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State Administrative Tribunal of Western Australia |
Last Updated: 16 April 2010
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM : VOCATIONAL REGULATION
ACT : 
BUILDERS' REGISTRATION ACT 1939 
( WA )
CITATION : BUILDERS' REGISTRATION BOARD OF WESTERN AUSTRALIA and
DANMAR HOMES PTY LTD & ANOR [2010] WASAT 28
MEMBER : DR B DE VILLIERS (MEMBER)
MR D MOUCHEMORE (SESSIONAL MEMBER)
MR R CAMPBELL (SESSIONAL MEMBER)
HEARD : 13 JANUARY 2010
DELIVERED : 25 FEBRUARY 2010
FILE NO/S : VR 218 of 2008
BETWEEN : BUILDERS' REGISTRATION BOARD OF WESTERN AUSTRALIA
Applicant
AND
DANMAR HOMES PTY LTD & ANOR
First Respondent
DANIEL JOSEPH WHITE
Second Respondent
Catchwords:
Disciplinary proceedings against builder for negligence
who allegedly built houses without a building licence and without complying
with
approved plans Responsibilities of a builder to apply for building
licence and to build in accordance with approved plans
Do the same
obligations rest on a subcontractor Responsibilities of subcontractor
Test for subcontractor
Relationship between builder and
subcontractor Can the Tribunal rely on extrinsic information and evidence
to determine the
relationship between parties - Tribunal must take all
information into account Tribunal not limited to the terms of the written
contract Test of reasonability and the standard expected of a reasonable
and competent builder What would a fair-minded
and reasonable builder do
in the same circumstances What would a fair-minded and reasonable
subcontractor do in similar circumstances
- Did the subcontractor fail to adhere
to the reasonable standard
Legislation: Builders' Registration Act 1939 ( WA ),
s 12D , s 13(1) , 13 (1)(C) Construction Contracts Act 2004
( WA ) State Administrative Tribunal Act 2004 ( WA ), s 11(4) ,
s 32(2)(a) , s 32(2)(b) , s 32(4), s 32(7)
Result:
The application for disciplinary proceedings is dismissed
Category: B
Representation:
Counsel:
Applicant : Mr M Mannes (Representative)
First Respondent : Mr P Monaco
Second Respondent : Mr P Monaco
Solicitors:
Applicant : Builders' Registration Board of Western Australia
First Respondent : GV Lawyers
Second Respondent : GV Lawyers
Case(s) referred to in decision(s):
Builders' Registration Board of Western Australia and Utopia Industries
Pty Ltd [2006] WASAT 295
Max Spiccia Homes Pty Ltd and Anor v Builders' Registration Board of Western Australia [2007] WADC 200
Qbsa v Phipps Keith Ralph D025-97 [1997] QBT 163 (25 September 1997)
Re Lamperd [1983] 63 FCA 22, 470
Strempel v Wood & Anor [2005] WASCA 163
Voli v Inglewood Shire Council (1963) HCA 15 (1963) 110 CLR 74 (29 May 1963)
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
1 The Builders' Registration Board of Western Australia applied for disciplinary steps to be taken against the respondents on grounds that they had commenced with the building of dwellings in a retirement village without the necessary building licences and that they had deviated from the approved plans.
2 The Builders' Registration Board had a two-fold argument: firstly, it contended that Danmar Homes Pty Ltd was the builder of the works and in this capacity it had the responsibility to ensure that the necessary building licences were in place prior to the works being undertaken. Danmar Homes Pty Ltd further had to ensure that the works complied with the specifications of the approved plans. Secondly, the Builders' Registration Board contended that even if Danmar Homes Pty Ltd had been a subcontractor to the registered builder, (Kemmish Nominees Pty Ltd) as was contended by Danmar Homes Pty Ltd, it should nevertheless have sighted the building licences and the approved plans and it should have ensured that all works took place in accordance with approved plans. The respondents were therefore negligent by not adhering to the standard of care that a reasonable and competent builder would have applied.
3 The respondents rejected the contention that they were negligent. Their reply to the allegations was twofold. Firstly, they said that Danmar Homes Pty Ltd was not the registered builder for the work but that Kemmish Nominees Pty Ltd was the registered builder. This perspective was confirmed by two directors of Kemmish Nominees Pty Ltd in evidence before the Tribunal. According to the directors, Danmar Homes Pty Ltd was a subcontractor to Kemmish Nominees Pty Ltd. Secondly, as a subcontractor to Kemmish Nominees Pty Ltd, Danmar Homes Pty Ltd was not required to apply for building licences. Kemmish Nominees Pty Ltd repeatedly assured Danmar Homes Pty Ltd that proper building licences had been issued. Furthermore, Danmar Homes Pty Ltd built in accordance with the working plans Kemmish Nominees Pty Ltd provided to it. There was no obligation on Danmar Homes Pty Ltd to sight the approved building plans. Danmar Homes Pty Ltd therefore complied with the standard that would be expected of a reasonable and competent subcontractor.
4 The Tribunal agreed in general with the Builders' Registration Board that a legal obligation exists for a subcontractor to take reasonable steps to ensure that building licences are current and that works take place in accordance with approved plans. The facts of each situation must be considered to determine if the legal standard has been met by the subcontractor.
5 The Tribunal dismissed the application for the following reasons: if all the evidence about the contract and arrangements between Danmar Homes Pty Ltd and Kemmish Nominees Pty Ltd and Moss Glades Pty Ltd were taken into account, it appears that Danmar Homes Pty Ltd was not the principal builder but a subcontractor for Kemmish Nominees Pty Ltd; Kemmish Nominees Pty Ltd had effective control over the building site, had applied for the building licences, liaised with the local authority about the licences and building plans, oversaw all the works on site, gave daytoday directions to Danmar Homes Pty Ltd, ensured quality control of the works, had permanent presence and an office on the site and signed off on all the works completed by Danmar Homes Pty Ltd.
6 In so far as the duties of Danmar Homes Pty Ltd as a subcontractor were concerned, the Tribunal was satisfied that Danmar Homes Pty Ltd acted in a way that a reasonable and competent builder would have done and that it was not negligent by relying on the assurances given by the registered builder, Kemmish Nominess Pty Ltd. Danmar Homes Pty Ltd made repeated enquiries with Kemmish Nominees Pty Ltd about the building licences and received assurances that licences had been issued and that everything was under control; it took directions from Kemmish Nominees Pty Ltd; and it built in accordance with plans, that according to Kemmish Nominees Pty Ltd, had been approved; and it received repeated assurances from Kemmish Nominees Pty Ltd that issues with the local authority were being attended to.
7 The Tribunal concluded that the Builders' Registration Board failed to demonstrate that a reasonable competent subcontractor would have taken further steps in the discharge of its duties. The precaution taken by Kemmish Nominees Pty Ltd was not inconsistent with what a reasonable subcontractor would have done in similar circumstances.
8 The application was therefore dismissed.
Background
9 The Builders' Registration Board (BRB)
lodged the application for disciplinary action on 21 November 2008
pursuant to s 13(1) of the Builders' Registration
Act 1939 ( WA ) (BR Act).
10 The first directions hearing took place on 15 January 2009, at which the Tribunal made orders for the matter to be sent to mediation. The matter did not settle in mediation and the Tribunal made orders on 12 March 2009 for a statement of agreed facts to be filed. The Tribunal also gave leave for the application to be amended.
11 At a directions hearing held on 7 May 2009, the matter was again referred for mediation. It failed to settle and was set down for a directions hearing on 1 October 2009. Orders were made at this directions hearing for the matter to be heard on 30 November 2009. At the request of the parties, the hearing was adjourned to 13 January 2010. The hearing took place as scheduled and the decision was reserved on the same day.
12 In accordance with s 11(4) of the State Administrative Tribunal
Act 2004 ( WA ) (SAT Act), the Tribunal constituted a legally
qualified member, (Member de Villiers), a person who has specialised
experience
in the building industry, Sessional Member Mouchemore and a
person who is familiar with the interests of persons engaged in the building
industry, Sessional Member Campbell. Mr Mouchemore is a registered
builder and building surveyor with extensive experience in the
building
industry. Mr Campbell is a registered electrical worker and contractor and
also has extensive experience in the industry.
He is also an adjudicator under
the Construction Contracts Act 2004 ( WA ).
Both sessional members bring to the Tribunal substantial practical experience
and theoretical knowledge in regard to the issue
under consideration.
13 The parties made extensive written and oral submissions in support of their respective positions. Several witnesses were called to give evidence. The Tribunal took all of the submissions, information and evidence presented to it into account.
Powers of the Tribunal in disciplinary proceedings
14 The BRB may commence disciplinary proceedings against a builder if there is a proper cause to do so under s 12D of the BR Act).
15 The Tribunal has, in accordance with s 13(1) of the BR Act, the power to suspend or cancel the registration of builder or to impose a fine if there is a proper cause for disciplinary action against a builder. Under s 13(1)(C), this may apply to a builder:
(c) who has been guilty of any negligence or incompetence in connection with the performance of any building work or who has been convicted of any offence against this Act or any regulation; or
Agreed statement of issues
16 The parties agreed on the following issues for the Tribunal to determine. The Tribunal used these issues as an agenda for the hearing and will summarise its reasons in accordance with those issues.
5.1 the plans supplied to the First Respondent were identical to the plans approved by the City of Stirling.
5.2 the building work carried out by the First Respondent was in accordance with the plans approved by the City of Stirling.
Facts
17 The facts giving rise to the application can be succinctly summarised as follows:
Orders sought
18 The BRB seeks orders that in respect of each of the buildings a finding be made that:
Summary of evidence
19 Several persons were called to give evidence. The evidence can be summarised as follows:
Leonard Walter Whyman
20 Mr Whyman, who is a director of Moss Glades and of Kemmish, told the Tribunal that he had told Mr White, the sole director of Danmar, that the building licences for the works had been issued to Kemmish by the City and that the licences were current. He explained that Kemmish had the responsibility for all dealings with the City, including applying and issuing of building licences and compliance with plans. Kemmish had started with works on all the sites before Danmar had been contracted.
21 He explained that: Kemmish approached Danmar since it (Kemmish) did not have the capacity to undertake all of the buildings works; the previous contractor had withdrawn; and Kemmish required a reputable company to do the work. After some negotiations with Danmar, an agreement was reached for Danmar to do the works.
22 Mr Whyman said that the directors of Moss Glades and Kemmish were the same persons and that nothing turns on the fact that the contract was between Moss Glades and Danmar. The contract was merely a standard home building contract, and in their minds, the arrangement was between Kemmish as registered builder and Danmar.
23 Kemmish had a permanent office on site, had full control over the site, supervised the work of Danmar, and had the final authority over all works. Mr Whyman referred to examples where Kemmish turned away contractors of Danmar and where Kemmish had given instructions to staff employed by Danmar. He further said that Danmar built in accordance with the plans that it (Kemmish) provided to Danmar. He said the contracts may as well have been with Kemmish because in their minds they were just one company doing business. Technically, the contract was between Danmar and Moss Glades, but if all the evidence is taken into account, it is clear that Danmar was the subcontractor for Kemmish. The obligation in the contract for Danmar to ensure that all approvals were in place, must be read in the context of the overall arrangements between the parties. Kemmish assured Danmar that the licences were valid even after concerns were raised by the City.
24 At no stage was Danmar required or authorised to liaise directly with the City. The relationship that existed between Danmar, Kemmish and Moss Glades was so good that no one paid any attention to the finer detail of the contract.
Mr Eion Samuel Martin
25 Mr Martin is a director of Moss Glades and of Kemmish. He is a registered builder and architect. He confirmed that the building licences had been applied for by, and issued to Kemmish. He also confirmed that Mr Leonard Whyman did all negotiations and other liaison with the City on behalf of Kemmish. He further confirmed that the work on the sites commenced prior to Danmar being contracted, but when Danmar became the subcontractor, Kemmish supervised all works.
26 He explained that the directors of Kemmish and of Moss Glades were essentially the same persons and that nothing should be made of the building contract being with Moss Glades and not with Kemmish. In their minds, he said, they were not separate companies because they were the same people going about their business.
27 He explained that Danmar never received nor was it entitled to the approved building plans. As the registered builder, Kemmish assured Danmar that the building licences were valid and current and that the plans given to them had been approved by the City. There was no need for Danmar to sight the original approved plans. A subcontractor would not be expected to sight the actual building licence or the actual approved plans. Subcontractors build on the instruction of the registered builder.
Mr Robert George Williams
28 Mr Williams is the registered builder and construction manager for Danmar. According to him, the registered builder for the works at all times was Kemmish. Danmar was the subcontractor for Kemmish and worked to the directions of Kemmish. He accepts that it may be confusing with the same two directors being responsible for two companies but in his mind, things were always clear Moss Glades was the owner of the land and Kemmish was the registered builder.
29 The building contract used by the parties was merely off the shelf and it was always understood that Danmar was a subcontractor for Kemmish who in turn was the registered builder.
30 Danmar was informed by Kemmish that current building licences were in place for each unit. Although he accepted that Mr Whyman and Mr Martin are directors of Moss Glades and of Kemmish, he also accepted that his instructions came from them in their capacity as Kemmish directors since Kemmish was the registered builder. He says he 'had no reason to doubt the information' given to him by Kemmish. Danmar never had any direct dealings with the City since that was the responsibility of the registered builder, being Kemmish.
31 When Danmar commenced work on site, basic site works had already been completed by Kemmish. According to him, 'this was consistent with information provided to me by the directors that they wanted Danmar Homes to be the subcontractor to complete the works'.
32 As construction manager, he also accepted the assurance from Kemmish that the plans provided to Danmar had been approved by the City. There was no reason or need for him to question the advice. The building packages given to him to build were consistent with Danmar's role as subcontractor. Clients could choose which of several options they preferred.
33 Danmar was not requested to amend any plans nor did it amend any plans. Danmar merely added detailed specifications for purposes of construction. There is nothing unusual or untoward about it. Danmar would not give approved plans to subcontractors and similarly Danmar did not expect approved plans from Kemmish.
34 He confirmed that Danmar was called in early 2007 by Mr Adrian Rodney Snape from the City to inquire about the currency of the building licences. Danmar was again given the assurance by Kemmish that the building licences were valid and that it (Kemmish) would clarify the issue with the City. He did not hear from Mr Snape again and no steps were taken by the City to stop the works. He therefore assumed that whatever misunderstanding gave rise to Mr Snape's visit, it had been cleared.
Mr Daniel Joseph White
35 Mr White is the sole director of Danmar. He explained that a salesperson for Danmar was approached by Mr Martin to inquire if Danmar would be interested in completing the buildings after the previous builder had withdrawn from the project: Mr Martin did not say whether he was talking on behalf of Kemmish or on behalf of Moss Glades since the directors of the two companies were the same.
36 According to Mr White the registered builder for the works was Kemmish since Mr Martin was a registered builder and a previous councillor of the City. The land and the units were owned by Moss Glades. Danmar was, in his understanding, at all material times, the subcontractor of Kemmish to complete the works.
37 There was never any doubt in his mind that Kemmish was the registered builder and that Mr Martin, on behalf of Kemmish, had responsibility to supervise all the works done by Danmar. He relied entirely on the information given to him by Mr Whyman and Mr Martin who happened to be the directors of Kemmish and of Moss Glades.
38 The contract used was the standard contract Danmar always uses when it is the registered builder, and in retrospect, he acknowledges that a special contract to set out the relationship between Danmar and Kemmish may have been preferable. On the other hand, he is used to making agreements over the table and it is therefore not strange to have a working relationship without a detailed, legal agreement. Much of his work takes place on the basis of good faith and a gentleman's understanding.
39 It was not unusual in the building industry that the identity of the person or entity to whom invoices are submitted, is different to that of the registered builder. It was within the discretion of the parties to decide who should be invoiced for works. That does not change the basic relationship between the registered builder (Kemmish), and the subcontractor (Danmar).
40 Danmar has been in the building industry for many years and if it had been the registered builder for these works, it would have applied for the building licence from the City. He was assured by both directors that building licences were in place and he had no reason to doubt the information.
41 He visited each of the building sites before commencement of works by Danmar and it was clear to him that Danmar was taking over work from Kemmish. Although most of the building work had to be done by Danmar, that did not change the relationship as a subcontractor for Kemmish.
42 He was impressed by the professionalism of Mr Martin and there was no reason to doubt that building licences were current and that the plans provided to Danmar had been approved.
43 The building plans were provided to Danmar by Kemmish and Danmar was told that the plans had been approved by the City. Danmar did not make any variations to the plans. Detailed specifications for purposes of construction were added to the plans, but that did not equate to alternation. In the instances where the buildings were not in accordance with the plans, they were due to a different type of brick being used, and due to instructions from Kemmish. The only major deviation from the plans was when a double garage rather than a single garage was built. This, however, was in accordance with the plan provided by Kemmish.
44 All the deviations from the approved plans were given retrospective approval by the City.
Contentions by the Builders' Registration Board
45 The contentions of the BRB can be summarised as follows:
Contentions of the respondents
46 The contentions of the respondents can be summarised as follows:
Consideration of the issues as identified by the parties
47 The Tribunal will deal separately with the issues as identified by the parties:
Is extrinsic evidence admissible or is the Tribunal bound to only take account of the terms of the contracts?
48 The respondents contended that the Tribunal should take into account all information about the agreement reached between the parties. There was, according to the respondents, no legal basis to contend that only the written contracts should be relied upon.
49 The BRB contended that the contracts entered into between the parties contain all the terms and conditions of their agreement and therefore there is no need or justification to take into account extrinsic information. The contracts were clear, precise and specific and leave no doubt as to the intention of the parties.
50 The Tribunal is satisfied that it can take into account all the information about the interaction between the parties before it, to properly categorise the relationship between Danmar, Kemmish and Moss Glades. This conclusion flows from the following reasons:
51 The Tribunal therefore finds that extrinsic evidence is admissible in order to properly categorise the relationship between Danmar, Kemmish and Moss Glades.
Was Danmar a subcontractor or the builder for purposes of the proceedings?
52 This question goes to the heart of the proceedings. The views of the parties are summarised above and there is no need to repeat it in detail.
53 In essence, the BRB says that:
(a) Danmar was the registered builder and therefore had a duty to ensure that valid building licences were in place; and
(b) Even if the Tribunal found that Danmar was a subcontractor, it still had a duty of care since the reasonable and competent subcontractor would have taken such precautionary steps.
54 Danmar in essence says that:
(a) Kemmish, and not Danmar was the registered builder; and
(b) Danmar acted reasonably, since it questioned Kemmish about the building licences and plans. Kemmish gave it the assurance that building licences and plans were current and that any issues arising from the works were being discussed between Kemmish and the City.
55 The relationship between Danmar, Kemmish and Moss Glades is indeed, at first glance, confusing. The following are key elements that reflect the different aspects of the relationship:
56 The Tribunal is satisfied, when all evidence and information is taken into account, that Danmar was not the registered builder for the works but that it was a subcontractor for Kemmish.
57 The Tribunal reaches this conclusion for the following reasons.
58 The Tribunal must, as has been found above, take into account all information about the interaction between Moss Glades, Kemmish and Danmar to properly characterise their relationship. There is no statutory requirement that only the terms of the contract be taken into account to properly categorise the relationship between the parties. If all the information is considered, the Tribunal is satisfied that it was the understanding, agreement and intention that Kemmish was the registered builder and that Danmar was a subcontractor for it
59 The building licence application submitted to the City clearly identified the registered builder as Kemmish. The building licence issued by the City identified the licensee as Kemmish. Kemmish, Moss Glades and Danmar acted in accordance with this intention and understanding although it may have been confusing at times due to the fact that Moss Glades and Kemmish essentially had the same directors.
60 The finding of the Tribunal that Kemmish was the registered builder, is consistent with the information before the investigation conducted by the BRB on 3 July 2007 when, in reply to a question by the interviewer, Mr Martin responded:
Interviewer: Mr Streeton;
And you've got a subcontractor agreement with them [Danmar], would that be correct? You've got like some building contracts that you signed with Danmar Homes for the for the units under construction? Is that correct?
Mr Martin: Yeah.
61 The Tribunal accepts that the fact that Mr Martin and Mr Whyman were both the directors of Moss Glades and of Kemmish, may appear confusing. However, if the entire picture of their activities as presented during evidence to this Tribunal and to the BRB is considered, it is clear that Moss Glades was the owner of the land, Kemmish was the registered builder and Danmar was the subcontractor. The parties acted in accordance with this understanding.
62 The conduct of the parties was consistent with the relationship as summarised above. It would have been unrealistic and impractical to expect Mr Martin and Mr Whyman to indicate each time to Danmar whether they were talking as directors of Kemmish or as directors of Moss Glades. As was so effectively pointed out during evidence, it would give rise to a situation where Mr Martin as the director of Moss Glades would authorise himself as the director of Kemmish to engage in a discussion with Danmar. It was therefore entirely reasonable for Danmar to assume that when they spoke to Mr Martin and to Mr Whyman, the two of them represented Kemmish, since (Kemmish) was the registered builder.
63 The Tribunal further notes that it was Danmar who had been approached by Mr Martin to undertake building work that another builder could not complete. This adds to the conclusion that Danmar was subcontracting for Kemmish, otherwise Danmar, who are reputable builders, would have approached the City directly to apply for building licences.
64 At the time when Danmar was approached, Mr Martin told Mr White that Kemmish was the registered builder, that building licences had been issued and that the plans had been approved. Mr Martin was a registered builder, an architect and a previous councillor of the City, and there was no reason for Mr White to doubt that all the necessary requirements were in place. It was further obvious to Mr White that Danmar would be a subcontractor for Kemmish for reasons set out above.
65 The Tribunal accepts that even when concerns were expressed during the building process by the City about the currency of the building licences and compliance with building plans, Mr Martin assured Danmar that everything was in order and that he would meet with the City and clarify any misunderstandings. There were, after all, no direct dealings between Danmar and the City. Danmar therefore relied on Kemmish to address the concerns raised by the City. The City did not raise any further concerns with Danmar and this added to their perception that Kemmish had clarified whatever misunderstandings may have existed.
66 The Tribunal understands that the home building contracts that were entered into between Danmar and Moss Glades give the impression, at first glance, that Danmar was to be the registered builder. The Tribunal, however, accepts the explanation given by Mr White during the hearing that Danmar only used these 'off the shelf' pro forma contracts for reasons of convenience, and because in previous projects where it, (Danmar), had been the registered builder, it used similar contracts. Mr White conceded that with the benefit of hindsight, it might have been better to have clarified the relationship between Danmar and Kemmish with a tailormade contract, but he added that in the building industry it is common to have extensive oral, gentlemen's agreements upon which work is done.
67 Mr White said he also did not find it unusual that although the registered builder was Kemmish, the invoices had to be sent to Moss Glades. He said it often happened in the building practice, that he would be far advanced with building, before a contract is signed or before was is told who to invoice. Mr White further explained that it is not uncommon that the entity or person who is invoiced, is not the same as the person who gives instructions, or is not the same person as the registered builder.
68 The Tribunal notes that the BDT found that, in order to determine who the registered builder was, for purposes of proceedings arising from workmanship issues under the BR Act, it was Kemmish.
69 It is proper for this Tribunal to take the finding of the BDT into account and, unless the weight of evidence goes against it, to make a determination that is consistent with the finding. If not, it would give rise to a curious and confusing outcome where the BDT found that Kemmish was the registered builder for purposes of one proceeding, while the Tribunal found Danmar was the registered builder for purposes of another proceeding.
70 Finally, the Tribunal notes the consistency of the evidence given by Mr Martin and Mr Whyman in this Tribunal, and the evidence given to the BRB in the interview it conducted on 3 July 2007. In that interview, it was explained that:
71 In their interview with the BRB that took place on 25 January 2008, Mr Williams and Mr White also gave the following information that was consistent with their evidence before this Tribunal:
(e) Danmar was given 'repeated' assurances that building licences were current and plans had been approved;
(f) The standard contract was only used for purposes of convenience and did not reflect the entire agreement between the parties; and
(g) There was no reason for Danmar as subcontractor, to sight the building licences or the approved plans.
72 The Tribunal is therefore satisfied that on the basis of all the evidence and information before it, Danmar should be regarded as the subcontractor for Kemmish for purposes of these proceedings.
Was Danmar negligent in the discharge of its duties as subcontractor?
73 The BRB contends that, although the duty to take out a building license and to comply with building plans ordinarily lie with the registered builder, it is not in the nature of a nondelegable duty. Each registered builder, even those who work as subcontractors, therefore has a duty to ensure that a building licence is in place and that work takes place in accordance with approved plans. The exact nature and extent of the duty, and whether it has been properly discharged, are determined by the circumstances of each case.
74 The BRB therefore submits that Danmar, even if it was a subcontractor, was retained to do almost the entirety of the construction (except for the ground works), and it therefore had a duty to ensure proper building licences were in place and to sight the approved plans and to build in accordance with it.
75 The question, according to the BRB, is not who was ultimately responsible for the works, but whether the reliance of Danmar on the verbal advice it received from Kemmish was reasonable. The BRB says the reliance was not reasonable. According to the BRB 'each practitioner, in this case each registered builder, had a duty, the circumstances of each case will determine the extent of that duty', (para 20 of closing submissions).
76 The BRB refers to the matter of
Strempel v Wood & Anor [2005]
WASCA 163 in which it was found that in a matter of medical negligence, the
surgeon, at [63], should have also applied his own knowledge to
the type of
treatment required and should not only have relied exclusively on a colleague's
advice. The patient should have had
the 'benefit of two specialists applying
themselves to the issues and contributing to the assessment. The first
respondent made
no contribution' and that amounted to negligence,
see [69].
77 The BRB contends on the basis of this finding, that Danmar could not therefore rely exclusively on Kemmish since it, (Danmar), also had a duty of care to ensure that all building licences and plans were in place.
78 Danmar contends in reply that it was not negligent and performed its duties in a manner consistent with those of a reasonable and competent subcontractor. Danmar contends that it also uses subcontractors and it is not reasonable to expect a subcontractor to inspect or sight building licences or approved plans.
79 Danmar submits that as a subcontractor it did what was reasonable, by accepting the assurance from the registered builder that the building licences were valid, and that the building plans had been approved.
80 According to Danmar: Mr Martin, who is a director of Kemmish, is a registered builder; Kemmish was issued with the building licences; Mr Martin gave them the assurance that the building licences were valid; and that the respective plans had been approved. There was no reason to question the credibility of Mr Martin or to double check the correctness of the assurances he gave. In the evidence Mr White gave to the BRB, Mr Streeton, at T: [79] [25.01.08] said as follows:
You're dealing with a person who is a former City councillor, an architect and a registered builder. It would be only fair for us to assume that he knew what he was doing in relation to any negotiations with the council or anybody else regarding the building licence.
81 Danmar, who also uses subcontractors on other building projects, explained that it is not the duty of the subcontractor to apply for a building licence, to demand sight of the building licence, or to demand sight of the approved plans. Subcontractors take their instructions from the registered builder and if any breach of a building licence occurs, the registered builder is accountable. The same applies to adherence to building plans. It is common practice for a registered builder to provide unstamped plans to a subcontractor for detailed specifications to be added and for work to commence. It is therefore not negligent for a subcontractor to use unstamped plans provided to it by the registered builder.
82 The BRB did not refer the Tribunal to any decisions by other courts or specialist building bodies in Australia where the duty of care of a subcontractor in regard to a building licence or adherence to building plans had been considered.
83 The BRB also did not call any expert witness from the building industry to explain what the industry would see as the reasonable discharge of duties by a subcontractor in a similar situation as Danmar.
84 The BRB referred to the matter of Voli v Inglewood Shire Council (1963) HCA 15 (1963) 110 CLR 74 (29 May 1963) at 84 (Voli) where it was held that the test as to whether an architect who provided drawings and specifications for a specific stage of a hall, was negligent in the discharge of such duties must be determined on the basis of due care, skill and diligence of a person in the same profession. In those proceedings, it was found that an architect, could in some instances, use as a defence, that a third party had a duty to identify faults in plans for which the architect was responsible. The court stressed however that in those proceedings the architect could not raise as a defence that 'by obtaining approval in this case the architect shed all liability for negligence' at 88. This means that as far as the reasonable care of an architect in those proceedings were concerned, at 84:
... He is not required to have an extraordinary degree of skill or the highest professional attainments. But he must bring to the task he undertakes the competence and skill that is usual (emphasis added) among architects practicing their profession.
85 and at 85:
... And it is convenient, because whether a duty of care arises from a particular situation or relationship may be, and often is, a question of law; but whether or not that duty was performed is ultimately a question of fact, to be judged by what, in the circumstances of the particular case and in the light of the apparent risks, a reasonable man would or would not do. (emphasis added).
86 The test for the Tribunal is therefore twofold:
87 The Tribunal will now deal with these questions.
(i) Legal standard required from a subcontractor
88 The BRB refers to the matter of Re Lamperd [1983] 63 FCA 22, 470 at 476 477 which was adopted by the Queensland Building Tribunal when it considered the meaning of 'negligence' under a similar provision, Qbsa v Phipps Keith Ralph DO 2597 [1997] QBT 163 (25 September 1997).
89 The following standard was adopted to determine negligence:
The better approach is to seek to define the standard of care required, departure from which will be negligent, rather than to nominate a degree of departure which is necessary to make the negligence an offence.
90 In order to set the appropriate standard, the BRB
then refers to the matter of Builders' Registration Board of
Western Australia and Utopia Industries Pty Ltd [2006]
WASAT 295 (Utopia Industries) in which it was found that
failure to ensure that a valid building licence was in place, constitutes ground
for disciplinary action.
91 It must be noted, however, that in the matter of Utopia Industries above, the registered builder who was held to be negligent, was not a subcontractor. In Utopia Industries, the registered builder assumed that the project manager had applied for a building licence. The project manager was not the registered builder. The Tribunal in those proceedings found that there was a duty on the registered builder to ensure that a building licence was in place. The registered builder in the Utopia Industries matter was, however, not a subcontractor as in the proceedings currently before this Tribunal, and the person on whose advice it relied was not a registered builder.
92 The question remains therefore, what is the legal standard that applies to a subcontractor?
93 The BRB contends that the Tribunal's response to the two questions should be that:
94 The BRB further refers to the decision on the matter of Max Spiccia Homes Pty Ltd and Anor v Builders' Registration Board of Western Australia [2007] WADC 200 (Max Spiccia), in which it was held that a builder who relied on the oral assurances of a trusted worker that a building licence had been in place, had been negligent. The fact that the builder had commenced construction without 'having laid eyes on the licence' was negligent, at [97]. According to the BRB, Danmar was negligent in not sighting the building licence and not sighting the approved plans.
95 The Tribunal notes, however, that in these proceedings Danmar did not merely rely on the word of a worker or employee. Danmar accepted the verbal assurances from the registered builder to whom a building licence for the work had been issued. The situation in which Danmar found itself, therefore cannot be equated to the Max Spiccia matter.
96 The Tribunal is satisfied that, as is contended by the BRB, that a subcontractor has a duty to take reasonable steps to ensure that the work it does is properly approved and lawful. A subcontractor cannot accept an instruction from any person off the street and then defend itself in disciplinary proceedings by saying it had no duty to ensure that a building licence was in place or that a building plan had been approved.
97 The Tribunal is satisfied that a subcontractor has, in general terms, a duty to satisfy itself that a building licence has been issued and that the work is being done in accordance with approved plans.
98 This is an appropriate legal standard as referred to in the Voli matter. A subcontractor therefore cannot close his eyes and blindly accept an instruction to build from any person who purports to be a registered builder without even considering whether the information it receives is accurate or whether the person giving the instruction is lawfully entitled to give such an instruction.
99 In response to the first question, the Tribunal therefore is satisfied that the BRB has shown that a legal duty rested on Danmar as subcontractor to take steps that are reasonable to ensure that building licences have been issued and plans have been approved.
(ii) Was the reliance of Danmar on verbal assurances reasonable?
100 The nature and extent of the enquiries that fall within the duty of care of a subcontractor and what is regarded as reasonable, would depend on all the surrounding facts and circumstances.
101 The Tribunal is, however, satisfied that a subcontractor cannot rely on or use as an absolute defence, that it had no duty whatsoever to make enquiries about proper approvals in regard to a building licence or approved building plans, merely because it is a subcontractor.
102 It is obvious, as has been contended by the BRB, that the standard of enquiry expected of a registered builder doing very minor subcontracting work would be different from the standard required from a registered builder doing major construction. It is ultimately for the Tribunal to determine whether the necessary standard of care had been adhered to.
103 As was pointed out in the Voli matter, it is not an 'extraordinary degree' of care that is required. It is what is regarded as 'usual' by the normal standards of conduct in the profession.
104 The question for the Tribunal is therefore what would be the reasonable or usual level of care that is applied by the reasonable, competent and fairminded registered builder in a similar situation.
105 The Tribunal follows the legal standard set in the Voli matter, but we do not agree with the BRB that the circumstances of the Voli matter are of direct applicability to these proceedings.
106 In the Voli matter, the issue centred on the professional standard of design of an architect that relied on the defence that the plans had been approved by another body. In these proceedings, however, Danmar did not merely rely on the assurances of a third party. Danmar, as subcontractor, relied on the repeated assurances of the registered builder, Kemmish, who had applied for and had been granted the building licences and who had control over the building site. The facts in Voli can therefore not be equated to the facts in these proceedings.
107 The same can be said of the applicability of the Max Spiccia matter to these proceedings. In those proceedings, the court found that a builder who relied on the advice of a nonbuilder had acted negligently. The same does not apply in these proceedings where Danmar acted on the advice of Kemmish, who was a reputable, registered builder, who had applied for a building licence, who was granted a building licence, and who had a range of plans approved for construction.
108 The Tribunal must take into account all the facts and circumstances to determine if Danmar had been negligent by failing to act in accordance with its duty as a reasonable and competent builder given the nature and scope of works it had been retained to do.
109 The Tribunal carefully considered the submissions of the parties. It came to its decision after thorough analysis of the evidence and consideration of all the facts and information presented to it.
110 The Tribunal notes that the BDT did not call as expert witness, any person from the building industry to explain what the 'reasonable' standard would be within the industry in a matter such as the one under consideration. The Tribunal had the benefit of the experience of the two sessional members who constituted the Tribunal, and their understanding of the reasonable standard of care expected of subcontractors, was of great assistance.
111 The Tribunal is not satisfied that the BRB has shown that Danmar was negligent in the discharge of its duties as a subcontractor when it relied on the assurances given by Kemmish.
112 The Tribunal comes to this finding for the following reasons:
113 Flowing from the Voli decision, the Tribunal is not satisfied that a subcontractor in the same position and faced by the same circumstances as Danmar, would in the normal and usual course of its duties, have acted to the standard that the BRB proposes. In retrospect one might say that extraordinary care should have been taken by Danmar and that it should have bypassed the registered builder to make direct inquiries from the City but 'extraordinary care' is not the test for what the reasonable and competent subcontractor would have done.
114 The Tribunal concludes that the BRB failed to show that Danmar was negligent in the discharge of its duties as a subcontractor in regard to the building licences and the building plans. It was reasonable for Danmar to have relied on the repeated verbal assurances given by Kemmish that building licences had been issued and that plans had been approved.
Summary of findings
115 The findings of the Tribunal in reply to the issues identified by the parties are therefore as follows:
116 The Tribunal finds that there is not a proper cause for disciplinary action against the first or the second respondent.
117 The application should therefore be dismissed.
118 The application for costs will be dealt with in subsequent proceedings.
Orders
I certify that this and the preceding [118] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
DR B DE VILLIERS, MEMBER
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