QLD: Q&A Who Do We Pursue for Building Faults in our Strata Scheme?

These Q&As are about the cost of building faults in Queensland. Who is responsible for the cost of repair?

Table of Contents:

• QUESTION: Our body corporate has just discovered concrete spalling in the building. This will cost around $1.2 mill to fix. The builder went broke and we’re wondering whether we can make a claim against the Certifier?
• QUESTION: Our 4 year old building is full of defects. The committee has taken the builder, who is also a lot owner in our building, to QBCC. The builder took a fine and cancelled his builder license rather than fix the building. We’ve found he is now operating under a new ABN. What are our rights?
• QUESTION: What warranty is afforded bodies corporate/owners of apartments in new build residential HIGH RISE complexes in Queensland?
• QUESTION: Our new building has many defects. An EGM was recently held and 13 of the 17 owners voted to take the case to QCAT for mediation, but the developer who owns 6 units was able to vote the special resolution down. What do we do now?
• QUESTION: Our complex has major building faults. The builder has entered into a deed of company arrangement. Should the body corporate approach the QBCC in relation to the matter?
• QUESTION: We have a building fault. The exhaust for the fire pump diesel engine is directed into the basement car park and fills the car park with fumes and smoke when tested once a month. Who do we chase to have the work rectified?
• QUESTION: A serious building defect affects every lot. Some lot owners have had the problem repaired at their cost. If the body corporate was found responsible, can those lot owners seek reimbursement?
• QUESTION: What happens when building faults in one unit cause damage to another unit? Defective plumbing installation to one unit has cause damage in the unit below. Who is liable?
• QUESTION: Is there an official line of recourse in Queensland for purchasers when building faults in an apartment block continue to appear shortly after the ‘builder’s guarantee period’ has expired?

Question: Our body corporate has just discovered concrete spalling in the building. This will cost around $1.2 mill to fix. The builder went broke and we’re wondering whether we can make a claim against the Certifier?

Two years ago we purchased an apartment in Brisbane. Our body corporate has just discovered the building has concrete spalling. The Engineer Report states that the spalling is due to insufficient concrete cover at the edges of the balconies. Isn’t this something the Certifier should have picked up?

The cost of the repairs is expected to be around $1.2m. We have 98 units in the two affected buildings, so that’s a significant cost to each owner. We’ve been advised that the builder went broke and we’re wondering whether we can make a claim against the Certifier?

Answer: A body corporate has a number of options to pursue a certifier for defects at the Scheme.

Like with builders, a body corporate has a number of options to pursue a certifier for defects at the Scheme.

These include:

1. a complaint to the QBCC for unsatisfactory conduct or professional misconduct of the certifier;
2. commencing proceedings against the certifier; and
3. commercial negotiations with the certifier.

These claims can be more difficult to pursue, however, as the body corporate will need to be able to demonstrate that the building defect was so obvious at the time of certification that the certifier should have reasonably identified it.

Like with all building defect claims, the appropriate approach to be taken by the body corporate will be determined by a consideration of the cost of the repairs, urgency of the repairs and progress being made with the certifier (or any other responsible party) regarding the defects.

Francesca Barnes
Mahoneys
E: [email protected]
P: 07 3007 3724

This post appears in the August 2022 edition of The QLD Strata Magazine.

Question: Our 4 year old building is full of defects. The committee has taken the builder, who is also a lot owner in our building, to QBCC. The builder took a fine and cancelled his builder license rather than fix the building. We’ve found he is now operating under a new ABN. What are our rights?

Our building is 4 years old. The committee has already taken the builder to QBCC regarding fire, waterproofing and roofing defects and the builder chose to fix some of the DTRs and then opted to take the $2500 fine and 4 demerit points rather than address the $100k plus costs associated with rectifying the remaining issues. The builder and developer still own 6 of the 24 units, and successfully voted down a motion at our AGM to take the builder to QCAT to recoup the $40K spent getting our building compliant. 

We now have drain pipes falling away from the building and failed waterproofing which has allowed water to penetrate the concrete slab at the entrance, causing the slab to erode significantly. 

When we approached the builder regarding these matters, he sent an email saying he was retiring from the family business and cancelling his builder’s licence. Several owners are now experiencing leaks in their units and going through QBCC again. The committee has recently discovered the builder is now trading under a new name and ABN and has reactivated his builder’s licence. 

What are our legal options?

Answer: Bodies corporate do have rights of subrogation into the developer’s shoes with contractual rights against contractors, but that starts with the contractual documentation.

The first is that a body corporate has a statutory duty to keep common property in good condition. That means defects must be addressed and not left to wait until court proceedings or the QBCC might produce an outcome. And dare I say it, if the developer still owns a quarter of the lots through ownership, then dealing with that now at least means they get to share in the costs as an owner.

The second is control of the general meeting. The answer is way more complex than would serve here, and it really is looking at whether those votes can be overturned or ignored so the body corporate can do what it should.

Then you need to look at the rights of the body corporate to recover from someone and that then sounds a bit messier, but bodies corporate do have rights of subrogation into the developer’s shoes with contractual rights against contractors, but that starts with the contractual documentation. But you have to start with the first two. Then look at this.

Frank Higginson
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in the February 2022 edition of The QLD Strata Magazine.

Question: What warranty is afforded bodies corporate/owners of apartments in new build residential HIGH RISE complexes in Queensland?

If the statutory warranty period in QLD applies only to construction of DOMESTIC new homes, related roofed building (e.g. a garage), townhouse or multiple unit dwelling (no more than 3 storeys), what warranty is afforded bodies corporate/owners of apartments in new build residential HIGH RISE complexes in Queensland?

Answer: The QBCC will investigate complaints about defective work for highrise buildings up to 6 years and 6 months from the completion date

The QBCC Home Owners Warranty Scheme does not apply to highrise buildings, however the QBCC will still investigate complaints about defective work for highrise buildings up to 6 years and 6 months from the completion date.

Before approaching the QBCC, owners should attempt to resolve any building defects directly with the Builder by undertaking a building defects report. Failure to reach a resolution with the builder and/or through the QBCC complaints process, we recommend lodging a complaint with QCAT. For further information, visit: QCAT Building disputes

Dean Potgieter
Seymour Consultants
E: [email protected]
P: 07 5573 4011

This post appears in Strata News #454.

Question: Our new building has many defects. An EGM was recently held and 13 of the 17 owners voted to take the case to QCAT for mediation, but the developer who owns 6 units was able to vote the special resolution down. What do we do now?

We are 3 years into our new residential build. Our building had its first ever fire and safety audit last year and over $100k in defects were identified which ended up being lodged with QBCC. DTRs were issued, however, the builder didn’t complete all DTRs leaving substantial costs to lot owners to wear.

An EGM was recently held and 13 of the 17 owners voted to take the case to QCAT to have it mediated, but the developer who owns 6 units was able to vote the special resolution down single-handedly. He refuses to believe the independent auditors have it right and has indicated to the committee and owners that this is a witch hunt and will not support any committee action to either pursue the builder through QCAT or raise funds to repair the defects directly.

Our committee is inexperienced and unsure of what our next steps should be to try and get the building compliant.

Answer: General meeting outcomes can be challenged through the Commissioner’s Office, on the grounds that the decision was unreasonable.

General meeting outcomes can be challenged through the Commissioner’s Office, on the grounds that the decision was unreasonable.

Given the situation you describe and the potential for further difficulties in voting on this and related matters, I strongly recommend that the committee seek qualified legal advice about both the challenge of the general meeting outcome, as well as the building defects situation more generally. I say that on the assumption that there would not be the same difficulties on voting at committee level as the ones you describe happening at general meeting level.

These are complex matters, particularly for a committee which you describe as inexperienced.

There are time limits on some of these things so I also recommend that you seek out legal advice sooner rather than later.

Chris Irons
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in Strata News #429.

Question: Our complex has major building faults. The builder has entered into a deed of company arrangement. Should the body corporate approach the QBCC in relation to the matter?

Construction of our multi unit complex was completed less than 3 years ago. The complex consists of 2 buildings each with 25 units with car parks underground and extending under both buildings.

The buildings are more than 3 stories and hence outside the scope of section 67 of the QBCC Act.

Large cracks have appeared in the roof of one of the buildings. Water has entered the ceiling of one of the top floor units through one such crack and has caused extensive mould damage to the ceiling.

There is every likelihood that other units will be similarly impacted unless expensive remediation work is undertaken. The body corporate is of the view that the builder should be obligated to remediate the defective work.

Just prior to completion of the building (the developer engaged another builder to complete the project) the builder, to avoid liquidation, entered into a “deed of company arrangement” which now appears to be complete. The company continues to trade.

The question then is “does the completion of the deed of company arrangement prevent the body corporate from having recourse to the builder in respect of work undertaken prior to execution of the deed?”

A comment would also be appreciated on whether it would be appropriate for the body corporate to approach the QBCC in relation to the matter.

Answer: The Body Corporate should make a complaint with QBCC.

At first glance, I would say the Body Corporate should make a complaint with QBCC. While it may not have recourse to the Home Warranty Insurance Scheme (because it is in excess of 3 storeys) that does not preclude QBCC from issuing a direction to rectify to the contractor responsible for the work – or the licensee responsible for the work if the contractor entity is no longer in existence.

If the relevant time limits are able to be met, then there is nothing that I can see from the information provided that would suggest the Body Corporate would be prejudiced by making a complaint.

I note the advice that a DOCA was entered into and has subsequently been satisfied. That may or may not have a bearing on a civil claim, we would need to consider the terms. However, it probably won’t matter for the purposes of a QBCC complaint.

You can download our guide to building defects (which has a lot more detail) here: Concerned about building defects in your building?

Frank Higginson
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in Strata News #344.

Question: We have a building fault. The exhaust for the fire pump diesel engine is directed into the basement car park and fills the car park with fumes and smoke when tested once a month. Who do we chase to have the work rectified?

Our building is four years old and recently it was discovered by our new fire management company that we have a building fault. The fire pump set, which all buildings require, was installed contrary to not only the requirements of the Fire and Emergency Services Act but also the Health & Safety legislation. The members of the committee have always felt that it was a shoddy design but didn’t think we had any redress at all.

In short, the exhaust for the diesel engine is directed into the basement car park and fills the car park and the close units with fumes and smoke when tested once a month.

Clearly, this needs to be rectified but at whose expense? My approach to the builder has been met with stony silence, so I need to know who I should chase to have the building fault rectified. Would it be:

• the installer who the builder engaged to have it installed;
• the builder’s project manager;
• the certifier who signed off on the installation
• or does the body corporate have to wear the rather large expense to have the exhaust directed outside the building and up the outside wall.

Any assistance you can give will be greatly appreciated.

Answer: Effectively, the body corporate is placed in the developer’s shoes for the purposes of the contracts that were entered into.

There are a number of avenues that a committee can take in a situation like this – but effectively, the body corporate is placed in the developer’s shoes for the purposes of the contracts that were entered into. So the starting point is what documentation around the works the body corporate has (where the developer has an obligation to provide the documents to the body corporate).

We have assisted a number of bodies corporate in similar situations and have published a guide for committees that can be accessed here: Concerned about building defects in your building?

That may assist the committee with more information about what avenues it can take.

Frank Higginson
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in Strata News #278.

Question: A serious building defect affects every lot. Some lot owners have had the problem repaired at their cost. If the body corporate was found responsible, can those lot owners seek reimbursement?

Assume a 100 unit building under the Queensland standard module with an identical costly serious problem for each unit that some owners have had fixed of their own accord at their cost.

Should it become evident subsequently that the body corporate was in fact responsible for such repairs, are those owners entitled to seek reimbursement for the reasonable costs incurred?

Alternatively, and further assuming insufficient sinking fund monies are available, is the body corporate legally able to raise a special levy that is only payable by those owners yet to have their work done or does a special levy need to be raised that is payable by all owners that includes a sufficient amount to reimburse the reasonable costs of those who have already had the work done?

Answer: This is obviously a difficult one to answer and will depend on the circumstances.

As always – it depends.

The starting point is to determine who is responsible for the issue – is it:

• Owner; or
• body corporate.

If it is in fact body corporate, the next question is whether owners carried out the repair work:

• as an improvement; or
• to fix the issue that the body corporate is responsible because the body corporate had failed to carry out its obligation.

This is obviously a difficult one to answer and will depend on the circumstances – i.e. did the owner demand any repair work from the body corporate, did they improve the area requiring repair work, etc.

If the work was carried out by owners because the body corporate hadn’t the owners would have a decent position to be able to recover those costs from the body corporate. However, if the body corporate needs to raise a special levy, it cannot be selectively applied only to some owners.

We can probably provide considered and specific advice if the poster gets in touch with us.

Frank Higginson
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in Strata News #258.

Question: What happens when building faults in one unit cause damage to another unit? Defective plumbing installation to one unit has cause damage in the unit below. Who is liable?

The plumbing in a unit on the second level was defectively installed such that the outlet pipe for the condensate from the air conditioner was not connected to a water evacuation pipe. The air conditioner itself was correctly installed with the outlet hose correctly inserted into the internal piping within the wall.

Unfortunately, the internal piping finished in the ceiling of the unit below. This position was established when the condensate generated by the air conditioner in the unit on level 2 leaked through the inside of the wall and saturated the carpet in the unit directly below on level 1. The wall is an internal wall separating the lounge from a bedroom.

The building fault has now been rectified at a cost of approx $3000 of which the owner of the unit on level 1 anticipates an insurance recovery of $1500.

The units are less than 2 years old but the builder and the plumber have both gone bankrupt or been placed in liquidation.

The owner of the unit on level 1 is seeking to recover the excess of costs of approx $1500 from the owner of the unit on level 2. The owner of the unit on level 2 only recently purchased the previously unoccupied unit and obviously was unaware of the building fault, in this case, defective plumbing installation. He accepts no responsibility for the damage to the carpet and wall in the unit below and is refusing to pay any amount of the costs of rectifying the problem.

Who is liable for the damage caused to one unit due to building faults in another unit?

Answer: It isn’t relevant that the owner of the lot on level 2 was unaware of the building faults. The Lot Owner on level 2 would be responsible for the consequential damage.

Owners are responsible for maintaining utility infrastructure that only services their lot. So if the installation was done poorly for the pipe servicing only the lot on level 2 and that caused damage to the lot on level 1, the owner of the lot on level 2 would be responsible for the consequential damage. It isn’t relevant that the owner of the lot on level 2 was unaware of the defect.

Frank Higginson
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in Strata News #224.

Question: Is there an official line of recourse in Queensland for purchasers when building faults in an apartment block continue to appear shortly after the ‘builder’s guarantee period’ has expired?

As a regular reader of your Strata News, I would like to inquire if there is an official line of recourse in Queensland for purchasers when building faults in an apartment block continue to appear shortly after the ‘builder’s guarantee period’ has expired.

Building faults, in this case, are plumbing problems and a ‘final plumbing certificate’ has never been presented to the Body Corporate. The builder has always maintained that the building would never have been given its final certificate (now 7 years since) if there had been any problems with the plumbing.

Answer: There is essentially a statutory cap on taking actions for issues more than 6 years after the issue was created.

The answer to this is potentially very long. The shortest of short versions is that there is essentially a statutory cap on taking actions for issues more than 6 years after the issue was created. This can be extended if the issue was not known about provided that it could not have been known about.

On top of that is the commerciality of taking any action. Legal proceedings can be expensive (and are never guaranteed for matters of this nature) so you need to assess the costs / benefit of that against what it would cost just to fix the building faults on your own.

The developer has statutory obligations to hand over records, but many do not. I think it would start with making enquiries of the local authority about what they may have as part of their records and then chasing the developer for what they had if the local authority had nothing.

Frank Higginson
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in Strata News #216.

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• QLD: Q&A Rules about what is covered by body corporate
• Guide to Body Corporate Building Defects

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