QUEENSLAND CIVIL AND 
ADMINISTRATIVE TRIBUNAL

CITATION:	Winchester v Knapp t/as Knapp Constructions Pty Ltd [2022] QCAT 61	
PARTIES:	Jeanette winchester 	
	(applicant)	
	v	
	Mark Knapp T/as knapp COnstructions Pty Ltd	
	(respondent)	
APPLICATION NO/S:	BDL194-20	
MATTER TYPE:	Building matters	
DELIVERED ON:	15 February 2022	
HEARING DATE:	On the papers	
HEARD AT:	Brisbane	
DECISION OF:	Member McDonald	
ORDERS:	Mark Knapp t/as Knapp Constructions Pty Ltd shall pay Jeanette Winchester the sum of $320 forthwith. 	
CATCHWORDS:	BUILDING REPORT – whether breach of contract – whether report complies with Australian Standards – where report provided by licenced contractor – whether report caused loss 
Queensland Building and Construction Commission Act 1991 (Qld), s 42 
Fair Trading Act 1989 (Qld), s 50, 50A
Billingham and Anor v Schluter t/as Better Building Inspections Qld [2018] QCATA 165
Clarke and Clarke V Prime Building and Pest Inspection
[2014] QCAT 325

APPEARANCES & REPRESENTATION:		
Applicant:	Self represented	
Respondent:	Self represented	
	This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)	

REASONS FOR DECISION
Background
[1]	This application is brought by Mrs Winchester who has relied on a building report of the Knapp Constructions Pty Ltd (hereafter “the Respondent)” when purchasing her residential property. 
[2]	Two major defects, in the roofing and flooring have become apparent in the months following settlement, and she argues that the Respondent has been negligent in failing to comply with the Australian Standards. She claims that due to this she has lost the opportunity to renegotiate the purchase price or repairs, or to terminate the contract within her rights. She claims damages for the cost of replacement of the roof, $25,000, and replacement of the timber floor, $7,284, Restitution for unlicenced contracting, $420 and costs of $475, a total of $33,179. She asserts that she has rights and remedies available to her for breach of contract, negligence and for breach of the Australian Consumer Law. 
[3]	Mrs Winchester, on 6 June 2018, entered into a contract to purchase a residential property subject to a satisfactory building and pest report being obtained with 14 days.
[4]	Mrs Winchester requested the real estate agent involved in the transaction to organise a building and pest report on her behalf. The agent contacted Amalgamated Pest Control, (APC), who undertook a pest inspection, and APC engaged the respondent to undertake a pre- purchase building report. She paid APC $440 in cash on the date of inspection and received a receipt from APC for the requested works which stated building and pest inspection. The respondent builder states that he was paid $220 by APC. APC performed the pest inspection and reported the results of their inspection in a separate document.
[5]	The respondent undertook the building inspection on 7 June 2018, and the report was provided to Mrs Winchester.  Although Mrs Winchester had requested to be present at the inspection, the inspection occurred prior to her arrival, and the parties subsequently discussed the inspection outcome on site immediately after the inspection. Mrs Winchester stated that in this discussion the only significant matter brought to her attention was the state of the gutters. Mrs Winchester, following receipt of the report then negotiated with the vendors to replace the guttering arising from the identified major defect. She claims this was the only major defect conveyed to her verbally. She submits that the Respondent failed to comply with the Australian Standard AS 4349.1.2007 Inspection of Buildings – Pre purchase inspections – Residential Buildings in a number of ways. She submits that in breach of these Standards, the Respondent was not licenced to perform the works undertaken; and did not provide a pre-engagement contract to undertake the report.  She submits further that inspection was inadequate and non-complaint with the standard, failing to identify and report on the defects in the roofing and floor space which resulted in her having to undertake extensive and costly repairs, where she argues, failing to undertake the report with due care and skill as an implied term of the contract and a failure to comply with the Australian Standard an act of negligence. 
Mrs Winchester’s Claim
[6]	Mrs Winchester argues that major defects in the roof were not identified, and the respondent had a duty of care to find and report these defects, but that his inspection of the same was inadequate and did not meet the standard required. Similarly, Mrs Winchester submits that the floorboards, subsequently found to have extensive and longstanding borer infestation was not adequately inspected as there was no examination of the suspended floor from under the house. In the months following the purchase, Mrs Winchester fell through these floorboards as a result of the borer damage, and suffered some degree of injury as a result. 
[7]	Mrs Winchester has presented evidence of the damage to the roof identified in notations of Pony Plumbing and Drainage on 4 September 2019, who stated: 
“Inspection of the roof as customer informed by other tradesmen roof was in very poor condition and unable to install new solar panel on roof. On inspection we found the roof in an unrepairable condition, and it was unsafe to walk on or make repairs, having very bent roof sheets, extremely large rust holes and missing most of the nails/ screws that hold it on, and we also located rotten timber battens that were above the bathroom and needed replacement. In my opinion, this work should have been foreseen by the building and pest inspection and necessary arrangements made before purchase as this roof because this roof required major structural repair, and structural curving grade iron which was quoted to the customer at approx. $25,000 to replace.”
[8]	Mrs Winchester also provided photos of the roof when detached post rectification, which demonstrated apparent curvature and rusting in the sheets.
Respondents Submission
[9]	The Respondent argues that there is no contract between the parties, and he was engaged by APC, and paid by them directly. He claims that there is no contractual relationship between them and there can be no claim on the basis of breach of contract. He stated that he was licenced to perform the works in his personal capacity as a builder, but his company Knapp Constructions Pty Ltd who provided the report was not at the time licenced, and has since been fined by the QBCC for this. He admitted his misapprehension that being licenced in his personal capacity would extend to his company.
[10]	The Respondent rejects Mrs Winchester’s assertion that the report did not identify major defects in the roof. He claims that this was clearly highlighted as a significant matter in accordance with the Standard. He drew attention to the Report Section 2 “Significant Matters”, which identified that the roof was “below average” and that repairs were required to repair roof and gutters.” 
“	At the time of inspection, the building and its parts are poorly maintained showing roughly executed workmanship neglect or lack of repairs and maintenance. There may be repairs or defects leading to substantial repair or remedial work required.”
[11]	He drew attention to the report identifying “rusted roof sheets” with photographic evidence noted that he had identified the roof as below average, using the above definition. Further, he noted that the report stated that sheet roofing had rusted through and parts needed re-screwing, and sections of roof ridge were identified as missing. These were both identified as below average using the definition contained above. Photographs were identified demonstrating the concerns.  Guttering was identified as below average also with a significant number of gutters rusted through.  Water leaks in the bathroom ceiling was identified due to missing ridge capping. Identification of the water leaks in the bathroom ceiling was prefaced by a recommendation for a special purpose inspection report. 
[12]	The Respondent argues that the roof space inspection was limited, and this limitation was noted on the report. He stated that he identified that “head room only” was available through the manhole to inspect the roof space.  
Are there rights under the Australian Consumer Law? 
[13]	The applicant seeks to rely on the Australian Consumer Law s 236, asserting entitlement to damages for the Respondent’s conduct in failing to identify these defects. However, the Fair Trading Act 1989 (incorporating the Australian Consumer Law) (Qld) only extends the Tribunal’s jurisdiction to consider the Australian Consumer Law to the minor civil dispute jurisdiction, for consumer trader disputes arising from a contract, and particular motor vehicle purchases, and consequently this avenue is not available to the applicant, whose application is in the minor commercial building dispute jurisdiction.  
Are there contractual rights?
[14]	The facts indicate that a third-party real estate agent engaged the building inspection through APC. There is not a contract between the parties. No terms were negotiated by Mrs Winchester through the third party, by instructing this third party to organise a building inspector, in the absence of instructions, Mrs Winchester accepted the terms upon which the builder was engaged. Mrs Winchester submits that a contractual relationship existed and relies upon the case of Clarke and Clarke v Prime Building and Pest Consultants [2014] QCAT 325, arguing that despite no signed agreement the parties had engaged the inspector. 
[15]	The Tribunal accepts the respondent’s submissions that Clarke was not authority for the existence of a contractual relationship in the absence of a contract. The Member found that the parties could not have agreed to a specific limitation of the report, in the absence of a pre-negotiated contract when it was received after the inspection.  The parties in applicant in Clarke directly engaged the inspector, which can be distinguished from these facts where a third party engaged the building inspector, and the Respondent was engaged on their terms. I find that Mrs Winchester has no contractual rights arising from this dispute. 
Did the report meet Australian Standards regarding (i) Pre-Engagement Contract and (ii) Licensing Requirements? 
[16]	Mrs Winchester argues negligence due to the Australian Standards though the report process and outcome. The relevant Standards is: Australian Standard AS 4349.1.2007 Inspection of Buildings – Pre purchase inspections – Residential Buildings
[17]	The report declares that it complies with these Standards, and is bound by them. The absence of a pre-inspection agreement is clearly a breach of the Standard. But in order to be successful in an argument in negligence, given the principle of causation, this breach would have to led to a loss. I do not accept that a failure to have a negotiated pre-inspection agreement has led to loss.
[18]	Similarly, the Respondent is in breach of the Standard where his company who provided the report, was not registered to provide the report. Again, causation is a necessary element, and I do not accept that this breach has caused Mrs Winchester loss, given that the author, in his personal capacity was registered at the time. I find that a breach of this standard has not caused Mrs Winchester’s loss. 
[19]	 However, s 42 Queensland Building and Construction Commission Act prohibits unlicenced builders must not perform building work. The QBCC have found investigated and determined that Knapp Constructions Pty Ltd undertook the building unlicenced contracting in relation to building work at the premises.  I find that the Respondent was not licenced to undertake building inspections at the time.
[20]	A person who carries out unlicenced building work is prohibited by the QBCC Act from receiving monetary or other consideration for the unlicenced work. Therefore, Knapp Constructions Pty Ltd is not entitled to the inspection fee he received and must repay this to Mrs Winchester.  Mrs Winchester claims she paid APC in the sum of $220 which he received for the report. $440 for in cash. The respondent claims his payment by APC for the building report component was $220. I accept that the amount Mrs Winchester seeks restored to her includes the balance for the pest inspection, and is beyond the scope of this application. I make order that the respondent refund the $220 he received to perform this work. 
Did the Inspection Report satisfy the Australian Standards as it pertained to the Roof and Flooring? 
(i)	Roofing and Roof Space
[21]	The Standard requires defects to be fully described, and any limitations to the scope of the inspection to be declared. Major defects are to be reported. 
[22]	The Standard states: major defect is defined as “a defect of unsafe conditions of sufficient magnitude where rectification has to be carried out in order to avoid unsafe conditions loss of utility or further deterioration of the property” 
[23]	The inspection shall comprise of visual assessment of the property to identify major defects and form an opinion about the condition of the property at the time of inspection.
[24]	The Standard also requires the report to identify areas that were not inspected and the factors that prevented inspection. 
[25]	Clause 3.2.1 specifies that the roof space roof exterior and sub -floor space are areas that shall be inspected where applicable. This however is subject to safe and reasonable access, the inspector shall determine whether sufficient space is allowable for safe access. Reasonable access shall be determined in accordance with s 3.2 with the roof exterior accessible from a 3.6 m ladder, and roof interior 400 x 500 access space and 600 x 600 crawl space. The report clearly states that only areas that had reasonable access in these terms were inspected. 
[26]	Mrs Winchester submits that Mr Knapp did not adequately discuss verbally with her these defects, and she relied upon this in her negotiations around the purchase. However, the report itself stands as documented evidence of matters brought to Mrs Winchester’s attention, and clearly indicate that there are significant issues with the roof requiring repair. The report provides contact details of Mr Knapp and invites further inquiries for matters arising from the report. 
[27]	Mrs Winchester submits that the report fails to make sufficient comments in relation to the floor space, as required by the standards, at C1, and C5, and of the Roof space as required by C3 and C4, to ensure the report clearly identifies the hazard in such a manner that it is not easily overlooked.
[28]	She submits that the Respondent was under an obligation to further inspect the causes of the damp damage which was the “in the main area of rotten roof battens in the dwelling, necessitating its replacement.” She relied on the Billingham v Schluter trading as Better Building Inspections [2017] QCAT 367, (“Billingham”). She asserts that there is no evidence that further inspection of this area was carried out.  In Billingham the Tribunal did find a breach of the Standards for failure to report on limitations to the scope of the report, where the defective wall had not been inspected. The report was found to be not deficient in failing to identify the defect, but in failing to note the limitation on access to do the inspection.
[29]	In the current report, limitations on the roof void and sub floor were specified as part of “Important information” regarding the scope and limitations of the report” stated at page 2. These limitations are consistent with the requirements for reasonable access within Australian standards. 
[30]	No specific measurements are provided about the space to void to inspect the roof space or manhole. Mrs Winchester has submitted photos of the manhole. But it is noted as “head room only” suggestive that the space is not amenable to further physical inspection.  The standard requires line of sight inspection. 
[31]	I find that the inspector exercised his discretion within the standard to determine whether there was sufficient space for access. Further, the inspection of the Roof Space was to standard, where it noted a head room only basis for the conclusion drawn, and the assessment was made from within the line of sight from that point. 
[32]	The Standards reporting requirements specify that the inspector shall appraise building elements for the presence of defects as specified in Table 3.3; and where the defect does not fall neatly into one of the categories of defect described and the inspector “should use a combination of the defect properties or otherwise assess and describe the defect in his/her own words based on his or her own experience”.  
[33]	The report very clearly identifies defects in rusting roof sheets accompanied by photographs, missing ridges, rusted sheets and need for re-screwing were identified.
[34]	I accept the Respondent’s submission that the roof exterior issues were brought to Mrs Winchesters notice in the report. 
[35]	I find that the defects in the roof exterior were sufficiently identified as a major defect and drawn to Mrs Winchester’s attention, identifying that it may require substantial repair or remedial work.  The limitations to access for inspection of the roof space beyond a line-of-sight inspection were clearly identified in the report. There was no access to observe trusses and beams and this limitation was identified.  I find that the roof and roof space inspection was complaint with the standard. 
[36]	Further, the report specifies that further special purpose investigations may be required for “water leaks” where “bathroom ceiling missing ridge capping front guttering and basin”. I find that issues with damp damage in the ceiling were brought Mrs Winchester’s notice and recommendations for further investigation made. 
(ii) Flooring
[37]	Mrs Winchester states “The respondent should have identified and reported the borer damage to the floor of the dwelling, and as such is jointly responsible for the loss caused to the applicant”. She claims that inspection the sub floor would have identified this damage, but was not undertaken. She noted a subsequent building and pest report she obtained on 18 January 2021 identified the moderate to extensive borer damage, and the QBCC Investigation report had identified that such damage had “almost certainly been there for an extensive period of time.”
[38]	Mrs Winchester noted that for both these report the sub floor was inspected by crawling under and photographs were taken. She submitted it was “highly likely that the underfloor was not inspected and there is no evidence that it was. 
[39]	It is relevant to note that the report Ms Winchester relies on in relation to the evidence of borer damage is both a timber and pest report undertaken in 2021. The Standards for pest inspections did not apply to Mr Knapp, whose inspection was limited to the building inspection, and regulated by AS4349.1-2007 Pre-purchase Building Inspections – Residential Buildings. 
[40]	Mr Knapp’s report notes that the floor was inspected and concludes the condition of the timbers were “average” which, by definition contained at page 5 indicated that:
“there may be components requiring repair and maintenance consistent with the dwelling of a similar age or construction. There were no significant times or problems that we (sic) not consistent with the structure or similar age or construction at the time of inspection” 
[41]	The evidence of the age of the building’s construction is provided by Eva Schmidt on behalf of the Respondent.  This states that home was built around 1890, and compared to houses built around that time.  That age is not disputed. The report only purports to make comparisons with houses of a similar age that have been maintained.
[42]	Mrs Winchester refers to damage arising from borer damage in the floor. 
[43]	Mr Knapp submits that he was not responsible to report on pest damage and that the report specifically referred to the strong recommendation for a timber and pest inspection. The report specifically states that it cannot make comment upon the presence or absence of timber pests.” He draws attention to the report referring to the flooring in the veranda demonstrating rotting and splitting floor boards on the veranda, and timber floors were “average,” and that average was identified at page  5 of the report as meaning that repairs may be required and at the time of inspection there were no significant items noted at the date of inspection. 
[44]	I find Mr Knapp has complied with his obligations under the standard in relation to the flooring by putting Mrs Winchester on notice that there are further investigations required in relation to Timber materials in the house, the Timber floors being one of them. 
[45]	I find that Mr Knapp has complied with the Standards in relation to the floor inspection and reporting of limitation to the report. I find that he provided notice of the limited scope of the timber inspection and made recommendation for Mrs Winchester to obtain a specialised timber inspection report to be pursued. 
[46]	It is further noted that the house was purchased by Mrs Winchester for $195,000 and that she renegotiated for repairs to guttering arising from the building report. The vendors carried the costs of the gutter repairs.  In the year immediately prior to the purchase, the house sold for $259,000 on 5 April 2017. There is no evidence of market conditions before the Tribunal, which might rebut the reasonable inference that the significant drop in the market value may have been influenced by the condition of the property
[47]	I find that the inspection and reporting of floor was performed within the Australian Standards. The Respondent has not breached his duty of care in relation to the flooring inspection. There being no breach of duty in these matters, there can be no compensation for loss relating to the roof and flooring incurred by Mrs Winchester. 
Remedy
[48]	There remains, however, a breach of duty for failure to comply with the Standards regarding pre-engagement contracts and licensing of the entity which was responsible for the report. In order to recover substantial damages, the applicant must establish that a breach of that duty has resulted in a loss of opportunity of some value.  There is no evidence of loss or damage caused by the breaches in relation to pre-engagement contracts and licensing.
[49]	Ms Knapp argues that she lost the opportunity to renegotiate the contract terms or terminate the purchase due to breaches of the Standards. However, these breaches do not flow from the failure of the company who issued the report to be registered, where that the report was ultimately authored by Mark Knapp in his personal capacity who was registered at the time. 
[50]	The absence of a pre negotiated contract denied Mrs Winchester the right to have notice of, and agree to, the terms of report.  However, the report itself, adopted which adopt the exclusions in accordance with the Standards. Since I have made findings the report was performed in compliance with these Standards, Mrs Winchester has not made out that she has sustained a loss arising from the absence of a pre- negotiated contract, nor the non-registration of the entity issuing the report. 
[51]	Nominal damages have been identified as appropriate where there has been a legal wrong, but no direct causation.  The sum of $100 has been identified as appropriate amount of nominal damages. Accordingly, Mrs Winchester is entitled to the $220 Inspection fee, plus nominal damages in the amount of $100. She would also be entitled to a filing fee, however, the record indicates that the filing fee was waived for the application filed 17 August 2020 and the Amended application filed 22 March 2021.  
[52]	I make order that Mark Knapp T/as Knapp Constructions shall pay Jeannette Winchester the sum of $320 forthwith.