Seirlis v Queensland Building and Construction Commission - [2014] QCAT 118

CITATION:

Seirlis & Ors v Queensland Building and Construction Commission [2014] QCAT 118

PARTIES:	Terry Seirlis (First Applicant) Ties Group Pty Ltd (Second Applicant) UKL Group Pty Ltd (Third Applicant)
v
Queensland Building and Construction Commission (Respondent)

APPLICATION NUMBER:

QR162/07, QR164/07

MATTER TYPE:	General administrative review matters
HEARING DATE:	14 October, 28 November 2013

HEARD AT:

Brisbane

DECISION OF:

Member Favell

DELIVERED ON:

28 March 2014

DELIVERED AT:

Brisbane

ORDERS MADE:

1. The applications are adjourned to a date to be fixed.

CATCHWORDS:

Review of a QBSA decision – whether appropriate to make orders concerning the determination of quantum issues on a preliminary question.

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Mr N. Steele of Counsel instructed by Hillhouse Burrough McKeown

RESPONDENT:

Mr G.I. Thompson of Counsel instructed by Holding Redlich

REASONS FOR DECISION

In 2001 Terry Seirlis Constructions Pty Ltd entered into a contract for construction of ten houses, road works and landscaping at 53 Tarragon Street, Yeronga. The work was to be performed in three stages. The builder was CMC Brisbane Pty Ltd.
Between 2 April 2001 and 4 February 2005 Terry Seirlis Constructions Pty Ltd (later C&E) was the owner of lot 5 on SP 143758, Parish of Yeerongpilly, County of Stanley (Lot 5) as trustee for the Terry Seirlis Family Trust established by a deed of trust dated 2 November 1997.
UKL Pty Ltd is the present trustee of the trust having been appointed by a deed of appointment of new trustee dated 16 October 2007.
On 4 October 2001 the respondent issued a certificate of insurance for lot 5 for the purposes of part 5 of the Queensland Building Services Authority Act 1991.
On 23 January 2004, C&E (formerly Terry Seirlis Constructions Pty Ltd) submitted an unsigned claim against the insurance which included a claim made in relation to lot 5.
On 10 February 2004, C&E submitted a signed claim form against the insurance which included a claim made in relation to lot 5.
On 31 July 2013 Terry Seirlis Constructions Pty Ltd, which by that time had become C and E Pty Ltd, had a liquidator appointed. Nick Jim Combis was the liquidator. Mr Seirlis was a director of that company up until 14 July 2012.
The applicants claim that on or about 2 June 2008 a deed of assignment between C&E (by its liquidator) as assignor and the second applicant Ties Group Pty Ltd was entered into. It is contended by the applicants that, by reason of the Deed of Assignment, the second applicant has standing and is entitled to payment of the amounts claimed. That contention rests on an assumption that rights under the deed were capable of being assigned by C&E, and if not C&E, then the liquidator on behalf of C&E. An issue before the Tribunal is whether the claim made is capable of assignment and whether the Deed of Assignment can retrospectively constitute the Second applicant as the “insured” under the policy with the respondent.
The Assignment was as follows.
The Assignment defined “The Claims” to mean
certain claims the Assignor has against third parties more particularly set out in the Schedules hereto and includes all actions, suits, demands and remedies available to the Assignor arising out of or in connection with those claims.
Clause 2 of the Assignment reads as follows:
2Assignment
2.1 The Assignor hereby absolutely assigns, transfers and sets over the Claims to the Assignee.
2.2 The Assignee agrees and acknowledges that it accepts the assignment of the Claims
Clause 3 of the Assignment reads as follows:
3Consideration
3.1 The Assignee acknowledges and agrees that it will pay the Assignor:
3.1.1The assignment fee on the execution hereof; and
3.1.2The Further Consideration within 28 days of receipt by it of the Net Proceeds.
Schedule A of the Assignment reads as follows:
1The BSA Insurance Claim
Details:The Assignor has lodged with the Building Services Authority (“BSA”) certain claims under the Statutory Insurance Scheme in relation to defective works performed by the builder CMC Brisbane Pty Ltd of the housing development at 53 Paragon Street, Yeronga.
Current Proceedings: Claim Nos. QR159-07 – Q164-07 (inclusive) commenced in the Commercial and consumer Tribunal at Brisbane.
The respondent contends that the rights under the Deed were property of the liquidator, and inter alia, C&E. Consequently, the liquidator of C&E requires retrospective approval under section 477(2B) of the Corporations Act to enter into the Deed and failure to obtain that approval renders the Deed ineffective.
Section 477 (2B) of the Corporations Act 2001 (Cth) relevantly provides:
Limitation on liquidator entering certain agreements without approval
Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not enter into an agreement on the company’s behalf (for example, but without limitation, a lease or a charge) if:
(a) Without limiting paragraph (b), the term of the agreement may end; or
(b) Obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance;
more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months.
On 23 January 2004 and 10 February 2004 defects in lots 2 and 5 of the project were the subject of complaints and insurance claims were made.
On 31 July 2007 the respondent authority conveyed a decision concerning insurance claims made in respect of lots 2 and 5.
The conveyed decision disallowed an insurance claim that was made under the statutory insurance scheme (now called the Queensland Home Warranty Scheme) which is administered by the respondent.
An issue for the Tribunal is whether those claims in respect of “category 2” Alleged Defects were made within “seven months of the date of practical completion”, being the time limit provided for under clause 2.5(b) of the Policy. The applicants allege that by 27 September 2003, practical completion of Lot 2 and Lot 5 had not occurred within the meaning clause 9.1 of the Policy.
The applicants have applied for a review of the respondent’s decision made on 31 July 2007 to disallow a claim under the statutory insurance policy operated by the respondent.
Those decisions are the subject of review proceedings before the Tribunal as test proceedings, there being another 8 properties the subject of defect complaints.
They contend the rights, if any, under the statutory insurance scheme are not personal to C&E. Instead, they argue that under section 70 of QBSA Act and the policy, rights conferred under the statutory scheme of insurance on a party meeting the definition of the “insured” are not personal to the insured. Consequently, notwithstanding that the applicants have never owned the subject lots and were not a party to the building contract with CMC, they are insured under the scheme.
The issue being argued as a preliminary issue before the Tribunal is whether, if the applicants are otherwise entitled to relief, quantification of the insurance claims and the exercise of discretion to payment properly falls to be considered in these proceedings and whether it ought to be undertaken by the Tribunal or ought to be remitted to the Authority.
The claim was for both liability and quantum. That is, had the respondent decided that the policy responded, it would have then been necessary for the respondent to have determined the amount owing under the policy.
In dispute is whether the policy only indemnifies the insured against actual loss suffered by it, as opposed to providing for the payment of a fixed or ascertained sum regardless of whether loss has been suffered.
If the policy only indemnifies against the former, there is no evidence of loss arising from alleged diminution in value or that the Applicants or C&E have incurred or suffered any expense or loss in causing the alleged defects to be rectified.
The exercise of discretion as to payment is provided for by clause 7.1 of the QBSA Insurance Policy. It provides that the QBSA may “at its own discretion, and in full discharge of its liability” take any one of a number of steps in the event of a defect, including payment of amount claimed to the insured or paying the amount of the claim to rectify defective works to a licensed contractor.
Under section 9(1) of the QCAT Act the Tribunal has jurisdiction to deal with matters it is so empowered to deal with under the QCAT Act or an empowering Act.
Section 86 of the QBSA Act provides:
86 Reviewable Decisions
(1)The Tribunal may review the following decisions of the authority
…
(h) a decision to disallow a claim under the statutory insurance scheme wholly or in part.
Under section 86(1)(h) of the QBSA Act, the Tribunal has the jurisdiction to review the QBSA’s decision to disallow the applicant’s insurance claim.
Schedule 1, section 48 of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’), provides as follows:
48 References to former entities
In an Act or document—
(a) a reference to the former authority may, if the context permits, be taken to be a reference to the commission; and
(b) a reference to the former board may, if the context permits, be taken to be a reference to the board; and
(c) a reference to the general manager under the QBSA Act may, if the context permits, be taken to be a reference to the commissioner.
Schedule 1, section 41 of the QBCC Act provides as follows:
41 Unresolved applications
(1) On the transfer day, the commission stands in place of the former authority for any unresolved application made—
(a) under the QBSA Act to the former authority; or
(b) by the former authority to the tribunal.
(2) For subsection (1)(a), the commission may be satisfied about a matter merely because the former authority was satisfied about the matter under the relevant provision of the QBSA Act.
(3) In this section—
unresolved application means an application made, but not finally decided or withdrawn, before the transfer day.
The meaning of ‘former authority’ is defined in Schedule 1, section as follows:
former authority means the former Queensland Building Services Authority established under the QBSA Act.
This review continues accordingly.
The respondent contends that a decision made by the QBSA in the exercise of its jurisdiction under clause 7.1 of the insurance policy is not simply reviewable under this provision, nor is it “disallowed” within the meaning of section 86(1)(h).
The respondent accordingly submits that the Tribunal has no jurisdiction to make any ruling as to the proper identity of the payee under clause 7.1 of the policy, even assuming the applicants were to be successful in every other respect. The position of the Authority has been that the only “live” issue in review proceedings concerning the statutory insurance scheme is whether the Policy responds.
The respondent accordingly submits that the applicant cannot succeed on liability.
Section 24 of the QCAT Act provides:
24 Functions for review jurisdiction
(1)In a proceeding for a review of a reviewable decision the tribunal may –
(a)   Confirm or amend the decision; or
(b)   Set aside the decision and substitute its own decision; or
(c)   Set aside the decision and return the matter for reconsideration to the decision-maker for the decision, with the directions the Tribunal considers appropriate.
The function of the Tribunal under the QCAT Act, to “exercise its review jurisdiction for a reviewable decision”, accords with the Tribunal reviewing the decisions to disallow the insurance claim purportedly advanced by the applicant, conveyed by letters of 31 July 2007.
The applicants submit that the Tribunal has jurisdiction to determine not only the respondents liability under the policy but, if liability is found, the quantum of the amount payable under the policy.
Section 87 of the QBSA Act provides that a person affected by a reviewable decision may apply for review “as provided for under the QCAT Act”. Accordingly, if the decision by the QBSA to disallow insurance is found to be reviewable, then, the Tribunal may do any of the things provided for by that section.
Under section 24(2) the decision of the Tribunal is taken to be the decision of the decision maker.
The applicant submits that the Tribunal should rule that it does have jurisdiction to consider quantum in this case, and make a ruling accordingly to either confirm, substitute or refer back to the Authority that determination of quantum.
In a determination on quantum, the applicants contend that their claims are in respect of defects only under part 2 of the Policy, as opposed to incomplete work under part 1 of the Policy. The Tribunal must therefore ascertain the cost of rectifying defects within the meaning of clause 2.1(a) of the Policy, pursuant to a finding that the applicants or C&E have in fact incurred or suffered any significant expense or loss in causing the alleged defects to be rectified.
The parties have agreed on issues in dispute.[1]
[1] Exhibit 1.
In the issues in dispute, paragraph 19 raised the following question: ‘if the applicants are otherwise entitled to relief, whether quantification of the insurance claims and the exercise of discretion as to payment: (a) properly falls to be considered in these proceedings at all; (b) ought to be undertaken by this Tribunal; or (c) ought to be remitted to the authority.’
The submissions made on behalf of the authority urge alternate rulings as follows:
(a)The Tribunal has no jurisdiction to embark upon any detailed assessment of quantum;
(b)Alternatively, given the applicant’s persistent refusal to bring forward any valuation evidence, the Tribunal should rule in advance that the question of quantum be remitted to the Authority under section 24 of the QCAT Act if the applicants succeed in having the subject decision overturned.
The Applicants urge the Tribunal to hold that it does have jurisdiction to consider quantum in this case.
In my view, the Tribunal in exercising its review jurisdiction in a proceeding for a review of a reviewable decision may do any of the things which are set out in section 24(1) of the QCAT Act.
If the Tribunal confirmed the decision, the question of whether or not the Tribunal had jurisdiction to embark upon any assessment of quantum would not arise. If it were to amend the decision, in my view it would be an amendment of the decision to disallow a claim under the statutory insurance scheme which would not necessarily involve any decision as to quantum.
If the Tribunal were to set aside the decision and substitute its own decision, in my view it would be able to consider questions of quantum. It is at that stage, if the Tribunal decided to set aside the decision that it needs to then determine whether to return the matter for reconsideration to the decision maker with or without directions, or substitute a decision which would involve a determination of quantum.
In my view, the substitution of the Tribunal’s own decision is not restricted to just questions of liability.
Further, I am of the view that regard has to be had to the original claim which was made. The original claim was in respect of both liability and quantum. Just because the Authority decided to reject the claim outright, does not in my view restrict what the Tribunal can do in its review function. I am of the view that the Tribunal does have the power to substitute its own decision including a decision on quantum.
That being said, the question presently posed as a jurisdictional question for the Tribunal is hypothetical. In my view it would not be appropriate to make either of the orders sought by the Authority nor would it be appropriate at this time to hold that the Tribunal does have jurisdiction to consider “quantum in this place.” That is because no decision has been made or could be made at this stage as to the likely outcome of the review because it primarily rests with the determination of liability.
However, that being so, I am of the opinion that if the applicants are otherwise entitled to relief, the Tribunal has the power to consider quantum. It is a matter for the parties whether appropriate evidence is called concerning quantum.
Given the submissions made on 28 November 2013, it seems likely that it would be desirable and appropriate for the Tribunal to hear all of the evidence including evidence concerning quantum. If the parties decide to follow that course further directions concerning further evidence, exchanges with reports and possible conclaves may need to be made. I note the submissions made especially the proposition that at least on one aspect of the issues in dispute liability and quantum may be necessary considerations on the question of whether the policy responds.
I order the applications be adjourned to a date to be fixed and the applications be listed for directions on a date to be fixed.