Rezaee v Queensland Building Services Authority
[2012] QCATA 147
•20 August 2012
| CITATION: | Rezaee and Anor v Queensland Building Services Authority [2012] QCATA 147 |
| PARTIES: | Mansoor Rezaee Taraneh Rezaee (Applicants) |
| v | |
| Queensland Building Services Authority (Respondent) |
| APPLICATION NUMBER: | APL068-11 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | 30 April 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr C Brabazon QC, Presiding Member Ms M Howard, Member |
| DELIVERED ON: | 20 August 2012 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | [1] Dismiss the application for leave to appeal and the appeal. [2] The decision of the respondent dated 15 June 2006 is affirmed. [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 – claims made out of time – discretion to allow further time Queensland Building Services Authority Act 1991, ss 69, 86, 87 Gallo v Dawson (1990) HCA 30 |
APPEARANCES and REPRESENTATION:
| APPLICANT: | Ms Hindman for the QBSA |
| RESPONDENT: | Mr A Duffy for Mr and Mrs Rezaee |
REASONS FOR DECISION
The Appeal
There are defects in Mr and Mrs Rezaee’s Brisbane house. They say that the statutory insurance cover provided by the Queensland Building Services Authority should cover the defects, so that they can get them fixed.
The QBSA says that their claim is outside the insurance’s time limits. It has a power to extend time, to allow claims out of time. It refused to exercise that power, in their favour.
The Rezaees’ believe that the power should have been exercised in their favour. They applied to QCAT in early 2011. The member who heard their application wrote a careful judgment. He found that they had not complied with the time limits in the policy. He said that the discretion to extend time to comply with the policy’s time limits should not be exercised in their favour.
The Rezaees have appealed to QCAT. Was the member right? Should he have extended time and allowed their claims?
QCAT’s powers
The QBSA Act identifies those decisions which are “reviewable decisions”:
Section 86(h) – “a decision to disallow a claim under the statutory insurance scheme, wholly or in part”,
Section 87 – “A person affected by a reviewable decision of the Authority may apply, as provided, to (QCAT) for a review of the decision.”
The QCAT Act 2009 establishes a review jurisdiction: see ss 19, 20 and 24. QCAT must hear and decide a review of a reviewable decision, by way of a fresh hearing on the merits.
QCAT has power to confirm or amend a decision, or set aside the decision and substitute its own decision.
The Policy
The QBSA policy, edition 4a, covers loss caused by defective construction. Attention has to be paid to two things – the expiry of insurance cover, and the time limits for making claims.
Section 5.1 says:
“(b)The insured is not entitled to payment for (defective construction) where;
(ii) In 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.”
Section 7.2 says:
“Time limits
All claims under this policy will be made”
(a) …
(b) In the case of a category 1 defect … within three months of that defect … first becoming evident (in the opinion of the QBSA)
(c) In the case of a category 2 defect – within seven months of the date of practical completion;
or within such further time as the QBSA may allow.”
Category 1 refers to a serious defect. Category 2 refers to less serious defects. It is clear, from the setting out and punctuation, that the QBSA has power to extend time, in both the category 1 and category 2 cases. The member in this case, and counsel before us, said that the QBSA’s discretion to extend time applied only to category 1 defects. As the above extracts show, the discretion is exercisable in both cases.
The Building
The Rezaees own number 21 Jullaten Street, Brisbane. The house was built for them by a licensed builder, Mr Laghai, as a house and land package. It is accepted that the date of practical completion was October 2001. The Rezaees moved in about one month after it was finished. They have continued to live there.
By early 2005, Mr Rezaee was concerned about defects in the house. He obtained a building report from Jeffrey Hills & Associates in September 2005. He went to considerable lengths to contact the builder between March 2005 and March 2006. He could not find him. On 26 April 2006 the builder became bankrupt.
It seems that no copy of any building contract is available. Indeed, Mr Rezaee says that there was no written contract.
A certificate of insurance is attached to Mr Rezaee’s statement. It was issued on 6 March 2001 and expired on 1 September 2007. Only the front page of the policy is available. It is clear from that first page that the policy conditions, edition 4a, were attached.
It was submitted for the Rezaees, that there is no evidence that they received that document. The issue was not raised during Mr Rezaee’s evidence. The QBSA gave no evidence about it at the hearing. The issue was raised in oral submissions, during the hearing of this appeal.
The QBSA was under a statutory duty to give a copy of the policy to the Rezaees. Since the 1999 amendment to the QBSA Act, section 69 says:
“…
(4)The certificate of insurance given to a consumer need not state the terms of the policy of insurance, but a copy of the policy must be given to the consumer when the certificate of insurance is given to the consumer and the certificate of insurance must include a clear reference to the policy.
(5)To remove doubt, it is declared that a policy of insurance has effect according to its terms …”
On the available evidence, we reach the conclusion that the Rezaees were given a copy of the insurance policy. It is addressed to them. It is called a “Certificate of Insurance”. It is clear that the front page was attached to a full set of Edition 4a conditions. For example – see the references to sections 4 and 5, and the warning at the end of the page.
Mr Rezaee said that he believed that they had insurance cover for about seven years. It is not clear who told him that. He did not say that he was told that by the QBSA. It seems that other people may have told him that. His statement does tend to confirm the existence of an insurance cover.
The complaints
Mr Rezaee wrote to the builder on 6 April 2006. He asked him to fix some problems in the house. There was no response. The letter was written, Mr Rezaee says, at the request of the QBSA, before he made a formal complaint. Mrs Rezaee collected a QBSA complaint form. They completed it and returned it to the QBSA on 28 April 2006.
The QBSA arranged an inspection, on 24 May 2006. The result was the identification of five defects according to the categories set out in the insurance policy:
1.The roof frame was loose and unattached, first noticed September 2005 (category 1).
2.Crack in the lounge room ceiling, first noticed 2002 (category 2).
3.Foyer tiles moved and broken, first noticed 2004 (category 2).
4.Roof tiles uneven, moving, and curved on top of garage, first noticed in 2005 (category 1).
5.Balcony flooring attached incorrectly. Noticed in 2002 (category 1).
The category 1 defects should have been noticed within three months of the defects becoming evident. In fact, they were noticed late – item 1 was four months late. Item 4 was one year and four months and item 5 was four years and four months.
The category 2 defects had to be noticed within seven months of practical completion – that is, by the end of May 2002. There was also the need to pay attention to the expiry of cover – where the defect first became evident more than six months after the date of practical completion in October 2001 – that is, by April 2002. Therefore, it is not known if item 2 was notified in time, by April 2002. Item 3 was first noticed in 2004 and so, was well out of time.
The QBSA response
The QBSA provided a Statement of Reasons for its decision. The long delays set out above were identified. The builder’s bankruptcy was noted. It was asserted that the delay has meant a likely increase in rectification costs. The builder’s bankruptcy meant an inability to recover money from him. The QBSA’s insurer had declined the claim – under the statutory insurance scheme that decision was contained in the QBSA letter of 15 June 2006. (That letter had a significant omission. The time limits were set out, without the additional condition, “or within such further time as the QBSA may allow.”)
The Members’ decision
The member noted the omission, set out above, about the direction to enlarge time. He went on to dismiss a suggestion that the Rezaees’ use of English as a second language was a significant factor. They, and Mr Laghai, are migrants from Iran. Their native language is Persian. Judging by the transcript of Mr Rezaee’s evidence before Mr Lohrisch, who first heard the matter, and his written correspondence, the language was not a significant difficulty. We accept what was said by the member (who did not see Mr Rezaee in person): “the only reason apparent to the Tribunal relates to the applicant’s lack of proficiency with the English language … the (Rezaees) illustrated that they had some difficulties with the language, but they were able to make clear what they were intending … the (Rezaees) did not lack proficiency with the English language to the extent that they could not complete the complaint form.”
The question of prejudice to either side was referred to. The member said in this case that the issue of prejudice to the Rezaees was 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.”
Prejudice to the QBSA was considered. Here, it is said that an earlier notification of the defects might have resulted in the builder being able to do repairs before his bankruptcy. That seems to have been a slim possibility. The fact that he was un-contactable from 2005 points to the strong probability that he could, or would, do nothing.
The Grounds of Appeal
The Rezaees’ grounds of appeal are set out in their “Application for leave to appeal, or appeal”, filed on 8 March 2011.
The grounds of appeal are two fold. The first ground relates to prejudice. Several errors are advanced by the Rezaees, namely that the Tribunal erred in law in finding that the question of prejudice was irrelevant to the exercise of discretion; that the Tribunal erred in finding that that the builder’s bankruptcy constituted actual prejudice to the QBSA; or in the alternative, if the bankruptcy was prejudice that it must be considered in the overall circumstances of the case which the Tribunal failed to do.
The second ground of appeal is that the Tribunal erred in law and in fact in finding that the discretion should be exercised against the Rezaees. Various circumstances are relied upon including the Rezaees’ English language abilities; their lack of experience in building matters; their understanding of the insurance cover; and their unsuccessful earlier attempt to complain to the QBSA which refused to accept it until they contacted the builder, despite the QBSA’s knowledge that the builder was not responding to correspondence.
Leave is not required to appeal a question of law.[1] The effect of the QCAT Act is that a party requires leave to appeal any question of fact, or of mixed law and fact: s 142(3)(b).
[1] Queensland Civil and Administrative Tribunal Act 2009, s 142.
Prejudice
It is submitted for the Rezaees, that the Member erred in law, in saying that the issue of prejudice was irrelevant to the exercise of discretion to extend time. It is necessary to understand the context in which the Member used these words. He referred to earlier decisions, in which the homeowners had no excuse or explanation for their failure to notify the QBSA in time and it was not appropriate to exercise the discretion to extend time. In this case, therefore, for that same reason, time should not be extended. An issue about prejudice does not arise, if there is no excuse for the delay.
The imposition of a time limit will always mean that often a person will suffer because of it. That is misfortune, not prejudice. It is the expected result of the time limit. The surrounding circumstances may be significant. Sometimes, the consequences may be undeserved, or out of all proportion to the default.
A Discretion
The QBSA had power to extend time. An instructive example of the exercise of a similar discretion can be seen in the decision of Gallo v Dawson (1990) High Court of Australia, 30. Relevantly, McHugh J put it this way:
“A notice of appeal against his Honour's judgment had to be lodged within 21 days. Thus, the present application was made over 16 months out of time. However, the applicant relied on the provisions of O.60, r.6 to support her application. That rule provides that the Court or a Justice may enlarge the time appointed by the Rules for doing an act upon such terms, if any, as the justice of the case may require.
The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties …
This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time … It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice.”
As the Judicial Committee of the Privy Council pointed out:
"The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion."
Discretion in this case
The QBSA, had the task of exercising a discretion, to allow or refuse an extension of time. The QBSA’s decision letter, and its statement of reasons, make no mention of that discretion. Its decision might be considered with caution, because of that omission. The QCAT member drew attention to that. He was aware that he had a duty to exercise a discretion, to allow or refuse further time to accept the claims.
Mr A Herbert of counsel appeared for the Rezaees. We have considered his written submissions.
The submissions by counsel deal carefully with the member’s exercise of discretion. Counsel for the Rezaees point out the principles that should have been observed. He submits that a proper exercise of discretion would have resulted in a decision in their favour – extension of time to allow all of their claims, or a further re-hearing of their case.
It can be accepted that the possibility of extending time should not have been, as the member put it, “of limited duration” only. On the other hand, the member was undoubtedly right to say that further time should be allowed “only for good reason”. That leads to a consideration of the relevant facts. Section 7.2 of the policy simply refers to claims being made, “within such further time as the BSA may allow.”
So, the general rule is that a discretion expressed without any qualification is unconfined except in so far as it is affected by limitations to be derived from the context and scope and purpose of the statute (R v ABC (1979) 144 CLR 45, para 13, High Court of Australia).
It is correct to say, that this Tribunal should now look at all the relevant facts and circumstances. What is the result of a careful exercise of the discretion? Mention was made of the Rezaees’ personal circumstances. They were Iranian migrants, speaking and reading a second language. Both of them worked, usually long hours. Mr Rezaee’s English skills were not perfect, but it seems that he had an adequate and workable command of the language. He was able to write an effective letter to the QBSA. In the early months of this dispute the Rezaees acted for themselves, before retaining solicitors. They had no particular knowledge about house construction.
It is true, as it was submitted, that the builder was unresponsive to claims and directions while the time for claims was passing. The facts show that he had also done defective work on other houses, at around the same time. That being so, it was submitted for the Rezaees, the liability of the QBSA was always the same, and that it never had the possibility of receiving anything from the builder. In that case, it was said, it suffered no relevant prejudice by the passing of time – compared to the Rezaees’ catastrophic loss of their insurance cover.
However, in our opinion, those considerations do not lead to the conclusion that this Tribunal should now declare that the time should be extended, or that there be a further hearing. The member’s decision was not beyond the limits of a proper exercise of the discretion. Indeed, it is hard to see how he could have come to any other conclusion. There is no material on which we might rely in coming to a conclusion in their favour.
The application for leave to appeal, and the appeal, must be dismissed.
Costs
The parties may wish to make written submissions about costs – possibly including some interlocutory costs.
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