Mansoor & Rezaee v Queensland Building Services Authority
[2011] QCAT 53
•10 February 2011
| CITATION: | Mansoor & Rezaee v Queensland Building Services Authority [2011] QCAT 53 |
| PARTIES: | Mr & Mrs Mansoor & Taraneh Rezaee |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | QR084-06 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Barry Cotterell, Member |
| DELIVERED ON: | 10 February 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | [1] The Decision of the Respondent dated 15 June 2006 is set aside. [2] The Tribunal substitutes a decision that the Applicants’ claim is dismissed for the reasons set-out in these reasons. [3] If a party wishes to apply for a costs order, the application and submissions shall be filed and served within 14 days of this order and the application shall be determined on the papers. |
| CATCHWORDS : | Review application – statutory insurance scheme - sections 5.1 & 7.2 of the QBSA Insurance Policy – all claims under this policy will be made within three months of the defect first becoming evident – exercising the discretion to allow such further time as the BSA may allow Ackermann v QBSA (2006) QCCTB 4, applied |
APPEARANCES and REPRESENTATION (if any):
| Decision on the papers |
REASONS FOR DECISION
Introduction
This is an Application to review the Respondent’s decision dated 15 June 2006 to reject the Applicants’ claim for insurance made pursuant to the statutory insurance scheme administered by the Respondent (“the Decision”). The claim relates to 5 items of category 1 and category 2 defective work.
The decision is a ''reviewable decision'' under section 86(f) of the Queensland Building Services Authority Act 1991 (the QBSA Act) which allows the Tribunal to review the Respondents “decision to disallow a claim under the statutory insurance scheme wholly or in part”. Part 1, Division 3 of the Queensland Civil and Administrative Tribunal Act 2009 (QId) (“the QCAT Act'') also applies.
The insurance policy applicable to the Applicants' claim is the Queensland Building Services Authority Insurance Policy Conditions Edition 4a (“the Policy”).
Section 70(1) of the QBSA Act states that a person claiming an indemnity under the policy must give notice to the QBSA in accordance with the Queensland Building Services Authority Regulation 2003 or otherwise in accordance with section 71A of the QBSA Act.
Section 71A of the QBSA Act states that a person who has made a complaint to the Respondent to consider whether to direct rectification of building work is taken to have notified the Respondent as required under section 70(1).
On 28 April 2006 the Applicants made a complaint (“the complaint”) to the Respondent about 5 items of defective work carried out by the builder at their residence at 21 Julatten Place, Upper Kedron (“the property”).
Upon receipt of the complaint the Respondent undertook a licence search for the builder. The search revealed that the builder had filed for bankruptcy on 26 April 2006.
On 24 May 2006 the Respondent's building inspector, Andrew Woodward, carried out an inspection of the property and concluded that the items of work complained of by the Applicants constituted a combination of category 1 and category 2 defects under the Queensland Building Services Board Policy: Rectification of Building Work (“the Board Policy”).
There is no dispute that the items of the work the subject of the complaint are defective under the Board policy. The matter was referred to the Respondent's Insurance Division on account of the builder’s bankruptcy.
[10] The questions for the Tribunal are whether:
a)the Applicants complied with the terms of the Time limits of the Policy;
b)the defects are correctly classified;
c)the Applicants should be granted an extension of time for compliance if they have failed to comply,
d)the Applicants are entitled to payment under the policy.
QBSA Insurance Policy conditions
[11] The Respondent is a body corporate duly constituted by Section 5 of the Queensland Building Services Authority Act 1991 (“the Act'').
[12] Section 69(2) of the Act provides that a policy of insurance comes into force in terms prescribed by regulation if a consumer enters into a contract for the performance of residential construction work and the contract is imprinted with the licensed contractor's licence cards. Section 69(3) provides that this is the case whether or not an insurance premium has been paid or a certificate of insurance has been issued.
[13] The relevant sections of the Queensland Building Services Authority Policy Conditions Edition 4a (''QBSA Insurance Policy conditions”) are as follows:
(A)Section 5.1 Expiry of Cover which states:
…
(b) The insured is not entitled to payment for loss under section 2 of this policy where:
…
(ii) ln the case of a category 2 defect, the defect first became evident more than six months after the date of practical completion of the residential construction work.
…
(e) The insured is not entitled to payment for loss under any section of this policy where a claim is not made within the time limits specified in clause 7.2 of this policy.
(B) Section 7.2 Time Limits:
All claims under this policy will be made:
(c) In the case of a category 2 defect - within seven months of the date of practical completion.
[14] Under section 10.1 of the QBSA Insurance Policy Conditions, the definition of ''practical completion'' is stated as follows:
“practical completion'' is that stage, in the opinion of the BSA, when the residential construction work becomes fit for intended use or occupation, and the term practically complete bears a corresponding meaning.”
[15] In relation to category 1 defects, relevantly section 7.2 of the QBSA Insurance Policy Conditions states:
“All claims under this policy will be made:
…(b) In the case of a category 1 defect or the subsidence or settlement of the foundations - within three months of that defect or the subsidence or settlement first becoming evident (in the opinion of the BSA) or within such further time as the BSA may allow. ''
Have the Applicants complied with the terms of the Time limits of the Policy?
[16] Firstly, the Tribunal notes that the Applicants state that they did not enter into a written contract with the builder and no contract was produced to the Tribunal other than for the purchase of the land which does record the name of the builder.
[17] However, the Applicant has filed a Certificate of Insurance issued on 6 March 2001 with a date of expiry being 1 September 2007. There does not seem to be any dispute that the policy of insurance has come into effect.
[18] The date of practical completion was October 2001 and this now does not appear to be in dispute.
The date the defects became evident and date of notification to the Respondent
[19] On 28 April 2006 the Respondent received a complaint form from the Applicant dated 28 April 2006 alleging five (5) items of defective building work completed by the builder in approximately October 2001.
[20] The five (5) items of defective building work are as follows:
Item 1of the Applicants complaint was in relation to the frame inside the roof which the Applicants alleged was lose and unattached. The date the defect was first noted is listed as September 2005.
Item 2of the complaint is in relation to a ''big crack on the ceiling that expanding'' in the lounge room. The Applicants state the date the defect was first noticed was in 2002.
Item 3of the complaint is in relation to the Foyer states ''tiles are moved and grouts are cracked and broken and a-bit bumpy''. The Applicants list the date the defect was first noticed as 2004.
Item 4of the complaint is in relation to ''roof tiles around the corners are all moved and bumped up and roof on top of the garage are curving in'' in the roof. The Applicants list the date the defect was first noticed as 2005.
Item 5 of the complaint is in relation to ''flooring attached incorrectly'' in the balcony area. The Applicants list the first date the defect was noticed as 2002.
[21] Upon inspection of the property on 24 May 2006, Mr Woodward, a BSA Building Inspector, determined that Items 1, 4 and 5 were category 1 defects while Items 2 and 3 were category 2 defects.
Category 1 defects:
[22] Therefore, assuming for the moment that they are correctly categorized, in relation to Items 1, 4 and 5, the category 1 defects, pursuant to section 7.2(b) of the QBSA Insurance Policy Conditions, the Applicants had three (3) months from the date the defect became evident to notify the Respondent.
[23] According to the Applicants, Item 1, became evident in approximately September 2005; Item 4 became evident in 2005 and Item 5 became evident in 2002.
[24] Therefore, pursuant to the QBSA Policy Conditions, Items 1, 4 and 5 were out of time to notify the Respondent by four months, one year and four months and four years four months respectively.
Category 2 defects:
[25] In relation to the category 2 defects, assuming for the moment that they are correctly categorized, pursuant to section 5.1(b)(ii) the defect must become evident within six (6) months of practical completion and pursuant to section 7.2 of the QBSA Insurance Policy Conditions, the Applicants had seven (7) months from the date of practical completion to notify the Respondent of the defects.
[26] Practical completion is agreed as approximately October 2001.
[27] ln relation to Item 2 there is no specific date when the defect became evident, only the year 2002. lt is not clear from the Applicants’ complaint form whether or not the defect became evident within the timeframe allowed under section 5.1(b)(ii).
[28] ln relation to Item 3 the date the defect became evident is not provided, only the year 2004. This is outside the timeframe allowed under section 5.1(b)(ii).
[29] For Items 2 and 3, the Respondent was notified of the defects approximately four years and six months after the date of practical completion.
[30] Pursuant to the QBSA Policy Conditions, Items 2 and 3 were out of time to notify the Respondent of the defects.
Are the defects correctly classified?
[31] The Applicants are obviously satisfied with the categorization of Items 1, 4 and 5. However, the Applicants have sought to have Items 2 and 3 categorised as category 1 defects. The basis on which the Applicants’ submit this change in category should occur is unclear to the Tribunal.
[32] Even if that change in category was accepted in relation to Items 2 and 3, pursuant to section 7.2(b) of the QBSA Insurance Policy Conditions, the Applicants had three (3) months from the date the defect became evident to notify the Respondent.
[33] Therefore, pursuant to the QBSA Policy Conditions, even if categorized as Category 1 defects, Items 2 and 3 were out of time to notify the Respondent by four years and two years respectively. Therefore, the Tribunal finds that even if Items 2 and 3 were Category 1 defects, the Applicants’ position in relation to acceptance of its insurance claim does not change.
Should the Applicants be granted an extension of time for compliance as they have failed to comply?
[34] The problem for the Applicants in obtaining an extension of time for compliance is sub-section (e) of Section 5.1 of the Policy which refers to the Expiry of Cover and states:
Section 5.1 Expiry of Cover which states:
…(a) The insured is not entitled to payment for loss under any section of this policy where a claim is not made within the time limits specified in clause 7.2 of this policy.
[35] The Applicants claim was made in writing on 28 April 2006. According to the Outline of Submissions for the Applicants dated 15 October 2008, the Applicants approached the Respondent for assistance on a date unknown but was directed by an employee of the Respondent to contact the builder.
[36] From Mr Mansoor Rezaee’s testimony at the Tribunal hearing on 28 October 2008, it appears that Mrs Taraneh Rezaee went to the Respondent’s office to collect a Complaint Form. It was at this time that she was told to first contact the builder. The Applicants sent the builder a letter dated 6 April 2006.
[37] The Applicants submit that at the time the Applicants went to the Respondent, the Respondent knew that the builder was uncontactable and not responding to the Respondent’s directions, breach notices and correspondence. The Applicants did not submit anything in writing at this time. The Applicants had not attempted to contact the builder.
[38] Section 7.2 of the QBSA Insurance Policy Conditions states:
“All claims under this policy will be made:
…(b) In the case of a category 1 defect or the subsidence or settlement of the foundations - within three months of that defect or the subsidence or settlement first becoming evident (in the opinion of the BSA) or within such further time as the BSA may allow.'' (Tribunal’s Underlining)
[39] There is clearly a dispute as to whether or not the Respondent considered its discretion to allow further time at the time of this Decision. In this regards, the Tribunal notes that in the reference to Section 7.2 in the Decision letter of 15 June 2006 and in the Statement of Reasons the words “or within such further time as the BSA may allow” were omitted. There was no explanation provided to the Tribunal as to why this serious misquoting of Section 7.2 occurred in the Decision letter of 15 June 2006 and again in the Statement of Reasons dated 1 August 2006.
[40] The Respondent submits that, despite a lack of reference to these words and to the discretion in the Statement of Reasons, it did consider the discretion and decided not to exercise it in favour of the Applicants.
[41] The Tribunal is now standing in the shoes of the Respondent (See Queensland Building Services Authority v Carey, District Court Appeal 1209 of 1997, Babazon DCJ, 20 June 1997). The question now is should the Tribunal allow further time, and if so, how much further time is reasonable?
[42] A relevant consideration is that the Applicants obtained a report from Shan Ali, of Jeffrey Hills & Associates Pty Ltd dated 30 September 2005. While that report did not categorise the defects as Category 1 or 2, it does provide evidence that the defects were “evident” at or prior to that date. The report also showed the need for further investigation of the defects.
[43] The fact that the defects were evident at or prior to 30 September 2005 is not denied by the Applicants who stated in the claim the dates each defect became evident. However, the report highlights the nature of the defects - they were sufficiently evident and serious for the Applicants to commission the report.
[44] If the Applicants had filed a claim within 3 months of obtaining that report their claim for an allowance of further time would have been stronger, even if they were still out of time.
Criteria for exercising the discretion?
[45] Section 7.2 of the Policy does not give any guidance as to how the BSA is to determine what “further time” it could or should allow. Likewise, it gives the Tribunal no specific guidance.
[46] Two other aspects of the Policy, however, do give some guidance. Firstly, Section 7.2 requires all claims under this policy to be made within three months of that defect first becoming evident. Three months, in the mind of the Tribunal, is a relatively short period for a significant defect to be notified given that failure to do so may result in the Policy expiring and the insured being denied the right to claim. Secondly, section (e) of Section 5.1 of the Policy states in very definite terms that the “insured is not entitled to payment for loss under any section of this policy where a claim is not made within the time limits specified in clause 7.2 of this policy.”
[47] The Tribunal finds on the basis of these clauses of the Policy that any “further time” to be allowed should be of limited duration and should be allowed only for good reason.
[48] Further, the Tribunal finds that it is for the Applicants to show why the Respondent should allow further time.
Was there a reasonable excuse or explanation for the failure to notify within time?
[49] While in some circumstances, the fact that the Applicants contacted the Respondent orally, might be considered relevant, here the fact that the date of this contact is left so vague on the evidence – February to April 2006 but most probably early April – the Tribunal finds that it cannot be taken into account here.
[50] Likewise, the fact that the Respondent was aware that the builder was uncontactable and not responding to the Respondent’s directions, breach notices and correspondence does not prove that the Respondent’s employee was aware of those fact when the Applicants did not submit a claim in writing at the time. It is not clear to the Tribunal as to what Respondent’s employee was told about the builder or, for that matter, what opportunity the employee had to investigate the oral complaint. In fact, the employee may simply have been asked for a Complaint Form on the basis of Mr Rezaee’s evidence at the hearing. For these reasons, the Tribunal finds that the initial contact by the Applicants with the Respondent cannot be taken into account here.
[51] This results in the first date of notification of the defects to the Respondent being 28 April 2006. This is almost seven months after the Jeffrey Hills & Associates Pty Ltd report dated 30 September 2005.
[52] The only reason apparent to the Tribunal relates to the Applicants’ lack of proficiency with the English language. Because this matter was determined by the Tribunal on the papers, it did not have an opportunity to directly assess the Applicants’ proficiency with the English language. In completing the Complaint Form dated 28 April 2006 and the letter to the builder dated 6 April 2006 the Applicants illustrated that they had some difficulties with the language but they were able to make clear what they were intending. The Tribunal finds that the contents of the Complaint Form dated 28 April 2006 could have been submitted just after 30 September 2005. The Applicants did not lack of proficiency with the English language to the extent that they could not complete the Complaint Form.
[53] There is no other evidence available to the Tribunal to support an application for any further time to make the claim. This leads to a finding that the Applicants have not offered a reasonable excuse or explanation for the failure to notify within time.
[54] ln Ackermann v QBSA (2006) QCCTB 4 at (75-79) Member Moon held that even though the QBSA had suffered no significant prejudice as a consequence of the delay in making a claim, in circumstances where the homeowners had not offered a reasonable excuse or explanation for the failure to notify within time, it was not appropriate to exercise the discretion to extend time.
[55] The Tribunal applies that reasoning here. In submissions, the parties have referred to prejudice both to the Applicants and to the Respondent. The Tribunal considers that in determining the question of extending further time to the Applicants, the issue of prejudice to the Applicants is irrelevant. The Applicants have failed to comply with the requirements of the Policy and, while a decision in their favour will benefit them, a decision against extending further time leaves them exactly where their failure to comply left them.
[56] Likewise, the Tribunal considers that where the claim on the insurance policy has been delayed to the extent that the Respondent is unaware of the claim until the builder has filed for bankruptcy, the Respondent will most probably always be prejudiced. The Tribunal considers rather that the lack of prejudice to the Respondent may be a relevant consideration for the applicants to raise when seeking any further time to make the claim.
[57] In Little v QBSA (2006) QCCTB 195 Member Coyne considered the issue of prejudice to the Respondent in exercising its discretion under the Policy. In Little the builder also had been placed into liquidation prior to the complaint being made to the Authority. The Tribunal held that the fact that the Authority was no longer able to recover any payment from the builder with respect to the cost of rectification of the defects established sufficient prejudice to deny the claim.
[58] At (44) Member Coyne said:
“I consider, having taken into account the written and oral evidence of the parties, that the authority was entitled to decline the claim on the statutory policy of insurance on the basis of late notification and prejudice. I therefore dismiss the application and confirm the decision the authority. The claim is out of time, and the time limits are in place for good reason. The applicants are undoubtedly honest people who unfortunately are not entitled to access the policy.”
[59] The Tribunal considers that the reason in Little was really late notification and, while prejudice is mentioned, the fact was that the claim was out of time with the result that the insured was not entitled to payment for loss under the policy. The reasoning in Little needs to be clarified to that extent.
[60] Likewise in Murray v QBSA (2005) QCCTB 33, where the complaints were lodged 3 and 5 months after the required time, at a time when the QBSA could no longer direct the builder to rectify the defective works, it was held that there was sufficient prejudice to deny the claim.
Conclusion and Decision
[61] Here the Applicants waited from 30 September 2005 when they had the benefit of the Jeffrey Hills & Associates Pty Ltd report to April 2006 and, according to Mr Mansoor Rezaee’s testimony at the Tribunal hearing on 28 October 2008, he was aware of other defective work experienced by his neighbours from the same builder and of their claims to the Respondent. He did not explain why under these circumstances he did not notify the Respondent until April 2006.
[62] Therefore, after considering the requirements of the Policy with regard to compliance with Time Limits the Tribunal finds that the Applicants have failed to comply by not claiming until 28 April 2006 and further finds, that the Tribunal should not allow further time so that the Applicants claim of 28 April 2006 is taken to comply.
[63] The Decision of the Respondent dated 15 June 2006 was based on an inaccurate recording of the Policy and must be set aside. The Tribunal substitutes a decision that the Applicants’ claim is dismissed for the reasons set-out in these reasons.
[64] Therefore, the consequence of these decisions is that the Applicants are not entitled to payment under the policy.
[65] This matter has a long history and both sides have been legally represented during some or all of the Tribunal processes.
[66] The Tribunal is aware of what was said by his Honour, QCAT President Alan Wilson in relation to costs in QCAT in McEwen v Barker Builders Pty Ltd [2010] QCATA 49 (15 September 2010) where he said:
“The language of s 100 plainly indicates that the legislature has turned its face against awards of costs in this Tribunal. The question that will usually arise in each case in which costs are sought is, then, whether circumstances relevant to the discretion inherent in the phrase ‘the interests of justice’ have arisen; and, whether or not they point to a costs award in a sufficiently compelling way to overcome the statutory hurdle.”
[67] It would not be appropriate for the Tribunal to dispose of the question of costs without giving the parties an opportunity to be heard. Therefore, if a party wishes to apply for a costs order, the application and submissions shall be filed and served within 14 days of this order and the application shall be determined on the papers.
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