Queensland Building and Construction Commission v Burr
[2014] QMC 25
•24 October 2014
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
Queensland Building and Construction Commission v Burr [2014] QMC 25
PARTIES:
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION
(plaintiff)
v
JASON ANDREW BURR
(defendant)
FILE NO/S:
M3026/14
DIVISION:
Magistrates Courts
PROCEEDING:
Application for summary judgment (in a claim for a debt under the Queensland Building and Construction Commission Act 1991)
ORIGINATING COURT:
Magistrates Court at Brisbane
DELIVERED ON:
24 October 2014
DELIVERED AT:
Brisbane
HEARING DATE:
8 August 2014, 9 September 2014
MAGISTRATE:
Springer BL
ORDER:
Judgment for the plaintiff in the sum of $47,307.00 plus interest and costs to be determined, following submissions.
CATCHWORDS:
TRADE PRACTICES – BUILDING AND CONSTRUCTION – Claim to recover amount paid by Queensland Building and Construction Commission under the Statutory Insurance Scheme from a Building Contractor
COUNSEL:
MM Cook appeared for plaintiff
C Upton appeared for defendant
SOLICITORS:
Rostryn Carlisle for plaintiff
PPCS Lawyers for defendant
Introduction
The plaintiff, the Queensland Building and Construction Commission (“the Commission”), seeks summary judgment against the defendant under rule 292 of the Uniform Civil Procedure Rules.[1] The claim relates to payments made under the statutory insurance scheme provided for in the Queensland Building and Construction Commission Act 1991 (the QBCC Act). That Act was formerly known as the Queensland Building Services Authority Act1991. Amendments were made in 2013 to change the relevant body from the Queensland Building Services Authority (“the Authority) to the Commission.
[1] Rule 292 states: “(1) A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.
(2) If the court is satisfied that –
(a) the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
(b) there is no need for a trial of the claim or the part of the claim;
the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.”
The defendant has defended the Claim and, unsurprisingly, has opposed the application for summary judgment. At the hearing of the application, Counsel for each party provided the court with comprehensive written and oral submissions.
I set out below a chronology of events relevant to this matter:
Date Event Source of evidence or information located 12 February 2007 Contract between Noonbrace Pty Ltd (“Noonbrace”) and homeowners (the Pescotts) to construct a home at Bribie Island Affidavits of Matthew Stratford filed 10 July 2014 (ex MJS2) and Burr sworn 28 July 2014 and filed 1 August 2014 (para 3) December
2007Noonbrace performed repair work Affidavit of Burr (para 6(c)) 9 January 2008 Commencement of proceedings in Queensland Commercial and Consumer Tribunal (QCCT) by Noonbrace Affidavit of Burr (para 6(c)) 18 January 2008 Homeowners filed a Defence and Counterclaim in QCCT proceeding Affidavit of Burr (para 6(c)) 13 February 2009 Homeowners filed a Further Defence and Counterclaim in QCCT proceeding Affidavit of Burr (para 6(i)) 26 August 2009 Decision of QCCT Referred to in Settlement Agreement (ex JAB 5 to Burr’s affidavit) 16 February 2010 Appeal to District Court of QCCT decision by homeowners. Appeal successful. Matter remitted to QCAT for further hearing on 3 November 2010 Affidavit of Burr (para 6(j)) 2 November 2010 Compromise of QCCT proceedings between defendant and homeowner Affidavit of Burr (ex JAB5). 9 February 2011 Claim by homeowners under statutory insurance scheme lodged with plaintiff Affidavit of Stratford (para 4b – i) 4 July 2011 Direction to rectify given to the defendant or Noonbrace Pty Ltd Affidavit of Stratford (para 4b – v) 19 September 2011 Decision that any rectification work done pursuant to direction to rectify not of satisfactory standard Affidavit of Stratford (para 4b – vi) 20 September 2011 “Notice of Potential Debt” with scope of works attached Affidavit of Stratford (para 4b – viii) Between 2 October and 29 November 2012 Work performed by Loi Constructions Pty Ltd
Affidavit of Stratford (para 4b – xviii)
15 September 2011 Noonbrace de-registered Stratford Affidavit (para 6 and ex MJS-3) 1 December 2011 Plaintiff approved insurance claim in amount of $44,007 and sent letter to Noonbrace Affidavit of Stratford (para 4b – vi) 29 April 2014 Current proceeding commenced Court file
The legislation
The QBCC Act contains the following provisions:
71 Recovery from building contractor etc.
(1) If the commission makes any payment on a claim under the insurance scheme, the commission may recover the amount of the payment, as a debt, from the building contractor by whom the relevant residential construction work was, or was to be, carried out or any other person through whose fault the claim arose.(2) For subsection (1)—
(a) a building contractor by whom the relevant residential construction work was, or was to be, carried out is taken to include—
(i) a licensed contractor whose licence card is imprinted on the contract for carrying out the work; and
(ii) a licensed contractor whose name, licence number and address are stated on the contract; and
(iii) a licensed contractor whose name is stated on the contract for carrying out the work; and
(iv) a licensed contractor whose name is stated on an insurance notification form for the work; and
(v) a licensed contractor whose licence number is stated on the contract for carrying out the work; and
(vi) a licensed contractor whose licence number is stated on an insurance notification form for the work; and
(vii) a licensed contractor whose PIN was used for putting in place, for the work, insurance under the statutory insurance scheme; and
(viii)a building contractor by whom the work was, or was to be, carried out; and
(ix) a person who, for profit or reward, carried out the work; and
(b) a person through whose fault the claim arose is taken to include a person who performed services for the work if the services were performed without proper care and skill.
(3) The commission is subrogated, to the extent of any payment that the commission has made, or has undertaken to make, to the rights of a person to whom, or for whose benefit, the payment has been, or is to be, made in respect of the matter out of which the insurance claim arose.
(4) In a proceeding brought by the commission under subsection (1) against a licensed contractor mentioned in subsection (2)(a)(i), it is a defence for the licensed contractor to prove that—
(a) the licensed contractor’s licence card was imprinted on the contract for carrying out the work without the licensed contractor’s authority; and
(b) the licensed contractor took all reasonable steps to ensure that the licence card was imprinted on contracts only with the licensed contractor’s authority.
(5) In a proceeding brought by the commission under subsection (1) against a licensed contractor mentioned in subsection (2)(a)(ii), it is a defence for the licensed contractor to prove that—
(a) the licensed contractor’s name, licence number and address were stated on the contract for carrying out the work without the licensed contractor’s authority; and
(b) the licensed contractor took all reasonable steps to ensure that the licensed contractor’s name, licence number and address were stated in contracts only with the licensed contractor’s authority.
(6) In a proceeding brought by the commission under subsection (1) against a licensed contractor mentioned in subsection (2)(a)(iii), (iv), (v), (vi) or (vii), it is a defence for the licensed contractor to prove—
(a) for a licensed contractor mentioned in subsection (2)(a)(iii)—that the licensed contractor’s name was stated on the contract for carrying out the work without the licensed contractor’s authority; and
(b) for a licensed contractor mentioned in subsection (2)(a)(iv)—that the licensed contractor’s name was stated on the insurance notification form for the work without the licensed contractor’s authority; and
(c) for a licensed contractor mentioned in subsection (2)(a)(v)—that the licensed contractor’s licence number was stated on the contract for carrying out the work without the licensed contractor’s authority; and
(d) for a licensed contractor mentioned in subsection (2)(a)(vi)—that the licensed contractor’s licence number was stated on the insurance notification form for the work without the licensed contractor’s authority; and
(e) for a licensed contractor mentioned in subsection (2)(a)(vii)—(i) that the licensed contractor’s PIN was used for putting in place, for the work, insurance under the statutory insurance scheme without the licensed contractor’s authority; and
(ii) that the licensed contractor took all reasonable steps to ensure the licensed contractor’s PIN was kept and used in accordance with the commission’s requirements for the keeping and use of the PIN.
111C Liability of directors for amounts
(1) …
(2) …
(3) This section also applies if a company owes the commission an amount because of a payment made by the commission on a claim under the insurance scheme.
(4) …
(5) …(6) If this section applies because of subsection (3), the liability to pay the amount attaches to—
(a) each individual who was a director of the company when building work the subject of the claim was, or was to have been, carried out; and
(b) each individual who was a director of the company when the payment was made by the commission.
(7) A liability under subsection (4), (5) or (6) to pay a penalty or an amount applies regardless of the status of the company, including, for example, that the company is being or has been wound up.
(8) …
86 Reviewable decisions
(1) The tribunal may review the following decisions of the commission—(a) …
(e) a decision to direct or not to direct rectification or completion of tribunal work;
(f) …
(g) a decision about the scope of works to be undertaken under the statutory insurance scheme to rectify or complete tribunal work;
(h) a decision to disallow a claim under the statutory insurance scheme wholly or in part;(i) …
The pleadings
The plaintiff pleads in paragraph 3 of the statement of claim that on 12 February 2007 Noonbrace Pty Ltd contracted to carry out residential construction work at Horace St, Bribie Island. At the relevant time, there was in force a statutory insurance scheme. Purportedly pursuant to that, the plaintiff paid out two amounts totalling $47,307.00. The plaintiff claims that amount from the defendant.
The defendant denies that Noonbrace performed any defective work on the Bribie Island property because during 2007, the works the subject of the contract with the homeowners were performed to the pre-paint stage. No further works were performed by the company after December 2007, other than: replacing bolts; replacing split decking boards; installation of packers and installing some flashing at the wall cladding sheet joins in early 2008 (para 9 of the Statement of Claim).
The defendant also pleads that the plaintiff is estopped from being subrogated to rights and remedies available to Homeowners. Further, that a proceeding was commenced in the QCCT on 9 January 2008 for outstanding progress payments and a compromise of those proceedings was reached on 2 November 2010.
Further and Better Particulars of the defence have been filed.
The statutory insurance policy
The subject policy is exhibited to affidavit of Matthew John Stratford filed 10 July 2014. It provides, relevantly, in clause 4.12:
“Where the contractor or other person has been released from any liability in relation to the insured works BSA is thereby released from liability under this policy to the same extent.”
The compromise document
The pleaded ‘compromise’ is contained within a document titled “Settlement Agreement” between “Noonbrace Pty Ltd trading as Jason Burr Constructions” and “Dean and Cathy Pescott” (see exJAB8 to the defendant’s affidavit). That document includes a reference to the parties agreeing:
“IN FULL AND COMPLETE DISCHARGE of all claims, interest and costs the subject of the Commercial and Consumer Tribunal proceedings, the District Court appeal and the remittal to the Queensland Civil and Administrative Tribunal the parties hereby agree to settle those claims, interest and costs”.
Clause 5 of the settlement agreement contains an acknowledgement by the parties that the agreement:
does not affect any actions, suits, claims or demands that have arisen since the original judgement of 26 August 2009 in the Commercial and Consumer Tribunal, or may arise, and which are not the subject of the abovementioned proceeding.
The material in support of, and in response to, the application
There have been multiple affidavits filed by both parties in the application. The plaintiff objects to some of the defendant’s material. In relation to the plaintiff’s objection, I accept that the settlement agreement speaks for itself and the plaintiff’s understanding is not relevant. Paragraph 7 of Mr Burr’s affidavit sworn 28 July 2014 is inadmissible. I note that rule 295 of the UCPR allows affidavits on information and belief in the context of summary judgment applications.[2] In view of the decision I make in relation to the application, I do not address issues of admissibility of other parts of his affidavits.
[2] Rule 295 states:
The issue of deemed admissions was also raised during argument but this current application does not seek judgment on the basis of those.
The plaintiff’s material contains three reports of Mr Lack. Exhibit PL5 to the affidavit of Peter Lack sworn 22 August 2014 (the latest report) refers to a local builder being engaged to complete the house construction and attend to defective work (see page 1 of 12 of report).
Mr Lack deposes to observing on 9 March 2011 “water pooling on the floor tiles in the main bathroom and ensuite shower recesses” and “tiles adjacent to the floor waste grates of both showers was lipping”. Further, that he was informed by the homeowners that they first noticed water pooling in the main bathroom and ensuite shower recesses in about October 2010, having moved into the house in 2009. The home owners also referred to ‘crowning’ of the flooring. Mr Lack deposes (in paragraph 12) to confirming that the defects referred to in his third report “were not matters that were the subject of the Queensland Commercial and Consumer Tribunal proceedings BD009-08” and nor were the defects those which were subject to rectification work by Loi Constructions Pty Ltd”. He deposes to it being clear to him that the defects existed from the time in which they were built by the original builder being Noonbrace Pty Ltd.
In contrast Mr Burr deposes that neither he nor Noonbrace Pty Ltd performed any work after early 2008 (para 6c) and “the defects in the house to which the insurance policy responded were defects in the work performed or promised to be performed by Loi or Loi Constructions Pty Ltd” (para 6p) and Noonbrace had not received any request from Loi or Loi Constructions Pty Ltd to remedy any defects.
Mr Burr also deposes to not receiving any communication from the plaintiff until early 2013, as he did not live at the addresses to which the correspondence was sent as he was going through a divorce with his former wife during the period (para 6q).
The ASIC search exhibited to Mr Stratford’s affidavit shows the address of Mr Burr and the registered office of Noonbrace were both at 14 Curlew Street, Woorim from 4 March 2011 up to 15 September 2011, being the date of de-registration of Noonbrace. The Direction to Rectify was sent to the company on 4 July 2011 at: PO Box 2190, Woorim; 38 North Street, Woorim and 15 Eighth Avenue Woorim. None of those addresses was the registered office, although the address at 15 Eighth Avenue had been the registered office up to 3 March 2011.
Subsequently, on 19 September 2011, further correspondence was sent addressed to the company at the same three addresses, although by that date, the company was deregistered. On 20 September 2011, the Authority sent to Noonbrace at the post office box a “Notice of Potential Debt” with scope of works attached. That letter included the following:
Please note that if any payment is made on this claim, BSA may seek recovery from you pursuant to Section 71 of the Act.
BSA’s decision about the scope of works to be undertaken is reviewable in the Queensland Civil and Administrative Tribunal (QCAT). Review applications to QCAT must be made within 28 days. Before making an application, you should consider obtaining independent legal advice. …
On 1 November 2011 a “Notice of Potential Debt with an amended scope of Works attached was sent to PO Box 2190 at Woorim.
Noonbrace Pty Ltd had a statutory obligation to update its details for the licensee register (see s 101 of the QBCC Act). At all relevant times, the defendant was the controlling mind of the company.
Section 109A of the QBCC Act authorises service of a document under the Act by “leaving it at, or sending it by post, telex, facsimile or similar facility to, the address of the licensee in the register of licensees kept by the commission”. In a later affidavit by Mr Stratford sworn 8 August 2014, he deposes to being informed by the Commission records that the postal address for Noonbrace Pty Ltd as it appears in the register of licensees kept by the Commission is PO Box 2190 Woorim. Accordingly, service was effected in the manner permitted by the QBCC Act.
There is no material filed by the homeowners.
There is evidence of two payments being made to the homeowners in respect of the insurance claim, being $44,007.00 and $3,300.00 respectively (see Affidavit of Mr Stratford, para 4b – xvi and xvii).
Restrictions on justiciability of steps prior to payment on insurance claim
Whether a person in the position of the defendant is able to raise steps which took place prior to the payment on the insurance claim received detailed consideration in Mahonyv QBCC [2013] QCA 323 and more recently in Namour v QBCC [2014] QCA 72. The decision in Mahony (and confirmed in Namour) is authority for the proposition that a range of decisions are not justiciable in a claim for debt based on section 71(1). In Mahony’s case, specific examples of the matters which were determined as not justiciable in a proceeding section 71(1) proceeding included decisions by the (then) Queensland Building Services Authority, namely: to direct or not direct rectification or completion work on a building and about the scope of works to be undertake under the statutory insurance scheme (see para [35]).
At paragraph [37] of Mahony, referring to comments of McMurdo P and Lyons J in an earlier decision, Gotterson JA said:
[37] I agree with these observations. I note that, in that case, McMurdo P and Ann Lyons J did not express a concluded view on the matter because it had not been fully argued before them. In so far as the learned President observed that it seems unlikely that Parliament would have intended for the authority to recover from building contractors payments wrongly made to those insured by the authority on policies entered into under Part 5 of the QBSA Act, I understand her Honour to be referring to any payment that may have been made wrongly in the sense that it was not in fact made upon a claim made validly under the Act. The language of s 71(1) would leave open scope for a defence that the payment sought to be recovered was not made upon a claim and a defence that the claim was not validly made under the Act. To my mind, the position was accurately summarised by Henry J in Queensland Building Services Authority v Orenshaw & Anor as follows:
“At the other extreme, it is unlikely that s 71 could be avoided by a building contractor disputing discretionary factual conclusions occurring as part of the professional judgment exercised by the QBSA in deciding whether and how much to pay in respect of a claim. It would not be enough to avoid the statutory liability imposed by s 71 for a defendant to point merely to any error of fact connected with the claim process. It must logically have been a factual error of such a nature that the claim was not, on the facts as correctly known, a claim under the insurance scheme or that the payment sought to be recovered was not a payment on such a claim.”
[38] Here, the appellant failed to seek any type of review of the respondent’s decisions to direct rectification on the claims or that rectification work was not satisfactorily attended to. … He did not seek judicial review of the decision to commence proceedings to recover against him under s 71(1). For the reasons given, he may not now in these proceedings, challenge those decisions on the ground he proposes.
In the current application, the plaintiff submitted that “the trigger is the payment itself and once that has been made liability is absolute”, citing Namour v QBCC where Fraser JA (with whom McMurdo P and Douglas J agreed) said that challenges to decisions which might be reviewed “should be made well before a recovery proceeding is brought against the contractor or directors” (paragraph [20]). Further, he said that a contractor “should make the challenge before the [Commission] pays under the policy”. A building contractor who does not make such a challenge is liable under section 71(1) whether or not one of those anterior decisions might have been the subject of a challenge” (paragraph [19]).
The defendant could have caused Noonbrace to seek reviews of either the decision to direct rectification or completion of tribunal work (s 86(1)(e) of the QBCC Act) or about the scope of works to be undertaken under the statutory insurance scheme (s 86 (1)(g) of the Act). There was no application for any review.
Consideration of issues
Dispute as to who performed the work the subject of the scope of works
One basis why, according to the defendant, the plaintiff ought not succeed in its current application is that the defendant’s position is that the defective work which is relied on to have justified the payments under the insurance policy was not performed by him or the company under his control. The plaintiff relies on the use of Noonbrace’s PIN for putting in place insurance under the statutory insurance scheme for the residential construction work (meaning that work to be carried out by Noonbrace for the Pescotts). Section 71(2)(a)(vii) provides that “a building contractor by whom the relevant residential construction work was or was to be carried out” includes a licensed contractor whose name, licence number and address stated on the contract and a licensed contractor whose licence number is stated on an insurance notification form for the work. Those criteria are met here.
The plaintiff has filed an affidavit by Peter Lack sworn 22 August 2014 deposing to various observations of the property at a time prior to the homeowners moving into the property. Mr Aldo Loi has deposed to the state of the premises when he inspected the premises on 12 February 2009. This was some 12 months after the defendant deposes to finishing work on site. Mr Loi deposes to tiles having been installed throughout the house “wherever tiles were to be installed, except for where a small number of tiles were to be installed on the wall of the ensuite bathroom (paragraph 4 b of affidavit filed 4 September 2014).
Those references to tiles and bathrooms should be considered against the defendant’s affidavit, particularly paragraph 6a, where the defendant states “… the reason why the tiling was incomplete as the company [Noonbrace] was waiting for the cabinet maker engaged by the Homeowners to finish his work”. That affidavit also refers to only limited further work being done by Noonbrace in early 2008. Other references to different aspects of the work done at the premises which I do not intend to refer to in these reasons.
Although the respective deponents’ evidence has not been subject to cross-examination, there is a current contest as to who performed certain work. It is not beyond the realms of possibility that a third person may have performed the defective work at the site.
The effect of the compromise of the QCCT proceeding
Here there is an added issue, namely the presence of a compromise agreement. That is exhibited to Mr Burr’s affidavit. There is in clause 5 a reservation as to the extent of the compromise. It specifies that it does not affect any actions, suits, claims or demands which have arisen since the original judgment of 26 August 2009 in Queensland Commercial and Consumer Tribunal or may arise and which are not the subject of the abovementioned proceedings.
The defendant may have considered that Noonbrace (and also he) was protected by the compromise that he had reached with the Pescotts. Nevertheless, the effect of the compromise was an issue that should have been raised in the review of the decision to direct rectification or the decision about the scope of works. Both of those decisions were well after the compromise. If the scope of works related to works which were properly within the scope of the settlement agreement, a review of the decision about the scope of works conducted before QCAT was the course that Noonbrace, controlled by the defendant, should have adopted. No such review was sought.
The effect of clause 4.12 of the policy
Having regard to the settlement agreement, the contractor (who for the purposes of this proceeding is the defendant) appears to have been released from liability for at least some works. The extent of those cannot be determined in the current application. By virtue of clause 4.12 of the policy, the plaintiff would also be similarly released.
The defendant submits that the payments were not made on a claim under the insurance policy having regard to clause 4.12 of the policy. Further, the defendant submits that the decision of Mahony “is no answer to the challenge about whether QBCC has satisfied the conditions precedent to the bringing of recovery proceedings”. I accept that latter point, but in the circumstances, it does not assist the defendant.
Conclusion
To succeed in its application for summary judgment, the plaintiff/applicant must establish that the defendant has no real prospects of successfully defending the claim and there is no need for a trial. If the plaintiff establishes that, there is an evidentiary shift to the defendant.
One of the issues in determining whether the defendant has no real prospect of successfully defending the claim in this matter is whether the defendant is precluded from raising events prior to the payment of the claim, such that those earlier events cannot provide a defence.
If the defendant was aware of his obligation to keep the Commission informed of current details of Noonbrace, he failed to do so. Further, the defendant’s statement that he was not living at the addresses to which the notices were sent does not address the issue of why mail sent by the plaintiff to the post office box was not able to be received by him.
The right under section 71(1) of the Commission to recover as a debt the payment it made arises when “a payment on a claim under the insurance scheme” has been made. If the decision to pay was made when the contractor no longer had an obligation to the homeowner because the builder was indemnified and the indemnity extended to the Commission by virtue of clause 4.12 of the policy, I have difficulty in seeing how the payment can be said to have been made under or pursuant to the policy.
The predecessor Authority gave Noonbrace notice of the Authority’s decisions in the manner provided by the QBCC Act. The response which Noonbrace should have taken following the direction to rectify was to argue in a review before QCAT that the direction was not justified because it had not done the work which was allegedly the subject of the direction. A similar response was also required in relation to the scope of works.
In this matter, the predecessor Authority gave directions to Noonbrace to rectify and issued a scope of works. They were sent to the address kept in the Authority’s register of licensees. There was no review of the decisions sought. The Authority received a claim from the homeowners, considered it and acted on it, including making payments under the policy. It is not clear what else the Authority could or should have done in the absence of a response from the defendant prior to paying out under the policy.
The structured processes set out in the QBCC Act provide timeframes in which steps are required to take. However, where there has been an opportunity for the defendant or the company which he previously controlled to respond to decisions directly affecting the company, and no response in the form of reviews specifically permitted by statute has occurred, the defendant cannot now raise them in a proceeding under section 71(1) of the Act. That is clear from the decisions of Mahony and Namour referred to above.
While a court will not lightly shut out a party from defending a claim, having regard to the reasons set out above, noting Rule 5 of the UCPR, the plaintiff’s application for summary judgment is granted. I am satisfied that the defendant has no real prospect of successfully defending some or all of the claim and there is no need for a trial.
The formal order is: Judgment for the plaintiff in sum of $47,307.00 plus interest and costs to be determined, following submissions.
(1) In a proceeding under this part, evidence must be given by affidavit unless the court gives leave.
(2) An affidavit may contain statements of information and belief if the person making the affidavit states the sources of the information and the reasons for the belief.
(3) A party to an application under this part who intends to rely on a document must—
(a) exhibit the document to an affidavit; or
(b) identify in an affidavit the provisions relied on to the extent the party is able to identify them.
(4) A person who makes an affidavit to be read in an application under this part may not be cross-examined without the leave of the court.
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