Queensland Building and Construction Commission v Watkins [2014] QCA 172

SUPREME COURT OF QUEENSLAND

CITATION: Queensland Building and Construction Commission v Watkins [2014] QCA 172

PARTIES: QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (appellant) v RUSSELL IAN WATKINS (respondent)

FILE NO/S: Appeal No 8692 of 2013 / DC No 5092 of 2011

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: District Court at Brisbane

DELIVERED ON: 25 July 2014

DELIVERED AT: Brisbane

HEARING DATE: 13 March 2014

JUDGES: Margaret McMurdo P and Morrison JA and Douglas J / Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS: **The appeal is allowed.**The orders below are set aside and instead judgment is given for the appellant against the respondent for its claim of $153,917.95 together with interest pursuant to Uniform Civil Procedure Rules **1999 (Qld) r 292.**The respondent is to pay the costs of and incidental to the proceedings below and one half of the costs of the appeal.

CATCHWORDS: PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – where the appellant sought summary judgment against the respondent in relation to a sum of money said to be payable under the Queensland Building Services Authority Act 1991 (Qld) – where the respondent then applied to the Queensland Civil and Administrative Tribunal challenging the appellant’s approval of an insurance claim against the respondent – where this application was brought outside of the statutory time limit – whether QCAT has the power to extend the time in which to make such an application – whether summary judgment should have been granted / Queensland Building Services Authority Act 1991 (Qld), s 71, s 86(2) / Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 61 / Hope v Brisbane City Council [2013] QCA 198, considered / Lange v Queensland Building Services Authority [2012] 2 Qd R 457; [2011] QCA 58, cited / Mahony v Queensland Building Services Authority [2013] QCA 323, followed / McKain v RW Miller & Co (SA) Pty Ltd (1991) 174 CLR 1; [1991] HCA 56, considered / Namour v Queensland Building Services Authority [2014] QCA 72, considered / Queensland Building Services Authority v Orenshaw & Anor [2012] QSC 241, cited / Watkins v Queensland Building Services Authority [2013] QCAT 535, related

COUNSEL: R J Anderson for the appellant / D M Stevenson (sol) for the respondent

SOLICITORS: Robinson Locke Litigation Lawyers for the appellant / Irish Bentley Lawyers for the respondent

1. MARGARET McMURDO P: I agree with Douglas J's reasons for allowing this appeal, setting aside the orders below and instead giving judgment for the appellant against the respondent with costs.

2. The issue of the costs of this appeal is more problematic. The appellant filed this notice of appeal on 17 September 2013 against the primary judge's adjournment of its summary judgment application. The Queensland Civil and Administrative Tribunal decided on 3 October 2013 that it had no jurisdiction to extend time in a related matter.¹ This meant that the respondent's argument which resulted in the adjournment of the application for summary judgment failed. The respondent did not seek to appeal from QCAT's orders. On 5 December 2013 the respondent's lawyers wrote to the appellant agreeing to the dismissal of this appeal with no order for costs. The appellant nevertheless pursued the appeal even though it could have renewed its adjourned application for summary judgment in the District Court. The respondent conceded in this Court that the appeal should be allowed but contended that the question of summary judgment should be remitted to the District Court with an order that the appellant pay his costs of the appeal on an indemnity basis.

3. As the respondent has not demonstrated he has any defence to the summary judgment application, it would be futile and costly to remit the matter to the District Court when this Court can grant summary judgment. Nevertheless, the appellant could have achieved this outcome by taking the less costly alternative of renewing the summary judgment application in the District Court. Instead, the appellant chose to have the error below authoritatively corrected by this Court because of its potential impact on future litigation in which the appellant may be involved. The appellant was entitled to do so but it is not fair that the respondent should shoulder the full additional costs burden of that election. In those circumstances I consider the interests of justice are best served by ordering that the respondent pay one half of the appellant's costs of the appeal.

4. The orders I would make are as follows:

1.The appeal is allowed.

2.The orders below are set aside and instead judgment is given for the appellant against the respondent for its claim of $153,917.95 together with interest pursuant to Uniform Civil Procedure Rules 1999 (Qld) r 292.

3.The respondent is to pay the costs of and incidental to the proceedings below and one half of the costs of the appeal.

5. MORRISON JA: I have read the reasons of Margaret McMurdo P and Douglas J and agree with both of their reasons. I agree with the orders the President proposes.

DOUGLAS J:

The issue

6. This is an appeal from an adjournment of an application for summary judgment by the learned primary judge in the District Court. Prima facie it is not a promising subject for an appeal to this Court but the case does raise an issue of some significance related to the powers of the Queensland Civil and Administrative Tribunal (“QCAT”). The summary judgment application also remains unresolved.

Background

7. The appellant, Queensland Building and Construction Commission, formerly known as the Queensland Building Services Authority, was the applicant for summary judgment. It had sued the respondent, the holder of a building licence, for $153,917.95 representing a sum it had paid for rectification of building work performed by the respondent. His Honour did not then grant the application for summary judgment on the ground that the respondent had applied, on 8 August 2013, a week before the hearing was listed for 15 August 2013, to QCAT apparently seeking to challenge the appellant’s approval of an insurance claim against the respondent. The challenge was made on the ground that the allegedly incomplete building works did not form part of the agreed scope of works to be undertaken by the respondent under its contract.

8. QCAT’s power to review such a claim about the scope of works was not available if 28 days had elapsed from the date of service of a decision to direct rectification or completion of work or since a decision about the scope of works to be undertaken had been served on the building contractor. That provision was to be found in s 86(2) of the Queensland Building Services Authority Act 1991 (Qld):

“86Reviewable decisions

…

(2)The tribunal must not review the following decisions of the authority -

(a)a decision to recover an amount under section 71;

(b)a decision to direct rectification or completion of tribunal work by a building contractor and any finding by the authority in arriving at the decision if -

(i)28 days have elapsed from the date the direction to rectify or complete was served on the building contractor and the contractor has not, within that time, applied to the tribunal for a review of the decision; and

(ii)the authority has -

(A)started a disciplinary proceeding against the building contractor by an application under division 4; or

(B)served a notice on the building contractor advising a claim under the statutory insurance scheme has been approved in relation to tribunal work stated in the direction; or

(C)started a prosecution, or served an infringement notice, for an offence against section 72(10);

(c)a decision about the scope of works to be undertaken under the statutory insurance scheme to rectify or complete tribunal work if 28 days have elapsed since the decision was served on the building contractor and the contractor has not, within that time, applied to the tribunal for a review of the decision.”

9. The respondent made his application to review the decision in conjunction with an application for an extension of time to make that application. The application for an extension of time was said to be pursuant to s 61 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) which allows that Tribunal to extend or shorten a time limit fixed by the Act, an enabling Act or the Rules.² An extension of time was needed because the appellant’s decision about the scope of works to be undertaken was served some time on or shortly after 17 November 2011 advising the respondent that the appellant was proceeding with a claim under the insurance provisions of the Queensland Building Services Authority Act and that it may seek recovery from him pursuant to s 71 of that Act. That letter also enclosed a document said to be the scope of work required.

10. The respondent said in an affidavit before the learned District Court judge that he had not received a completed scope of works statement from the appellant “although they keep telling me that I have”. The affidavit went on to say:

“The only scope of work statement I ever received from the Plaintiff contains no detail at all.”³

11. Be that as it may, he was clearly on notice of the intention to take proceedings against him and did not seek then to initiate proceedings in QCAT.

12. The learned primary judge refused the application for summary judgment at that stage because he was persuaded that QCAT should have the opportunity to consider the application before it for an extension of time. His reason for that was that there was an argument available that QCAT could extend the time, which he regarded as an issue fundamental to the appellant’s right of action.

Did QCAT have the power to extend time in which to make the application?

13. The appellant challenged both of those assumptions. QCAT has since dismissed the application for an extension of time and made it clear in cogent reasons that it had no jurisdiction to extend time. The appellant has persisted with this appeal rather than renewing its application to the District Court for summary judgment as it wished to clarify the legal basis on which the adjournment was sought by the respondent, for the benefit of future such applications by it, and also to submit that summary judgment should have been granted by his Honour in any event.

14. Dr Forbes, the member of QCAT who dealt with the case, decided that QCAT had no jurisdiction to extend time in the case because:⁴

“The prohibition in section 86(2) defines and limits the jurisdiction of the Tribunal … It is not merely a procedural rule that may be relaxed under section 61 of the QCAT Act. It is a mandatory substantive rule of law, and a condition of jurisdiction.”

15. Apart from the authorities the learned member relied on, his conclusion is also supported by decisions such as McKain v RW Miller & Co (SA) Pty Ltd⁵ where, among other things, Brennan, Dawson, Toohey and McHugh JJ referred to the type of statute which: “creates a right of limited duration so that, after the expiry of the time prescribed, the right ceases to exist for any purpose. Such a statute is substantive in nature”. A similar approach may be seen also in Hope v Brisbane City Council.⁶

16. The respondent did not challenge that decision of QCAT and made no submission in this case to the contrary of its effect. The language of the section, in prescribing that QCAT must not review decisions of the nature described in the section if 28 days have elapsed since the relevant decision or direction, makes it correct to conclude that it is a mandatory provision having substantive rather than procedural effect. The compelling inference from the structure of the Act is that applications for review of such matters should be made expeditiously to avoid further delay in the completion or execution of rectification work.

Should summary judgment have been granted?

17. The appellant also sought to pursue its application for judgment in this court rather than having it remitted to the District Court for the further issues raised by the respondent to be dealt with there. The issues that were raised in the affidavit filed by the respondent in the District Court were persuasively addressed by the appellant in its written submissions as follows:

“28.The following defences raised, and the answers to them, are as follows.

a.Firstly, it is said that the contract was a cost plus contract that did not give rise to a statutory policy of insurance (paragraph 2 of the defence (AB209)). This is an irrelevant issue as, even if despite the clear terms of the contract to the contrary, it were to be held to be a cost plus contract, that is not an issue that is open to review. That is, it is now too late for the respondent to question that issue (if indeed he held that right in any event, it not being a matter for review pursuant to s 86(1) of the QBSAA) for the reasons given above. Furthermore, and also for reasons given above, the issue of whether payment ought to have been made, or whether it was in fact made in accordance with the policy (the defendant’s proposition seemingly being that because the appellant had no express liability to the owner under the contract (see clause 1.2(a) of the policy document appearing at page 37 of the exhibit bundle to the affidavit of Mr Paul (AB65)) it was improperly made) does not give rise to a defence to a proceeding under s 71 of the QBSAA.

b.Secondly, it is said that the defendant did not receive notification of the decision to approve the scope of works (paragraphs 6 and 11 of the defence (AB209- 210)). The giving of such notice is not a precondition to the making of a payment under the scheme, nor to the recovery of that payment from the builder pursuant to s 71 of the QBSAA. The issue therefore does not assist the defendant in seeking to defend the claim.

c.Thirdly, and lastly, in his defence, the appellant says that any notice in relation to the scope of works is invalid, in any event, as he is not liable to undertake any further work (paragraphs 4 and 6 of the defence (AB209)). This final defence depends entirely, it seems, upon the earlier raised arguments for its success. Thus, for the reasons given above, it too ought be rejected.”

18. That approach is also justified by the decision of this court in Mahony v Queensland Building Services Authority.⁷ In that decision, Gotterson JA discussed the limited circumstances in which recovery proceedings of this nature may be challenged. His Honour said:⁸

“[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]The relevance of the submission to the appellant’s case is presaged by paragraph 18 and its analogues in the fourth amended defence. It will be recalled that, in those paragraphs, the appellant put in issue the competency of Mr Michael Rendell to carry out the inspections and produce reports for the respondent.

[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, by that means, seek to impugn Mr Rendell’s reports and the respondent’s reliance upon them for its decision making. 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.”

19. Applying those principles leads to the conclusion that, on the evidentiary material raised before the learned primary judge, no substantive defence existed to this statutory claim. In those circumstances, it is more convenient to deal with the application on its merits now rather than to remit the case to the District Court. To do so would incur further costs unnecessarily.

Conclusions and orders

20. I agree with the orders proposed by the President.

Footnotes

1. Watkins v QBSA [2013] QCAT 535. ↩

2. See s 61(1)(b). ↩

3. See AR 156, para 12. ↩

4. See Watkins v Queensland Building Services Authority [2013] QCAT 535 at [15] (footnotes omitted). ↩

5. (1991) 174 CLR 1, 42-43. ↩

6. [2013] QCA 198 at [11]. ↩

7. [2013] QCA 323. ↩

8. Mahony v Queensland Building Services Authority [2013] QCA 323 at [31]-[38] (footnotes omitted). See also Namour v Queensland Building Services Authority [2014] QCA 72 at [12]-[14]. ↩