MacFarlane v Queensland Building and Construction Commission [2019] QCAT 408

(b) The owner took possession of the house in December 2015 before it was finished.

(c) On 15 March 2016 the owner noticed rain water ingress in the main bedroom, master ensuite, master walk in robe, and second bedroom after heavy rain.

(d) On 20 March 2016 the owner informed the contractor about the problem. The contractor attended site and did some repairs, claiming that this had solved the problem.

(e) The house was completed, and the purchase of the house was settled in June 2016.

(f) There was no further water ingress until about March 2017 again after heavy rain.[1] Again the contractor did try to rectify the problem but there were further leaks in April 2017 and again in October 2017.[2]

(g) About October 2017 on the contractor's advice, the owner engaged other contractors to assess the source of the problem and to rectify it.[3]

(h) The owner was advised by two separate contractors that to rectify the problem the entire top deck would have to be lifted, the waterproof membrane repaired or replaced and then the top deck would have to be retiled.[4] The date of this advice has not been given, but the owner knew this at least from 22 November 2017.[5]

(i) There was further water ingress in November 2017, December 2017, January 2018 and February 2018.

(j) On 6 December 2017 the owner registered as a 'user' on the QBCC's website and he started to complete a complaint form to the QBCC. The owner had some technical difficulties in completing the online form and did not successfully complete it until February 2018.[6]

(k) The complaint was received by the QBCC on about 25 February 2018 which described 'rain water leaks, main bedroom, master ensuite, master walk-in robe, second bedroom'.

(l) All the leaks had one cause: the failure of the waterproofing membrane to the deck and other associated defects. This was structural defective building work.

(m) On 16 May 2018 liquidators were appointed for the contractor following insolvent liquidation.

(n) On 6 June 2018 the QBCC decided not to give a direction to rectify. The owner sought an internal review of the decision.

(o) On 19 July 2018, following a second inspection for an internal review, an inspector engaged by the QBCC reported that there had been rain water ingress in the areas of the complaint and that it had been caused by structural defective building work.

(p) On 30 July 2018 the QBCC decided that although there had been structural defective building work, because of the delay in reporting the problem to QBCC it would be unfair to the contractor to give a direction to rectify.

• [3] In conducting this review the tribunal effectively stands in the shoes of the QBCC and must conduct the review having regard to the statutory provisions which apply to the QBCC. The tribunal must reach the correct and preferable decision by hearing and deciding the review by way of a fresh hearing on the merits.[7]
• [4] The statutory provisions governing the QBCC's power to give a direction to rectify are in section 72 of the Queensland Building and Construction Commission Act 1991 (Qld) ('QBCC Act').
• [5] It is notable that this is a discretionary power, in other words the QBCC is not obliged to give the direction to rectify. When deciding whether or not to give a direction to rectify the QBCC, and on review the tribunal, will weigh up many factors.
• [6] Some of those factors are required by statute. Section 72 of the QBCC Act lists them. The QBCC would need to be of the opinion that building work was defective or incomplete or consequential damage has been caused by, or as a consequence of, carrying out building work.[8] Then section 72(3) says:-

In deciding whether to give the direction, the commission may take into consideration all the circumstances it considers are reasonably relevant and, in particular, is not limited to a consideration of the terms of the contract for carrying out the building work (including the terms of any warranties included in the contract).

• [7] On the question of fairness, which was relied on in the decision under review, section 72(5) states:-

The commission is not required to give the direction if the commission is satisfied that, in the circumstances, it would be unfair to the person to give the direction.

Example for subsection (5) -

The commission might decide not to give a direction for the rectification of building work because an owner refuses to allow a building contractor to return to the owner's home or because an owner's failure to properly maintain a home has exacerbated the extent of defective building work carried out on the home.

• [8] The question whether there would now be any point in giving a direction to rectify since the contractor has lost its licence has been raised by the owner in recent submissions.[9] The same question may be asked in the light of the insolvent liquidation of the contractor. I note however, that under section 71I(2) of the QBCC Act, the persons to whom a direction to rectify may be given is not limited to the contractor itself but may extend to others involved in the relevant work, including those who directly or indirectly cause the work to be carried out. Also under section 72(3) if a direction to rectify given to someone who is not currently licensed, the person must have the work carried out by a licensed contractor. Whether any direction to rectify would be effective under these provisions has not been addressed in the submissions. I will assume, for the purposes of this review, that a direction to rectify would be effective.
• [9] In the same submissions the owner has also pointed out that he has now had the structural defective building work repaired at his own expense so he queries the consequences of issuing a direction to rectify. It is the position of the QBCC that the fact that this work has been done would make it difficult to determine the work for which the contractor is responsible, and so it would be unfair to give a direction to rectify. Since this argument raises some points in principle which have not been fully addressed by the owner, it would seem unfair to the owner to take it into account. I have not permitted it to influence my decision.
• [10] In exercising the discretion whether or not to give the direction to rectify the QBCC would be obliged to act in a way which best achieves the objects of the statute. These are set out in section 3 of the QBCC Act and, of relevance to this matter are:-

The objects of this Act are -

(a) to regulate the building industry -

(i) to ensure the maintenance of proper standards in the industry; and

(ii) to achieve a reasonable balance between the interests of building contractors and consumers;

and

(b) to provide remedies for defective building work; and

...

(f) to provide for the proper, efficient and effective management of the commission in the performance of its functions.

• [11] As was pointed out by Acting Senior Member Browne in Cowen & Anor v Queensland Building and Construction Commission & Anor [2017] QCAT 416,[10] the power to give a direction to rectify is not for the benefit of the homeowner but rather a discharge of the QBCC's responsibilities under the Act.
• [12] Of importance to this review, an owner is expected to report defects which might result in a direction to rectify within 12 months after becoming aware of the defects.
• [13] This is in the QBCC's Rectification of Building Work Policy made on 20 June 2014 which states:-

It is a policy of the Board that if a consumer is seeking the assistance of the Queensland Building and Construction Commission (QBCC) to issue a direction to a building contractor to rectify defective building work, the consumer must lodge a formal complaint with the QBCC of defective building work as soon as possible but no later than within 12 months of becoming aware of the defects.

• [14] This policy is promulgated on the QBCC's website. The policy was made under section 19 of the QBCC Act by the Queensland Building and Construction Board,[11] and was approved by regulation as required by section 19(3).[12] For that reason the policy has high significance. This is emphasised by section 20K of the QBCC Act which requires the Commissioner to give effect to any policy or direction of the board relevant to the Commissioner's responsibility. It is however, provided that the Commissioner must act independently of the board when making a decision about (amongst other things) rectification of building work.
• [15] The time limit in the policy has had a long history.
• [16] The Policy in force on 1 July 2010 explained that if a consumer wanted the BSA (as it then was) to give a direction to a contractor to rectify, then the consumer should not delay making their application if the delay would result in the giving of the direction being unfair or unreasonable in the circumstances. That policy said that it may be unfair or unreasonable, for example, to give a direction for category 1 building work if the delay exceeds three months after the defective work became apparent.
• [17] The Policy in force before that, applying from 1 September 2004, explained that in deciding whether to give a direction for rectification of building work, the Authority could take into consideration all the circumstances and that might include any delay by an owner in notifying the authority of a defect, where the delay in respect of a category 1 defect, exceeds three months after the defect became apparent.
• [18] It can be seen therefore, that whereas the time limit has been enlarged from three months to one year, the wording has become more prescriptive.
• [19] It may also be noted that as from 10 November 2017 the 12-month time limit was given direct statutory force.[13] Since then it has been provided in section 71J(4) of the QBCC Act (of relevance to this matter) that a request for a direction to rectify building work must be made within 12 months after the person becomes aware of the building work the person considers is defective or incomplete.
• [20] I invited submissions from the parties on the question whether a request made after 10 November 2017, for example in a complaint like the complaint made by the owner here, is not properly made and cannot be considered by the QBCC, or whether the QBCC would have a discretion to consider a request for a direction to rectify made in a complaint despite it being out of time under this provision.
• [21] I am grateful for the submissions made by the parties in response to this invitation. From the submissions it is clear that the QBCC might come to decide whether or not to give a direction to rectify in one of the three following circumstances:-

(a) there may be a valid complaint or request made within the 12-month time limit in section 71J(4); or

(b) there may be a complaint or request made outside the 12-month time limit in section 71J(4); or

(c) irrespective of the length of time which has passed, circumstances may come to the attention of the QBCC which may cause it to decide whether or not to give a direction to rectify.

• [22] One of the types of reviewable decisions which can come to the tribunal on review is that in section 86(1)(e), namely 'a decision to give a direction to rectify or remedy or not to give the direction'.
• [23] It is clear that a decision whether or not to give a direction to rectify in circumstance (a) is clearly within section 86(1)(e). In circumstance (b) or (c) it could be said there could be two decisions - the first, whether to proceed to consider whether or not to give a direction to rectify and the second if the first decision is in the affirmative, about whether to give a direction to rectify. It could be argued that in each case, if the first decision is decided in the negative then there is no reviewable decision under section 86(1)(e). The alternative argument would be that really there is only one decision being made under circumstances (b) and (c), that is whether or not to give a direction to rectify. In other words if a decision is made not to proceed any further because the period of 12 months has passed, this is really a decision not to give a direction to rectify because of the age of the matter and therefore the decision is reviewable on that basis.
• [24] For the purpose of this review (without deciding the matter because the parties have not made submissions on this point), I am content to proceed on the basis that the decision which I am asked to review does indeed come within section 86(1)(e).

• [25] The position can be summarised as follows. When the problem first appeared after the heavy rains of March 2016 the owner believed that repairs done by the contractor who built the house would remedy the problem. After the repair was done, the builder tested for leaks and assured the owner that the leak was no longer an issue. At first this appeared to be the case because there was no further water ingress for a year. There were then a series of leaks between March 2017 and February 2018 and a number of attempts to repair. At least from 22 November 2017 the owner was aware that some major repair work may be required.
• [26] With some force, the owner points out in his submissions:-

I honestly believe that I reported the defect to the QBCC within a time frame that is fair and practical once trying to work with the builder to rectify the fault and seeing that the rectification attempts were unsuccessful.

In fact I contacted QBCC within 12 months of the initial 'fixed' leak becoming serious enough to warrant further action.

If all initial building defects were reported to QBCC just in case they may reoccur the QBCC would be swamped with thousands upon thousands of defect reports, it is impractical.

• [27] Against this is the Rectification Policy which required the complaint to be made within 12 months of becoming aware of the defects. The policy is silent about what happens if the owner delays in notifying the QBCC about the defective work. But like any time limit, it is there for a purpose and it would only be relaxed for good reason. If it were usual to relax the rule it would lose its desired effect.
• [28] Here the reason for the time limit is fairly clear to understand in the case of structural defective building work. Generally, such defects need to be rectified as soon as possible to avoid further deterioration or consequential damage. And, it is good policy to give the contractor early warning of the need for rectification work, whether as part of the QBCC's dispute resolution process or by formal direction to rectify, because the contractor is then more likely to find it easier to rectify, particularly if subcontractors have been used. This is of greater importance in the case of such work because it will be usually more expensive to do. Early notification also helps the QBCC to identify without delay those contractors who are performing poorly or who may be in financial difficulty, and this is important for the protection of the public generally.
• [29] It is in this context that the owner's approach to the matter should be considered. Having regard to the legal and moral duties and obligations between himself and the contractor, his approach when the leaks first occurred in March 2016 clearly was reasonable. In the face of uncertainty about the cause of the water ingress, he permitted the contractor to try to fix the problem without involving the QBCC. When the leaks recurred a year later and were persistent despite attempts to repair however, the owner should have contacted the QBCC immediately. Probably this should have been done when it was clear the contractor's attempts to remedy had failed, but certainly this should have been done by October 2017 when other contractors became involved.
• [30] As for the technical difficulties which the owner faced in completing his complaint using the QBCC's online system, the difficulty with this is that once the owner had passed the time limit, it was all the more important to act quickly on learning of the possible serious defects in the work. As it turned out, instead of informing the QBCC immediately in October 2017, the owner tried to do so only at the beginning of December 2017, a delay of about two months, and then took a further two and a half months to complete the complaint.
• [31] In the circumstances, overall, I must take the view that the decision of the QBCC not to give a direction to rectify was the correct decision.

[1] The complaint of 20 February 2018 says this happened in March 2017, but the submissions say it happened in April 2017.

[3] In the complaint, the owner says that this happened 'at that stage', which is presumed to be in about October 2017. There is an email of 21 December 2017 in which the owner sought reimbursement of $6,957. The email says that other contractors had completed the works, which would be tested in the next rains, but that it was hoped the problems were solved (page 52 of the documents in the Statement of Reasons).

[5] Page 62 of the exhibits to Ms Tyler's statement; there is also an email on 1 December 2017, page 75.

[6] This appears from the owner's submissions of 26 September 2019.

[7] Section 20 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) ('QCAT Act').

[9] Submissions in email of 26 September 2019.

[10] [2017] QCAT 416, [25].

[12] Although section 19 was repealed on 10 November 2017, by transitional provisions inserted at that time into section 76 of the QBCC Act by the Building Industry Fairness (Security of Payment) Act 2017 (Qld), the policy continued in force.

[13] This is by amendment made by the Building Industry Fairness (Security of Payment) Act 2017 (Qld) coming into force on that day, which was the date of its assent.