Progressive Enterprises Pty Ltd v Queensland Building Services Authority

[1997] QCA 398

IN THE COURT OF APPEAL	[1997] QCA 398
SUPREME COURT OF QUEENSLAND

Appeal No. 1022 of 1996

Brisbane

[Progressive Enterprises P/L v. Qld Building Services Authority]

BETWEEN:

PROGRESSIVE ENTERPRISES PTY. LTD. ACN 010 238 285

Appellant

AND:

QUEENSLAND BUILDING SERVICES AUTHORITY

Respondent

Davies J.A.
Shepherdson J.

White J.

Judgment delivered 4 November 1997

Joint reasons for judgment of Davies J.A. and White J.; separate reasons of Shepherdson J. concurring as to the orders made.

APPEAL DISMISSED WITH COSTS.

CATCHWORDS:	INSURANCE - appellant was the developer of nine duplexes of 18 apartments and entered into nine contracts with a builder, one in respect of each duplex - in the circumstances the Statutory Insurance Scheme contained in the Queensland Building Services Authority Act 1991 applied - whether the Residential Construction Work in question comprised or related to a multiple dwelling such that an exception in the policy of insurance applied.
ESTOPPEL - whether the respondent was estopped from relying on the exception in the policy of insurance. Queensland Building Services Authority Act 1991, ss.58, 68, 69.
Counsel:	Mr. P. A. Keane Q.C., with him Mr. K. B. Varley for the appellant Mr. D. J. S. Jackson Q.C., with him Mr. A. B. Crowe for the respondent
Solicitors:	McCullough Robertson for the appellant Phillips Fox for the respondent
Hearing Date:	18 August 1997

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 1022 of 1996

Brisbane

Before Davies J.A.
Shepherdson J.
White J.

[Progressive Enterprises P/L v. Qld Building Services Authority]

BETWEEN:

PROGRESSIVE ENTERPRISES PTY. LTD. ACN 010 238 285

Appellant

AND:

QUEENSLAND BUILDING SERVICES AUTHORITY

Respondent

JOINT REASONS FOR JUDGMENT - DAVIES J.A. AND WHITE J.

Judgment delivered 4 November 1997

This is an appeal from a judgment of the District Court on 10 January 1996 allowing an appeal,

by leave, from a determination made by the Queensland Building Tribunal. The Tribunal had determined

that the respondent was obliged to indemnify the appellant under each of 18 policies of insurance

contained in 18 certificates of insurance issued by the respondent. That determination was reached, not

on the basis of a contract between the parties, but on the basis of estoppel founded on the certificates

of insurance. The learned District Court Judge overturned the finding of estoppel.

The appellant before this Court makes two submissions; the first that on the contract or

contracts between the parties the appellant was entitled to indemnity; the second on the basis of

estoppel.

The appellant was the developer of nine duplexes of 18 apartments. It entered into nine

contracts with a builder, each dated 30 May 1994, one in respect of each duplex. Each duplex was

a multiple dwelling and, when completed, each of 18 apartments would be a residential unit. The

dispute concerned insurance under the Statutory Insurance Scheme contained in the Queensland

Building Services Authority Act 1991.

The work the subject of each contract was both "residential construction work" and "major

domestic building work" as defined by reg.4 of the Queensland Building Services Authority Regulation

1992. Section 58(1)(b) of the Act requires a contract for carrying out work of the latter kind to

describe the building work to which it relates. When such a contract is entered into in compliance with

s.58 a policy of insurance in the terms set out in the Board's published policy comes into force "in

relation to the building work" (s.69(2), reg.24(1)); that is, plainly enough, in relation to the building

work the subject of the contract. The terms of the published policy then insure the performance of the

obligations under the contract.

The central question in this case concerned an exception under the policy. Clause 2.4(c)

provided that:

"Where the Residential Construction Work comprises or relates to a multiple dwelling
-

(i)          no amount is payable under this Policy in respect of the Contractor's failure to complete the work except where the Owner occupies or proposes to occupy a residential unit in that multiple dwelling as his or her place of residence; and

(ii)         if the Owner owns more than 4 residential units in that multiple dwelling, the Owner is entitled to compensation for non-completion in relation to 4 of those units only."

The appellant contends that this exception does not apply in the present case because the work

covered by the policies does not comprise or relate to a multiple dwelling. This argument appears to

be that, because there were separate premiums in respect of each residential unit and because separate certificates of insurance were issued in respect of each residential unit, the residential construction work

insured in each case comprised and related to a single residential unit and therefore did not comprise

or relate to a multiple dwelling.

The appropriate premium is a multiple of the number of residential units whether the residential

construction work comprises or relates to a single unit or a multiple dwelling: reg.23(2). And although

Mr. Keane Q.C., for the appellant, points to paragraph 9 of the chronology which refers to 18 sets of

insurance premiums having been paid, that may simply be a reflection of the effect of reg.23(2). It is

unlikely that 18 separate cheques were paid on the same day. In any event, as appears from s.69(2),

the payment of a premium had no relevance to the coming into force of a policy and consequently its

meaning or effect.

Ultimately 18 certificates of insurance were issued by the respondent, one in respect of each

of the residential units. Four of these issued on 15 July 1994, four on 19 September 1994 and ten on

22 September 1994. On each occasion there also issued an Insurance Policy Conditions Booklet

containing the terms of the policy. In each certificate the residential construction work is described as

either "New Construction, Duplex - up to 3 storey" or "New Construction, Duplex". That was

undoubtedly in each case a correct description.

Nevertheless the appellant relies on the issue of separate certificates and the fact that they are

conclusive evidence that the work is covered by a policy of insurance (s.68(3)) for the contention that

there was a separate policy for each residential unit. It also points to the terms of the policy agreeing

to compensate "in relation to the Residential Construction Work described in the Certificate of

Insurance". However, as already pointed out, the residential construction work to which each certificate

relates is described as duplex. And, in any event, the certificates, issuing as they did a considerable time

after the contract of insurance came into effect, could not alter its terms.

The appellant's argument, in the end, is somewhat artificial. The residential construction work

under each contract with the contractor comprised all of the work on a duplex, some of it common to

both residential units. Such work could not, except in an artificial sense, be divided. The certificates

simply halved the amount of each contract. Not until well after the completion of the work did separate

residential units come into existence.

The contractual argument must therefore fail. The insurance was in respect of residential

construction work comprising or relating to a multiple dwelling and, subject to any question of estoppel,

the exception in cl.2.4(c) of the policy applied.

Although no particulars of the estoppel were ever asked for or given it seems that it was based

on the certificates of insurance, specifically in two respects. First it was said that the certificates were

clear certificates; they did not contain any exception; in particular they did not state this one. Secondly

it is said that there was room in the form on the certificate for "POLICY SECTIONS EXCLUDED

UNDER THIS CERTIFICATE" and that section of each certificate was blank. Regulation 24(2)

provides that the certificate of insurance must set out the terms of the policy. It did not do so but the

booklet which accompanied it did. The policy contained in the booklet included cl.2.4(c).

The respondent's first answer to this, here and below, and his Honour's judgment was that the

certificates had no effect on the appellant; they induced no belief, one way or the other, about whether

the appellant was covered for non-completion by the contractor. Secondly it was submitted, and his

Honour also held, that there was no evidence that, by the time the first batch of certificates issued, there

was anything which the appellant could have done to avoid its loss.

Both of those contentions appear to be correct. At the time that the building work commenced,

which was well before the first batch of certificates issued, Mr. Rushton, who was the governing mind

of the appellant, had an understanding that the policy which had been taken out would provide cover if the builder "went broke" or caused a major defect. He derived this understanding from persons other

than the respondent.

By the time the first batch of certificates issued on 15 July a lot of work had already been done

under the building contracts. Probably all the slabs were down and some walls were up. Mr. Rushton

said that, even at that stage, had he then read the policy, he would not have believed that what was

being built were multiple dwellings. In fact, at the time he gave his evidence he still did not believe that.

It follows that even if he had read cl.2.4(c), which he did not, he would have thought it did not apply.

Plainly nothing contained in or omitted from the certificates contributed to his belief or its maintenance

that the appellant was covered for non-completion by the contractor.

As to detriment, three possibilities were relied on: alternative insurance, selling the remainder

of the lots for whatever profit could have been obtained and insisting on some guarantee from the

builder. It was submitted that the appellant was deprived of the opportunity of obtaining any of these.

The Tribunal held that the appellant failed to obtain further insurance and was left with significant

detriment but there was simply no evidence on which that finding could have been made. In particular

there was no evidence that any such insurance would have been or even might have been available at

other than an uneconomic rate or at all. Nor was there any evidence as to what price could have been

obtained for the remainder of the lots at the time the first batch of certificates issued. And the third

possibility was no more than fanciful. So that even if, contrary to our view, reliance on the certificates

was established, there was simply no evidence of detriment.

In our opinion therefore the learned District Court Judge was correct in concluding that, on the

uncontradicted evidence before the Tribunal, there was nothing to show that the appellant relied to its

detriment on any representations contained in the certificates of insurance. For those reasons the

learned trial Judge was correct in concluding that the respondent was not estopped from relying on the
terms of the contract of insurance.

The appeal should therefore be dismissed with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Brisbane	Appeal No.1022 of 1996
Before	Davies JA Shepherdson J White J

[Progressive Enterprises P/L v. Qld Building Services Authority]

BETWEEN:

PROGRESSIVE ENTERPRISES PTY LTD

ACN 010 238 285

Appellant

AND:

QUEENSLAND BUILDING SERVICES

AUTHORITY

Respondent

REASONS FOR JUDGMENT - SHEPHERDSON J.

Judgment delivered 4 November 1997

I have read the joint reasons for judgment prepared by Davies JA and White J. I agree that the

appeal should be dismissed with costs and for the reasons which they give.