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[2025] ACTSC 55
Supreme Court of the ACT
2025-02-26
Mossop J
Original judgment source is linked above.
Source: the ACT Courts (www.courts.act.gov.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: Jolley v Construction Occupations Registrar Citation: [2025] ACTSC 55 Hearing Dates: 14-16 October 2024 Decision Date: 26 February 2025 Before: Mossop J Decision: See [214] Catchwords: BUILDING, ENGINEERING AND RELATED CONTRACTS – BUILDING AND CONSTRUCTION – Rectification orders issued to licensees under Construction Occupations (Licensing) Act 2004 (ACT) – whether rectification order can be issued to nominee of corporate licensee – it can BUILDING, ENGINEERING AND RELATED CONTRACTS – BUILDING AND CONSTRUCTION – Rectification orders – limitation period – order must be issued within 10 years of act that caused contravention – Construction Occupations Registrar issues order within limitation period – application for review – limitation period expires while application for review on foot – whether ACAT precluded from confirming, varying or setting aside and making a new order – it is not Legislation Cited: ACT Civil and Administrative Tribunal Act 2008 (ACT), ss 68, 69, 79, 82, 83(2) Administrative Appeals Tribunal Act 1975 (Cth), s 43(6) Administrative Appeals Tribunal Act 1989 (ACT), s 44(11) Building (General) Regulation 2008 (ACT), ss 31, 32 Building Act 2004 (ACT), ss 42, 51 Building and Construction Legislation Amendment Act 2019 (ACT) Construction Occupations (Licensing) Act 2004 (ACT), ss 6, 7, 8, 16, 17, 27, 28, 29, 30, 31, 33A, 34, 35, 36, 37, 38, 40, 41, 84, 85, 123A, 123C Construction Occupations (Licensing) Regulation 2004 (ACT), ss 19, 42A, Sch 4 item 13 Legislation Act 2001 (ACT), s 139 Cases Cited: Frugtniet v Australian Securities and Investments Commission [2019] HCA 16; 266 CLR 250 House v The King (1936) 55 CLR 499 Jolley v Construction Occupations Registrar & Anor (Administrative Review) [2022] ACAT 47 Jolley v Construction Occupations Registrar & Anor (Administrative Review) [2023] ACAT 65 Jolley v Construction Occupations Registrar & The Owners – Units Plan 3941 (Administrative Review) [2021] ACAT 112 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 R v His Honour Judge Miller and Builder’s Registration Board, ex parte Graham Evans and Co (Qld) Pty Ltd [1987] 2 Qd R 446 Wallaby Grip v QBE Insurance (Australia) Ltd [2010] HCA 9; 240 CLR 444
Texts Cited: Explanatory Statement, Building and Construction Legislation Amendment Bill 2019 (ACT) Explanatory Statement, Construction Occupations (Licensing) Bill 2003 (ACT) The Allen Consulting Group, Occupational Licensing in the ACT Building and Construction Industry: A National Competition Policy Review of the Building Act 1982, the Electricity Act 1971, and the Plumbers, Drainers and Gasfitters Board Act 1982 (Final Report, August 2000)
Parties: Andrew Jolley (Appellant) Construction Occupations Registrar (First Respondent) Owners – Units Plan No 3941 (Second Respondent) Representation: Counsel S Robertson SC with A Greinke and O Bellhouse-Smith (Appellant) N Oram (First Respondent) P A Walker SC with J N Bird (Second Respondent) Solicitors Mills Oakley (Appellant) ACT Government Solicitor (First Respondent) Clayton Utz (Second Respondent) File Numbers: SCA 7 of 2024 SCA 8 of 2024 Decision Under Appeal: Tribunal: ACT Civil and Administrative Tribunal Before: Senior Member Orlov and Senior Member Professor Foley Date of Decision: 1 December 2023 Case Title: Jolley v Construction Occupations Registrar Court File Number: AT 21/2021 MOSSOP J: Introduction
These proceedings involve two separate appeals from an order of the ACT Civil and Administrative Tribunal (ACAT) made on 1 December 2023. The order required Mr Andrew Jolley to comply with a “rectification order” in relation to several building defects associated with a residential apartment building known as “Manhattan on the Park”. The order was made by the Construction Occupations Registrar (the Registrar) pursuant to s 38 of the Construction Occupations (Licensing) Act 2004 (ACT) (COLA).
After the ACAT made its decision, Mr Jolley filed an internal appeal pursuant to s 79 of the ACT Civil and Administrative Tribunal Act 2008 (ACT) (ACAT Act) and that appeal, and an appeal by the Owners Corporation for the building, were removed into this court under s 83(2) of the ACAT Act.
Background
Between 2012 and 2013, Manhattan on the Park was built. It is a residential apartment complex on Bunda Street near Glebe Park in the centre of Canberra. According to the Certificate of Occupation and Use dated 13 August 2013, work commenced on the premises on 10 May 2012, and the date of certification indicates that it was ready for occupation and use on 13 August 2013. Chase Building Group Pty Ltd (Chase) “managed” the building work necessary to construct the building, but did not perform any building work itself, instead arranging subcontractors to do so. Chase did, however, hold a Class A builder’s licence under s 28 of the COLA during the building of Manhattan on the Park, as did Mr Jolley personally.
Chase’s Class A building licence expired on 1 July 2016 and was not renewed. The company was deregistered on 18 October 2017 following a members’ voluntary winding up, was reinstated on 22 April 2021, and was deregistered a second time in the early months of 2024.
On 5 December 2018, solicitors for the Owners Corporation of the units plan wrote to the Registrar noting Chase’s deregistration and urged the Registrar to issue a rectification order in relation to the building to Mr Jolley and to certain others.
On 19 March 2020, the Registrar gave a notice of intention to make a rectification order under s 34(2) of the COLA to Mr Jolley.
On 18 March 2021, the Registrar issued a rectification order to Mr Jolley pursuant to s 38 of the COLA, requiring him to rectify several defects associated with the Manhattan on the Park building, those defects being: (a) Defect 1 – Balcony Slab Cracking Defects; (b) Defect 2 – Balcony Tiling Defects; (c) Defect 4 – Delamination of Balustrade Glass Panels; (d) Defect 5 – Loose Balustrade Cap Railings; (e) Defect 6 – Basement Cracking Defects; (f) Defect 7 – Water Ingress into Internal Spaces; and (g) Compliance and Fire Safety Concerns.
Mr Jolley applied to the Tribunal for review of the Registrar’s decision on 14 April 2021.
Three separate substantive oral hearings were held by the Tribunal in relation to Mr Jolley’s review application. The first was a hearing in response to an application made on 15 June 2021 for a preliminary determination of whether the rectification order issued to Mr Jolley was invalid. The basis for this alleged invalidity advanced by Mr Jolley was that the notice of intention to make a rectification order did not identify any failure of supervision on the part of Mr Jolley in relation to construction services alleged to have been provided otherwise than in accordance with the COLA or an operational Act, and that the notice of intention referred to the 2013 edition of the Building Code of Australia instead of the 2010 edition. The application was heard on 26 August 2021. On 19 November 2021, Senior Member Prof Foley of the Tribunal determined that the rectification order was not invalidated on either of those grounds: Jolley v Construction Occupations Registrar & The Owners – Units Plan 3941 (Administrative Review) [2021] ACAT 112.
Mr Jolley’s appeal (SCA 8 of 2024)
Mr Jolley has appealed from the Tribunal’s orders on 11 separate grounds. Although the grounds are lengthy, most of the factual conclusions reached by the Tribunal about the nature of the defects and the manner in which Mr Jolley acted as a nominee of the builder were not challenged.
The grounds of appeal can be separated into two categories. Grounds 1, 2 and 2A argue that the Tribunal’s order was made without power, and that this court accordingly has no power to make an order in replacement of the Tribunal’s order. Grounds 3 to 10 argue that even if the Tribunal’s order was made with power to do so, the Tribunal’s finding that it was satisfied of the matters of which it was required to be satisfied by s 35(1)(c) of the COLA was infected with error.
Mr Jolley’s appeal was initially brought before the Tribunal pursuant to s 79(3) of the ACAT Act. However, in lieu of constituting an “appeal tribunal”, the Tribunal exercised its jurisdiction to remove the appeal to this court pursuant to s 83(2) of the Act on 25 January 2024.
Of the 11 grounds of appeal, Ground 6 was not pressed. The remaining 10 grounds are as follows: Rectification orders unavailable against nominees in their capacity as such 1 The Tribunal erred in finding ([2022] ACAT 47 at [23]) that a rectification order under Part 4 of the Construction Occupations (Licensing) Act 2004 (ACT) (COLA) can validly be issued to a “nominee” in connection with a construction service provided by the nominee in his or her capacity as such. The Tribunal should have found that the power to make a rectification order under Part 4 of the COLA is only available to be exercised in connection with a “construction service” provided by a licensee or former licensee in his, her or its capacity as such (see COLA section 34(1)(a)).
No power to make substitute decision after 10-year limitation period 2 The Tribunal erred in finding ([2023] ACAT 65 at [72]) that s 68(3) of the ACT Civil and Administrative Tribunal Act 2008 (ACT) authorised the Tribunal to make a substitute decision for the decision under review that the original decision-maker was not, at the time of the making of the substitute decision by the Tribunal, empowered to make by reason of section 35(5) of the COLA (rectification orders generally to be made within 10 years of relevant act or certificate).
Mr Jolley did not provide the relevant construction service 2A The Tribunal erred in assuming or finding for the purposes of s 35(1)(b) of the COLA that Mr Jolley provided the construction service, or part of the construction service, to which the notice given to him under s 34 of the COLA (Notice of Intention) related. The Tribunal should have found that: (a) the construction service to which the notice related was building work associated with “Manhattan on the Park”; (b) Mr Jolley did not provide that service. In the alternative, the Tribunal should have found that: (c) the conduct of Mr Jolley alleged by the Notice of Intention did not constitute the “prov[ision]” of a construction service; (d) in the premises, Mr Jolley did not provide the construction service, or part of the construction service, to which the notice relates for the purposes of s 35(1)(b) of the COLA.
“Supervis[ion]” does not require actual observance of work 3 The Tribunal erred in finding ([2023] ACAT 65 at [161]) that “supervis[ion]” of construction services for the purposes of section 31(2) of the COLA cannot be performed without the nominee observing the execution or performance of work (as distinct from, for example, putting in place adequate structures and procedures for management and supervision of construction work).
COLA does not impose a self-executing obligation to rectify non-compliant work 4 The Tribunal erred in finding ([2023] ACAT 65 at [168]) that a nominee’s function under section 31(1)(b) of the COLA to ensure that relevant construction services comply with the Building Act extends to taking “appropriate steps” to correct work that was not carried out in accordance with that Act (as opposed to ensuring that relevant construction services comply with the Building Act when those services are being performed with any failure to do so being subject to the potential criminal and civil consequences contemplated by the COLA).
Specific errors in relation to Waterproofing Work (Defect 2) 5 The Tribunal erred in finding ([2023] ACAT 65 at [112]) that the Waterproofing Specification (Exhibit PJ5) did not apply to external balconies (see Exhibit PJ5 at 6, second dash point, second line). 6 [Not pressed] 7 The Tribunal erred in finding ([2023] ACAT 65 at [153], [155]) that the fact that building work relating to waterproofing of external balconies (Waterproofing Work) was not carried out in accordance with the Bostik Specification, the Dampfix Gold Technical Data Sheet and AS 4654.2 supported (without more) a conclusion that the Waterproofing Work had not been carried out in a “proper and skilful way” for the purposes of s 42(1)(c) of the Building Act 2004 (ACT) (Building Act) in circumstances where: (a) the Waterproofing Specification required the work relating to external balconies to be carried out in accordance with AS3740; (b) AS3740 was a relevant rule or guideline published by Standards Australia for the purposes of cl 31(b) of the Building (General) Regulation 2008 (ACT) and therefore, by reason s 42(2) of the Building Act, was a consideration to be taken into account by the Tribunal in deciding whether the Waterproofing Work was carried out in a proper and skilful way for the purposes of s 42(1)(c) of the Building Act; (c) the Tribunal did not take AS3740 into account in deciding whether the Waterproofing Work was carried out in a “proper and skilful way” and made no finding as to whether the Waterproofing Work was carried out in accordance with AS3740. Errors in relation to delamination of glass balustrade panels (Defect 4) 8 Having correctly found ([2023] ACAT 65 at [246]) that: (a) there was a latent defect in glazing materials used in construction; and (b) supervision of the installation of those glazing materials would not have alerted anyone to the fact that the glass was defective, the Tribunal erred in finding ([2023] ACAT 65 at [252]-[253]) that Mr Jolley contravened s 31(2) by failing to ensure that Chase corrected the defective glass after the defect in it became manifest. The Tribunal should have held that, on its findings ([2023] ACAT 65 at [246]), there was no failure of supervision as a causal factor in relation to any contravention of the Building Act and therefore no contravention by Mr Jolley of the COLA (see [2023] ACAT 65 at [245]). Errors in concluding that it was “appropriate” to make a rectification order 9 The Tribunal erred in finding ([2023] ACAT 65 at [322]) that the fact that the building work the subject of the Tribunal’s decision was not carried out by Mr Jolley himself was “irrelevant” to the question of whether it is appropriate that a rectification order be made requiring Mr Jolley to take specified action. 10 The Tribunal erred in finding ([2023] ACAT 65 at [331]) that it was appropriate to make a rectification order and ought to have concluded, in the circumstances, that it was not appropriate to make a rectification order.
Owners Corporation appeal (SCA 7 of 2024)
The Owners Corporation also appealed from the decision of ACAT. The grounds of appeal are: Ground 1: Costs The question of law involved is as follows: Does the Tribunal have a discretion to make a costs order under section 48(1) of the ACT Civil and Administrative Tribunal Act 2008 (ACT) (ACAT Act) otherwise than in accordance with the types of orders and circumstances specified in section 48(2)?” … [T]he Tribunal erred in determining that section 48(1) of the ACAT Act does not provide the Tribunal with a general discretion to award costs. The Tribunal’s reasoning for this determination is set out in the following paragraphs of written reasons provided in Proceeding AT21/2021 (Primary Proceeding): • paragraphs [345] to [350] of the Tribunal’s reasons for decision dated 26 October 2023 (Final Decision); and • paragraph [22] of the Tribunal’s reasons for orders dated 1 December 2023 (Final Orders). Ground 2: Scope of orders The question of fact involved is as follows: Should the Tribunal have included each of Units 702, 803, 908, 1506 and 1511 in paragraph 7 of the Rectification Order on the basis that there was evidence before the Tribunal that the balconies to those units were also defective and required rectification? … [T]he Tribunal erred in fact in failing to include units 702, 803, 908, 1506 and 1511 (Affected Units) in paragraph 7 of the rectification order contained in the Final Orders (Rectification Order) concerning the rectification of balcony waterproofing and tiling defects. (Footnote omitted.) Registrar’s notice of contention (SCA 8 of 2024)
The Registrar filed a notice of contention which identified that the order should be confirmed on the following grounds: The question as to whether s 35(5) of the Construction Occupations (Licensing) Act 2004 (ACT) was satisfied was required to be answered by the Tribunal as at the date that the decision under review was made. Grounds 1. The Tribunal held, at [73], that the Tribunal’s power to make an order under s 68(3) of the ACT Civil and Administrative Tribunal Act 2008 (ACT) (ACAT Act) was unaffected by the requirement that the Registrar may only make a rectification order within 10 years of the day on which a certificate of occupancy was issued under the Construction Occupations (Licensing) Act 2004 (ACT) (COLA), ss 35(5) and 35(6). 2. The Tribunal was correct in this regard. 3. In the alternative, if the Tribunal erred in this regard, on the proper construction of the COLA, when determining whether the proviso contained in s 35(5) applies to the power to make a rectification order under s 35(2) of the COLA, the Tribunal was required to consider the state of affairs as they existed as at the date the Registrar made a rectification order (being the decision under review), and not as at the date on which the Tribunal made an order under s 68(3) of the ACAT Act. Owners Corporation’s notice of contention (SCA 8 of 2024)
The Owners Corporation was given leave to file a notice of contention. The grounds for which leave was given were: The Second Respondent contends that the following question of fact or law was incorrectly decided by the Tribunal in the order appealed from: 1. Question of law Does a nominee provide a construction service contrary to s31 of the Construction Occupations (Licensing) Act 2004 (ACT) (COLA) for the purposes of s35(1)(c) of the COLA simply because the building work for which the nominee is responsible contravenes s42 of the Building Act 2004 (Building Act)? Grounds 1. The Tribunal erred: a) in finding at [39] that, “in most circumstances” proof that the construction service for which the nominee is responsible does not comply with s42 of the Building Act will be sufficient to establish that the nominee has provided a construction service contrary to s31(2)(b) of the COLA; b) in finding at [245]-[246] that, it is necessary to identify some particular failure of supervision as a causal factor when determining whether the nominee has failed to comply with its obligation in s31(2)(b) of the COLA to ensure the building work is compliant with s42 of the Building Act; and c) to the extent that it found, at [167], that a particular failure of supervision must be identified and shown to result in non-compliant building work in order for a contravention of s31(2)(b) of the COLA to be established. 2. The Tribunal should have found that: a) Mr Jolley contravened s31(1)(b) in conjunction with s31(2)(b) of the COLA once the Tribunal was satisfied that the building work for which he was responsible did not comply with s42 of the Building Act; b) it is not necessary for the Registrar or the Tribunal to identify any particular acts or omissions on the part of the nominee that caused, contributed, or resulted in the defective work (causative factors) when determining whether the nominee has contravened s31(2)(b) of the COLA; c) any causative factors are matters which are relevant (along with other factors) to whether the discretion to issue a rectification order to a nominee should be exercised; and d) the fact that Mr Jolley did not cause the defective work to be corrected when he had actual or constructive knowledge of the manifestation of the defective work are matters which make it appropriate to exercise the discretion to issue the order to him. 2. Alternate basis for confirming the order The Second Respondent contends that the order of the Tribunal should be confirmed on the following ground. The Tribunal should also have found that the discretion to issue a rectification order to Mr Jolley arose because he had provided a construction service contrary to s31(1)(a) in conjunction with s31(2)(a) of the COLA. Grounds 4. The Tribunal found at [161] that a) Mr Jolley did not personally supervise any of the work on a day to day basis or otherwise; and b) the “adequacy of the supervision Mr Jolley provided…does not arise because he provided none”. 5. The Tribunal was correct in its finding in 4a) but it erred in its finding in 4b) to the extent that it found that the inadequacy of Mr Jolley’s supervision was not relevant to whether a rectification order could be issued to him. 6. In the light of its finding in 4a) the Tribunal should have found that: a) Mr Jolley provided a construction service contrary to s31(2)(a) of the COLA; b) That constituted a separate and additional ground that enlivened the power to issue a rectification order to him under s35(1)(c)(i) of the COLA; and c) the inadequacy of Mr Jolley’s supervision was otherwise relevant to the exercise of the discretion because it meant that he did not cause defective work to be corrected when the effect of the defects manifested.
The nature of the appeals
Each appeal was removed from the ACAT into the Supreme Court in accordance with orders made by the ACAT on 25 January 2024 pursuant to s 83(2) of the ACAT Act. Pursuant to s 82, the Appeal Tribunal, and hence the court on a removed appeal, may deal with an appeal either as a new application or as a review. No party contended that the appeal should be dealt with as a new application. I consider it appropriate to deal with it as a review.
Appeals under s 79 extend to questions of fact and questions of law. For the most part, the notices of appeal are sufficient to identify matters falling into both of those categories. The written submissions filed on behalf of the Owners Corporation and Mr Jolley raised the adequacy of some of the grounds in the respective notices of appeal. In each case, the grounds were sufficient to disclose a question of fact or a question of law, or adequate to allow such a question to be derived.
It is not clear, however, in the absence of a House v The King (1936) 55 CLR 499 error, that the manner in which a discretion is exercised gives rise to a question of fact or a question of law on appeal. As consideration of ground 10 of Mr Jolley’s appeal and grounds 2(d) and 6(c) of the Owners Corporation’s notice of contention are to be the subject of further directions, that issue does not need to be addressed at this stage. Introduction to grounds 1, 2 and 2A
These grounds raise legal issues which are fundamental to the capacity of the Registrar to make a rectification order or the capacity of the ACAT to make a rectification order in substitution of the order of the Registrar when it did. They do not require an examination of the factual findings of the Tribunal in any detail. If Mr Jolley succeeds on any of these grounds, then the rectification order made by the ACAT must be set aside and it will not be necessary to determine the balance of the grounds of appeal.
Statutory provisions
Division 3.1 General 17 Licence applications (1) An individual, corporation or partnership may apply to the registrar to be licensed in a construction occupation or, for a construction occupation that is divided into classes, in an occupation class. Note 1 If a form is approved under s 128 for an application, the form must be used. Note 2 A fee may be determined under s 127 for this section. Note 3 An entity’s entitlement to apply for a licence may be affected by a disqualification (see s 98 (3)). (2) However, a corporation or partnership may apply under subsection (1) in relation to a construction occupation or occupation class only if the regulations allow a corporation or partnership to be licensed in the occupation or class. (3) The regulations may prescribe the requirements for applications. (4) If this Act or the regulations prescribe requirements for applications, the registrar need not consider an application that does not comply with the requirements. … Division 3.2 Nominees 27 Meaning of mandatory requirement for div 3.2 In this division: mandatory requirement of the nominee means a written requirement by the nominee that the corporation or partnership do something, or not do something, in compliance with, or to achieve compliance with, this Act or an operational Act. 28 Nominees of corporations and partnerships (1) A corporation or partnership is eligible to be licensed only if it complies with subsection (2) or (3). (2) The corporation or partnership complies with this subsection if— (a) it has a single nominee appointed by it; and (b) the nominee is responsible for the supervision of the construction services provided by it. (3) The corporation or partnership complies with this subsection if— (a) it has 2 or more nominees appointed by it; and (b) each nominee is responsible for the supervision of particular construction services provided by it; and (c) there is a written record of the construction services each nominee is responsible for supervising; and (d) between them, the nominees are responsible for the adequate supervision of all the construction services to be provided by the corporation or partnership. (4) A corporation or partnership may, in writing, appoint an eligible individual to be a nominee. (5) If the nominee is to be responsible for the adequate supervision of only some of the construction services to be provided by the corporation or partnership, the appointment must state the services for which the nominee is responsible. (6) For subsection (4), an individual is an eligible individual if the individual— (a) is eligible under the regulations to be appointed as a nominee; and (b) is licensed in the construction occupation and occupation class (if any) appropriate for each of the construction services for which the individual is to be responsible; and (c) agrees in writing to the appointment. (7) A nominee of a corporation or partnership automatically stops being a nominee if the nominee— (a) ceases to be eligible under the regulations to be appointed as a nominee; or (b) ceases to be licensed in a construction or occupation class (if any) appropriate for any of the construction services for which the nominee is responsible. 29 Resignation of nominee (1) A nominee of a corporation or partnership may resign his or her appointment only with the registrar’s approval. (2) The registrar may approve the resignation of the nominee only if satisfied that— (a) the corporation or partnership has refused to comply with a mandatory requirement of the nominee; or (b) the nominee cannot exercise his or her functions because of mental or physical incapacity; or (c) the nominee, or entity that appointed the nominee, has arranged for another nominee to take over the nominee’s functions; or (d) it is otherwise appropriate to approve the resignation. 30 Revocation of nominee’s appointment (1) A corporation or partnership may revoke a nominee’s appointment only with the registrar’s approval. (2) The registrar may approve the revocation of the nominee’s appointment only if satisfied that— (a) the nominee cannot exercise his or her functions because of mental or physical incapacity; or (b) the nominee, or entity that appointed the nominee, has arranged for another nominee to take over the nominee’s functions; or (c) it is otherwise appropriate to approve the resignation. 31 Role of nominees (1) A nominee of a licensed corporation or partnership has the following functions: (a) to supervise the construction services of the corporation or partnership for which the nominee is responsible (the relevant construction service); (b) to ensure that the relevant construction services comply with this Act and the operational Acts. (2) The nominee commits an offence if the nominee fails to— (a) adequately supervise the relevant construction services; or (b) ensure that the relevant construction services comply with this Act and the operational Acts. Maximum penalty: 50 penalty units. (3) Subsection (2) does not apply to a failure of a nominee of a corporation or partnership (the nominee’s firm) if— (a) the nominee had given the nominee’s firm a mandatory requirement in relation to the matter that made up the failure; and (b) the nominee had given the registrar a copy of the mandatory requirement; and (c) the failure would not have happened if the mandatory requirement had been complied with. (4) The licensed corporation or partnership commits an offence if the nominee fails to— (a) adequately supervise the relevant construction services; or (b) ensure that the relevant construction services comply with this Act and the operational Acts. Maximum penalty: 50 penalty units. (5) An offence against this section is a strict liability offence. … 84 Certain entities not to provide construction services (1) A person commits an offence if the person— (a) provides a service (whether as an employee or otherwise) in a construction occupation or occupation class; and (b) either— (i) is not licensed in the occupation or class; or (ii) if an endorsement on the licence is required for the person to be authorised to provide the service provided and the licence does not have that endorsement. Maximum penalty: 50 penalty units. (2) Each partner in a partnership commits an offence if the partnership— (a) provides a service in a construction occupation or occupation class; and (b) either— (i) is not licensed in the occupation or class; or (ii) if an endorsement on the licence is required for the partnership to be authorised to provide the service provided and the licence does not have that endorsement. Maximum penalty: 50 penalty units. (3) This section does not apply if— (a) an individual provides the service, whether directly or for an entity; and (b) the individual is working under the supervision of a licensee whose licence authorises the provision of the service; and (c) the licensee is not required by a condition or endorsement on the licence to provide the service as an employee or under supervision; and (d) a regulation allows the service to be provided by an individual without a licence if provided under the supervision of a licensee. (4) It is a defence to a prosecution for an offence against subsection (2) if the partner proves that— (a) the partner did not know about the contravention of the subsection involved in the offence; and (b) either— (i) the partner took reasonable precautions and exercised appropriate diligence to avoid the contravention; or (ii) the partner was not in a position to influence the partnership in relation to the conduct involved in the contravention. (5) An offence against this section is a strict liability offence. 85 Allowing unlicensed people to provide construction service (1) A person commits an offence if— (a) the person engages someone else (the worker), or allows an employee (also the worker), to provide a construction service for the person; and (b) the worker is not licensed to provide the service; and (c) the person is reckless about whether the worker is licensed to provide the service. Maximum penalty: 50 penalty units. (2) Each member of a partnership commits an offence if— (a) a partner engages someone else (the worker), or allows an employee of the partnership (also the worker), to provide a construction service for the partnership; and (b) the worker is not licensed to provide the service; and (c) the partner is reckless about whether the worker is licensed to provide the service. Maximum penalty: 50 penalty units. (3) This section does not apply to an entity that provides a service if— (a) the service is provided under the supervision of a licensee; and (b) the licensee is not required by a condition or endorsement on the licence to provide the service as an employee or under supervision; and (c) a regulation allows the service to be provided by an individual without a licence if provided under the supervision of a licensee. (4) It is a defence to a prosecution for an offence against subsection (2) if the partner proves that— (a) the partner did not know about the contravention of the subsection involved in the offence; and (b) either— (i) the partner took reasonable precautions and exercised appropriate diligence to avoid the contravention; or (ii) the partner was not in a position to influence the partnership in relation to the conduct involved in the contravention.
The ground
Mr Jolley’s submissions
The submissions on behalf of Mr Jolley were that the Act respected corporate form in some ways and not in others. It did not wholly discard the corporate form of a licensed builder and thereby create a dual form of liability covering both the corporate entity and the nominee. Rather, the obligations upon the nominee were enforced by way of the criminal sanction provided in s 31(2). To interpret the Act so as to allow rectification orders against nominees “would have the extraordinary result that a nominee of a licensee – who could be an employee who neither owns nor is an officer of a licensed company – could face financial ruin by being required, at his or her own cost, to rectify a building built by his or her employer and, in the event of non-compliance, be exposed to criminal sanctions and bankruptcy”.
A rectification order under s 38(1)(a) is something that is directed to “work done”. “Work” means physical work, and “supervising” work is not in and of itself “work”. This interpretation means that “work done as part of a construction service” in s 38(1)(a) must be read as referring to work done as part of a construction service provided by the recipient of the rectification order. It would be absurd to read the phrase “work done as part of a construction service” as extending to work done by someone else. It would empower the making of a rectification order directed to the builder of a building in Civic that required work on a building someone else constructed in Tuggeranong. Counsel for Mr Jolley submitted: We say in short that's an absurd construction because taken to the logical conclusion it would mean that if a licensee did work in Civic, for example, at the level of power, that licensee could be required to rectify other work that they had no connection with in say Tuggeranong and it was left simply to a matter of discretion.
That interpretation is also supported by the references to “provided” in s 34(1)(a) (“has provided a construction service”) and s 35(1)(b) (“provided the construction service”), and by s 35(5)(a) referring to an “act” (“act that caused the contravention”). Mr Jolley submitted that an omission to supervise could not be a service “provided” or an “act”.
All of the examples given under s 34 (as in force at the time of the construction, which did not include Example 4) are examples where the licensees have done “work”. The insertion of a new example (Example 4) in 2019 did not have the effect of expanding the class of persons against whom a rectification order could be made.
So far as extrinsic materials were concerned, the Explanatory Statement for the bill which became the COLA indicated an intention to implement the recommendations of the National Competition Policy Review of Occupational Licensing in the ACT Building and Construction Industry, and the relevant recommendation referred to unacceptable work being “rectified by the original tradesperson”, consistent with an interpretation that limits rectification orders to those who performed the construction work.
Decision
The text, structure and context of the Act indicate that the submissions made on behalf of Mr Jolley cannot be accepted.
The scheme of the Act places individual and corporate licensees on the same footing by ensuring that there is a natural person responsible for supervision of building work. In the case of a corporate licensee, that is done by the requirement that there be a nominee who is responsible for the supervision of the construction services provided by the company, or that there be multiple nominees, each responsible for documented categories of construction services provided by the company.
A nominee must be licensed in the construction occupation for each of the construction services (or occupation classes) for which the individual is to be responsible: s 28(6). The person must consent in writing to being a nominee: s 28(6)(c).
For a builder (and indeed each of the construction occupations that involves construction work as distinct from certification or assessment work), a “construction service” includes “supervision of work”. That arises from the fact that s 6(2) provides that a construction service is the “doing or supervision of work in a construction occupation” and that the definition of builder in s 8 relies upon the concept of a “building service” which is “the doing or supervising of building work”.
Because a “construction service” includes the supervising of work, a person who is a nominee can have provided a construction service otherwise than in accordance with the COLA or an operational Act, and a rectification order may be made against that person. The references in ss 34, 35 and 38, which empower and regulate the making of rectification orders, cover situations in which a licensee who has undertaken supervision has “contravened, this Act or an operational Act”: s 35(1)(c)(i). Because of the offence provision in s 31(2) of the COLA, a nominee would fail to comply with the COLA if the nominee failed to “adequately supervise the relevant construction services” or “ensure that the relevant construction services comply with … [the COLA] and the operational Acts”.
The textual features of the legislation pointed to by Mr Jolley are inadequate to indicate that the correct interpretation of its provisions is to exclude nominees from liability. The use of the word “provided” (in ss 34(1)(a), 35(1)(b)) and “act” (in s 35(5)(a)) are not inconsistent with the application of those provisions to nominees. The nominee “provides” a service when the nominee takes on and performs the role of supervising the relevant building work. As pointed out earlier, that arises directly from the definitions of “construction service” and “building service”. The reference to “the act that caused the contravention” in s 35(5) is not so clearly confined to positive physical acts involving construction so as to influence the scope of the Act in its application to nominees. In its context, the use of the word “act” is designed to fix time by reference to something done or not done that caused the contravention. It is not designed to refer only to positive physical acts and to exclude omissions. Such an interpretation is inconsistent with the role that it performs in s 35(5), defining the start of the period during which the 10-year limitation runs.
Ground 2A
Submissions of Mr Jolley
Mr Jolley submitted that the only “construction service” that was specifically referred to in the s 34 notice was a construction service provided by Chase. He therefore contended that the only “construction service” was the building work associated with Manhattan on the Park and that was a construction service which Mr Jolley did not provide. He submitted that the power of the Registrar to make a rectification order was conditioned upon notice having been given under s 34 (as a consequence of s 35(1)(a)) and that the hearing before the ACAT did not cure the failure to comply with this procedural requirement.
Further, he submitted that the ACAT in fact found (at [161]) that Mr Jolley provided no supervision and, hence, “supervision” could not be the construction service provided. In light of the finding of the ACAT, he submitted that a construction service could not be provided by omission, saying that to “provide” (within the meaning of the COLA) a construction service required a positive act.
Decision
The notice under s 34 made substantial reference to building work carried out by Chase. It also identified that under s 28(2), the nominee of a corporation is responsible for supervision of the construction services provided by the corporation, and that under s 31, the nominee of the corporation has the responsibility to supervise the construction services provided by the corporation and ensure the relevant construction services comply with the COLA and operational Acts. The notice identified a range of defects in the construction. The notice was addressed to Mr Jolley and it identified an intention to “issue a Rectification Order to the Nominees [sic] of Chase Building Group Pty Limited”. The notice was sufficient to indicate that it was given to Mr Jolley as a result of his role as nominee and arising out of his obligations under ss 28 and 31 of the Act. Necessarily, it asserted a failure to adequately supervise Chase’s building works in a manner consistent with s 31.
The proposition advanced by Mr Jolley that supervision of building work is not a construction service that is “provided” has been rejected earlier.
Insofar as Mr Jolley submitted that the ACAT had found that he provided no supervision and as a result provided no construction service to which the notice related, the argument seemed to be that: (a) the notice asserted that he provided a service; (b) he did not provide that service; (c) therefore, the notice was invalid; (d) therefore, no rectification order could be made.
For the reasons given in relation to ground 3 below, the ACAT did not conclude that Mr Jolley did not provide any construction service. Even if it had made such a finding, there is a distinction between what is asserted in the notice and what is ultimately required to be established. It is possible that the notice may have asserted that he provided a construction service but that either the Registrar or ACAT was not ultimately satisfied of that fact. That the fact was not ultimately established would not invalidate the earlier notice. It would simply make it inappropriate to make a rectification order. Therefore, even if the factual point was a good one, it would not invalidate the notice.
Finally, insofar as it was asserted that a construction service could not be provided by omission, that argument has been rejected earlier. In circumstances where there is a positive obligation to supervise and ensure compliance, the distinction between a positive act and an omission is not a useful one. In either case, the conduct of the nominee, whether it be characterised as an act or an omission, involves the nominee acting in a manner which fails to meet the statutory requirements.
Ground 2: Limitation period
Introduction
This ground of appeal asserted that it was not possible for the ACAT to make a substitute decision for the decision under review because s 35(5) of the COLA required that an order could only be made within 10 years of the act that caused the contravention, and that period had expired.
For the purposes of this ground of appeal, it is necessary to have regard to the terms of ss 68 and 69 of the ACAT Act as in force at the time of the ACAT’s decision. Those provisions were as follows: 68 Review of decisions (1) This section applies if the tribunal reviews a decision by an entity. (2) The tribunal may exercise any function given by an Act to the entity for making the decision. Note A reference to an Act includes a reference to the statutory instruments made or in force under the Act, including regulations (see Legislation Act, s 104). (3) The tribunal must, by order— (a) confirm the decision; or (b) vary the decision; or (c) set aside the decision and— (i) make a substitute decision; or (ii) remit the matter that is the subject of the decision for reconsideration by the decision-maker in accordance with any direction or recommendation of the tribunal. 69 Effect of orders for administrative review (1) This section applies if the tribunal makes an order under section 68 (3) in relation to a decision. (2) The order— (a) is taken to be the decision of the decision-maker; and (b) takes effect from the day the tribunal makes the order, unless the tribunal orders otherwise. Appellant’s submissions
The essential argument presented by Mr Jolley was that, although the original decision was made within the time required by s 35(5), by the time of the ACAT decision in December 2023, that period had expired. The appellant identified that any contravention occurred no later than August 2013, when Chase’s work was completed and certificates of occupancy and use had been issued. Given that the ACAT made its order in December 2023, just outside the 10-year period, the appellant argued that it was not open to the ACAT, standing in the shoes of the Registrar, to do what it did, namely substitute a different decision for that made by the Registrar.
The submission relied upon the fact that s 69(2) of the ACAT Act provided that the decision of the ACAT took effect on the date it was made unless the ACAT “orders otherwise”. The appellant noted that this was a different default position from that which applied under the Administrative Appeals Tribunal Act 1975 (Cth). Section 43(6) provided a default rule that the decision of the Administrative Appeals Tribunal took effect on the date of the original decision. Mr Jolley pointed out that there had been a change from the Bill for the ACAT Act as originally presented, in which the default position was that decisions of the ACAT took effect from the time of the original decision, to a default position that they took effect when they were made. Mr Jolley placed emphasis upon what was described as “current looking language or future looking language” in s 69, namely “takes effect”. He therefore contended that, having regard to the language of s 69(2), the power of the ACAT to “order otherwise” was limited to ordering that its decision took effect at a date later than when the Tribunal made an order and did not permit the ACAT to order that its decision took effect at a date earlier than when it made its decision. That interpretation necessarily precluded the possibility that the ACAT decision would take effect from when the original decision was made. He submitted that it would also be unusual to permit any retrospectivity, as would be the case if the ACAT decision could take effect earlier than the date upon which it was made.
Decision
The ACAT directly confronted the limitation issue. It recognised that it was standing in the shoes of the Registrar. However, it said at [72]-[73]: Although in this application the Tribunal is required to exercise the functions of the Registrar in deciding whether a rectification order should be made against Mr Jolley, the power the Tribunal is exercising in making its decision comes from section 68(3) of the ACAT Act, not section 35 of the COLA. …Although, the Tribunal decision post-dates the expiry of … [the 10-year] period, the Tribunal’s power to make an order under section 68(3) of the ACAT Act is unaffected.
The submissions made on behalf of Mr Jolley involve two central propositions: (a) first, the limitation period in s 35(5) applies to the ACAT when conducting a review in the same way as it applies to the Registrar when making the original decision; (b) second, any limitation period problem cannot be solved by making the ACAT decision take effect from the date upon which the Registrar’s original decision was made.
Neither of those propositions are correct.
The application of the limitation period
The power to engage in a review of the Registrar’s decision is given by s 123C of the COLA in combination with the definition of “reviewable decision” in s 123A and the Construction Occupations (Licensing) Regulation, s 42A and Sch 4 item 13. The nature of that review is not defined by the COLA but instead by the provisions of the ACAT Act. The ACAT Act itself does not explicitly describe the nature of the review. However, the nature of the review is impliedly disclosed by the terms of ss 68 and 69 which are set out above.
The function of conducting an administrative review which may lead to the confirmation, variation or substitution of the original decision where the decision of the Tribunal “is taken to be the decision of the decision-maker” (ACAT Act, s 69(2)(a)) allows the exercise to be characterised as one of administrative merits review. In Frugtniet v Australian Securities and Investments Commission [2019] HCA 16; 266 CLR 250 at [51], a majority of the High Court described the equivalent jurisdiction of the Commonwealth Administrative Appeals Tribunal in the following terms: [E]xcept where altered by some other statute, which has not occurred here, the jurisdiction conferred on the AAT by ss 25 and 43 of the AAT Act, where application is made to it under an enactment, is to stand in the shoes of the decision-maker whose decision is under review so as to determine for itself on the material before it the decision which can, and which it considers should, be made in the exercise of the power or powers conferred on the primary decision-maker for the purpose of making the decision under review. The AAT exercises the same power or powers as the primary decision-maker, subject to the same constraints. The primary decision, and the statutory question it answers, marks the boundaries of the AAT's review. The AAT must address the same question the primary decision-maker was required to address, and the question raised by statute for decision by the primary decision-maker determines the considerations that must or must not be taken into account by the AAT in reviewing that decision. A consideration which the primary decision-maker must take into account in the exercise of statutory power to make the decision under review must be taken into account by the AAT. Conversely, a consideration which the primary decision-maker must not take into account must not be taken into account by the AAT. (Footnotes deleted, emphasis added.)
The context in which those remarks were made involved a question as to whether the considerations that could be taken into account by the AAT included a matter which the statute precluded the original decision-maker from taking into account, but which another statutory provision indicated might be taken into account by a tribunal. The court determined, as a matter of construction of the relevant statutes, that the AAT’s considerations were confined in the same manner that the original decision-maker’s were.
Frugtniet illustrates that the question is one of statutory construction. In the present case, the question is whether the limitation period in s 35(5) of the COLA applies only to the original decision by the Registrar or whether, in circumstances where the Registrar has made a decision within the relevant period, it continues to apply to the decision of the ACAT under the ACAT Act.
The date of the decision
Even assuming, contrary to the above, that the COLA and the ACAT Act should be interpreted so that the limitation period also binds the ACAT in relation to its decision on review even when the Registrar had made a decision within time, s 69 permits the backdating of the ACAT decision to the date of the Registrar’s decision so as to avoid any limitation problem.
It is clear that the legislature has departed from the default rule that existed in the predecessor legislation in the Territory, namely s 44(11) of the Administrative Appeals Tribunal Act 1989 (ACT). It also departed from the default rule that was originally articulated in the Bill for the ACAT Act. The reasons for that change are not clear. In particular, it is not clear whether the earlier default rule was seen as creating some difficulty in relation to some aspect of the jurisdiction given to the ACAT by other legislation.
However, the significant point is that the default rule is just that, a rule which applies unless the Tribunal otherwise orders. The use of the language “takes effect” is insufficient to justify an interpretation which substantially restricts the generally worded powers of the ACAT to make an order that takes effect at a time appropriate having regard to the nature and consequences of the decision under review. To restrict the section in the manner contended for by the appellant would be to substantially constrain the powers of the ACAT. That is unlikely to have been the legislature’s purpose given that it was establishing a vehicle for administrative review which could be given jurisdiction under a wide variety of Territory statutes. Although the parties did not point to particular Acts apart from the COLA that supported the argument that an inability to backdate orders of the Tribunal so that they corresponded with the date of the original decision would be perceived to be anomalous, it is unlikely to have been the purpose of the legislature to constrain the generally expressed language “unless the tribunal orders otherwise”.
For these reasons, the appellant’s submission that s 69(2)(b) only permits the ACAT to make orders that take effect later than the day upon which the Tribunal makes the order cannot be accepted.
Further, even if the interpretation adopted above (at [81]) is not correct and the limitation period applies again to the decision of the ACAT, the existence of that limitation period would not be interpreted as qualifying the power in s 69(2)(b) to backdate the decision of the ACAT to the date of the Registrar’s decision. That would allow the ACAT to make a decision on the merits as to the appropriate scope of the rectification order and fulfil its review functions in a manner that was not impeded by the limitation period. In the present case, it would have the effect that, even if the ACAT had proceeded wrongly on the basis that the limitation period could not apply, it would be open to the Supreme Court, fulfilling the role of the appeal tribunal, to backdate the rectification order so that it took effect from the date of the Registrar’s decision if that was appropriate. That would have the effect of avoiding the operation of the limitation period contained within the COLA. The exercise of the discretionary power to make an order in this way would reflect the desirability of preserving the scope of merits review and avoiding outcomes which depend upon the arbitrary application of a limitation period rather than the substantive merits of the matter.
Introduction to grounds 3-9
Introduction
This ground alleges that the Tribunal erred by finding that supervision of construction services cannot be performed without the nominee observing the execution or performance of the work, as distinct from putting in place adequate structures and procedures for the management and supervision of construction work.
The error is said to arise from what the Tribunal said at [161]: It is clear from Mr Jolley’s evidence that he did not supervise any of the work personally, whether on a day-to-day basis or otherwise. The adequacy of the supervision Mr Jolley provided – which he submitted is the key issue the Tribunal must decide – does not arise because he provided none. Submissions
Mr Jolley submitted that in the passage at [161], the ACAT approached the issue on the basis that “the statutory duty of nominees adequately to supervise may only be performed by ‘personally’ viewing or inspecting the work performed by his or her firm on a daily basis”. He then submitted that this was an “impermissible gloss on the statutory language”. He submitted that a dictionary definition of “supervise” required the person to “have the oversight and direction of” the activity, but that this did not require that the person necessarily “personally view and direct the carrying out of the thing on a daily basis”. Instead, what is necessary for supervision to be adequate will depend on the particular circumstances, and a strong team of subordinates might require limited oversight from the supervisor. He referred to s 19(d) of the Construction Occupations (Licensing) Regulation which refers to the person being “able to exercise the functions of a nominee on a daily basis”. He pointed out that the terms of the Regulation may not be used to determine the content of the Act: Wallaby Grip v QBE Insurance (Australia) Ltd [2010] HCA 9; 240 CLR 444 at [21]. However, even if it was considered, the Regulation has nothing to say about what a nominee’s functions actually are. As a result, Mr Jolley submitted that the ACAT was wrong to proceed on the basis that he had a duty to personally view or inspect the work, and as a result, the ACAT erred in its conclusion that Mr Jolley had contravened s 31 by providing no supervision.
This error in relation to the requirement for supervision affected the decision insofar as it related to Defect 2 (Balcony Tiling and Waterproofing) and Defect 6 (Basement Cracking). It did not affect the finding relating to Defect 4 (Delamination of Glass Balustrade Panels) because that finding was not a failure of supervision but failure to “ensure”.
The Owners Corporation submitted that the Tribunal’s decision did not turn upon its observations that Mr Jolley did not personally supervise any of the work. It submitted that the observation applied to the “supervise” limb of s 31. It submitted that the Tribunal’s decision should have been based upon the “supervise” limb but was not (and this is the point made in the Owners Corporation notice of contention - see [161] below). Instead, it submitted that the ACAT dealt with the issue on the basis that Mr Jolley contravened the second limb, which is the obligation to “ensure”. It submitted that the Tribunal found that the supervisory system that Mr Jolley had put in place was ineffective to ensure that waterproofing and tiling was carried out in a proper and skilful way and that this had resulted in non-compliant building work, hence invoking the second limb of s 31 but not the first.
Decision
The difference between the parties turns on how the reasons of the ACAT should be understood. The relevant parts of the ACAT’s reasons are within the extract reproduced at [87] above. For the purposes of the ground of appeal, the critical passage is [161], but that paragraph needs to be understood in the context in which it appears. Paragraph 161 fell within consideration of Defect 2, which related to balcony tiling and waterproofing. That was considered between [109] and [168]. Paragraphs 148-159 of the decision involve consideration of whether, in relation to balcony tiling and waterproofing, Chase had provided a construction service in contravention of s 42 of the Building Act. The Tribunal concluded at [155] that the waterproofing and tiling issues were “systemic issues caused by a failure to carry out the waterproofing and tiling of external balconies in a proper and skilful way”. At [156], the Tribunal found that the defective workmanship “was of a kind that must have been observable during the performance of the work if anyone appropriately qualified to supervise the work … had checked the work being done”. It made findings that the Inspection and Test Plans (ITPs) were inadequate and that the Chase supervisors had failed to implement or enforce strict compliance with the ITPs, failed to carry out spot checks while the waterproofing and tiling was being done, lacked the skill and knowledge reasonably necessary to ensure waterproofing and tiling was carried out in a proper and skilful way, and left responsibility for the day-to-day supervision to the tiling contractor, Saba.
There is then the portion of the reasons in which [161] appears, namely [160]-[168], which involves consideration of whether Mr Jolley provided a construction service in contravention of s 31(2).
The chain of reasoning disclosed in these paragraphs appears to be: (a) Mr Jolley provided no personal supervision and, hence, whether that personal supervision was adequate does not arise. (b) The structures and procedures put in place for the management and supervision of the project did not fulfil the statutory function that he “adequately supervise” (s 31(2)(a)) or “ensure” compliance with the COLA and the Building Act (s 31(2)(b)). Nor did the structures and procedures meet the requirement under s 19(d) of the Construction Occupations (Licensing) Regulation that he be “able to exercise the functions of a nominee on a daily basis”. (c) The management systems described in [163] did not amount to “supervision” in the relevant sense, namely, overseeing the execution or performance of a task or activity to ensure that it is done correctly. (d) Employing competent supervisors is essential, but the mere holding of a relevant builder’s licence is not enough to demonstrate that they have the relevant skills and knowledge to supervise the work. A competent supervisor must be competent to exercise the kind of judgment required by ss 31-32 of the Building (General) Regulation 2008 (ACT). (e) The COLA makes the nominee personally responsible for any failure of supervision that results in non-compliant building work. (f) Mr Jolley provided the construction service of supervision of the waterproofing and tiling in contravention of s 31(2). Further, there was a separate contravention of s 31(2) when he failed to ensure that Chase took appropriate steps to correct the non-compliant building work.
Grounds 4 and 8
Introduction
These grounds of appeal challenge the findings of the Tribunal that the obligation of Mr Jolley, as nominee, extended to taking appropriate steps to correct work that had not been carried out in accordance with the Act (ground 4) and that this extended to an obligation to correct the defective glass balustrades after the defect became manifest (ground 8). Ground 4 arises from [168], which is set out at [87] above. Ground 8 is said to arise from paragraphs [245]-[253] which, in context, provide: 245. As we have said earlier, a nominee must supervise the construction services for which the nominee is responsible to ensure that the services comply with the COLA and operational Acts. A ‘failure to ensure’ that the construction services comply necessarily must involve some failure of supervision as a causal factor. Whether a nominee personally supervises every aspect of the building work or delegates all supervision to others, as Mr Jolley did, the nominee is personally responsible for any failure of supervision that causes or contributes to work being carried out otherwise than in accordance with the COLA and the Building Act. 246. In this case, the contraventions of the Building Act were the result of a latent defect in the glazing materials used in the construction. We accept that supervision of the work during installation at site would not have alerted anyone to the fact that the glass was defective. Whether it might have made a difference earlier, if appropriate quality assurance processes had been implemented in relation to the selection, manufacture and procurement of the glass, is not possible to say. The evidence did not touch on this issue. In those circumstances we are not satisfied that a contravention of section 32(2) of the COLA at the time of construction has been established. 247. However, as the Court of Appeal said in Koundouris: Accordingly, the mere fact that the building has been “completed” for statutory purposes and was subject to a certificate of occupancy does not necessarily mean that the builder has complied with all legal requirements for actual completion of the building. 248. In Victory Homes Pty Ltd v Construction Occupations Registrar (Victory Homes) the tribunal said: It is apparent that a licensee’s statutory obligations with respect to compliance with section 42 and the building code do not come to an end simply because the licensee has finished carrying out the non-compliant work. The work remains non-compliant and therefore not actually ‘complete’. Where building work has been carried out otherwise than in accordance with the requirements of section 42, a licensee is under a continuing obligation to carry out the building work in accordance with the requirements of the section to achieve compliance with relevant provisions of the building code appliable to the work, at least until the day on which a certificate of occupancy is issued. Failure to do so may render the licensee liable to prosecution under section 49 or 51. After a certificate of occupancy is issued the licensee may be compelled to do so by a rectification order issued under section 38 of COLA. 249. The same may be said about the statutory functions of a nominee to ensure that the construction services for which the nominee is responsible comply with the Building Act. In our view, where non-compliant work done by the builder comes to the attention of the builder after completion, the builder has a statutory responsibility to make the work compliant, which is independent of any civil liability the builder may have for damages. Correspondingly, the nominee has a continuing statutory responsibility to ensure that the builder makes the work compliant, if necessary by issuing a mandatory requirement to the builder and the Registrar. 250. In this case, delamination manifested within several years after the Manhattan Apartments were completed. Peak Consulting, who had been assisting the owners corporation since May 2014 to conduct inspections, update defects lists and monitor the progress of rectification works carried out by Chase, reported on 1 April 2016 that glass balustrade delamination had significantly advanced since the previous inspection on 21 January 2015 and had been observed in balconies where calcite leaching was present and also where it was not. There is no direct evidence to show whether the Peak Consulting report was given to Chase at the time, although that seems probable given the role Peak Consulting was performing on behalf of the owners corporation. In any event, Chase was involved in inspecting and investigating the balcony tiling and waterproofing issues as part of an ongoing defect rectification programme, which required balcony edges to be inspected next to the glass balustrades and the balustrade spigots to be examined to determine whether the appropriate membrane upturn had been provided. 251. We are satisfied that delamination – sufficient to give rise to legitimate concerns that the structural integrity of the balustrade system may be compromised – had manifested and was readily observable by the first quarter of 2016. We are satisfied that Chase knew, or ought to have known, by then that delamination had occurred. 252. Once the defect manifested, Chase had a statutory responsibility to make the work compliant with the BCA and the Building Act and Mr Jolley had a statutory responsibility to ensure that Chase did so. Clearly, he failed in that regard. If it is true that Mr Jolley mistakenly believed Chase’s building licence expired in June 2015 and that he was no longer the nominee – about which we entertain some doubt given Mr Jolley elected not to return to the witness box to explain his earlier evidence after the error was revealed – is no answer to his failure to perform his statutory functions in relation to the correction of non-compliant building work done by Chase. 253. We find that once the defects in the glass panels had manifested, Mr Jolley failed to ensure that Chase took appropriate (or any) steps to correct the non-compliant building work, which is a contravention of section 31(2) of the COLA. (Footnotes omitted.) Submissions
Decision
Section 42 of the Building Act provided, as at the date the COU was issued (8 August 2013): 42 Requirements for carrying out building work (1) Building work must not be carried out except in accordance with the following requirements: (a) the materials used in the building work must comply with the standards under the building code for the materials in buildings of the kind being built or altered; (b) the way the materials are used in the building work must comply with their acceptable use under the building code for buildings of the kind being built or altered; (c) the building work must be carried out in a proper and skilful way; Note The considerations to be taken into account to decide when work is carried out in a proper and skilful way may be prescribed under the regulations (see s (2)). (d) building work must be carried out— (i) in accordance with approved plans; or (ii) if the building work involves handling asbestos or disturbing friable asbestos—in accordance with approved plans that comply with this Act in relation to the asbestos; (e) for building work required to be done only by a licensed builder— (i) the building work must be carried out by or under the supervision of the builder mentioned in the building commencement notice; and (ii) the builder’s licence must authorise the doing of the building work; (f) the building licensee in charge of the building work must take— (i) all the safety precautions stated in or with the application for the building approval; and (ii) any other safety precaution that a certifier or building inspector may require the building licensee to take under section 46. (2) The regulations may prescribe considerations to be taken into account to decide whether building work is carried out in a proper and skilful way.
As contemplated by the note to s 42(1)(c), the provisions of s 42 in relation to what constitutes the carrying out of work in a “proper and skilful way” were supplemented by ss 31-32 of the Building (General) Regulation: 31 Considerations for proper and skilful work—material and work standards—Act, s 42 (2) In deciding whether building work has been carried out in a proper and skilful way, the following considerations must be taken into account: (a) whether the work uses a product or system in accordance with any accessible instructions, directions, guidelines or suggestions of the maker or seller of the product or system; Examples—instructions that are not accessible 1 instructions not in English 2 an information leaflet printed 10 years ago that is now unavailable Note An example is part of the regulation, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132). (b) whether the work is in accordance with any relevant rules or guidelines published by Standards Australia; (c) whether, as part of the work, a product or system is being, or has been, used in a way that a reasonable person would expect is contrary to the intended use of the product or system; (d) whether, as part of the work, a product or system is being, or has been, used in a way that the maker has given written notice will void the maker’s warranty; Example—use Installing roof sheeting so it is level at any point is not carrying out building work in a proper way if the manufacturer’s published literature indicates that the sheeting’s warranty is voided if the sheeting is installed at a fall of less than 1 off level. (e) whether a reasonable person doing the work would know or suspect on reasonable grounds that the use of a product or system in a particular way would cause more instability, or affect the durability or soundness of the product or system or of the building work than if the product or system were used appropriately; (f) how reasonable it is in all the circumstances for the user of a product or system to rely on the maker’s statement that the product or system complies with a stated standard; (g) whether the building work contravenes the Act or another territory law. 32 Considerations for proper and skilful work—construction tolerances— Act, s 42 (2) (1) In deciding whether building work has been carried out in a proper and skilful way, consideration must be taken of whether the work has been carried out— (a) to meet or exceed the standards stated in the approved plans; or (b) if the approved plans do not vary reasonable minimum industry standards—to meet or exceed reasonable minimum industry standards. (2) In this section: reasonable minimum industry standards—a matter covered by the tolerances guide meets reasonable minimum industry standards if the matter is not a defect under the guide…
Ground 5
Introduction
This is the first of three grounds which assert specific errors in the Tribunal’s reasons relating to the waterproofing work. Ground 5 asserts that the Tribunal erred in finding that the waterproofing specification in Exhibit PJ5 did not apply to external balconies. At [111]-[112], the ACAT said: 111. The contract incorporated Revision B of a ceramic tiling and associated waterproofing specification prepared by the architects (Waterproofing Specification) which provided for: (a) waterproofing membrane to be installed to all residential unit balconies; (b) installation of tiling to comply with all applicable requirements of AS 3958 and the BCA; (c) flood testing of 10% of balconies under direction from the Construction Manager to verify waterproofing adequacy; (d) the subcontractor to provide written and photographic evidence that the installations are in accordance with the waterproofing manufacturer's recommended construction methods and as detailed; (e) control joints to be installed through the tile and bedding in accordance with clause 5.4.5 of AS 3958.1 with a sealant width of 6 – 25 mm; (f) ASA Dampfix Gold or approved equal to be used as the waterproofing membrane. 112. The Waterproofing Specification included a section dealing with the requirements for waterproofing wet areas. This did not apply to external balconies. Bostik, the manufacturer of Dampfix Gold, prepared a project specific specification for waterproofing external balconies for Saba, dated 27 July 2012 (Bostik Specification), which specified that: (a) the specification “MUST” (original emphasis) be read in conjunction with relevant Australian Standards – namely AS 3958.1 and AS 4564.2 – and the referenced Technical Data Sheets for all referenced products, including relevantly the Technical Data sheet for Dampfix Gold; (b) surface preparation required removal of all materials, including screed or coatings, back to the primary concrete substrate; (c) Dampfix Gold is to be applied over the asaphonic (acoustic) mat in accordance with the attached Technical Data Sheet; (d) a 6mm wide gap is to be left between the screed and any penetrations and perimeter areas with the gap to be filled with Bostik Seal’N’Flex FC applied in accordance with the attached Technical Data Sheet; (e) a further layer of Dampfix Gold is to be applied over the screed once it is fully dried over a period of approximately 7 days and a layer of Bostik Moisture Seal has been applied in accordance with the attached Technical Data Sheet; (f) tiling is to be carried out in accordance with AS 3958.1; (g) each stage of the Jobsite Specification has to be logged, inspected and fully documented by the contractor. (Footnote omitted.)
The critical sentences for the purposes of this ground of appeal are the first two sentences of [112].
Submissions
Mr Jolley submitted that the finding that the Waterproofing Specification did not apply to external balconies was inconsistent with the Waterproofing Specification itself. That relevantly provided: - Waterproofing membrane to wall tiling to AS3740 and entire floor tiled area over bedding at the following locations: All residential wet areas; All residential unit balconies;
The Owners Corporation placed emphasis on the opening words of [112], which explained that the Waterproofing Specification as defined by [111] included a section dealing with the requirements for waterproofing wet areas, but this did not apply to external wet areas.
The Owners Corporation also submitted that nothing turns on that finding in any event because the critical findings of the Tribunal were that the Bostik Specification and Technical Data Sheets required the work to comply with AS 4654 (at [112](a)) and the work did not (at [153]). There were other contraventions of the Building Act found by the Tribunal at [153]-[155], most importantly that the balconies leaked and the tiling was obviously inadequate. These defects were unaffected by whether the waterproofing specification applied AS 3740 to external areas.
Decision
The Specification had three parts to it which were headed as follows: (a) “Ceramic tiling (& Associated Waterproofing)”, which had a single subheading “General” and outlined general requirements relating to both tiling and waterproofing; (b) “0631 Ceramic Tiling”; and (c) “0621 Waterproofing - Wet Areas”. Each of the latter two sections contain subheadings “General”, “Products”, “Execution”, “Selections”, and “Referenced documents”.
Thus, the first sentence of [112], which stated that the Specification “included a section dealing with the requirements for waterproofing wet areas”, would appear to be referring to that part of the Specification headed “0621 Waterproofing - Wet Areas” (Section 0621). The second sentence of [112] is most obviously read as indicating that the identified section did not apply to external balconies.
If that is how the statement is read, then there is an inconsistency between what is said at [111] and [112] of the ACAT’s reasons. That is because, amongst the requirements of the specifications set out in [111] is the identification at (f) that “ASA Dampfix Gold or approved equal” was to be used as the waterproofing membrane. The reference to that product occurs within Section 0621 under the heading “Selections” but not elsewhere. There is an inconsistency with, on the one hand, saying that a product specified in Section 0621 is required by the specification and, on the other hand, to say that the section from which it is derived does not apply.
Further, the terms of Section 0621 do not preclude their application to balconies. The Owners Corporation relied upon the definition of “wet area” within the “General” subsection of Section 0621 (under the heading “Interpretations”) which was “[a]n area within a building supplied with a floor waste”. It relied upon the reference to being “within a building” impliedly asserting that a balcony was not within a building. The material in the appeal books did not indicate whether or not balconies had a “floor waste”. If they did, then it would be open to read the reference to “within a building” as meaning “part of a building” rather than “inside a building”.
There are some parts of Section 0621 which indicate that it may have been intended to apply to balconies. In relation to the application of the waterproofing membrane under the heading “Extent”, the document relevantly provides: General: Over entire ceramic floor tiled internal & external areas less airlocks - refer Scope above.
The reference to “Scope” is a reference to the “General” section of the Specification which includes the text relied upon by Mr Jolley, which refers to its application to “All residential unit balconies”.
Also under the heading “Execution” in Section 0621 is a section headed “3.3 FLOOD TEST”, which refers back to and adopts what appears in the “Ceramic Tiling (& Associated Waterproofing)” (subheading “General”) section of the Specifications under “Scope of Work”. In that section, it refers to flood testing 10 percent of “Balconies”. The fact that section “3.3 FLOOD TEST” was contemplated as applying to balconies is reinforced by the reference in the section to determining the success of the flood test by making a visual inspection of areas that include “the floor soffit below”, consistent with an examination of the underside of a balcony.
Ground 7
Introduction
Submissions
Mr Jolley submitted that the ACAT had found that the waterproofing to external balconies was not carried out in a “proper and skilful way” because it was not carried out in accordance with the Bostik Specification, the Dampfix Gold Technical Data Sheet and AS 4654.2. This was said to be in error because, although it was necessary to have regard to such guidelines or suggestions, it did not follow, without more, from non-compliance with such a guideline or suggestion that there had been a failure to carry out work in a proper and skilful way.
He submitted that the reasoning was that AS 4654.2 required vertical downward terminations at free edge balconies, but that the balcony membrane edges were terminated horizontally: [143], [145(b)]. Mr Jolley submitted that the ACAT did not consider whether the work complied with AS 3740, which was also a relevant guideline. Further, regard had to be had to the approved plans, which included a T-section of the balcony edges that did not permit a turn up or turn down that could have complied with AS 4654.2.
The Owners Corporation submitted that no question of fact or law had been formulated for the purposes of this ground. It submitted that the Tribunal had correctly found that the manufacturer specified compliance with AS 4654. It submitted that the fact that the architect’s waterproofing specification specified AS 3740 did not make it “relevant” when determining whether the Building Act had been complied with under section 31(b) of the Building (General) Regulation. It was not relevant because it applied to the waterproofing of wet areas within residential buildings, not to external balconies.
The Owners Corporation also submitted that any error would be immaterial because the balconies leaked and, hence, it was open to the Tribunal to find that the building work contravened the Building Act for the reasons that it gave.
Decision
An initial difficulty for this ground of appeal are the following findings of the Tribunal which are not challenged in any ground of appeal: 120. … AS 3740 – 2010 applies to waterproofing internal wet areas of the units, not external balconies. AS 4654.2 applies to external balconies … 121. Nobody at Chase who looked at the certificate – if anyone did – realised that AS 3470 – 2010 is a standard that provides for waterproofing wet areas within residential buildings and not external balconies. It appears nobody at Chase noticed that the waterproofing certificate Saba provided did not certify that the waterproofing of external balconies had been carried out in accordance with the applicable Australian Standard – AS 4654.2.
The premise behind each element of this ground of appeal is that AS 3740 was an applicable standard because the Waterproofing Specification required that work relating to external balconies be carried out in accordance with it.
The principal reference to AS 3740 is in the section of the Waterproofing Specification that defines the scope of work. That scope requires “wall tiling to AS3740”. It does not say that all floor tiling should comply with that standard. Section 0621 makes further references to AS 3740 (at 23, 24, 25, 26) but not in a way that indicates that work on the balconies was required to comply with it. Therefore, the premise of the ground of appeal is not made out.
The text of AS 3740 was not included in the appeal papers. However, its limited scope can be discerned from the evidence in the report of Mr Stephenson, which was included. In Mr Stephenson’s report (the Second Diagnostech Report’), clause 1.1 of AS 3740 is set out as follows: 1.1 SCOPE This Standard sets out requirements for materials and minimum design and installation criteria for the waterproofing of wet areas within residential buildings (my emphasis).
The words emphasised by Mr Stephenson are not apt to apply AS 3740 to outdoor areas such as balconies. Mr Stephenson in the Second Diagnostech Report expressed the opinion that it is “specifically for internal wet areas such as bathrooms and laundries”.
He said that, insofar as the Building Code of Australia references AS 3740, it refers to wet areas such as bathrooms, laundries, toilet amenities and floors or walls with urinals installed, and that “[t]he referenced BCA clause has nothing to do with external balconies”. He also said that “AS 3740:2004 and AS 3740:2010 make no mention nor describe or claim any applicability to the waterproofing of balconies”.
He also pointed out that there was an applicable code. He said that, notwithstanding that AS 4654.1 and AS 4654.2 was not “referenced” in the Building Code until 2013, “they were well known in the waterproofing industry as they were the first update since 1970 for the AS CA 55-1970 external waterproofing code”.
Ground 9
Introduction
This ground asserts that the statement by the Tribunal at [322] — that the fact that Mr Jolley had not carried out the building work was “irrelevant” in determining whether it was appropriate to make a rectification order addressed to him — was erroneous.
Towards the end of the decision, the Tribunal was setting out and addressing the submissions made by Mr Jolley in support of his contention that it was not appropriate to make a rectification order in the circumstances. Four reasons were provided by Mr Jolley. The first of those was recorded by the Tribunal (at [318]) as being that “Mr Jolley did not carry out the defective building work”. As to that submission, the Tribunal said (at [322]): As to the first reason, we are satisfied that in each case, Mr Jolley’s contravention was a contributing cause of the defects in question, whilst recognising that in a practical sense primary responsibility for the failure to carry out work in compliance with the requirement of section 42 of the Building Act and to ensure that the completed building met the relevant performance requirements of BCA – 2011 lay with Chase. Nevertheless, the statutory scheme provides for Mr Jolley to be personally responsible for the defects caused by the non-compliant work done by Chase. The fact that he did not do the work himself is irrelevant. He was responsible to supervise the work to ensure that it did comply. Submissions
Mr Jolley submitted that it could not be said that the fact that he did not carry out the building work himself was irrelevant. He referred to the statement of Derrington J in R v His Honour Judge Miller and Builder’s Registration Board, ex parte Graham Evans and Co (Qld) Pty Ltd [1987] 2 Qd R 446 that, in a case where the builder had adhered to a contract which required defective work, “the Board, in exercising that discretion [to make a rectification order] properly, must in a proper case recognise the builder’s innocent position and afford him protection by the exercise of its discretion in his favour”.
The Registrar made submissions which recognised that there was a wide discretion as to whether or not to make a rectification order.
The Owners Corporation submitted that reliance upon Miller was not appropriate as that was a case in which the builder had, contrary to the advice of his architect, varied the contract to require the builder to use an inferior product which then failed. It was a case that was not analogous to the present because Mr Jolley was not relevantly “innocent”, having failed to ensure that the building complied with the Building Act and failed to cause the defects to be rectified when they became obvious. It therefore submitted that the Tribunal was correct in concluding that Mr Jolley’s submission that he had not done the work was irrelevant.
Decision
The Owners Corporation is correct to point out that the decision in Miller is so factually different as to render it of little utility.
The point being made by the ACAT in the quoted passage was that the statutory scheme provides for Mr Jolley to be personally responsible, through the mechanism of a rectification order, for the defects caused by non-compliant work. The Tribunal expressly recognised that primary responsibility for carrying out the work and ensuring that it met appropriate standards lay with Chase. It did not ignore the fact that Chase was primarily responsible but recognised the statutory regime which allowed Mr Jolley, as nominee, to be personally responsible. The statement that the fact that he did not do the work himself is “irrelevant” cannot be correct if understood in an administrative law sense. The factual circumstance that Mr Jolley was not the builder and, hence, did not have primary responsibility for constructing the building in a way that met relevant standards could not be said to be an irrelevant consideration for the purposes of the exercise of the discretion as to whether to issue a rectification order. However, having regard to what was said earlier about the primary responsibility of the builder and the statutory obligations of the nominee, the point being made was that the fact that he did not do the work himself was not, in light of his statutory obligations and the circumstances of the case, a reason to refuse to make a rectification order. That is made clear by the final sentence of the paragraph.
The fact that Mr Jolley was not the builder did not have the salience in the present case that it would have had if the builder was still in existence and able to carry out the rectification work. The submissions made on behalf of Mr Jolley did not identify any particular significance of the primary responsibility of the builder in the circumstances of this case for the exercise of the discretion to issue a rectification order.
It is axiomatic that the Tribunal’s reasons must be read fairly and not in a hostile manner with an eye keenly attuned to the perception of error: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272. Fairly read in the context of the paragraph as a whole, no error of law is demonstrated as alleged by ground 9. The ground is not made out. Registrar’s notice of contention
This notice of contention addresses the situation that would arise if the court found that the power of the ACAT to make a rectification order was subject to the 10-year limitation period in circumstances where the Registrar had made a decision within that period. In that situation, the Registrar contended that, when determining whether the 10-year limitation period applied, the ACAT was required to consider the circumstances that existed at the date of the Registrar’s decision rather than the date on which the Tribunal made its order.
Having regard to the conclusion on ground 2 above (at [81]) the Tribunal’s power to make a rectification order was not subject to the 10-year limitation period, it is not necessary to determine the Registrar’s contention. Owners Corporation notice of contention grounds 1 and 2 Introduction
Submissions
The Owners Corporation submitted that the Tribunal was wrong insofar as it held that there must be some causal connection between a particular act or omission in the supervision and the contravention of the Building Act. The Tribunal had found at [39] that, “in most circumstances”, the fact that there was a contravention of the Building Act would be sufficient to establish that the nominee had provided a construction service contrary to the COLA. It submitted that a nominee contravened the second limb of s 31 of the COLA once it is established that there had been a contravention of the Building Act because the nominee had not “ensured” that the work was compliant with the Building Act. This meant that, in every case in which the building work did not comply with s 42 of the Building Act, there was a contravention of s 31 of the COLA. This is sufficient to enliven the discretion to make a rectification order.
The ACAT should therefore have found that Mr Jolley provided a construction service contrary to the COLA because he had failed to ensure that the glass balustrades complied with the Building Act when they were installed and that the balcony waterproofing and tiling was performed in accordance with the Building Act when carried out. Contrary to the approach taken by the Tribunal (at [246]), it was not necessary to identify any particular act or omission in supervision that caused or contributed to the contravention of the Building Act.
Mr Jolley’s submissions focussed on his primary contention that the regime was not intended to create a scheme of dual liability by permitting rectification orders to be made against nominees as a result of a failure to ensure compliance with the COLA or operational Acts. In fact, Mr Jolley’s submission was that the potential for s 31(2)(b) to give rise to what he described as “absolute liability” was a factor in favour of his interpretation which excluded nominees from the scope of rectification orders altogether.
Decision
Given the function of a nominee in s 31(1)(b) and the offence created by s 31(2)(b), it is clear that the obligation on the nominee is to “ensure” that the relevant construction services comply with the COLA and the operational Acts, most relevantly the Building Act.
Ensure is a strong word. Having regard to the context in which it appears, it should be given its ordinary meaning, being to make sure or certain that a result will be achieved. This means that, if the construction services provided by the builder do not comply with the COLA or an operational Act, the nominee will have not complied with the nominee’s obligation under s 31 of the COLA and thereby will have provided the construction service of “supervision of work” in a manner that contravened the COLA for the purposes of s 31(1)(c)(i) of that Act.
The only possible exception to this statement of the operation of s 31 arises from the terms of s 31(3), which provides that s 31(2) does not apply where the nominee has given the builder a mandatory requirement (as defined in s 27) and the failure to ensure compliance would not have happened if the mandatory requirement had been complied with. This is not an issue arising in the present case because there is no suggestion that such a mandatory requirement was given by Mr Jolley.
For these reasons: (a) Once the Tribunal found that the building work did not comply with s 42 of the Building Act (at the point where the builder ceased work, as discussed in relation to ground 4), that was sufficient to establish that Mr Jolley contravened s 31(2)(b). (b) It was not necessary for the Registrar or the Tribunal to identify particular acts or omissions on the part of Mr Jolley that had caused, contributed or resulted in the defective work. (c) Any causative factors would be relevant to the exercise of discretion, as would be the fact that the defects remained unremedied as at the date of the Registrar’s or Tribunal’s decision.
As a consequence, the first question of law raised in the Owners Corporation’s notice of contention should be answered in a manner favourable to the Owners Corporation. Grounds 1 and 2 are established and the consequence for ground 2(d) is deferred pending further directions. Owners Corporation notice of contention grounds 4-6 – failure to supervise Introduction
These grounds contend that, because Mr Jolley did not personally supervise any of the work on a day-to-day basis or otherwise, the ACAT should have found that he provided a construction service contrary to s 31(2)(a) and that this provided an additional ground which enlivened the power to make a rectification order.
Ground 6(c), like 2(d) is a ground directed to the ultimate exercise of discretion and it will be subject of further directions in light of the conclusions reached in the balance of these reasons.
Submissions
The Owners Corporation submitted that the Tribunal was correct to find that Mr Jolley did not supervise the work personally, on a day-to-day basis or otherwise. He delegated the supervision to others. His evidence was that he knew nothing about the systemic defects and the balcony failures were not brought to his attention. He exercised no functions as nominee from June 2015 because he believed Chase’s licence had expired by then. The Owners Corporation submitted that the finding (at [161]) that the adequacy of Mr Jolley’s supervision “[did] not arise because he provided none” was in error. It submitted that the Tribunal should have found that he contravened s 31(2)(a) of the COLA as a separate and additional basis for enlivening the discretion. His failure of supervision meant that he did not detect the defective work when it was performed and also meant that he did not ensure that the defective work was corrected when the defects manifested themselves.
Mr Jolley relied upon the concession in the notice of contention that the Tribunal was in error in concluding that Mr Jolley had provided no supervision and reserved his submissions as to ground 6(c), which goes to the significance of the inadequacy of supervision for the ultimate exercise of discretion.
Decision
In relation to Ground 3 above, I have not accepted Mr Jolley’s submission that the Tribunal proceeded on the basis that only personal supervision was relevant and there was therefore no need to assess what he did: see [100] above.
Although the Tribunal referred to the absence of personal supervision of the construction works, it went on to consider the overall system of supervision that he put in place: see [97] above.
Ground 5 in the Owners Corporation’s notice of contention is qualified because it only is engaged “to the extent that [the Tribunal] found that the inadequacy of Mr Jolley’s supervision was not relevant to whether a rectification order could be issued to him”. I do not find that the Tribunal considered that the inadequacy of Mr Jolley’s supervision was not relevant to its exercise of discretion. As a consequence, the premise underlying the grounds in the notice of contention is not established and the question of law identified in the notice of contention does not arise. Owners Corporation Appeal ground 1 – costs
This ground of appeal relates to a decision of the ACAT in relation to costs. It raises the question of whether there is a general discretion to award costs under s 48(1) of the ACAT Act. As any decision in relation to costs is dependent upon the outcome of the proceedings, the issue relating to costs will be deferred pending determination of the balance of the issues in the proceedings. Owners Corporation Appeal ground 2 - scope of orders
Introduction
Submissions
The Owners Corporation submissions addressed the different circumstances of the various units.
So far as unit 908 was concerned, this had been included in the draft rectification order that was provided to the parties by the ACAT. However, the Tribunal accepted the submission made by Mr Jolley that unit 908 should not be included, namely because it had not been accessed by the experts and no defect had been identified in that unit by expert or oral evidence.
The Owners Corporation submitted that unit 908 was inspected and that there was expert evidence concluding that it required rectification. That arose from paragraphs 96-97 of the Second Diagnostech Report. It submitted that the report indicated that unit 808 had been inspected and that the soffit above the balcony (that is, the balcony of unit 908) had cracks and a high moisture reading. As a consequence, Mr Stephenson said that the balcony above unit 808 had to be remediated. That balcony is the balcony for unit 908.
In relation to unit 1511, the position was the same insofar as Mr Jolley had successfully submitted to the ACAT that no defect was identified by any expert or oral evidence. The Owners Corporation contended that the balcony to this unit was inspected from unit 1411 below and it was by that means that the defects were recorded.
In relation to units 702, 803 and 1506, these were not included in the rectification order. The Owners Corporation accepted that these units were not identified in a non-exhaustive list of balconies affected by waterproofing problems listed at paragraph 6.2.5 in the report of Mr Darren Sweetnam (the First Diagnostech Report). However, the “Defects Schedule”, from which the units identified in Mr Sweetnam’s report had been drawn, identified that each of the units had efflorescence staining, which meant that the balcony required rectification or re-waterproofing. The Tribunal had found that efflorescence staining is evidence of defective work requiring rectification: at [153]-[155] and in its supplementary reasons of 1 December 2023 at [11]-[12].
Mr Jolley submitted that the ground of appeal does not raise a question of fact or a question of law.
He then submitted, in relation to units 908 and 1511, that none of the experts below said that those balconies required rectification for failed waterproofing. He submitted that, in circumstances where a claim based on slab cracking within the balconies had been abandoned (ACAT decision at [83]), the Diagnostech reports did not identify units 908 or 1511 as being relevantly defective. Those two units were not included in the list of units affected by defective tiling or waterproofing in the Diagnostech reports.
He submitted that there was no error in relation to units 702, 803 or 1506 because the Owners Corporation had not submitted that ACAT should include such units in the rectification order.
Decision
Although these grounds were not formulated as discrete questions of fact (or questions of law), they raised issues of fact which would be capable of being formulated as questions of fact and hence within the scope of s 79(3) of the ACAT Act.
In relation to units 908 and 1511, the ACAT said in its 1 December 2023 reasons at [10] that it had accepted Mr Jolley’s submissions that they should not be included. The units were impliedly referred to in the Second Diagnostech Report. The First Diagnostech Report did not involve inspection of units 908 and 1511 or the units below those units, 808 and 1411. When inspecting the building for the purposes of the Second Diagnostech Report, Mr Stephenson inspected units 808, 1411 and 1511: Second Diagnostech Report at 8-9. In the Second Diagnostech Report, Mr Stephenson addressed what was described as Defect 1 (Balcony Slab Cracking Defects). These were defects which had been identified by Mr Joannides, an expert who prepared a report relied upon by Mr Jolley. The defects were apparent because cracking (and efflorescence) could be observed on the underside of balconies. Mr Joannides had described this cracking as “unusual”: Second Diagnostech Report at [80]. Neither Mr Stephenson nor Mr Joannides provided an opinion as to the cause of the cracking in the post-tensioned concrete which formed the balconies. However, Mr Stephenson considered that cracking was significant because it could cause corrosion to the post-tensioning cables, causing the slab to lose significant strength: [102].
Mr Stephenson recorded that, in the 97 units he inspected, he looked for soffit cracks. He identified seven additional units going beyond those previously identified in the First Diagnostech Report which had cracked balcony soffits: Second Diagnostech Report at [71]. He said (at [73]): From my review of the documentation, my observations, and my measurements of moisture content of the concrete balcony slabs, I have concluded that the stalactites that are extruding from the cracking are a symptom of the failure of the finishes and waterproofing on top of the balcony slabs, in that neither the tiles or the applied waterproofing are preventing water from penetrating into the concrete, and the widespread high to extreme moisture content of the concrete slabs indicates the reinforcement of the slabs are at high risk of corrosion.
In recording why the cracking of the soffits of the balcony slabs was non-compliant with the Building Act, he said that the obligation to carry out work in a proper and skilful way was breached “in that the construction of the balconies has not been carried out in a proper and skilful way to ensure the slab did not crack and allow the water and efflorescence to extrude”: Second Diagnostech Report at [76]. In explaining his opinion that the cracking of the balcony slabs represented non-compliance with a performance requirement in the Building Code of Australia, he said (at [82]-[83]): The high moisture content that I measured in the balcony slabs, as I explain below under this defect, and the demonstrable water and calcium leakage through the balcony slabs show that the external balcony waterproofing membrane to the balconies has failed and on all levels. The external balcony waterproofing failure, as shown by the high moisture readings I took during my 2023 Inspection, shows that the failure is not necessarily due to the visible cracking, but the cracks have provided a visible demonstration of the extent of failure of the external waterproofing membrane to the balconies. The water penetration will cause deterioration of the reinforcement, including the post tensioning cables in the slab, which will in turn cause damage to the concrete disproportionate to the local failure of the waterproofing.
Conclusion and order
In summary, the position is as follows in relation to Mr Jolley’s appeal, the Owners Corporation appeal and the two notices of contention. The outcome is summarised by reference to the identified grounds of appeal or contention rather than by reference to answers to questions of fact or law.
Mr Jolley’s appeal: (a) Ground 1 – not established. (b) Ground 2A – not established. (c) Ground 2 – not established. (d) Ground 3 – not established. (e) Ground 4 and 8 – established but subject to Owners Corporation notice of contention. (f) Ground 5 – not established. (g) Ground 6 – not pressed. (h) Ground 7 – not established. (i) Ground 9 – not established. (j) Ground 10 – not yet determined.
Registrar’s notice of contention: Having regard to the outcome in relation to Mr Jolley’s ground 2, it is not necessary to determine that contention.
Owners Corporation notice of contention: (a) Grounds 1 and 2: established except ground 2(d) is deferred. (b) Grounds 4, 5 and 6: having regard to the findings in relation to Mr Jolley’s ground 3, these grounds do not arise.
Owners Corporation appeal: (a) Ground 1: as this related to costs, it has been deferred. (b) Ground 2: established.
In light of these decisions, it will be necessary to make directions as to the further conduct of the proceedings.
The order of the Court is: (1) The proceedings are listed for directions at 9:30am on 5 March 2025 and the parties are to provide agreed or competing directions to the chambers of Mossop J by 3 March 2025 and, in the event that directions are not agreed, each party has liberty to provide written submissions of not more than three pages along with its proposed directions.
I certify that the preceding two hundred and fourteen [214] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop. Associate: Date: 26 February 2025
Jolley
Construction Occupations Registrar [2025] ACTSC 55
(1936) 55 CLR 499
(1996) 185 CLR 259
The second Tribunal hearing arose from a further application by Mr Jolley dated 29 March 2022 seeking to determine whether the Registrar had power to issue a rectification order to a nominee of a corporate licensee, acting in that capacity, in respect of construction work carried out or supervised by the licensee prior to the commencement of the Building and Construction Legislation Amendment Act 2019 (ACT). Those amendments, inter alia, gave the Registrar power to make a rectification order concerning directors of corporate licensees, including where, before or after a rectification order is made, the licensee becomes the subject of a winding up order, or has a controller or administrator appointed, or is deregistered. This was heard on 11 May 2022. On 8 June 2022, Presidential Member McCarthy determined that a rectification order can be issued to a nominee of a corporate licensee, including under the COLA as in force prior to the 2019 legislative amendments: Jolley v Construction Occupations Registrar & Anor (Administrative Review) [2022] ACAT 47.
The third Tribunal hearing consisted of a merits review of the Registrar’s decision and whether it should be confirmed, varied, or set aside. The Tribunal agreed with Presidential Member McCarthy’s earlier decision and adopted it as the basis for its decision: Jolley v Construction Occupations Registrar & Anor (Administrative Review) [2023] ACAT 65 (at [17]). It identified (at [78]) the issues that it needed to determine: (a) whether the construction service provided by Chase – doing or supervising building work – contravened section 42 of the Building Act 2004 (ACT); (b) if so, whether the construction service provided by Mr Jolley – supervision of the construction service provided by Chase – contravened section 31(2) of the COLA; (c) if so, whether it is appropriate to make a rectification order in relation to Mr Jolley considering: (i) any injury, loss or damage caused, or that could have been caused, by Mr Jolley’s contravention; (ii) how the proposed rectification order may affect people affected [sic] by the contravention(s): and (iii) anything else that is relevant.
The ACAT gave its decision and reasons on 26 October 2023. The reasons comprise 350 paragraphs and are detailed and clearly structured. The order made was that the decision of the Registrar be varied by requiring Mr Jolley to arrange and pay for an appropriately licensed entity to rectify Defect 2 (Waterproofing and Tiling of Balconies), Defect 4 (Delamination of Glass Balustrade Panels) and Defect 6 (Basement Slab Cracking). Defect 1 had not been pursued by the Owners Corporation as a defect separate to Defect 2. The ACAT decided that rectification of Defect 5 (Loose Balustrade Cap Railings) and Defect 7 (Water Ingress Into Internal Spaces) should not be required as part of the rectification order. It then ordered that the parties were to confer and attempt to agree on the terms of a rectification order in accordance with its reasons.
Further submissions were made concerning the form of the order. The actual rectification order was made on 1 December 2023 and some further reasons were given in relation to the form of the order and the issue of costs. Both Mr Jolley and the Owners Corporation of the units plan applicable to the building appeal from that order.
In these reasons, references to the reasons given by the ACAT are to the reasons given on 26 October 2023 unless otherwise stated.
Because the grounds of appeal in Mr Jolley’s appeal are lengthy and detailed, and because there is also an appeal by the Owners Corporation and two notices of contention, it is useful first to describe the substance of those documents.
In relation to paragraphs 2(d) and 6(c), Mr Jolley contended that it was not appropriate to determine these grounds which related to the ultimate appropriateness of the making of a rectification order without further submissions from him. The court indicated that any determination of those issues would be the subject of further directions.
Although acknowledging the fact that the COLA has a clear public purpose, no legislation pursues its purposes at all costs. The Act reflects legislative choices which involve recognising corporate form in some instances but not casting it aside in relation to rectification orders.
The submissions made on behalf of Mr Jolley that the language of the Act would lead to “extraordinary” or “absurd” results cannot be accepted. The “extraordinary” submission was directed to the proposition that a nominee, who could be a mere employee, may be subject to criminal sanctions and bankruptcy. The “absurd” submission was directed to the proposition that if a rectification order was not confined to the entity that physically undertook the relevant work, it would be possible under the Act to make a rectification order addressed to a person who was a licensee but who had nothing to do with the relevant building project.
The aspect of the legislation which both of these submissions ignore is the fact that the making of a rectification order is discretionary. The exercise of discretion is regulated by the terms of ss 34-38 and by the scope and purpose of the Act as a whole. It is therefore not persuasive to point to a possible extreme and unreasonable application of the provisions as a reason for giving the language of the Act a more confined operation than its text and structure would naturally bear.
So far as the potential exposure of a nominee to criminal sanctions and bankruptcy (the “extraordinary” submission) is concerned, that is something which is within the scope of the Act. It is the situation faced by an individual builder against whom a rectification order is made. The scheme of the Act, which makes it obligatory for a corporate builder to have a nominee, means that, like an individual builder, there is a natural person who is responsible for the building work and who may be subject to the range of measures available under the Act to ensure that the Act and operational Acts are complied with. The Act confronts the reality that the exposure of individuals to statutory remedies is more likely to advance the goals of the legislation than merely giving that exposure to corporate entities whose liability is limited and who may more easily cease to exist. The Act itself (as distinct from the Construction Occupations (Licensing) Regulation 2004 (ACT), s 19) does not specify what the relationship between the nominee and the corporate licensee must be. It therefore does not require that the nominee be a person whose financial interests are closely aligned with those of the corporate licensee, such as a director or senior employee. However, being a nominee is a role to which the prospective nominee must consent: s 28(6)(c). In those circumstances, it cannot be assumed that imposition of liability as a result of a failure to comply with a rectification order, which in turn arises from a failure to comply with statutory obligations, is necessarily “extraordinary”. It certainly cannot be said to be “extraordinary” in circumstances where the decision to make a rectification order is a discretionary decision made for clear statutory purposes and where the person potentially the subject of a rectification order has had the opportunity to make any submissions that the person wishes to, including submissions as to their relationship with the corporate licensee, about why a rectification order should not be made.
The position is even clearer in relation to the submission that allowing rectification orders to be made against entities other than those which performed the actual construction would be “absurd”. First, the possibility that, under s 38(1)(a), a rectification order might be made requiring rectification of work with which the entity had no connection is precluded by the terms of the Act. Section 35(1)(b) requires that the entity the subject of the order provided the construction service (or part of the construction service) to which the s 34 notice related. A notice cannot be given to, and hence, an order cannot be made against, an entity that had nothing to do with the alleged non-compliance with the Act or an operational Act. Second, the power in s 38 requires the exercise of discretion that has regard to the circumstances of the case and the scope and purpose of the Act. “Absurd” possible applications of the Act would be constrained by the need to exercise the statutory discretion in a manner consistent with the scope and purpose of the legislation. As a result, “absurd” applications of the Act that have been formulated without regard to the existence of that discretion or the scope and purpose of the Act are not persuasive reasons to read it in a manner inconsistent with its language.
Insofar as Mr Jolley relied upon the terms of the recommendation in the National Competition Policy Review of Occupational Licensing in the ACT Building and Construction Industry, that review and the relevant recommendation are at such a level of generality that they are of no significance for the interpretation of the Act, notwithstanding that the legislative intention as set out in the Explanatory Statement was to give effect to the regulatory changes recommended in that report. No mention of nominees under the Building Act is made anywhere in the National Competition Policy Review Report. The relevant recommendation was not addressing the proposed new legislative framework at a level of detail which involved consideration of the differentiation between a licensee who was a nominee and a licensee that was “the original tradesperson”. The fact that the report made reference to “the original tradesperson” is of no weight when interpreting the COLA.
For these reasons, rectification orders are available against nominees in their capacity as such. Ground 1 of Mr Jolley’s notice of appeal is not made out.
Insofar as such an interpretation may have the effect that, through the lodgement of an ACAT appeal, the potential for the power to make a rectification order could expire by the effluxion of time, he submitted that it would be wrong to construe the general provisions of the ACAT Act by reference to the consequences of the application of those provisions under a specific Act, which is only one of many that gives jurisdiction to the ACAT.
In developing the argument on this ground of appeal, the appellant was compelled to confront each of the different dispositions available under s 68(3), confirming the decision, varying the decision, or setting aside the decision and either making a substitute decision or remitting the matter to the decision-maker. The appellant appeared to accept that, if the Tribunal simply confirmed the Registrar’s decision (s 68(3)(a)) or varied it (s 68(3)(b)), then the expiry of the 10-year period would not necessarily be fatal. Counsel submitted that whether or not the Registrar’s decision was being “varied” or “set aside” would be determined as a matter of substance rather than of form.
Mr Jolley submitted that the approach adopted by the ACAT, which asserted that the 10-year period did not apply because the source of power being exercised was under the ACAT Act, was wrong because the power is to “stand in the shoes” of the original decision-maker and hence is subject to the same limitations that apply to the original decision-maker. The 10-year limitation period applies whether or not republication 26 or republication 56 applies. If republication 56 applies, then the Legislative Assembly has addressed the issue of the expiry of the limitation period by accommodating circumstances where the Registrar only discovered the issue close to the expiry of the 10-year period. He submitted that it was significant that the legislature had addressed the issue but done so in a way which did not assist the Registrar in the circumstances of this case.
The appellant acknowledged that his submission led to a result that could be seen as unsatisfactory because it would mean that, where an ACAT review was not completed before the end of the 10-year period, ACAT would have no power to make a substitute rectification order where it concluded that the correct and preferable decision had not been made by the Registrar. However, he submitted that this is simply a product of the statutory regime, which confined the power to make rectification orders, and hence was a matter for the legislature to fix.
There is nothing in any extrinsic materials that would suggest that the legislature had contemplated that the 10-year limitation period would constrain the ACAT in circumstances where the Registrar had made a decision within time. To the extent that there is any indication in the extrinsic materials, they appear to be consistent with a legislative assumption that administrative review would be available and a decision may be amended or substituted notwithstanding the expiry of the limitation period prior to the ACAT decision. That arises from the (admittedly limited) terms of the Explanatory Statement for the Building and Construction Legislation Amendment Bill 2019 (ACT) (at 20) where, having referred to the limitation regime, the Explanatory Statement says: “The decision to make the order remains reviewable.”
Assuming for the purposes of the discussion (and contrary to the conclusion I reach below) that the appellant is correct and backdating of orders under s 69 is not available, the application of the 10-year limitation period to decisions of the ACAT where the Registrar’s decision was made within time would give rise to circumstances which would appear to be anomalous. An example is provided by the circumstances of the present case where, notwithstanding that the application for review was made well in advance of the expiry of the limitation period, as a result of interlocutory applications made by one of the parties described earlier in these reasons, the limitation period has expired during the course of the proceedings prior to the ACAT making its decision.
The fact that the limitation period ran out prior to the making of the ACAT’s review decision would then have consequences for the scope of the review available. Those consequences might be that the entitlement to review is denied, or it might mean that the power to make a rectification order is denied or qualified. Either way, it would be a significant qualification upon the usual regime under the ACAT Act for merits review.
The submissions made on behalf of Mr Jolley sought to confine consideration of this issue to circumstances in which the decision under review is “set aside” (s 68(3)(c)) as distinct from confirmed (s 68(3)(a)) or varied (s 68(3)(b)). As a starting point for his submissions, that was a problematic one in circumstances where the order made on 26 October 2023 was: “The decision of the respondent to issue a rectification order in relation to the applicant is varied by …”. However, even if the starting point was correct, the question of statutory interpretation must be undertaken in the context of those other alternatives. As pointed out earlier, the appellant appeared to accept that, if the decision of the ACAT was to “confirm” the Registrar’s decision, then that could be done notwithstanding the expiry of the 10-year period. However, upon the appellant’s interpretation of s 69, it is not clear how that could be the case. Given that the appellant’s contention was that the default rule in s 69(2) would not permit an order to take effect as at the date of the Registrar’s decision, the confirmation of the decision under s 68(3)(a) would be, under s 69(2)(a), “taken to be the decision of the decision-maker” and, hence, would amount to the making of a rectification order after the expiry of the 10-year period.
It is also clear that variation of the Registrar’s decision can create difficulties either for an applicant for review or the Registrar. On the one hand, a variation may be quite minor, for example, a variation in the date for compliance having regard to the time taken in the administrative review process. On the other hand, a variation may be substantial and similar in effect to the setting aside of a decision and the making of a substitute decision. If the 10-year limitation period applied, then it is hard to see how any variation could be made even if such a variation was appropriate. It is not clear whether the application of the 10-year limitation period would disable the Tribunal from making any change, hence leaving in place the earlier decision, or if some change could be made, where the boundary between an acceptable change and an unacceptable change could be drawn.
Finally, in relation to setting aside the decision and making a substitute decision, on Mr Jolley’s interpretation of s 69, any such decision would be a decision which took effect after the limitation period and, hence, could not be made. That would either have the effect of denying the applicant his entitlement to merits review (if it meant that no order could be made) or alternatively denying any effect to the Registrar’s order notwithstanding that it had been made within time (if an order could be made setting aside the Registrar’s decision but no substitute decision made).
The effect of each of Mr Jolley’s submissions would be significant and adverse, in uncertain ways, to the regime for merits review. This needs to be considered when determining whether his submissions as to the interpretation of the relationship between s 35(5) of the COLA and the ACAT Act should be accepted.
It is also significant, when deciding whether the limitation period in s 35(5) continues to apply even after the Registrar has made a decision within time, to note that other statutory preconditions (such as the giving of notice under s 34 of the Act) are spent when they are complied with by the Registrar and not required to be repeated as part of the ACAT merits review regime. That arises not only from an interpretation of the relationship between s 34, s 35 and s 38, but also from the fact that such a notice would be redundant having regard to the procedural fairness of the procedures adopted by the ACAT. Although the limitation period is not a statutory precondition directly comparable to the notice requirement in s 34, the existence of statutory preconditions which apply to the decision of the Registrar but are not then applicable again when the ACAT is “standing in the shoes” of the Registrar illustrates the possibility that once complied with, a statutory precondition such as the limitation period may not apply again as part of the administrative merits review.
The terms of the ACAT Act defining what is involved in administrative merits review by the ACAT are not so clear as to compel an interpretation that applies the 10-year limitation period to decisions made upon an application for review. The very general language of the ACAT Act leaves open an interpretation that preserves the scope of administrative review, where the Registrar has acted within the limitation period, in a way that allows the ACAT to make one of the orders contemplated by s 68(3) without being again constrained by that limitation period. Such an interpretation avoids the significant but uncertain qualifications upon the entitlement to merits review or the power to issue rectification orders outlined above that would exist if the limitation period was applied again. It also appears to be consistent with the assumption upon which the legislature seems to have acted. It is therefore an interpretation that gives effect to the purpose of the legislation, both the COLA and the ACAT Act, more effectively than the interpretation contended for by the appellant. For that reason, it must be adopted under s 139 of the Legislation Act 2001 (ACT). To be specific, where the Registrar has made a rectification order within the time permitted by s 35(5) of the COLA, the power of the ACAT to make one or other of the orders set out in s 68(3) of the ACAT Act is not then qualified by s 35(5).
The statement in [161], if read in isolation, can be understood as saying that, in order to “supervise” for the purposes of the Act, that supervision must be “personal”. That is not a word used in the COLA. Nor is it a word which has a fixed meaning. If the paragraph was read in that way, it would be clear that the Tribunal had erred because the term supervision (even when expanded by the definition to include “direct”) is not so prescriptive that it defines a particular standard of personal oversight of the construction activities.
However, it is not correct to read [161] in isolation. Having addressed the question of personal supervision, the Tribunal moved on to consider (at [162]-[167]) whether the systems as summarised in [163] met the requirements of: (a) being “adequate”: s 31(2)(a); and (b) “ensuring” that the building work complied with the COLA and the Building Act: s 31(2)(b).
In doing so, it made the important point (at [164]-[166]) that, where discharge of the nominees’ duties is done through the employment of personnel to conduct supervising activities, supervisors must have sufficient qualifications or experience to determine whether the work has been done to the required standard.
The ACAT concluded that s 31(2) was breached. Although the reasons do not say so explicitly, it is clear from the reasons that that was because both limbs of s 31(2) were not complied with.
Having regard to this discussion of the requirements for systems of supervision, it is clear that the Tribunal did not at [161] proceed on the basis that Mr Jolley had to personally supervise the actual construction work. The finding that he provided no personal supervision of the actual construction work was simply a step along the way to considering the requirements of systems for supervision and the need for sufficient skill and knowledge to judge the work done by individual trades.
Having regard to the unchallenged findings in the earlier section of the reasons at [156]-[158] as to the inadequacies of the systems and the Chase supervisors relied upon by Mr Jolley, the conclusion reached by the Tribunal at [168] was clearly open to it.
This ground of appeal is not established.
Mr Jolley submitted that the ACAT proceeded on the basis that s 42 of the Building Act imposed a continuing and unlimited statutory responsibility on a builder to make work compliant. That was said to be in error because s 42 simply prohibits building work from being carried out except in accordance with certain requirements. A failure to comply with that prohibition constitutes an offence and leaves the builder at risk of a rectification order being made. Section 42 of the Building Act does not impose an additional and time unlimited obligation to correct work that has been carried out in breach of the section. As a result, the obligation in s 31(2)(b) does not extend to requiring a nominee to ensure the correction of construction services provided in the past.
Mr Jolley submitted that to hold otherwise would defeat the limitation period in s 35(5) because, if the act that caused the contravention was the omission to correct the defect, then that act would continue until correction occurred. As a result, so long as the defect remained uncorrected, the 10-year period would never commence.
In applying s 31(2)(b), the ACAT required that there be “some failure of supervision as a causal factor”. Mr Jolley submitted that, applying that test, no contravention was established in relation to Defect 4 (Glazing on the Glass Balustrades) because the ACAT found that supervision of the work during installation would not have alerted anyone to the fact that the glazing materials were defective. As a result, Mr Jolley submitted for the purposes of ground 8 that the ACAT should not have found that Defect 4 involved a breach of s 31(2).
The Owners Corporation characterised the question of law that is raised by grounds 4 and 8 of the appeal as: Does a nominee contravene s 31(2) of the COLA if the nominee fails to ensure the defective work is corrected? The Owners Corporation submitted that the answer is “yes”. It submitted that the obligation in s 31 does not only apply when the builder first attempts to perform the work or first purports to have completed the work. It submitted that the provision does not suggest that the nominee’s statutory obligations are complete once a Certificate of Occupancy and Use (COU) is issued. As a result, a nominee who discovers that building work does not meet the requirements of the Building Act has an obligation to ensure that the building work is compliant. For the purposes of the limitation period, the act that caused the contravention is the act that constituted the defective building work in the first place.
If the court finds that s 31 of the COLA does not oblige a nominee to correct defective work after a COU has been issued, then the Owners Corporation submitted that would not affect the ACAT’s findings because: (a) the Tribunal had found that the supervision was inadequate to ensure compliance at [160]-[168]; and (b) the Tribunal should have concluded (as set out in the notice of contention) that the fact of the contravention of the Building Act in relation to the balcony and balustrade defects was sufficient to establish a failure to ensure that the work was compliant and hence enliven the discretion to make a rectification order.
Section 51 of the Building Act provided that carrying out building work in contravention of s 42 is a strict liability offence.
The reason that this issue arises is because, in relation to the balustrades, the ACAT found that there had been no breach of the s 31 obligation at the time of construction because defects in the laminated glass used in the balustrades had not become manifest. There was therefore a question as to whether there was any obligation on the part of the nominee, arising once defects became manifest, to ensure compliance with s 42 by taking steps to rectify the defects.
Any breach exists at the point when the builder’s construction services come to an end. It may be that, because of defects in the work, the builder has not complied with its obligation under s 42. As a consequence, the nominee would not have complied with the obligation under s 31(2) to “ensure” that the work complied with an operational Act, namely, the Building Act. While a builder may undertake further work to remedy defects and, hence, avoid the consequences that might follow from the non-compliance for it and its nominee, s 31 should not be interpreted as giving rise to new obligations upon a nominee to remedy work done earlier by the builder when a previously unknown defect subsequently manifests itself.
The role of the nominee is the supervision of work by the builder. The liability of a nominee must be tied to the work of the builder. A nominee acquires no new obligation if, after the builder has ceased performing work, a new defect manifests itself. The obligation of the nominee, tied to its supervision of the builder’s construction services, is crystallised at the point where work ends. At that point, the obligations under s 31(2) will have been complied with or not.
There is therefore no ongoing duty upon the nominee. The nominee has either complied or not. Subsequent action to remedy defects may remedy non-compliance with both s 42 by the builder and s 31(2) by the nominee, but it is not correct to characterise this as a duty, or part of the content of an ongoing duty under s 31.
For these reasons, ground 4 is made out. The matters raised by ground 8 would also disclose an error of law insofar as the Tribunal found that a new obligation on Mr Jolley arose upon the manifestation of defects in the balustrades. These conclusions need to be read with the conclusions reached on the Owners Corporation’s notice of contention at [167] below.
If the balconies had a “floor waste”, then there would be enough to interpret Section 0621 as applying to the balcony areas. Even if there was not a floor waste, then, recognising the potential for architectural specifications to be imperfectly drafted, the terms of Section 0621 are sufficient to indicate that it was intended to apply to balconies.
Having regard to the above, the statement “this did not apply to external balconies” is not correct. However, it did not involve an error that was a material one. The substantive point that was being made was that, for all relevant purposes, the details of what was required to be done on the balconies was provided by the Bostik Specification as described. That fact is not subject to any ground of appeal. No aspect of Section 0621 was identified in the submissions as being of any significance for the conclusions reached by the ACAT either as to non-compliance with the Building Act, or in relation to the exercise of discretion as to whether or not to make a rectification order. In those circumstances, the answer to any question of fact derived from this ground of appeal would not assist Mr Jolley. This ground of appeal is not made out.
Finally, he said “an experienced and prudent Supervisor would have, knowing the requirements of the Building Regulation, referred to the AS 4654 Standards when selecting and supervising the installation of the waterproofing membranes at the Premises”.
In those circumstances, I do not consider that the Tribunal erred when it relied upon the Bostik Specification in the manner that it did.
The ground of appeal does not articulate how the application of AS 3740 (either by itself or in conjunction with the Bostik Specification, the Dampfix Gold Technical Data Sheet and AS 4654.2) would have affected the outcome in any material way. The submissions hinted at the potential to avoid the requirement for upward or downward terminations as required by AS 4654.2. However, the submissions were inadequate to demonstrate that the requirements of AS 4654.2 could be excluded or that the application of AS 3740 would have meant that the failure to install a T-section at the balcony edges as shown on the approved plans could have been justified.
This ground of appeal is not made out.
The Owners Corporation contends in grounds 1 and 2 of its notice of contention that the Tribunal should have found that Mr Jolley contravened his obligation to “ensure” compliance with the Building Act if the building work for which he was responsible did not comply with s 42 of that Act. Therefore, the Owners Corporation contends that it was not necessary to identify any particular acts or omissions that caused the defective work. Whether or not any failure in supervision caused the defective work was a matter relevant to the discretion as to whether or not to issue a rectification order.
Ground 2(d) is a ground directed to the ultimate exercise of discretion and it will be subject of further directions in light of the conclusions reached in the balance of these reasons.
In describing that he did not measure the width of the cracks, he said that this would have required a “scrubbing brush to remove the hardened calcium”: at [91]. He said that he had formed the view that “the appearance of those cracks on the bottom surface of the balcony with the calcium stalactites indicated a serious issue” and continued: I formed the view that the width of the cracks on the top of the slabs that was allowing water to breach the waterproofing membrane and seep into the concrete would be the more appropriate measure of the seriousness of the defect.
At [95], he listed the units that were identified as having this problem in the First Diagnostech Report. He then said (at [96]-[97]): 96. The following additional units were accessed during my 2023 Inspection and are, in my opinion impacted by the presence of cracks to the soffits above their balconies: 624, 710, 713, 808, 817, 917, 1109, 1411, 1509. 97. As I am of the opinion that the cracks and the high moisture readings of the balcony slabs demonstrate the failure of the waterproofing to the balcony decks of those slabs, the units above the listed units are also impacted in that they will have to be remediated to expose and repair the waterproofing under the tile and then ensure that the finish above falls to the drainage as required by the BCA and the available Australian standards.
These passages indicate that the existence of cracking with efflorescence was a symptom of water passing through the balcony. That was only possible if the waterproofing of the upper side of the balcony was inadequate to stop water penetration. As a consequence, the existence of the soffit cracking with efflorescence was evidence of inadequate waterproofing. It is in that context that the election by the Owners Corporation not to pursue Defect 1 must be understood. The position was made clear at [82]-[83] of the ACAT’s reasoning which was as follows: 82. A conclave of experts was held in advance of the hearing, attended by Messrs Stephenson, Buchanan, Hazelton, Joannides and Dr Jacob. They prepared a joint report dated 17 April 2023 in which they summarised the outcome of their conferral in relation to each of the numbered defects the subject of the rectification order. There was significant agreement on most issues and those that remained in dispute were narrow in scope and clearly identified. 83. As to defect 1 (balcony slab cracking defects) Messrs Stephenson, Joannides, Hazelton and Buchanan agreed the balcony slab cracking is not a structural defect. However, they considered balcony waterproofing defects must be rectified as part of defect 2. At the hearing, the owners corporation elected not to pursue defect 1.
The change of focus was referred to again at [142]-[143]: 142. Although initially it had been surmised that the cracking of the balcony slabs was a contributing factor to the failure of the waterproofing membrane, the consensus of expert opinion at the conclave was that the observed cracking was not structural but the waterproofing issues had to be addressed, among other reasons, because of the importance of keeping water out of pre-tensioned slabs. It was noted that Dampfix Gold was said to be capable of covering static cracks up to 4 mm wide, whereas the cracks observed on the soffit of the balconies were only approximately 0.5 mm wide. 143. The focus therefore shifted to the waterproofing and tiling defects.
So far as the existence of Defect 2 was concerned, the position of the experts was set out at [84]: 84. As to defect 2 (balcony tiling defects) Messrs Stephenson, Joannides, Hazelton and Buchanan agreed the tiling and associated waterproofing defects exist and must be rectified. Mr Stephenson considered wholesale replacement of balcony waterproofing and tiling is required. Mr Joannides considered the free edges require remediation, with strip repairs over cracks and localised repairs where necessary being sufficient. Messrs Hazelton and Buchanan did not offer an opinion on remediation.
The abandonment of a separate claim relating to balcony slab cracking did not affect the capacity to rely upon Mr Stephenson’s evidence in relation to the claim that the waterproofing of the balconies was defective.
Mr Stephenson then went on to address the evidence of Mr Joannides in what he referred to as the Partridge Report. He addressed Mr Joannides’s opinion that the cracks were likely to “self seal”. In the course of doing so, he said (at [103]): The water that is causing the observed stalactites, staining on the soffits, and disfiguring the building is coming from above, not from below … If there is still water penetrating and precipitating calcium on the underside of the balcony slabs [it] is clear to me that these cracks are unlikely to self-heal.
He then referred to his finding that water penetration was currently occurring at the premises: [107]. He described his use of a moisture meter on the undersides of the balconies over the units that he inspected. He described the ranges of the results from that moisture meter, with readings above 170 to be considered at “risk” and above 200 to be “wet”. He took readings on the balcony soffits close to the glass doors leading to the apartment proper, and then at various positions out to the outside edge of the balcony soffit. He said that there were only four instances where the readings of the balcony slab moisture content at the outer edge (“outboard edge”) were less than 200. Of the readings close to the glazing (“inboard readings”), 60 of 91 recordings were above 200 “indicating a general elevated level of water penetration into the balcony slabs”.
He rejected the proposition that cracks had permanently self-sealed, saying at [12]: Such cracks that appeared to be no longer dripping water were, as I detail below, in slabs that showed very high moisture content levels across the slabs. In any event, the ‘self-sealing’ at the bottom of the cracks is, in my opinion, somewhat meaningless if the slabs are, as I have reported, suffering water penetration from above.
He then addressed the remediation technique proposed by Mr Joannides, which involved only removing tiles in the area immediately above the crack in the soffit below and then only on a small number of units. Mr Joannides proceeded on the basis that, in other units where there was cracking, water ingress was no longer a problem. Mr Stephenson illustrated that moisture penetration was unlikely to have ceased by setting out the moisture levels in those units that both he and Mr Joannides had inspected. He set out those results in a table at [120]. None of the units set out in that table were relevant to units 908 or 1511. However, that was just because Mr Stephenson was illustrating his opinion about continued water penetration by reference to those units that both he and Mr Joannides had inspected. He was not purporting to set out all of those units in which moisture levels had been found to be elevated. As a result, the content of the table at [120] could not be interpreted as a qualification of his opinion about elevated moisture levels expressed earlier in his report.
Having set out the results in the table, he said (at [121]-[122]): 121. From the above it can be seen that the moisture content in the balcony slabs has little relationship to the visible presence of water on the soffit (underside) of a balcony slab. 122. From my investigation of the moisture content in the slabs, I am of the opinion that all of the units identified in the Preliminary Diagnostech Report and those additional units that I identified should be rectified.
He then went on to set out his proposed method of rectification.
He subsequently, in section 7.3, addressed “Defect 2 – Balcony Tiling Defects” which included identification of defects in the waterproofing system on the balconies.
The ACAT found (at [153], set out above at [87]), as part of its general findings as to the inadequacy of the waterproofing that, amongst a variety of listed ways in which the defective workmanship manifested itself was in “calcification to balcony soffits”, thereby linking the observable cracking and associated calcification under balcony soffits to the defective workmanship on the balcony above.
The submission made by Mr Jolley to the ACAT was: (a) Unit 908 was not accessed by the experts and no defect is identified in that unit or in any of the expert or oral evidence. (b) Unit 1511 was only accessed by Mr Stephenson and no defect is identified in that unit in any of the expert or oral evidence.
Having regard to the content of the Second Diagnostech Report, those submissions were not correct and should not have been accepted by the ACAT. Units 908 and 1511 were identified as needing rectification of their failed waterproofing as a result of the identification of unit 808 and 1411 having cracks in the soffits above their balconies. The units above those units were 908 and 1511 respectively, and Mr Stephenson identified at [97] of the Second Diagnostech Report that those units above needed the waterproofing to be remediated.
Therefore, the ground of appeal is made out in relation to units 908 and 1511.
In relation to units 702, 803 and 1506, these units appear not to have been included because the units to be covered by the rectification order appear to have been drawn from the non-exclusive table of balconies affected by defects at 6.2.5 of the First Diagnostech Report rather than the comprehensive defects in Appendix A of that report. The report stated at [6.1] that the report identified “Defect occurrences as recorded in the Diagnostech Defects Schedule in Appendix A of this Report”. In relation to “balcony deck waterproofing defects”, the table at [6.2.5] identified balcony waterproofing defects that fell within that category but included at the end: “Note that the above list is not exhaustive but represents occurrences of typical defects of similar nature and propensity.” Each of units 702, 803 and 1506 were identified as defective in Appendix A, being items 211, 212 and 497 respectively. So far as units 803 and 1506 are concerned, they were identified by the need to re-waterproof the balconies above units 703 and 1406.
While the Owners Corporation did not make a submission that these units should be included in the rectification order, in the circumstances of this case the absence of such a submission is not fatal to this ground of appeal. It is clear having regard to the evidence in the First Diagnostech Report that these balconies required remediation in the same way that other balconies included in the rectification order did. It is also clear that, had the issue been drawn to the Tribunal’s attention, consistently with its approach to other units which had defective waterproofing on the balcony, it would have included those units. In those circumstances, it can be inferred that the decision of the ACAT was based upon an error of fact, namely that the balconies of the three units were not defective and in need of remediation. The failure to make such a submission was an oversight by all parties and the Tribunal rather than a forensic decision on the part of the Owners Corporation. In those circumstances and having regard to the administrative nature of the proceedings, the fact that the Owners Corporation made no submission to the Tribunal that the units had defects and should be included is not a reason to find that the ground of appeal fails to be established. Therefore, this ground of appeal is made out.