the construction of the drainage works which the appellant carried out was unsatisfactory because the appellant constructed an inadequate number of soakwells. That was what the Tribunal found. It was no answer to the above findings for the appellant to say it had received advice from engineers, which it had engaged, as to the required number of soakwells. In all the circumstances, I see no error of law in the Tribunal taking this approach. It was the appellant's failure to construct the stormwater works in accordance with the City's requirements that was the basis for making a building remedy order.[20]

Design and construction are not mutually exclusive concepts

35 Another premise behind the appellant's submission is that the design and the construction of a building are mutually exclusive concepts, at least in the circumstances of this case. I do not accept that premise. The ordinary meaning of the term 'construct' - to form by putting together parts; build; frame; devise[21] - inherently comprehends aspects of design. Whether the construction of a building is satisfactory may depend on the configuration of the building, the materials used for the building and the methods used to place or join material chosen. The choices made about many of these matters may be regarded as aspects of both design and construction of the building. The Act does not exclude the Tribunal having regard to such matters so long as construction is involved. It is sufficient that the work can be characterised as the construction of a building carried out by the builder. If the work can be so characterised, it does not matter whether or not the work is also characterised as an aspect of design.

Whether construction is satisfactory is a question of fact

36 In determining whether building work has been carried out unsatisfactorily it will be appropriate for the Tribunal to have regard to all of the relevant circumstances. Those circumstances may include what the builder has been engaged to do. If the builder has been engaged to construct a specific number of soakwells, and the builder constructs that number of soakwells, then the Tribunal may not be satisfied that the building work is unsatisfactory because the number of soakwells is inadequate for a particular purpose. That is, it would be more difficult to regard work carried out in the manner required by the customer as unsatisfactory. In such a case the builder has done what has been asked of it.

37 The Tribunal may be more readily satisfied that work is unsatisfactory where the builder has been engaged to construct a drainage system that will cope with a one in 10year storm event, and the builder constructs an inadequate number of soakwells for that purpose.

38 In either case, the question of whether the building work carried out by the builder is unsatisfactory will be a question of fact for the Tribunal to determine having regard to all of the relevant circumstances.

39 In the present case the Tribunal found the following facts. The appellant was engaged to design and construct the carpark stormwater drainage system.[22] It was a condition of the respondent's development approval that the stormwater system be designed in accordance with the ARR on the basis of a one in 10year storm event.[23] The appellant's building licence required the appellant to comply with the conditions of the development approval.[24] The constructed stormwater system had less underground storage capacity that that required under the ARR for a one in 10year storm event.[25] These factual findings were not challenged in the internal review or on appeal.

40 In all those circumstances, it was open to the Tribunal to be satisfied that the construction of the carpark stormwater drainage system without sufficient underground stormwater storage to accommodate a one in 10year storm event was unsatisfactory.

41 The appellant points to the requirement that the unsatisfactory work must be work which it has carried out, and says that it did not carry out the design of the stormwater system (which the appellant says is where the problem lay). There are two answers to this submission.

42 First, even if the appellant did not carry out the design, it did carry out the construction of a carpark stormwater drainage system with inadequate underground stormwater storage. It was that construction which was found to be unsatisfactory, and which the appellant has been ordered to remedy.

43 Second, a builder may carry out construction even if the builder engages a contractor to do work on the builder's behalf. Most builders will be corporations which can only act through officers, employees or independent contractors. Builders commonly engage subcontractors to undertake work for which they are contractually responsible. In that context the reference to work being 'carried out' by a registered building service provider must comprehend the carrying out of work through the agency of a subcontractor. In my view there is no basis for distinguishing between the engagement of an engineer to provide advice on design from the engagement of a tradesperson to install pipework and soakwells. In both cases the relevant work has been 'carried out' by the builder for the purposes of the Act.

44 The context in which the Act was enacted also counts against a construction of s 38(1) of the Act which would preclude a finding that building work is unsatisfactory where a cause of a deficiency can be characterised as an aspect of 'design'.

45 Prior to the enactment of the Act, complaints about unsatisfactory building work were the subject of s 12A of the Builders' Registration Act 1939 (WA). Section 12A enabled a complaint to be made 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'. When a Disputes Tribunal (and at an earlier time, a Board) was satisfied of this matter under s 12A(1) of the Act, it could order the person who carried out the work to remedy the faulty or unsatisfactory building work.

46 There was no definition of 'building work' in the Builders' Registration Act. There was a definition of 'building' as a noun and a 'person trading as a builder'. A party to proceedings in the Disputes Tribunal could apply to the State Administrative Tribunal for review of the decision, and at an earlier time an appeal was available to a magistrate.

47 The operation of s 12A(1) of the Builders' Registration Act, as it stood in 1986, was considered by a Full Court comprised of Burt CJ, Wallace and Pigeon JJ in Bradshaw v McGuire.[26] At this time the remedial order was made by the Board, subject to an appeal to a magistrate. In Bradshaw, the builder agreed to construct a dwelling in accordance with a rough sketch plan prepared by the owner of the land. The local authority advised the builder that a condition of his building licence would require that the footings of the building be designed by a qualified engineer. This was done and the dwelling constructed, but the footings were inadequate to support the building. The Board found the building work to be unsatisfactory, and its decision was confirmed on appeal by a magistrate.

48 The builder obtained an order nisi for a writ of certiorari to quash the magistrate's decision on the ground that the magistrate had no jurisdiction to make the order because the work performed by the engineer was not building work for which the builder was responsible.

49 All members of the court agreed that the order nisi should be discharged. Burt CJ said:

The expression 'building work' as used in s 12A(1) of the Act is not defined. It is, I think, a compound concrete noun. In the instant case and relevantly it is the footings as constructed or built. That work was carried out by the applicant. The work was, and it is common ground that it was, 'faulty and unsatisfactory' in that it was not capable of sustaining the weight of the building built upon it. And that conclusion is not, I think, displaced by a finding, if made, that the work was properly carried out in accordance with a design and specifications prepared by a consulting engineer engaged by the builder (7).

Whilst it may well be the case that the design presented to the applicant to be incorporated in the residence was defective it is clear that the footings constructed in accordance with that design was also defective in that the structure was built in accordance therewith. It is for this reason that I am unable to appreciate that the faulty footings do not come within the definition of 'building work'.

As I apprehend the purpose or intent of the statute it is to protect the public from, in words of the Minister in the Second Reading speech, 'incompetent or negligent work'. It matters not that the inspiration for such incompetent work emanated from elsewhere. Just as a builder is responsible to the building owner for faulty workmanship carried out by subcontractors so too is he responsible to the building owner for the incompetence of a professional subcontractor. This of course does not mean that he is left without remedy against that contractor. Finally there can be no doubt that the faulty work was performed by the applicant. I agree with what Pidgeon J had to say thereon in Shaw v McLeod. (citation omitted)

The applicant undertook to erect a building according to a rough sketch plan that was handed to him. A person who undertakes to erect a structure in those circumstances is undertaking to erect it to a stable design in order that it remains standing and in this sense design is an integral part of the building work. In the present case there could be no question that the applicant undertook both the design and the erection. No building could be erected to the sketch plan the applicant was handed and the applicant arranged for further plans to be prepared. The local authority required a practicing structural engineer to design the footings and the applicant arranged for this to be done. The contract with the engineer was made by the applicant and the building owner was not a party to it. The applicant was the registered builder to whom the permit issued and I would in all these circumstances regard him as the person who carried out the building work within the meaning of s 12A. It would, in my view, be an erosion of what the legislature intended by s 12A for a builder to escape the jurisdiction of the Board by submitting that the work complained of was not within the builder's specialty and had been done by a specialized subcontractor. The fact that the local authority required this to be done would not I consider alter the position (3 4).

52 In Bradshaw an argument to the same effect as that which the appellant now seeks to advance was put and rejected by the Full Court. Under s 12A of the Builders' Registration Act, a builder could not avoid liability on the basis of 'faulty or unsatisfactory' building works because the builder had engaged a third party to design the building which he constructed. The argument that a builder does not 'carry out' work for which he engages a contractor was also rejected.

53 The similarity between the language of s 12A(1) of the Builders' Registration Act and s 38(1) of the Act strongly suggests that the substituted provision is intended to operate in a similar manner to that established for the repealed provision. There was no evident intention to radically reduce the available scope of complaints about building work from those which could be made under s 12A(1) of the Builders' Registration Act. Section 38(1) should be construed consistently with the observations in Bradshaw, so that the Tribunal is not precluded from finding that building work is unsatisfactory where the builder has received professional advice as to the design of the building and carries out construction which is inadequate but accords with the advice.

54 That inference is further supported by the explanatory memorandum to the Bill for the Act. The commentary to the definition of 'building service' in the memorandum describes a building service in the following terms:

A building service is, in its broadest sense, any service or work provided in respect of the design, construction, maintenance or certification of a building. (emphasis added)

55 This passage indicates that it was not a purpose of the Act to reverse the outcome of Bradshaw. Rather, it indicates a purpose of the Act to allow for remedial orders to be made in relation to a broad range of services provided in respect of matters including the design of a constructed building. Regard may be had to the explanatory memorandum to identify the purpose of the provisions, and a construction which promotes that purpose preferred, pursuant to s 18 and s 19 of the Interpretation Act 1984 (WA).

56 Of course, primacy must be given to the text of the provision, and the court must construe the text rather than the explanatory memorandum.[27] However, in the present case I have already found the text of the relevant provisions to support a conclusion consistent with the purpose identified in the explanatory memorandum. The explanatory memorandum also confirms that the meaning of s 38(1) of the Act is the ordinary meaning conveyed by the text of the provision, taking account of its purpose and object in the manner I have identified.

57 For the reasons I have given, it was open to the Tribunal to be satisfied that the construction of the drainage works which the appellant carried out was unsatisfactory because insufficient underground stormwater storage was constructed to comply with the requirements of the ARR and accommodate a one in 10year storm event. The Tribunal was not precluded from being so satisfied by the fact that the appellant had received professional engineering advice from a contractor as to the volume of underground water storage which should be constructed.

58 For these reasons, in my view the question of law which is the subject of this appeal should be answered affirmatively in the respondent's favour. I would grant leave to appeal from the Tribunal's decision on the question of law identified but dismiss the appeal.

[1] Section 5(1) of the Act. It was common ground that the present case did not concern a 'home building work contract' to which s 5(2) and related provisions of the Act could apply.

[2] Section 3 of the Act (definitions of 'building service' and 'regulated building service').

[3] Section 3 of the Building Act (definitions of 'building work' and 'incidental structure').

[4] Section 11(1)(d) of the Act.

[5] Section 36(1)(a) and s 38(1)(a) of the Act.

[6] Section 52 of the Act.

[7] Section 53(1)(b) of the Act.

[8] Section 54 of the Act.

[9] South Central WA Pty Ltd and Diploma Construction (WA) Pty Ltd [2015] WASAT 38 [18].

[11] Australian Rainfall and Runoff - A Guide to Flood Estimation published by the Institution of Engineers, Australia in 1987.

[14] Section 58(2) of the Act.

[15] Paragraph 21 of the respondent's submissions before the Tribunal.

[16] Section 105(1) and s 105(2) of the SAT Act.

[17] I adopt what I said on this question in Laing O'Rourke Australia Construction Pty Ltd v Samsung C & T Corporation [2015] WASC 237 [96] [104]. For an application of the principles of statutory construction to the Tribunal's powers under the Act see Psaros Builders Pty Ltd v Owners of Strata Plan 52843 [2014] WASC 34, especially at [33] [34].

[18] Paragraph 29 of the respondent's submissions before the Tribunal.

[21] Macquarie Dictionary (6th edition), definition 1 of 'construct'.

[26] Bradshaw v McGuire (unreported, WASC, Library No 6260, 30 April 1986).

[27] See the comments in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 [47].