Schneider v Queensland Building and Construction Commission - [2018] QCAT 412

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Schneider & Anor v Queensland Building and Construction Commission [2018] QCAT 412

PARTIES:

HEINZ (HENRY) GUNTHER SCHNEIDER
and
MARIE LOUISE SCHNEIDER
(applicants)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

APPLICATION NO:

GAR046-17

MATTER TYPE:

General administrative review

DELIVERED ON:

3 December 2018

HEARING DATE:

23 October 2018

HEARD AT:

Brisbane

DECISION OF:

Member Dr Collier

ORDERS:

1.   The decisions of the Respondent to deny the Applicants indemnity under the statutory insurance scheme are set aside.

2.   The Respondent is to pay the Applicants $128,205 within 30 days

3.   The parties are to make submissions to the Tribunal by 31 January 2019 in respect of the costs of remediation of the House as it presently stands sufficient to restore it to a sound condition in respect of frame stage. The parties are at liberty to negotiate and agree the compensation payable by the Respondent to the Applicants prior to 31 January 2019, in which case the parties must notify the Tribunal of any agreement reached by them in this regard.

4.   The Respondent is to pay the Applicants’ costs of $35,907.85 within 30 days.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – whether an assignment or a novation – purported assignment of contractual obligations – effect of de-registration by ASIC of builder company – termination notices

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – STATUTORY INSURANCE SCHEME FOR RESIDENTIAL BUILDING WORK – fraud on home-owners by builder – payments by home-owners in reliance on fraudulent misrepresentations by builder – effect on right to recover – termination notices – statutory insurance policy terms – calculation of extent of loss

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where Applicants successful – whether costs should be awarded under s 102 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) – indemnity costs

Queensland Building and Construction Commission Act 1991 (Qld), s 24(1), s 24(1)(b), s 24(1)(c), s 107(1), Schedule 1B, Sub-division 1 of Division 3 of Part 7

Queensland Building and Construction Commission Regulation 2003, Schedule 2C
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 102

Cachia v Hanes (1994) 179 CLR 403
Latoudis v Casey (1990) 170 CLR 534
Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444
Oshlack v Richmond River Council (1998) 193 CLR 72

APPEARANCES & REPRESENTATION:

Applicant:

C Garlick

Respondent:

S Tabaiwalu, in-house solicitor

REASONS FOR DECISION

Mr and Mrs Schneider, who live near the Murray River in rural New South Wales, had the misfortune to attend a property spruiking seminar in Victoria. As a result of attending this seminar they decided to purchase a block of land in Roma, Queensland, and have a residence built upon that block.
The block of land, Lot 450 Lomandra Avenue, Clearview Rise, Roma, Queensland[1] (the “Land”), was purchased from the Queensland Minister for Economic Development on 3 February 2014…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] QCAT 412
Decision Date: 3 December 2018

CaseChat Overview and Summary

In Schneider v Queensland Building and Construction Commission, the applicants, Mr and Mrs Schneider, sought compensation from the Queensland Building and Construction Commission (QBCC) for defective construction of their home. The QBCC had denied the Schneiders' claim for compensation under the statutory insurance scheme, which they had purchased from the QBCC to cover the construction of their home. The applicants sought to set aside the QBCC's decisions and recover the cost of the insurance policy and other losses they had suffered. The primary legal issues in this case were whether the Schneiders had properly terminated their contract with the builder, Line Constructions, and whether the QBCC was liable to compensate the Schneiders for their losses under the insurance policy. The court found that the Schneiders had properly terminated their contract with Line Constructions and that the QBCC was liable to compensate the Schneiders for their losses under the insurance policy. The court also found that the Schneiders were entitled to recover the cost of the insurance policy and other losses they had suffered. The court set aside the QBCC's decisions to deny the Schneiders' claim for compensation and ordered the QBCC to pay the Schneiders $128,205 within 30 days, together with their costs of $35,907.85. The court also ordered the parties to make submissions to the tribunal regarding the costs of remediation of the house and the parties were at liberty to negotiate and agree the compensation payable by the QBCC to the Schneiders prior to 31 January 2019.

Orders

Orders of the court

1. The decisions of the Respondent to deny the Applicants indemnity under the statutory insurance scheme are set aside.

2. The Respondent is to pay the Applicants $128,205 within 30 days

3. The parties are to make submissions to the Tribunal by 31 January 2019 in respect of the costs of remediation of the House as it presently stands sufficient to restore it to a sound condition in respect of frame stage. The parties are at liberty to negotiate and agree the compensation payable by the Respondent to the Applicants prior to 31 January 2019, in which case the parties must notify the Tribunal of any agreement reached by them in this regard.

4. The Respondent is to pay the Applicants’ costs of $35,907.85 within 30 days.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The deterioration of the floor and, possibly, the steel frame and other parts of the extant House constitutes ‘defective construction’ within the meaning of that term under the Insurance Policies, and the Schneiders are entitled to indemnity for the associated loss.Decisions by the QBCC The QBCC has made at least four decisions relevant to this matter:(a)The decision to deny the Schneiders’ insurance claim on 10 November 2016;(b)The further decision to deny the Schneiders’ insurance claim on 19 November 2016; (c)The decision of the Internal Review on 3 February 2017 to deny the Schneiders’ insurance claim; and(d)The reconsidered decision of 16 May 2018 following the Tribunal’s Direction issued on 11 April 2018. For the elimination of doubt, each of these four decisions is hereby set aside. The Tribunal finds that the Applicants are entitled to compensation arising from the Insurance Policies under the Home Warranty Scheme in respect of money paid by them to Line Constructions relating to the enclosed stage and the fixing stage of the House, and for the remediation of the defective construction apparent in the extant House sufficient to bring it to a proper and sound condition.Calculating the loss suffered by the Schneiders Clause 1.5 of the Second Insurance Policy deals with payments that may be made under the insurance policy where the works have commenced, as they had in this case. It says:Subject to Parts 6, 7 and 8 of this policy, where the contractor has commenced the contracted works in accordance with clause 1.3, the total amount of the payment under this Part is limited to the total of:(a) the QBCC’s assessment of the reasonable cost of completing the contract less the Insured’s remaining liability under the contract (exclusive of any amount by way of liquidated damages or damages for delay) at the termination of the contract … The relevant portions of Parts 6, 7 and 8 of the policy applicable this instance are:(a)The maximum liability of the QBCC is $200,000;(b)The Insured must act in good faith; and(c)The Insured must give the contractor the opportunity to remedy any defective construction. The general limitation of liability of $200,000 should be sufficient to compensate the Schneiders for their loss. The Schneiders have acted in good faith throughout the time covered by the events described in this decision. They are responsible for no tangible contribution to the losses they have suffered. Given that each of Contract Build and Line Constructions are no longer trading, giving either contractor the option to remedy any defective construction is not possible. The Schneiders presently own a building that has been completed to frame stage, but which now suffers from defective construction. They have suffered loss arising from the fraud perpetrated upon them to the extent of the payments of $128,205 they made for construction of the House from frame stage to fixing stage. $128,205 is the sum that should permit them to complete the House to fixing stage, which is the position they would be in had Line Constructions completed the work to that stage as provided in the Second Contract, and for which the Schneiders had paid.

Ratio Decidendi

Legal Principle Established

On 21 May 2015 the QBCC issued a Confirmation of Insurance in respect of the work to be undertaken by Line Constructions to build the House under the Second Contract. The ‘Notified Contract Value’ is cited in the letter as $284,900.Consideration of the Schneiders’ claim by the QBCC An assessment of the complaint by the Schneiders and their claim upon the Insurance Policy was assessed by the QBCC, Katrina Ennor, Insurance Assessment Officer, on 13 October 2016. Ms Ennor concluded:I am of the opinion that the insured has fulfilled the necessary requirements for a claim under Part 1 – Non-Completion-Completion of the QBCC Home Warranty Scheme.[23][23]File Note QBCC Home Warranty Claim Assessment Reason for Decision-Part 1: Non-Completion. This included her assessment under clause 1.7 of the First Insurance Policy that the owner had terminated the contract with the contractor within 2 years of the date of the payment of the insurance premium or contract date, whichever is the earlier. Despite this and the QBCC internal memorandum prepared by Katrina Ennor on 26 October 2016 recommending that the Schneiders’ insurance claim be admitted (as explained in paragraph [33]), on 19 December 2016 the QBCC advised the Schneiders that their claim under the under the Second Insurance Policy had been declined. On or about 9 January 2017 the Schneiders sought an Internal Review by the QBCC of the decision by Ms Ennor to decline the Schneiders’ claim. This was conducted by Mr Jonathan Pacey, acting Manager Internal Review for the QBCC. Mr Pacey made the decision to uphold the QBCC’s earlier decision. By letter dated 3 February 2017 he informed the Schneiders that: “I have decided to disallow the claim in full on the basis that the contract with the contractor was not properly terminated.” In his decision Mr Pacey goes on to say:… even if I were to accept that you had properly terminated your contract with Line Constructions Pty Ltd on 16 August 2016, I would nevertheless have to decline your claim on the basis that the cover has expired … He goes on to cite the term in the insurance contract that says:The QBCC is only liable for loss under this Part where the insured has properly terminated the contract with the contractor within 2 years from the date of payment of the insurance premium or the date of entering into the contract (whichever is the earlier). In his letter Mr Pacey says that the contract was executed on 26 November 2013 and that the two years ran from that date, with the assignment not constituting a new contract. The fact that Contract Build’s licence had been terminated by the QBCC meant that Contract Build could not complete the house it had contracted to build for the Schneiders. In turn, this would appear to activate the entitlement of the Schneiders to make a valid claim against the Insurance Policy. Under the terms of the Insurance Policy, the QBCC will pay for loss arising from, among other things, non-completion of the building.

CITATION:	Schneider & Anor v Queensland Building and Construction Commission [2018] QCAT 412
PARTIES:	HEINZ (HENRY) GUNTHER SCHNEIDER and MARIE LOUISE SCHNEIDER (applicants)
v
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (respondent)
APPLICATION NO:	GAR046-17
MATTER TYPE:	General administrative review
DELIVERED ON:	3 December 2018
HEARING DATE:	23 October 2018
HEARD AT:	Brisbane
DECISION OF:	Member Dr Collier
ORDERS:	1. The decisions of the Respondent to deny the Applicants indemnity under the statutory insurance scheme are set aside. 2. The Respondent is to pay the Applicants $128,205 within 30 days 3. The parties are to make submissions to the Tribunal by 31 January 2019 in respect of the costs of remediation of the House as it presently stands sufficient to restore it to a sound condition in respect of frame stage. The parties are at liberty to negotiate and agree the compensation payable by the Respondent to the Applicants prior to 31 January 2019, in which case the parties must notify the Tribunal of any agreement reached by them in this regard. 4. The Respondent is to pay the Applicants’ costs of $35,907.85 within 30 days.
CATCHWORDS:	CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – whether an assignment or a novation – purported assignment of contractual obligations – effect of de-registration by ASIC of builder company – termination notices CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – STATUTORY INSURANCE SCHEME FOR RESIDENTIAL BUILDING WORK – fraud on home-owners by builder – payments by home-owners in reliance on fraudulent misrepresentations by builder – effect on right to recover – termination notices – statutory insurance policy terms – calculation of extent of loss PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where Applicants successful – whether costs should be awarded under s 102 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) – indemnity costs Queensland Building and Construction Commission Act 1991 (Qld), s 24(1), s 24(1)(b), s 24(1)(c), s 107(1), Schedule 1B, Sub-division 1 of Division 3 of Part 7 Queensland Building and Construction Commission Regulation 2003, Schedule 2C Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 102 Cachia v Hanes (1994) 179 CLR 403 Latoudis v Casey (1990) 170 CLR 534 Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723 Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 Oshlack v Richmond River Council (1998) 193 CLR 72
APPEARANCES & REPRESENTATION:
Applicant:	C Garlick
Respondent:	S Tabaiwalu, in-house solicitor