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[2014] VSC 255
Supreme Court of Victoria
2014-06-02
McMillan J
Original judgment source is linked above.
ADMINISTRATIVE LAW - Judicial review - Jurisdictional error - Error of law on the face of the record - Building Act 1993, s 93
1 This is an application for judicial review of a decision of the Building Appeals Board ('the Board'). The Board decided that an insurance policy taken out in respect of building works did not comply with of the ('the Act'). The question for the Court is whether that decision was made in accordance with law.
2 The applicant, Mr Ren Chuan You, is building a new house on his property at 5 Montalto Avenue, Toorak. The second respondent, Mr Wal Mykytenko, owns the property next door, at 6 Montalto Avenue.
3 By a decision of a 'relevant building surveyor',[1] Mr You was required to carry out 'protection work', that is, work designed to protect adjoining property from damage. Mr You was required to construct a retaining wall along the boundary of his land adjacent to Mr Mykytenko's property.
4 Pursuant to s 87(4) of the Building Act 1993 ('the Act'), the building surveyor determined that Mr You's proposed design for the retaining wall was appropriate. Mr Mykytenko appealed that decision to the Board pursuant to s 141(a) of the Act. The Board was satisfied that the proposed design was appropriate and affirmed the decision of the building surveyor.
5 Section 93 of the Act requires that, '[b]efore any protection work is commenced ..., an owner must ensure that a contract of insurance is in force' against damage to the adjacent property and against liability to the adjoining owner or a member of the public. An insurance policy for the protection work was taken out by Mr You's builder, Raisin & Braden Pty Ltd.
Proper Protection Works Insurance policy in accordance with Section 93 of the [Act], be issued in the name of the owner of 5 Montalto Avenue Toorak namely Mr Ren Chuan You
and an order for reimbursement for reasonable expenses incurred.
On 11 July 2013 the Board conducted a hearing, and on 29 October 2013 the Board issued the following determination:
7 Although the wording in determination 'A' is somewhat ambiguous, it became clear from the written reasons of the Board dated 28 November 2013, which Mr You requested by a letter dated 25 November 2013, that the Board decided that the insurance policy for the protection work did not comply with s 93 of the Act.
8 Mr You now appeals to this Court for review of the decision under s 3 of the Administrative Law Act 1978. Mr You seeks that the decision of the Board be set aside pursuant to s 7 of the Act.
9 The Board, which is the first respondent, has provided a letter dated 7 March 2014 and a further letter dated 1 May 2014. The Board has indicated that it consents to paragraph A of the determination of 29 October 2013 being set aside. Otherwise, the Board has taken no active role in the proceeding and has said that it will abide the decision of this Court in accordance with the principles enunciated in R v Australian Broadcasting Tribunal; ex parte Hardiman.[2]
10 Mr You relied on an affidavit in support of the application sworn by Mr David Fairweather, solicitor for Mr You, on 17 December 2013. The affidavit sets out the background to the dispute, the submissions made to the Board, the determination of the Board and the reasons for that determination.
11 The decision for the Board was whether the insurance policy complied with s 93 of the Act. Section 93 provides:
(1) Before any protection work is commenced in respect of an adjoining property, an owner must ensure that a contract of insurance is in force, in accordance with this section, against -
- (a) damage by the proposed protection work to the adjoining property; and
- (b) any liabilities likely to be incurred to adjoining occupiers and members of the public during the carrying out of the building work and for a period of 12 months after that building work is completed.
(2) The contract of insurance must be entered into with an insurer and for an amount -
- (a) agreed to by the owner and the adjoining owner; or
- (b) in the event of a dispute, determined by the Building Appeals Board under Part 10.
(3) The owner must lodge a copy of the contract of insurance with the adjoining owner before the commencement of the protection work.
(4) The owner must ensure that the contract of insurance is renewed or extended as often as may be necessary during the carrying out of the building work and for 12 months after that work is completed.
(5) The owner must lodge a copy of a document evidencing the renewal or extension of the contract of insurance with the adjoining owner as soon as it is practicable to do so after the renewal or extension.
12 When asked to provide written reasons for why the insurance policy did not comply with the Act, the Board gave the following 10 reasons:
14 Ms Fitzgerald submitted that the Board denied Mr You natural justice when it made its decision on the basis of issues on which Mr You was not heard.[3] In particular, the Board did not hear from Mr You on the fact that the period of insurance ends on 23 April 2014, which formed the basis of reason (3) of the Board's decision. Had the matter been addressed at the hearing, Mr You would have submitted that s 93(4) of the Act recognises the industry practice of issuing insurance policies on an annual basis.
15 Ms Fitzgerald submitted that upon a true construction of s 93(4) there is no requirement that the period of insurance identified in the insurance contract cover the entire duration of the building works. Rather, s 93(4) contemplates that the usual period of insurance is one year.
16 Section 93(4) requires an owner to 'ensure that the contract of insurance is renewed or extended as often as may be necessary during the carrying out of the building work and for 12 months after that work is completed'. Section 93(5) requires the owner to lodge evidence of the renewal or extension with the adjoining owner. By necessary implication, the period of cover in the insurance contract need not cover the entire duration of the building work, else there would be no reason to impose a statutory obligation upon the owner to extend or renew the insurance contract, or to lodge evidence thereof with the adjoining owner.
17 I am satisfied that the failure to hear Mr You on the period of insurance, which formed the basis of reason (3) for the Board's decision that the insurance contract did not comply with s 93 of the Act, constituted a denial of procedural fairness. It cannot be said that, had the Board heard Mr You on the period of insurance, there could have been no difference to the outcome of the proceeding.[4]
18 Ms Fitzgerald submitted that the Board, in deciding whether the policy complied with s 93, failed to take into account or did not give proper consideration to two relevant considerations:
A failure to take into account relevant considerations constitutes jurisdictional error by an administrative decision-maker, for which reason the decision should be set aside.[5] Counsel urged the Court to infer from the Board's reasons that the Board did not take into account those considerations.
19 Ms Fitzgerald also submitted that each of the 10 reasons proffered by the Board was irrelevant to the decision whether the policy complied with the Act. In his affidavit 17 December 2013, Mr You's instructing solicitor sets out the reasons why it was submitted that each of the Board's reasons was irrelevant.
20 Without considering all of the points raised by counsel for Mr You, I am satisfied, for the reasons that follow, that the decision of the Board is invalid for jurisdictional error and should be quashed. The errors identified below are jurisdictional in nature, because the Board does not have power to make a decision otherwise than in accordance the law or authoritatively to determine questions of law.[6]
21 The critical submission is that by reason (2) the Board both took into account an irrelevant consideration and erred in law. Ms Fitzgerald submitted at trial that the Board took into account an irrelevant consideration when it decided that the policy was invalid because Mr Mykytenko was not named as the insured. First, it was submitted that Mr Mykytenko was in fact named in the contract. Secondly it was submitted that, owing s 48(1) of the Insurance Contract Act 1984, Mr Mykytenko need not be identified as the insured. To consider that there was a requirement that Mr Mykytenko be named as the insured was also to err in law.
22 At the hearing before the Board, the solicitor for Mr Mykytenko, Mr Tomyn, submitted that the policy was invalid because it did not name Mr You, the owner, as the insured. By contrast, reason (2) of the Board's reasons why the policy did not comply with s 93 is that it did not name Mr Mykytenko, the adjoining owner, as the insured. At trial, Ms Fitzgerald made submissions in favour of the proposition that s 93 did not require Mr You to be named in the policy. Given that none of the Board's reasons was that Mr You was not named as the insured, it is unnecessary to consider those submissions.
23 Ms Fitzgerald referred the Court to the certificate of currency on the front page of the insurance policy, where 'Mr W and Mrs M Mykytenko' are listed under 'Owner Details'. Counsel then referred to page 21 of the policy, whose relevant parts read:
The "Insured" shall include:
1.A Named Insured stated in the Schedule
1.B Additional Insureds
...
(d) with the consent of the Insurer, any other party or person where the Insured nominated in the Schedule assumes an obligation under contract or agreement to include their name as an Insured in relation to the Interest Insured.
24 In answer to the question from the Bench whether the Schedule was the certificate of currency, Ms Fitzgerald submitted that it was. When it was put to Ms Fitzgerald that the certificate of currency states that 'This Certificate is issued as a matter of information only and confers no rights upon the holder', she responded that her instructions were that no other schedule was provided with the insurance policy.
25 On the material before me, I am unable to conclude whether it can be said that Mr Mykytenko was in fact named in the policy. Certainly Mr Mykytenko's name appears in the certificate of currency, but I have serious doubts as to whether that document is the Schedule referred to in the policy itself.
26 For the following reasons, I have concluded the fact that the insured identified under the policy is the builder, not the adjoining owner, is an irrelevant consideration.
27 To comply with s 93(1), the insurance policy must cover 'damage by the proposed protection work to the adjoining property': s 93(1)(a). It must also cover 'any liabilities likely to be incurred to adjoining occupiers and members of the public during the carrying out of the building work': s 93(1)(b). The subject-matter of s 93(1)(a) is the adjoining property, whereas the subject-matter of s 93(1)(b) is any liability likely to be incurred by the insured. The former concerns the protection work, the latter concerns the building work.
28 The type of insurance contemplated by s 93(1)(b) of the Act is liability insurance, that is, insurance whereby the insurer undertakes to indemnify the insured for loss suffered as a result of liability to a third party; in this context, the adjoining owner and members of the public. It follows that the consideration that the adjoining owner is not the insured under the contract is an irrelevant consideration in the context of s 93(1)(b), since the adjoining owner is the person liability payable to whom is covered.
29 The next question is whether, in order for the contract to comply with s 93(1)(a), Mr Mykytenko must be named as the insured in the contract. Counsel referred to ss 20 and 48(1) of the Insurance Contract Act 1984 in support of the proposition that Mr Mykytenko need not be named as the insured.
30 Section 20 states that an insurer is not relieved of liability under a contract merely because the names of the person or persons who may benefit under it are not 'specified in the policy document'. Section 48(1) allows a person who is not a party to an insurance contract recover from the insurer under that contract if that person is specified or referred to in the contract.
31 I have come to the conclusion that an insurance contract wherein the adjoining owner is not named as the insured will not, for that reason alone, fail to comply with s 93(1)(a). That section requires there to be a contract of insurance indemnifying the insured against damage by the protection work to the adjoining property. Its purpose is the protection of the adjoining owner against loss. An insurance contract upon which the adjoining owner was unable to recover would necessarily fail to comply with s 93(1)(a), for it would not in effect indemnify the adjoining owner against loss. In my opinion, s 93(1)(a) requires that the adjoining owner be insured under the contract.
32 But, as Ms Fitzgerald submitted, by operation of ss 20 and 48(1) of the Insurance Contract Act 1984, a person may be insured under a contract without being explicitly named as the insured. It follows that the fact that the adjoining owner was not named as the insured was not a relevant consideration.
33 Insofar as reason (2) rests on the supposition that, for the policy to comply with s 93, the adjoining owner must be named as the insured in the policy, the Board erred in law. There is no such requirement under s 93.
34 As I have said at paragraph [16] above, there is no requirement under s 93 that the insurance policy cover the entire period of the building work. Indeed, such a requirement would render ss 93(4) and (5), which compel the owner to renew or extend the contract, nugatory. It follows that reason (3) of the Board's reasons is an irrelevant consideration. Insofar as the Board considered that s 93 required the policy to cover the entire period of the building work, it erred in law.
The identification of Mr and Mrs Mykytenko as adjoining owner
35 In response to reason (4), Ms Fitzgerald submitted that Mr and Mrs Mykytenko were in fact included in the contract, namely, by being named in the certificate of currency. Had Mr and Mrs Mykytenko not been identified in the contract, it was submitted, they would have been covered in any event, by operation of s 20 of the Insurance Contracts Act 1984. Hence, even if Mr and Mrs Mykytenko had not been named, this would have constituted an irrelevant consideration, because they were nonetheless covered by it.
36 Leaving aside the question whether the certificate of currency forms part of the contract,[7] Mr You must succeed on this point. The effect of s 20 of the Insurance Contracts Act 1984 is that Mr and Mrs Mykytenko need not be named in the insurance policy in order to be covered by it. It follows that a finding that they were not named in the policy cannot form the basis of a conclusion that the policy did not comply with s 93.
37 Ms Fitzgerald submitted on behalf of Mr You that the Board made several errors of law in deciding that the insurance policy did not comply with s 93. Those errors were either jurisdictional errors or errors of law on the face of the record. The decision therefore ought to be quashed.
38 Section 10 of the Administrative Law Act 1978 prescribes that the statement of reasons of the Board for its decision forms part of the record of that decision. An error of law manifest on the face of those reasons will therefore constitute an error on the face of the record of that decision.[8] An order in the nature of certiorari is available to remove the legal consequences of a decision the record of which discloses an error of law.
39 As I am satisfied that in making the foregoing errors of law the Board exceeded its authority or power under the Act, it is unnecessary for me to conclude whether those errors also constituted errors of law on the face of the record.
40 For the foregoing reasons, the determination of the Board that the insurance policy does not comply with s 93 of the Act should be quashed. Subject to hearing from the parties on the issue of costs, I propose to make the following orders:
[1] As defined in s 3 of the Building Act 1993.
[3] Kioa v West [1985] HCA 81; (1985) 159 CLR 550.
[4] MZYUL v Minister for Immigration and Citizenship [2013] FCA 584 (14 June 2013), [32]; Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141, 147; Re Refugee Tribunal; ex parte Aala [2000] HCA 57; (2000) 204 CLR 82, 88-9 (Gleeson CJ); 116-7 (Gaudron and Gummow JJ).
[5] Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, 351 (McHugh, Gummow and Hayne JJ).
[6] Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163, 179; Kirk v Industrial Court of NSW (2010) 239 CLR 531, 572.
[8] Wingfoot v Australia Partners Pty Ltd v Kocak [2013] HCA 43; (2013) 303 ALR 64, 73 [28].
You
Thomas [2014] VSC 255
(1980) 144 CLR 13
(1985) 159 CLR 550
(1986) 161 CLR 141
(2000) 204 CLR 82
(2001) 206 CLR 323
(1995) 184 CLR 163
(2010) 239 CLR 531
(2013) 303 ALR 64