Queensland Building and Construction Commission v Leon
[2014] QMC 26
•28 July 2014
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
Queensland Building and Construction Commission v Leon [2014] QMC 26
PARTIES:
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION
(plaintiff)
v
NELSON WAYNE LEON
(defendant)
FILE NO/S:
M3015/14
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:
28 July 2014
DELIVERED AT:
Brisbane
HEARING DATE:
30 June 2014
MAGISTRATE:
Springer BL
ORDER:
Application dismissed.
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:
NJ Morgan (solicitor) appeared for plaintiff
L Humphries (solicitor) appeared for defendant
SOLICITORS:
Rostryn Carlisle Solicitors for plaintiff
JKR 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 at relevant times was a director of Vertigrated Group Pty Ltd (formerly Vertigrated Contracting Pty Ltd) (“the company”). It is not in dispute that in March 2011, residential construction work was done at 1957 -1967 Mount Cotton Road, Cornubia. Because of dissatisfaction with aspects of that construction work, the owners of the Cornubia property made a claim under the statutory insurance scheme. In response to that claim, the Authority made a payment on the insurance claim. The plaintiff pleads that the company is indebted to the Commission for the amount of the payment by virtue of section 71(1) of the QBCC Act. Further, pursuant to section 111C(6) of the QBCC Act, the company’s liability has attached to the defendant.
The defendant has defended the Claim pleading, among other matters, a denial that the payment (if made) was validly made because the plaintiff did not make a valid decision within the meaning of the QBCC Act and consequently, the plaintiff was without power to make payment to the owners; further the defendant denies that the payment is recoverable from him as a debt.
The material relied on by the applicant
The plaintiff’s application is supported by an affidavit by Matthew Stratford. He deposes to inspections of the Cornubia property following the insurance claim in October 2011 and to a rectification request for the company to rectify and complete the work. That was sent on 18 November 2011. On 7 December 2011 the Authority granted an extension of time to rectify and complete the work.
On 8 February 2012 the plaintiff granted a further extension of time in which to rectify the work. There was no subsequent direction to rectify work, as allowed by section 72(1) of the QBCC Act. At paragraph 4 b. ix of his affidavit, Mr Stanford deposes:
On 28 February 2012, the Plaintiff Commission made the following decisions
1.A decision about the scope of works (“the Rectification Work”) to be undertaken under the statutory insurance scheme under the Act to rectify the Residential Construction Work; and
2.A decision that the Contract had been validly terminated by the Owners having the consequence of allowing a claim for non-completion under the statutory insurance scheme under the Act; and
wrote to the Company notifying it of those decisions (“the Scope of Works Decision and Termination Decision Letter”).
That letter is exhibited to Mr Stratford’s affidavit and also to an affidavit by the defendant filed on 27 June 2014. The letter refers to it having “been determined the contract has been validly terminated upon the contractor’s default”. It referred to an enclosed Scope of Work. According to the defendant, Mr Leon, that Scope of Works was not enclosed and he wrote to the Commission to inform them of that by letter dated 3 March 2012. The defendant also exhibits to his affidavit a letter dated 29 February 2012 on the letterhead of the Authority from Scott Macdonald in the position OF Resolution Services Building Inspector. That includes the same reference as the previous day’s letter. Significantly, that letter addressed to Vertigrated Group Pty Ltd commences with the salutation “Dear Directors” and reads:
1957-1967 MOUNT COTTON ROAD, CORNUBIA
I refer to the complaint received by BSA for the above property.
BSA has received confirmation the required rectification work has been completed.Your cooperation is appreciated and BSA will take no further action in regard to this matter.
Please contact me if you have any questions, quoting file reference 3-4476-11.
One can well understand why the defendant may have understood that matters relating to the complaint had been resolved and nothing further would occur about that.
Consideration of the issues
Is the defendant precluded from now raising the validity of the steps prior to the payment under the insurance claim?
The plaintiff relies on the Queensland Court of Appeal decision in Mahony v Queensland Building Services Authority [2013] QCA 323. That involved a consideration of provisions of the QBCC Act. 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 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.
The letter of 28 February 2012 identifies two decisions: first, that the contract had been validly terminated and second, the scope of work required to complete the building to the standards required by the contract. In the proceeding before me, there is nothing to indicate that any review of those two decisions has commenced in QCAT. Mr Stratford deposes to there being no application for review of the decisions. However, given the second letter received by the defendant, it is unsurprising that at least at that stage, that he did not consider any review necessary.
It was open to the company to seek a review of the decision that the contract had been validly terminated, having the consequence of allowing a claim for non-completion under the statutory insurance scheme (see s 86(1)(i) of the QBCC Act). It was also open to the company to seek review of the scope of works to be undertaken under the statutory insurance scheme to rectify or complete tribunal work (see s 86(1)(g)). The letter of 28 February 2012 made plain the process to be followed to initiate a review of the decision about valid termination of the contract.
The Defence does not plead specifically a purported invalidity of the decision that a contract had been validly terminated, or that the scope of works was not justified, but rather that the letter of 28 February 2012 purporting to be a decision was not a valid decision because the letter did not contain the scope of works referred to within it and because of the advice contained within the letter of 29 February 2012. Despite a reply from the defendant of 3 March 2012 to the plaintiff seeking clarification of the letter of 29 February 2012, no response was received. That lack of response was specifically pleaded in the Defence. The affidavit of Mr Stratford in support of the current application does not address the lack of a response to the defendant’s letter.
In my view, a review of the two decisions within the letter of 28 February 2012 is not justiciable in the current proceeding; the decisions are in the same category of those decisions referred to in paragraph [35] of Mahony’s case extracted above. The defendant does not depose to an intention to seek judicial review in respect of the decision to commence the current debt proceeding. It is also unclear whether the purported validity of the two decisions set out in the letter from the plaintiff can be challenged in any forum given the time that has passed. It is not obvious how the defendant might show the plaintiff was without power under the QBCC Act to make the payment to the owners of the Cornubia property, as pleaded in the defence, while the purported decisions in the letter of 28 February 2012 have not been challenged.
However, in my view, the non-response to the defendant’s letter of 3 March 2012 (which is not denied), when taken with the letter of 29 February 2012 which suggested that no further action would be taken by the (then) Authority, means that I am not persuaded that it is appropriate to grant summary judgment at this time. The principles to be considered in an application for summary judgment was considered by the Court of Appeal in Bolton Properties Pty Ltd v JK Investments (Australia) Pty Ltd [2009] 2 Qd.R 202. That decision sets out a number of cases where rules 292 and 293 have been considered, Daubney J said at paragraph [73]:
Persuading the court that there is “no real prospect of successfully defending all or a part of the plaintiff’s claim” is a necessary step on the path to summary judgment, but satisfaction of this element alone does not compel the exercise of the discretion in a particular way.
In the Court of Appeal decision in Deputy Commissioner of Taxation and Salcedo [2005] 2 Qd.R. 232 President McMurdo stated that nothing in the Uniform Civil Procedure Rules “detracts from the well established general principle that issues raised in proceedings will be determined summarily only in the clearest of cases”. I am not satisfied that this is such a case.
In the circumstances, I decline to exercise the discretion granted by the Uniform Civil Procedure Rules to allow summary judgment.
Conclusion
The application for summary judgment filed by the plaintiff on 5 June 2014 is dismissed. I will hear submissions on the question of costs.
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