Builder wins QCAT review of QBCC Direction to Rectify issued out of time: Oracle Building Corporation Pty Ltd v Queensland Building and Construction Commission [2020] QCAT 69

Directions to rectify (DTRs) issued by the Queensland Building and Construction Commission (QBCC) can have significant impacts on contractors, particularly if the defects complaint snowballs into an insurance claim under the Queensland Home Warranty Scheme (QHWS). The Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) provides a process by which a decision to issue a DTR, as well as other QBCC decisions, can be reviewed by either the QBCC Internal Review Unit (IRU) and/or the Queensland Civil and Administrative Tribunal (QCAT). However, a recent QCAT decision confirms that not all DTRs are capable of review.

In Oracle Building Corporation Pty Ltd v Queensland Building and Construction Commission [2020] QCAT 69, QCAT considered the statutory timeframe in which QBCC may issue a DTR and when a DTR or a decision to direct rectification becomes a “reviewable decision” (capable of review by either the IRU or QCAT) under section 86 of the QBCC Act.

Background

The applicant builder, Oracle Building Corporation Pty Ltd (Oracle), entered into a contract with the owner (Owner) for the construction of a new residential dwelling (Works). Oracle carried out the Works and achieved practical completion on 21 December 2011. Pursuant to section 72A(4) of the QBCC Act, QBCC may only issue a DTR within 6 years and 6 months after the building work was completed (or left in an incomplete state) unless the QBCC applies to QCAT to extend this timeframe.

On 21 August 2017, approximately 5 years and 8 months after practical completion, the Owner made a complaint (Complaint) to the QBCC in respect of alleged defective building work carried out by Oracle. The QBCC inspected the items of the Complaint and, on 27 November 2017, decided to direct Oracle to rectify defective building work (First DTR). The First DTR was sent to Oracle by post.

Oracle applied to the QBCC for an internal review of the First DTR. On 19 February 2018, the IRU upheld the decision to issue a DTR to Oracle (Internal Review Decision) and, as a result, two days later on 21 February 2018, the QBCC issued a second DTR (Second DTR) to Oracle.

Oracle filed two separate applications to QCAT to review both the Internal Review Decision and the Second DTR (collectively, Proceedings).  Oracle contended in the Proceedings that it did not receive a copy of the Second DTR until 26 July 2018. Relevantly, the statutory time limit for QBCC to give the Second DTR to Oracle expired on 21 June 2018.

The work the subject of the Second DTR was ultimately rectified pursuant to the Queensland Home Warranty Scheme (QHWS) prior to the determination of the Proceedings by QCAT.

QCAT was required to determine, inter alia, whether:

  1. the Internal Review Decision was a “reviewable decision”;
  2. Oracle had in fact carried out defective building work;
  3. it would be fair to decide to issue a DTR if the defects had already been rectified under the QHWS; and
  4. the QBCC served the Second DTR on Oracle prior to 26 July 2018.

QCAT Decision

A final hearing of the Proceedings occurred on 30 May 2019 and the QCAT decision was delivered on 4 March 2020.

Internal Review Decision

QCAT held that the Internal Review Decision was a “reviewable decision” under sections 86E(b) and 86(1)(e) of the QBCC Act as it was a decision made upon an internal review of the decision to give a DTR.  QCAT was also satisfied that the building work carried out by Oracle was defective and that a DTR may be given even if the defective work had since been rectified by another contractor under the QHWS.

QCAT then considered the effect of section 72A(4) of the QBCC Act, which provides that a DTR cannot be given more than 6 years and 6 months after the relevant building work was completed or left incomplete unless the QBCC successfully seeks an extension of time from QCAT. Relevantly, a “reviewable decision” under the QBCC Act may be served on a licensee by leaving it at, or sending it by post, telex, facsimile or similar facility to, the address held in the QBCC licensee register.

QCAT accepted that at all relevant times, Oracle’s postal address, as well as its business address and email address, were correctly recorded on the QBCC licensee register. Oracle had received previous correspondence from the QBCC at its postal address, however, Oracle argued that it never received the Second DTR at its postal address, nor by any other means.  Ultimately, QCAT held that the QBCC did not give the Second DTR to Oracle by post nor at any time prior to 26 July 2018.

Accordingly, it was held that the QBCC did not give the Second DTR to Oracle within 6 years and 6 months after Oracle achieved practical completion of the Works. Therefore, QCAT set aside the Internal Review Decision and replaced it with a decision not to issue a DTR.

Second DTR

QCAT also considered whether the Second DTR itself was a “reviewable decision”. To determine this, QCAT considered whether the Second DTR was a decision, made or taken to have been made, by the QBCC to give a DTR. QCAT considered case authority on this point, which provides that there is a difference between reviewing a “decision to direct rectification” and the actual “DTR” document; QCAT only has jurisdiction to review the former.

It was held that the Second DTR was not itself a “reviewable decision” but rather a means of giving effect to the Internal Review Decision. Accordingly, QCAT dismissed Oracle’s application to review the Second DTR.

Importance of Decision

There are two important messages from QCAT’s decision in Oracle Building Corporation Pty Ltd v Queensland Building and Construction Commission [2020] QCAT 69, being:

    1. directions to rectify issued by the QBCC after an internal review decision:
      a.   may not be a “reviewable decision” capable of review by QCAT;                                                                                                                                                                                             b.   are likely to be set aside if they were issued outside the statutory timeframe (that is, issued more than 6 years and 6 months after practical completion); and
    2. when applying to QCAT to review an internal review decision of the QBCC, builders should be careful to ensure that:                                                                                                            a.   they apply to review the “reviewable decision”, which may be the “decision to give a direction to rectify” and not the actual document titled “Direction to Rectify”. This is because only the internal review decision to give a direction to rectify may be considered a “reviewable decision”- not necessarily the direction to rectify document itself; and                                     b.   the review period of 28 days from receipt of the “reviewable decision” is not missed because the right to challenge the decision, after that time, is likely to be lost.

Given the serious consequences if a QBCC direction to rectify is not complied with or successfully reviewed (i.e. demerit points, fine, expensive insurance claim and/or notation on licence), builders should ensure they receive timely legal advice regarding QBCC decisions, particularly directions to rectify, in order to have the best chance of success in any review proceedings.

If you have received an internal review decision, a Direction to Rectify or have any queries regarding other QBCC decisions, contact Kirsty Stewart at Construct Law Group on (07) 3139 1874 or email us at info@constructlaw.com.au.

This article is provided for general information and educational purposes only and does not constitute legal advice. Readers should obtain appropriate independent legal advice based on their own specific circumstances.