Queensland Building and Construction Commission v Cyclone Constructions P/L
[2014] QMC 27
•4 July 2014
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
Queensland Building and Construction Commission v Cyclone Constructions P/L & Anor [2014] QMC 27
PARTIES:
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION
(plaintiff/ respondent)v
CYCLONE CONSTRUCTIONS PTY LTD ACN 010240267
(first defendant/ first applicant)
and
ALLAN DAVID THOMPSON
(second defendant/ second applicant)
FILE NO/S:
M1856/14
DIVISION:
Magistrates Courts
PROCEEDING:
Claim- Application to set aside summary judgment
ORIGINATING COURT:
Magistrates Court at Brisbane
DELIVERED ON:
4 July 2014
DELIVERED AT:
Brisbane
HEARING DATE:
30 June 2014
MAGISTRATE:
Springer BL
ORDER:
Application refused
CATCHWORDS:
PRACTICE AND PROCEDURE – SUMMARY JUDGMENT – application to set aside judgment – whether the defendant has a real prospect of successfully defending the claim
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
Second defendant appeared for first defendant and on own behalf
SOLICITORS:
Holding Redlick for plaintiff
Second defendant for first defendant and on own behalf
Background
On 2 June 2014, on application by the plaintiff, summary judgment was granted against the defendants by Magistrate Payne. The defendants were not present at the hearing of the application.
The defendants have now applied to set aside the judgment that was ordered on 2 June 2014. Mr Thompson, on his own behalf and on behalf of the company of which he is a director appeared without legal representation.
It was not clear from the defendant’s application the basis on which he made the application. I understood the defendant’s position to be that he was relying on the order being made in his absence. The respondent/plaintiff suggested two alternative bases under the Uniform Civil Procedure Rules (UCPR) which the defendant might purport to rely on, namely under rule 302 or rule 667.[1]
[1] Sections 302 and 667 provide:
It is clear from the court file that the presiding magistrate was conscious of the defendant’s application for adjournment on 2 June 2014 and refused the adjournment. She also expressed the view, as noted on the court file, that the defendant had no real prospect of successfully defending the claim.
The defendant argues that because Magistrate Payne did not have the benefit of his submissions, he should now be able to argue against the summary judgment application. Unsurprisingly, the current application is opposed.
The explanation for the defendant’s absence at the hearing
The defendant tendered two statutory declarations. No objection was taken to them not being in the form of an affidavit. The defendant states in one such statutory declaration that only on the morning of 2 July 2014 (which should refer to “June”), he became aware of a scheduled hearing in Brisbane. That awareness contributed to onset of arrhythmia “sometimes caused by business stress”. The timing of his becoming aware of the hearing is contrary to evidence from the plaintiff about service by registered post of the application and affidavit in support on 15 May 2014 on each of the first defendant company and Mr Thompson (see affidavit of Rebecca Burnett filed 27 June 2014). In a further affidavit by Ms Burnett filed by leave on 30 June 2014 there are exhibits which include copies of the signatures of the persons who purportedly signed acknowledging receipt of the relevant documents. Neither is immediately obvious as the signature of Mr Thompson, when conducting a superficial comparison with his signature on his affidavits on statutory declaration.
The statutory declarations filed by the second defendant include some letters from medical practitioners or facilities. That most relevant to Mr Thompson’s absence on 2 June 2014 is one dated that date. It reads:
“Medical Attendance Notice
This notice is to confirm that Allan David THOMPSON elected to attended (sic) The Cardiac Centre and Heartlab on 02 June 2014 due to his concern of his cardiac condition. He underwent a cardiac ultrasound (Echocardiogram).”
The defendant’s material includes earlier correspondence concerning his cardiac condition. In his affidavit filed 18 June 2014, the defendant deposes at paragraph 1(b):
My Cardiac condition was severe requiring cardiologist attention, which resulted in an Echocardiogram (Cardiologist Report Attached).
The attachment is the same as that attached to his most recent statutory declaration made 27 June 2014. I am not persuaded that the letter from the “Secretary to Heartlab Pindara” is evidence of a severe condition requiring cardiologist attention on 2 June 2004, but rather the defendant elected to attend there because of his concerns. There is no reference to additional treatment being required to be done as a result of the echocardiogram
The plaintiff’s solicitors contacted the medical facility and were provided with some information about the defendant’s presentation there on 2 June 2014. The affidavit of Ms Burnett filed 27 June 2014 is made on information and belief and includes a record of a conversation with Rhonda Machin from The Cardiac Centre which included that Ms Machin said of Mr Thompson, among other things, “If there was anything severe we wouldn’t have allowed him to leave”; and “he came for a routine echocardiography booking”. Ms Machin said that Mr Thompson had asked and the letter (attached to his material) and was arguing with her as to what he wanted in the letter. On the basis of that, it is open to infer that the defendant may have attended the facility solely to have an excuse for not attending court. During the hearing before me, the defendant attempted to provide information from the bar table about cardiac conditions that I did not consider relevant. On more than one occasion during the hearing statements which may have been intended to be evidence were made from the bar table. I have confined myself to only material filed by either party in the form of affidavits or the two statutory declarations.
The letter exhibited to the defendant’s statutory declaration does not suggest an identified cardiac emergency. This is reflected also on Ms Machin’s comments. It is clear that the second defendant’s cardiac condition is worrying for him. However, on the basis of the material, I am not persuaded that there was a genuine medical situation extant on 2 June 2014 which precluded the second defendant from attending court.
In some situations a failure to attend may be fatal to the success of the application (see The Reserve Vault Pty Ltd v. Barrier Reef Arts Pty Ltd [2012] QCA 35). The plaintiff’s evidence establishes on the balance of probabilities that the first defendant had notice of the application well ahead of the scheduled date. I cannot be satisfied, in the absence of expert handwriting analysis, that the signature of the person who signed for the registered post item addressed to the second defendant containing the application was Mr Thompson. However, where, as here, the second defendant is the controlling mind of the first defendant and, therefore, should have had arrangements in place for material served on the first defendant company to be notified to him in a timely way, he too should have been aware of the application. The affidavit of Ms Burnett filed 27 June 2014 shows service was effected on the first defendant company under cover of a letter dated 15 May 2014 addressed to the company contained in the Notice of Intention to Defend, which was also the registered office of the company. That was signed for as being received on 16 May 2014 (see Ms Burnett’s affidavit filed by leave on 30 June 2014).
In my view, the second defendant has not provided a reasonable excuse for not attending. However, even if I take the view that his absence should not be regarded as fatal to his application, I do not consider that the discretion to set aside the judgment and orders made on 2 June 2014 should be exercised in the manner sought by Mr Thompson. This is because, like Magistrate Payne, I am satisfied that the defendant has no real prospect of successfully defending the claim and, in my view, there is no need for a trial. Rule 5 of the UCPR[2] requires a court to apply the Rules to avoid delay and facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum expense.
The proceeding before the Court
The claim relates to payments made under the statutory insurance scheme provided for in the (then) Queensland Building Services Authority Act 1991, now the Queensland Building and Construction Commission Act 1991 (the QBCC Act). The owner of the property on which a building had been constructed by the first defendant made a complaint to the Authority in 2007. The statement of claim pleads (paragraph 10) that the complaint was a valid notice of a claim of indemnity or accepted as such by the Authority. Following that complaint the QBSA formed the view that the work was defective and incomplete. The QBSA made a determination to indemnify the owner on the complaint, and notice of that decision was communicated on 1 February 2013.
In the hearing of the application for summary judgment on 2 June 2014, the plaintiff relied on the Affidavit of Darren Lee Philip. Mr Philip deposes to a direction to rectify and or complete number 37211 to be sent to the first defendant. The time to perform the rectification was extended to 24 February 2012. It is implied that the rectification work was not done, because the rectification works were sent out to tender on or about 30 November 2012, after which the Authority amended the Scope of Work to be undertaken pursuant to the insurance policy to rectify the defects.
The first defendant has applied to the Queensland Civil and Administrative Tribunal (QCAT) for (what I understand is) a review application under section 86(1)(g) of the QBCC Act. That allows QCAT to review:
(g) a decision about the scope of works to be undertaken under the statutory insurance scheme to rectify or complete tribunal work;
In a dispute about whether the review was sought within the legislated time frame, Member Howe of QCAT concluded that the application for review of the decision of the Authority (now the Commission) about the amended Scope of Works to be undertaken under the statutory insurance scheme to rectify defective building work within the time required by s 86 of the QBSA Act. The substantive hearing about the appropriateness of the Amended Scope of Works has not yet been finalised.
The respondent/plaintiff relies on the Queensland Court of Appeal decision in Mahony v Queensland Building Services Authority [2013] QCA 323. Gotterson JA, delivering the decision for the Court, said (with footnotes omitted and highlighting added):
The justiciability of the “claim assessment” issue
[31] The appellant submits that in a recovery proceeding under s 71(1), it is open to a defendant to defend the claim by challenging the legal efficacy of any step taken by the authority in the assessment of the claim. Taken to its full extent, that approach would allow the defendant to challenge matters such as an inspection report, a decision to direct rectification of work, a decision that rectification work had not been satisfactorily attended to, and a decision to accept a particular tender from those submitted for rectification work.
[32] …
[33] The submission invites consideration of whether such matters are justiciable in s 71(1) recovery proceedings. In my view, they are not for the following reasons.
[34] Section 71(1) confers a right to recover as a debt from any of the designated persons “any payment on a claim under the insurance scheme”. It is sufficient for recovery under the section that the authority have made a payment on a claim under the insurance scheme. The statutory right to recover is not conditioned upon the legal quality of a determination by the authority to make the indemnity payment or of any anterior step taken by the authority that had led to the decision to pay.
[35] That is not to say that a decision to make an indemnity payment or any anterior step is not reviewable. At the relevant time, Division 3 of Part 7 of the QBSA Act conferred a review jurisdiction on the Commercial and Consumer Tribunal (“the Tribunal”) with respect to the following decisions by the authority: to direct or not direct rectification or completion work on a building; that work undertaken at the direction of the authority was not of a satisfactory standard; about the scope of works to be undertaken under the statutory insurance scheme in order to rectify; and to disallow a claim under the scheme wholly or in part. A decision by the authority to recover an amount under s 71(1) was not reviewable by the Tribunal. However, it was a decision which was judicially reviewable in the Supreme Court of Queensland pursuant to the provisions of the Judicial Review Act 1991. So, too, for other anterior decisions of the authority. The availability of review of those kinds and at those stages provides a sound rationale for a legislative intention that the types of decisions to which I have referred, not be justiciable in s 71(1) debt recovery proceedings. Another indicator of such an intention is that s 71 itself specifies certain defences which may be raised in proceedings under the section. None of these are relevant to the kind of defence that the appellant would wish to agitate in these proceedings.
[36] The view I take of this aspect of the construction and application of s 71(1) finds support in the following observations of Margaret Wilson AJA in Lange v Queensland Building Services Authority:
[72] Sections 71 and 111C provide for recovery of the amount of a “payment on a claim under the insurance scheme” rather than the recovery of the amount of a “payment under the insurance scheme”. For this reason, I do not accept counsel for the appellant’s submission that the triggering circumstance on which the respondent relies does not apply.
[73] The administrative decision sought to be reviewed is one about entitlement to indemnity under the statutory policy. The appellant is a person aggrieved by that decision because, in consequence of it, a payment was made to the owners and he was exposed to recovery proceedings pursuant to s 111C. He is entitled to seek judicial review of that decision pursuant to s 20 of the Judicial Review Act 1991.”
The triggering circumstance to which her Honour was referring was the payment by the authority of the claim.
[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, by that means, seek to impugn Mr Rendell’s reports and the respondent’s reliance upon them for its decision making. 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 separate comments President McMurdo of the Court of Appeal was not persuaded that, where the statutory insurer has made payments to those who were not entitled to claim under the scheme, the Queensland Building Services Authority Act 1991 (s 71(1)) would allow the insurer to recover the amount of such payments from the builder.
The reference in paragraph [38] quoted above highlights a distinction between the factual scenario in Mahony’s case and that relevant in the proceeding before me. In this proceeding, there is a review proceeding before QCAT although there is nothing to indicate judicial review proceedings in the Supreme Court to seek review of the decision to commence the current debt recovery proceeding. Despite that point of distinction, the outcome of the review proceedings in QCAT will not affect the current liability of the defendants in the debt recovery proceeding which have been brought in this Court.
Conclusion
It is clearly undesirable that the decision by the Authority to pay out under the insurance scheme was made even before the time in which the defendants could seek review of the Amended Scope of Works. Even though there is a matter still to be determined by QCAT (that is the review of the Amended Scope of Works) in my view that is of the type of those matters that are not justiciable in the current proceeding, as considered in Mahony’s case. As Member Howe in QCAT observed in his reasons, there may be cost consequences for the Commission. I do not need to determine in the current application what will be the outcome if the defendants were successful in the QCAT proceeding in reducing the value of the amended Scope of Works to nil or significantly less than the payments made out under the insurance scheme.
There is nothing in the material that suggests the payments made by the plaintiff were not made in response to a claim validly made under the QBSA Act, indeed the contrary is the position (refer to Mr Philip’s affidavit). The Authority has made a payment on a claim under the insurance scheme, and that is sufficient for the Commission (the successor to the Authority) to recover the payment as a debt, as is sought in the current proceeding.
For the reasons set out above, in my view, the defendants have no real prospect of successfully defending the claim and there is no need for a trial of the debt recovery claim to which the proceeding relates. That, taken with the absence at the hearing without reasonable excuse of Mr Thompson for himself and on behalf of the first defendant company means that, regardless of whether it is brought under rule 302 or under rule 667 of the UCPR and having regard to rule 5, the appropriate order is to dismiss the defendant’s application. That is the order I make.
I will hear submissions on the question of costs.
302 Setting aside judgment
The court may set aside or vary a judgment given on an application under this part against a party who did not appear on the hearing of the application.
667 Setting aside
(1) The court may vary or set aside an order before the earlier of the following—
(a) the filing of the order;
(b) the end of 7 days after the making of the order.
(2) The court may set aside an order at any time if—
(a) the order was made in the absence of a party; or
(b) ….
(3) This rule does not apply to a default judgment.
Note— For a default judgment, see rule 290.
(2) Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules.
(3) In a proceeding in a court, a party impliedly undertakes to the court and to the other parties to proceed in an expeditious way.
(4) …
0
2
0