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Queensland Judgments
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Kline Industries International Pty Ltd v Queensland Building and Construction Commission

 

[2020] QSC 243

SUPREME COURT OF QUEENSLAND

CITATION:

Kline Industries International Pty Ltd v Queensland Building and Construction Commission [2020] QSC 243

PARTIES:

KLINE INDUSTRIES INTERNATIONAL PTY LTD ACN 094 676 918

(applicant)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

FILE NO:

13189 of 2019

DIVISION:

Trial

PROCEEDING:

Further amended application for review

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

11 August 2020

DELIVERED AT:

Brisbane

HEARING DATE:

18 May 2020

JUDGE:

Flanagan J

ORDERS:

The Court orders that:

  1. pursuant to s 26(1)(b) of the Judicial Review Act 1991 (Qld) (JR Act), the time for filing the application for review be extended from 19 November 2019 to 27 November 2019;
  2. pursuant to s 30(1)(a) of the JR Act, the decision of the respondent dated 18 July 2019 to approve a claim under the Queensland Home Warranty Scheme in the sum of $106,636.69 for work at 5 Golden Grove Blvd, Reedy Creek, Queensland, is set aside; and
  3. the Court will hear the parties as to any further orders and costs.

CATCHWORDS:

ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – GENERALLY – where the homeowners brought a claim under the Queensland Home Warranty Scheme in respect of defects with a dwelling constructed by the applicant  – where the respondent made a discretionary decision to accept the claim out of time – where the respondent made a significant error as to the length of the delay in bringing the claim – where the respondent approved the claim because it was satisfied that the applicant would not comply with the direction to rectify the works – where the respondent had failed to direct the applicant to rectify the works – where the parties accepted that any reviewable error in the decision to accept the claim infected the decision to approve the claim – whether the decision to approve the claim should be set aside

Judicial Review Act 1991 (Qld) s 20, s 23, s 26

Queensland Building and Construction Commission Act 1991 (Qld) s 67WA, s 71, s 72, s 73, s 111C

Queensland Building and Construction Commission Regulation 2018 (Qld) sch 6 reg 67, sch 6 reg 68

Lange v Queensland Building Services Authority [2012] 2 Qd R 457, cited

Jess v Scott (1986) 12 FCR 187, cited

Besson v Repatriation Commission [2014] FCA 881, cited

Buderim Ginger Ltd v Booth [2003] 1 Qd R 147, cited

Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, cited

Commissioner of Taxation v Addy [2020] FCAFC 135, cited

Cairns City Council v Commissioner of Stamp Duties [2000] 2 Qd R 267, cited

COUNSEL:

SP Taylor for the Applicant

SJ Forrest for the Respondent

SOLICITORS:

Duncan Solicitors for the Applicant

HWL Ebsworth Lawyers for the Respondent

  1. [1]
    By further amended application for review, the applicant seeks various orders including an order that the respondent’s decision of 18 July 2019 to approve a claim under the Queensland Home Warranty Scheme be set aside.  Part 5 of the Queensland Building and Construction Commission Act 1991 (Qld) (“QBCC Act”) establishes a statutory insurance scheme “to provide assistance to consumers of residential construction work for loss associated with work that is defective or incomplete.”[1]  “Queensland Home Warranty Scheme” is the name prescribed for the statutory insurance scheme by reg 25 of the Queensland Building and Construction Commission Regulation 2018 (Qld) (“Regulation”). 
  2. [2]
    Although the application seeks review of the respondent’s decision of 18 July 2019 to approve the claim, the parties accept that this decision is founded on an earlier decision of the respondent made on 20 December 2018 to accept the claim.[2]  It follows that if reviewable error was committed in making the decision to accept the claim, such error infects the decision to approve the claim.
  3. [3]
    The decisions of the respondent to accept and approve the claim arose in the following circumstances. 

Chronology of relevant events

  1. [4]
    Pursuant to a residential building contract dated 20 July 2014, the applicant constructed a dwelling for Brett and Narah Seagrott (“the Homeowners”) at Reedy Creek, Queensland.[3]  Practical Completion in respect of the works the subject of the contract occurred on 14 May 2015.[4]
  2. [5]
    As early as 15 January 2015, the Homeowners became aware of issues with the dwelling relating to the external poles and base of poles and subsequently, on 1 March 2017, of an issue with the garage.[5]
  3. [6]
    On 11 January 2018, the Homeowners filed a complaint with the respondent which commenced an investigation by the respondent.[6]  The applicant was advised of the complaint and on 1 May 2018, Greg Matthews (an inspector with the respondent) contacted the applicant to arrange a site inspection of the dwelling.[7]
  4. [7]
    During May 2018, there were dealings between the applicant and Mr Matthews in which the parties attempted to arrange provision of an engineering report to resolve some of the complaints and a site inspection.[8]  Some rectification works were carried out.[9]
  5. [8]
    On 8 June 2018, the applicant received an informal notice to rectify the works[10] which was followed by further correspondence between the applicant and Mr Matthews regarding the rectification works, engineering report and a possible further inspection.[11]
  6. [9]
    Ultimately, on 12 July 2018, the respondent issued a Direction to Rectify (“DTR”) to the applicant, requiring the applicant to undertake rectification works pursuant to s 72 of the QBCC Act.[12]  As will be explained, the DTR is one of several mail communications which Mr Graydon Kline, the sole director of the applicant, deposes that the applicant did not receive until August 2019 when a demand was made by its then solicitors.[13]  The respondent does not seek a finding that the applicant received the DTR.[14]
  7. [10]
    On 12 November 2018, the respondent issued a Failure to Rectify Notice advising that the applicant had not complied with the DTR.[15]  This notice was also not received by the applicant.[16]
  8. [11]
    On 10 December 2018, the respondent issued an Infringement Notice to the applicant advising that the applicant had committed an offence under the QBCC Act by failing to comply with the DTR.[17]  This notice was received by the applicant on 17 December 2018 and Mr Kline contacted Ms Jennifer Burslem of the respondent seeking clarification of the Infringement Notice and explaining that the applicant had not received any DTR.[18]  Mr Kline deposes that on that occasion, he had a phone conversation with Ms Burslem in which she “essentially accused [him] of lying”.[19]  Ms Burslem’s oral evidence is that she does not recall this conversation.[20]
  9. [12]
    On that same date of 17 December 2018, Ms Burslem considered the Homeowners’ application under the Queensland Home Warranty Scheme, finding that before being able to accept or decline the claim, the respondent required the Homeowners to explain the reason for the delay in lodging the complaint.[21]  Ms Burslem corresponded with the Homeowners regarding the delay[22] and on 20 December 2018, the respondent processed the Homeowners’ application and Ms Burslem decided to accept the insurance claim.[23]
  10. [13]
    Importantly, the notes prepared by Ms Burslem on 17 December 2018 and 20 December 2018 regarding the decision to accept the claim record that the Homeowners first noticed all defects in March 2017[24] in circumstances where, as recorded in [5] above, the issues with the external poles and base of poles had been identified as early as 15 January 2015.
  11. [14]
    On 18 March 2019, the respondent issued a Notice of Potential Debt enclosing a Scope of Works, which was not received by the applicant.[25]  After receiving correspondence on 12 June 2019 referring to the Scope of Works,[26] the applicant emailed the respondent requesting clarification and stating that “there seems to be missing pieces of the puzzle”.[27]
  12. [15]
    On 17 July 2019, Ms Tiffany Barber of the respondent undertook the assessment of the claim.[28]  On 18 July 2019, Ms Kristine Somerville of the respondent approved the claim.[29]  The applicant was notified of this outcome via email from the respondent on 18 July 2019 attaching a Notice of Debt in the sum of $106,636.69.[30]  It is apparent from an examination of the Statement of Reasons for the decision to approve the claim[31] that the decision is based on the respondent having issued to the applicant both a DTR and a Failure to Rectify Notice,[32] and on the defects having become evident on 1 March 2017.[33]
  13. [16]
    On 27 August 2019, pursuant to a demand made by the applicant's then solicitors, the respondent provided to the applicant copies of all notices purportedly served on the applicant including the Inspection Notice dated 1 May 2018, the DTR dated 12 July 2018, the Failure to Rectify Notice dated 12 November 2018 and the Notice of Potential Debt and Scope of Works dated 18 March 2019.[34]
  14. [17]
    On 24 January 2020, the respondent withdrew the DTR, the Failure to Rectify Notice and the Infringement Notice.[35]  The mechanism by which these notices were withdrawn is not identified in the evidence.  The respondent accepts, however, that the notices were withdrawn pursuant to s 24AA of the Acts Interpretation Act 1954 (Qld).  Section 24AA(a) provides that if an Act authorises or requires the making of an instrument or decision the power includes power to amend or repeal the instrument or decision.
  15. [18]
    The rectification works have now been completed by another builder and the Homeowners’ claim has been paid by the respondent in the amount of $106,636.69.[36]
  16. [19]
    The above chronology reveals that at the time Ms Burslem accepted the claim on 20 December 2018, the applicant had not received the DTR or the Failure to Rectify Notice.  This remained the case at the time Ms Somerville approved the claim on 18 July 2019.  The respondent concedes that at the time of making the decision to accept the claim, Ms Burslem proceeded on the mistaken assumption that the DTR had been given to the applicant.[37]

Extension of time

  1. [20]
    The applicant seeks an order pursuant to s 26 of the Judicial Review Act 1991 (Qld) (“JR Act”) that the time for filing the application for review be extended from 19 November 2019 to 27 November 2019. 
  2. [21]
    On 27 November 2019, the applicant filed a document entitled “Application for Review”.  The respondent’s decision to approve the claim under the Queensland Home Warranty Scheme was made on 18 July 2019.  The Statement of Reasons was not provided until 22 October 2019.[38]  Section 26 of the JR Act specifies a period in which an application for a statutory order of review must be made.  Where the terms of a decision are recorded in writing and set out in a document that was given to the applicant, an application must be made within the period of 28 days after the relevant day or such further time as the court allows.  The “relevant day” for the purposes of s 26(5) is the day that the applicant received the Statement of Reasons, which was 22 October 2019.
  3. [22]
    Although the applicant’s application is entitled “Application for Review” and purports to be made under r 567 of the Uniform Civil Procedure Rules 1999 (Qld), as correctly identified by the respondent, the applicant seeks both a statutory order of review pursuant to s 20 of the JR Act and an application for review pursuant to s 43 of the JR Act.  To the extent that the applicant seeks prerogative and declaratory relief, no extension of time is required.  The respondent does not oppose the extension of time sought by the applicant in respect of the application for a statutory order of review.

The decision to accept the claim

  1. [23]
    The decision to accept the claim was made by Ms Burslem on 20 December 2018.  
  2. [24]
    Ms Burslem, on 17 December 2018, proceeded to assess the Homeowners’ claim under the Queensland Home Warranty Scheme.  The applicable edition of the Insurance Policy Conditions is edition 8.[39]
  3. [25]
    There are two aspects of Ms Burslem’s application of these conditions in assessing and ultimately accepting the claim which, in my view, constitute reviewable error.  Before I consider these two errors, it is convenient to identify matters that are not in dispute and briefly outline the relevant statutory framework.
  4. [26]
    The respondent accepts that the applicant is a person aggrieved by the decision and is entitled to seek judicial review pursuant to s 20 of the JR Act.  As observed by Margaret Wilson AJA in Lange v Queensland Building Services Authority[40]:

“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.”[41]

  1. [27]
    Her Honour accepted that the relevant insurance policy was a statutory instrument and accordingly, an interpretation of the conditions which best achieved the purpose of the Act was to be preferred to any other.[42]  The Act considered by her Honour was the Queensland Building Services Authority Act 1991 (Qld). 
  2. [28]
    Sections 71 and 111C of that Act are in similar terms to ss 71 and 111C of the QBCC Act (as in force at the relevant time).  Section 71(1) of the QBCC Act provides that if the QBCC makes any payment on a claim under the statutory insurance scheme, it may recover the amount of the payment, as a debt, from the building contractor.  Section 71A(1) allows the QBCC to seek tenders for carrying out building work if it is of the opinion that a person may be entitled to assistance under the statutory insurance scheme.  Section 71C provides that a person claiming to be entitled to assistance under the statutory insurance scheme may give notice of the claim to the QBCC in compliance with the requirements prescribed by regulation.[43]  Section 72 deals with the QBCC’s power to require rectification of building work and remediation of consequential damage.  By s 72(1)(a), the section applies if the QBCC is of the opinion that building work is defective or incomplete.  The word “incomplete” is defined in s 67WA as follows:

incomplete, in relation to residential construction work—

  1. (a)
    means work that has not reached practical completion; but
  1. (b)
    does not include—
  1. (i)
    work that does not comply with the contract because of a cosmetic difference; or

  1. (ii)
    work that is defective.”
  1. [29]
    Under s 72(2) the QBCC may direct the person who carried out the building work to rectify defective building work within the period stated in the DTR.[44]  By reg 67 of sch 6 of the Regulation, where the QBCC is given a notice of claim for assistance under the statutory insurance scheme and it is of the opinion that the residential construction work the subject of the claim is defective, then before deciding to allow or disallow the claim the QBCC must decide whether to give a DTR under s 72.  As is evident from [9] above, the respondent did decide to issue a DTR to the applicant. 
  2. [30]
    Section 73 of the QBCC Act creates an offence where a person fails to rectify building work that is defective or incomplete as required by a DTR.  Section 111C deals with the liability of directors and provides that if a company is convicted of an offence against a provision of the QBCC Act and a penalty is imposed on the company, then if the amount of the penalty is not paid, the liability to pay such penalty attaches to each individual who was a director of the company when the offence was committed.
  3. [31]
    Regulation 68 of sch 6 of the Regulation is also relevant.  It provides that if the QBCC gives a DTR under s 72, it must not make a decision to allow or disallow a claim under the statutory insurance scheme in relation to the work until the period for complying with the DTR has ended.  Regulation 68(3) creates an exception to this and provides that the QBCC may make a decision to allow or disallow the claim before the period for complying with a DTR has ended if the circumstances in reg 68(3)(a) to (c) arise.  Those circumstances include the death, bankruptcy or insolvency of the licenced contractor. 
  4. [32]
    The respondent, having paid the Homeowners the sum of $106,636.69 in relation to their claim, is yet to decide whether to seek to recover this amount from the applicant.  As noted in [15] above, however, the respondent has issued to the applicant a Notice of Debt for that sum.  The applicant is therefore aggrieved by the decision to approve the claim, which exposes the applicant to recovery proceedings for the amount paid by the respondent to the Homeowners.
  5. [33]
    The decision to approve the claim is one to which the JR Act applies as it is an administrative decision made under an enactment, namely the QBCC Act, Regulation and the Queensland Home Warranty Scheme which is a statutory instrument.  Further, as observed by Margaret McMurdo P in Lange, it is unlikely that Parliament would have intended the respondent “to recover from building contractors (or where building contractors are companies, their directors) payments wrongly made to those insured by [the respondent] on policies entered into under Pt 5 of the [QBCC Act]”.[45]
  6. [34]
    I turn then to the first reviewable error.
    1. (a)
      Accepting the Homeowners’ claim out of time
  7. [35]
    The first error concerns an exercise of discretion by Ms Burslem in accepting the claim out of time. 
  8. [36]
    Clause 4.5 of the Insurance Policy Conditions[46] provides:

“Time Limit for Making a Claim

The Insured is NOT ENTITLED to payment for loss under this Part unless:

  1. (a)
    in the case of a category 1 defect, the claim is made within 3 months of that defect first becoming evident (in the opinion of the QBCC); or
  1. (b)
    in the case of a category 2 defect, the claim is made within 7 months of the date of practical completion,

or within such further time as the QBCC may allow.”

  1. [37]
    The external poles and base of poles are category 1 defects.  The Homeowners therefore had 3 months from 15 January 2015, that is until 15 April 2015, to lodge a claim with the respondent.  The Homeowners did not lodge a complaint with the respondent until 11 January 2018.  The claim was therefore out of time by 2 years, 8 months and 27 days. 
  2. [38]
    It is apparent from two documents annexed to Ms Burslem’s affidavit, namely “QBCC Home Warranty Claim Assessment Reasons for Decision – Defective Works Insurance Policy Conditions – Edition 8”[47] and a QBCC file note dated 20 December 2018 authored by Ms Burslem,[48] that in determining whether the Homeowners’ claim was out of time, Ms Burslem proceeded on the basis that the Homeowners became aware of the category 1 defects on 1 March 2017 rather than 15 January 2015.  In cross-examination, Ms Burslem accepted that in considering the application of clause 4.5 and whether an extension of time should be granted, she incorrectly proceeded on this basis.[49]  Ms Burslem, however, referred to the respondent having “a discretionary decision under 4.5”.[50]  This is a reference to the words in clause 4.5 “or within such further time as the QBCC may allow”.  She accepted that the discretion under clause 4.5 must be exercised consistently with the QBCC’s “Rectification of Building Work Policy”.[51]  Clause 1 of this policy identifies that it is a policy of the respondent that a building contractor who carries out defective building work should be required to rectify that work.  Clause 3 deals with notification of defects and provides:

“1. It is a policy of the Board that if a consumer is seeking the assistance of the Queensland Building and Construction Commission (QBCC) to issue a direction to a building contractor to rectify defective building work, the consumer must lodge a formal complaint with the QBCC of defective building work as soon as possible but no later than within 12 months of becoming aware of the defects.

  1. The QBCC will then consider the issuing of direction to rectify to a building contractor:
  1. (a)
    for structural defective building work, within 6 years and 3 months of the building work being completed; or
  1. (b)
    for non-structural defective building work, within 12 months of the building work being completed.”
  1. [39]
    Ms Burslem clarified that the “Rectification of Building Work Policy” governs the situation where a formal complaint is made to the QBCC, whereas the discretion to extend time for accepting a claim under the statutory insurance scheme is governed by clause 4.5.  This must be accepted.  Ms Burslem conceded that in exercising her discretion under clause 4.5 to extend time she did so by reference to an incorrect period, namely 1 June 2017 to 11 January 2018 rather than 15 April 2015 to 11 January 2018.[52]
  2. [40]
    The applicant, in the further amended application for review, relies on the following grounds:[53]

“The decision maker, in focusing her attention on the wrong date:

  1. (i)
    wrongly considered the extent of the delay;
  1. (ii)
    failed to give any real of [sic] genuine consideration to the real extent of the delay;
  1. (iii)
    erred in law; and
  1. (iv)
    erroneously determined the jurisdictional fact at sub-paragraph (a) by asking herself the wrong question;
  1. (f)
    in the premises, the decision maker’s exercise of discretion, was:
  1. (i)
    irrational, illogical and not based upon findings or inferences of fact;
  1. (ii)
    unsupported by logical grounds; and
  1. (iii)
    in all the circumstances unreasonable.”
  1. [41]
    The jurisdictional fact referred to is as follows:

“(a) Prior to accepting a claim under the Home Warranty Insurance Scheme, the decision maker must first ensure, that:

  1. (i)
    the claim is brought within the time specified within sub-paragraph (a) or (b) of clause 4.5 of the Insurance Policy; or
  1. (ii)
    alternatively, exercise his or her discretion to extend the time in which a claim under the Scheme may be received.”
  1. [42]
    These grounds were expressed slightly differently in the applicant’s written submissions.  The applicant submits that Ms Burslem, by having regard to the incorrect period in considering an extension of time, either failed to consider a relevant consideration (the correct period of delay) or took into account an irrelevant consideration (the incorrect period of delay).[54]  The applicant further submits that Ms Burslem exercised her discretion to extend time “in an unreasonable manner” in that she “gave excessive weight to an irrelevant and plainly wrong fact, namely that the Homeowners had become aware of ‘all’ the defects on 1 March 2017; and gave insufficient weight to a relevant consideration.”[55]
  2. [43]
    The respondent submits that the error by Ms Burslem in identifying the wrong period of delay constitutes an error of fact and not one of law:

“Whether the relevant date was 15 January 2015 or 1 March 2017, Ms Burslem correctly identified that the Homeowner’s complaint was out of time.  She had a discretion, pursuant to cl 4.5 of the insurance policy, to extend the time.  She exercised her discretion having to do so having regard to a range of circumstances, not limited to the length of the delay.  Those circumstances included that the Homeowners had been engaged in direct negotiations with the applicant who had, according to the Homeowners, ‘admitt[ed] fault and promis[ed] fixes’, and that the QBCC had not been prejudiced by the delay.”[56]

  1. [44]
    In considering whether Ms Burslem’s error in identifying the incorrect length of the delay constitutes reviewable error (rather than jurisdictional error), it is unnecessary to determine whether such an error was one of fact or law.  The issue is whether Ms Burslem was bound to take into account, in exercising her discretion to extend the time limit for making a claim, the actual length of the delay.  That is determined by reference to the proper construction of clause 4.5 of the Insurance Policy Conditions.[57]
  2. [45]
    Clause 4.5 establishes a time limit for the making of a claim in relation to a category 1 defect.  That time period is three months.  If a claim in relation to a category 1 defect is not made within three months, clause 4.5 provides that the insured is “NOT ENTITLED” to payment for loss under Part 4 of the Insurance Policy Conditions.  Any exercise of discretion to extend time must therefore commence with a consideration that clause 4.5 establishes a time limit of three months.
  3. [46]
    The discretion under clause 4.5 for the decision maker to extend time is specified to be “within such further time” as the respondent may allow.  It is implicit in the words “within such further time” that any extension of time within which to make a claim is from the expiration of the specified time limit of three months. 
  4. [47]
    Cases concerning general statutory discretions to extend time (albeit in different terms to clause 4.5), identify the length of the delay as a relevant consideration in the exercise of that discretion.[58] As observed in Jess v Scott:[59]

“It should not be overlooked that [the rule in question] enables leave to be given ‘at any time’; the ‘special reasons’ relevant to such a power cannot but describe an elastic test, suitable for application across a range of situations, from an oversight of a day to a neglect persisted in during a prolonged period.  It would require something very persuasive indeed to justify a grant of leave after, for example, a year; equally, it may be said, something much less significant might justify leave where a party is a few days late.  ‘Special reasons’ must be understood in a sense capable of accommodating both types of situation.  It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule prescribing a period within which an appeal must be filed and served.”

  1. [48]
    In Besson v Repatriation Commission[60] Rangiah J observed that:

“The matters relevant to the exercise of the Court’s discretion to grant an extension of time include:

  1. (a)
    whether the applicant has shown that there is an acceptable explanation for the delay;
  1. (b)
    whether the applicant took any other steps to assert his or her rights;
  1. (c)
    the length of the delay;
  1. (d)
    any prejudice to the respondent as a result of the delay; and
  1. (e)
    the merits of the proposed appeal.”
  1. [49]
    To similar effect is the decision of the Queensland Court of Appeal in Buderim Ginger Ltd v Booth,[61] which concerned a decision to accept a complaint under the AntiDiscrimination Act 1991 (Qld) outside of the prescribed 12-month time period:

“Although it is not essential to show that there is a reason for and justification for the delay in order to show good cause, such a consideration is always relevant to such a decision.  In forming an opinion that the complainant has shown good cause, the Commissioner is not fettered by rigid rules but must take into account all of the relevant circumstances of the particular case such as the length of the delay; whether the delay is attributable to the acts or omissions of the complainant or his or her legal representatives, the respondent, or both; the circumstances of the complainant; whether there has been a satisfactory explanation for the delay; and whether or not the delay will cause prejudice to the respondent.”

  1. [50]
    In considering whether time should be extended, the actual period of delay is a relevant consideration.   
  2. [51]
    Ms Burslem, in her letter to the Homeowners seeking an explanation for the delay in lodging the claim, specifically identified the period of delay (albeit the incorrect period).

“● The reason for the delay in lodging the complaint to the Commission, you have noted on the complaint form that you became aware of the defects on or around the 1 March 2017, however did not lodge a complaint to the Commission until the 11 January 2018.  Please advise in writing the reason for delay”

  1. [52]
    The error as to the actual length of the delay was Ms Burslem’s error.  It was a significant error as the period of delay considered by Ms Burslem was shorter by 2 years, 8 months and 27 days.  For the purposes of exercising the discretion to extend time she had before her the Residential and Commercial Construction Work Complaint Form sent by the Homeowners.[62]  This form stated that the date the Homeowners first noticed the category 1 defects was 15 January 2015.  Ms Burslem appreciated that she required an explanation from the Homeowners for the delay in lodging the complaint out of time.  However, in her file note and her Statement of Reasons she incorrectly identified that the defects had first been noticed by the Homeowners on 1 March 2017.  The difference from the actual period of delay may be described as significant when it is considered that the specified time period for bringing such a claim is three months.  Ms Burslem therefore failed to take into account a relevant consideration, namely the actual period of delay of 2 years, 8 months and 27 days.  Further, by taking into account the incorrect period of delay, she has had regard to an irrelevant consideration in exercising her discretion to extend time.  In light of these findings it is unnecessary to consider the unreasonableness ground.

(b)The respondent’s satisfaction that the applicant would not comply with the DTR

  1. [53]
    The second error concerns Ms Burslem being satisfied, for the purposes of clause 4.3 of the Insurance Policy Conditions, that the applicant would not comply with the DTR. 
  2. [54]
    Clause 4.3 of the Insurance Policy Conditions provides:

“Limits on Right to Payment

The QBCC’s liability to pay under this Part will not arise:

  1. (a)
    where, in the opinion of the QBCC, the Insured unreasonably refuses access to the contractor or his/her agent to undertake rectification; or
  1. (b)
    in circumstances where the QBCC issues a direction to rectify defective work, until the QBCC is satisfied that the contractor will not comply with that direction or the requirements of the Tribunal or a Court in relation to that direction; or
  1. (c)
    in circumstances where the contractor has a continuing obligation to complete the residential construction work.”
  1. [55]
    In her Reasons for Decision of 17 December 2018,[63] Ms Burslem identified that a DTR dated 12 July 2018 was issued to the applicant.  In considering clause 4.3(b) Ms Burslem identifies the question as “Is QBCC satisfied the contractor will not comply with a Direction to Rectify (if one has been issued)?”  Ms Burslem answers this question “yes”.  Ms Burslem’s explanation for being satisfied that the applicant would not comply with the DTR is as follows:

“I was also satisfied that Kline would not comply with the Direction for the purposes of clause 4.3(b) of the Insurance Policy as there had been no request by Kline for an extension of time to comply with the Direction nor any correspondence received by the Commission from Kline regarding the Direction.  The Direction had expired and the Building Inspector had sent Kline a letter confirming that the Direction items had not been satisfactorily attended to.”[64]

  1. [56]
    In her affidavit, Ms Burslem makes no mention of a telephone call she received from Mr Kline on 17 December 2018.  Mr Kline’s uncontested evidence is that on 17 December 2018, he received an Infringement Notice dated 10 December 2018 for not undertaking work the subject of a DTR.  This was in circumstances where he swears to having never received the DTR.[65]  According to Mr Kline, he was at a “complete loss as to why I had received this infringement notice because at no time had I ever received a Direction to Rectify and as I recalled, Greg Matthews stated that he would contact me if there was an issue arising from the reinspection”.[66] 
  2. [57]
    Mr Kline swears to ringing Ms Burslem on 17 December 2018 seeking clarification as to why he had received the Infringement Notice, because as far as he understood, the issue had been finalised.  Mr Kline’s uncontested recollection of the conversation is as follows:

“During that phone conversation Jenny Burslem essentially accused me of lying and explained that the QBCC had sent me a notice to three addresses that include my home address, my P.O. Box and the registered address of the Applicant on 12 November 2018, which was after the purported offence.  During that phone call I advised Jenny Burslem that I had not received any notices from the Greg Matthews or the QBCC at any of those 3 addresses.  Still to this date I have never been provided with a copy of correspondence to my personal address or my work address.”[67]

  1. [58]
    As observed above, Ms Burslem’s evidence is that she does not recall receiving the phone call from Mr Kline.[68]  She accepts that in her affidavit she has not sought to respond to Mr Kline’s recollection of the conversation.[69]  As Mr Kline was not crossexamined and there is no challenge to his recollection of the telephone conversation with Ms Burslem on 17 December 2018, I accept his version of the conversation as outlined above.
  2. [59]
    Not only did Mr Kline have a telephone conversation with Ms Burslem on 17 December 2018, he also sent her an email explaining that the applicant had not received the purported notice at its registered address.  The relevant email sent at 1.12 pm on 17 December 2018 states:[70]

“Since our discussion this morning whereby you were adamant a notice was sent to both my home addresses and P.O. Box including my accountants address on the 12 November 18.  The email below is from my accountants office, they like myself have never received any correspondence from your office or the QBCC.”

  1. [60]
    In the further amended application for review, the applicant identifies a number of grounds which include the following:
    1. (a)
      Procedures that were required by law to be observed in relation to the making of the decision were not observed (JR Act s 20(2)(b)).  The primary basis for this ground is that the applicant was not served with the DTR or the Notice of Failure to Rectify Works or a copy of the Scope of Works until 27 August 2019, being a date some 40 days after the decision to approve the claim was made.  As part of this ground, the applicant seeks a declaration that the DTR is void.  As is apparent from the reasoning below, it is unnecessary to determine whether such a declaration should be made.
    2. (b)
      A breach of the rules of procedural fairness and/or natural justice happened in relation to the making of the decision (JR Act s 20(2)(a)).  The alleged breach of natural justice is that the respondent failed to serve the applicant with the DTR, Notice of Failure to Rectify Works and the Scope of Works until after the decision was made.
    3. (c)
      The person who purported to make the decision took into account irrelevant considerations or failed to take into account relevant considerations (JR Act ss 20(2)(e) and 23(a) and (b)).  The irrelevant consideration was the assumption that the applicant had been issued with a DTR and the other notices prior to the making of the decision.
    4. (d)
      That the decision to arrive at a state of satisfaction that the applicant would not comply with a DTR was an exercise of a power that is so unreasonable that no reasonable person could so exercise the power (JR Act ss 20(2)(e) and 23(g)).  This ground relies on the fact that Ms Burslem was informed by Mr Kline that the applicant had not received any of the relevant notices including the DTR. 
  2. [61]
    The applicant relies on other grounds of review, including an allegation that Ms Burslem did not have jurisdiction to make the decision to accept the claim.  The grounds of review are interwoven in that each primarily relies on the fact that Ms Burslem was satisfied that the applicant would not comply with the DTR in circumstances where she was informed on the day of the decision that the applicant had not received the DTR and subsequent notices.
  3. [62]
    The respondent did decide to direct the applicant to rectify the building work.  As outlined in [29] above, reg 67 of sch 6 of the Regulation requires the respondent, before deciding to allow or disallow a claim, to decide whether to direct a person to rectify the building work under s 72 of the QBCC Act.  Schedule 6, reg 68 of the Regulation provides that if the QBCC gives a DTR under s 72, it must not make a decision to allow or disallow a claim under the statutory insurance scheme in relation to the work until the period for complying with the direction has ended.  The requirement under reg 67 is also reflected in clause 8.2 of the Insurance Policy Conditions which provides:

“Before admitting a claim, the QBCC will determine whether a direction should be made requiring the contractor to rectify the residential construction work.”

  1. [63]
    The applicant submits that the respondent cannot properly be satisfied that the applicant will not comply with the DTR as required by clause 4.3(b) “unless some type of enquiry was made with the Applicant and the Applicant was informed that there was a DTR and the Applicant indicated its refusal to perform the works”.[71]  In short, Ms Burslem could not be satisfied in terms of clause 4.3(b) where the applicant had not received a DTR.  It follows, according to the applicant, that procedures which were required by law to be observed were not observed. 
  2. [64]
    The respondent submits that clause 4.3 is predicated upon the respondent being “satisfied” that the contractor will not comply with a DTR.  It is not necessary, according to the respondent, for it to establish, as a question of fact for the purposes of clause 4.3, that the applicant would not comply with the DTR or even that it had actually received the DTR.  The relevant question is whether the decision maker has been satisfied.[72]  The respondent accepts, however, that Ms Burslem was operating under a mistake of fact insofar as she believed that the DTR had been received.  This, however, according to the respondent, was a mistake of fact and not an error of law:

“This … is a judicial review, not a re-hearing or a merits review, and is therefore concerned with correcting errors of law, not errors of fact.”[73]

  1. [65]
    Whether Ms Burslem committed reviewable error in being satisfied for the purpose of clause 4.3(b) of the Insurance Policy Conditions that the applicant would not comply with the DTR, should not be determined by reference to the vexed dichotomy between an error of fact and an error of law. 
  2. [66]
    The respondent’s liability to pay under clause 4.3(b) arises in circumstances where a DTR has issued and the respondent is satisfied that the contractor will not comply with the DTR.  The respondent’s liability to pay is conditioned upon such satisfaction.  Where a DTR has not in fact been issued so as to give the contractor notice of a requirement to rectify defective works, the circumstance which forms the underlying premise for the operation of clause 4.3(b) is absent.  The respondent cannot, upon a proper construction of clause 4.3(b), be satisfied that the contractor will not comply with a DTR in circumstances where a contractor has not been directed to rectify defective works. 
  3. [67]
    In being “satisfied” in circumstances where a DTR had not been issued by the respondent, Ms Burslem also failed to follow procedures required by law.  The decision maker cannot be satisfied “that the contractor will not comply with that direction” if the respondent has not followed the legal procedure, namely considering whether to issue a DTR and issuing a DTR under s 72 to the contractor.[74] 
  4. [68]
    The requirement that a decision maker be “satisfied” of a particular matter does not mean the relevant decision is not reviewable under the JR Act. As observed by the High Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang:[75]

“It is no longer the case that a decision as to ‘satisfaction’ is unreviewable. It used to be so. In Ex parte Walsh and Johnson; In re Yates, Knox CJ said:

‘When the operation of a law is made conditional upon the opinion, as to certain matters, of some person named or described, or on proof of certain matters to his satisfaction, the question whether his opinion is justified, or whether he should have been satisfied on the materials before him, is not examinable by the Courts.’

As Windeyer J noted in Federal Commissioner of Taxation v Brian Hatch Timber Co (Sales) Pty Ltd that statement ‘is now too far-reaching’. In England, this has been so at least since Secretary of State for Education and Science v Tameside Metropolitan Borough Council. At common law, a similar position had been reached earlier in Australia. From the classic dictum of Sir Owen Dixon in Avon Downs Pty Ltd v Federal Commissioner of Taxation was derived a list of matters upon which ‘satisfaction’ could be reviewed. In considering a power of the Federal Commissioner of Taxation to make certain decisions based upon satisfaction as to the state of corporate voting power, his Honour said:

‘His decision, it is true, is not unexaminable. If he does not address himself to the question which the sub-section formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review.’” (Footnotes omitted)

  1. [69]
    Similarly, in Commissioner of Taxation v Addy,[76] Derrington J observed that:

“In Avon Downs at 360, Dixon J referred to a number of circumstances which might vitiate a state of satisfaction on which the operation of a legislative provision was conditioned.  They were where the repository of power does not address the correct statutory question, where the state of mind is affected by a mistake of law, where an extraneous reason is taken into consideration, or where there has been a failure to consider a relevant factor which would affect the determination.   To these may be added grounds centred upon defective fact finding or reasoning as are referred to in Eshetu, S20/2002, SGLB and SZMDS.   The several grounds of review as they have developed have recently been discussed at length in other decisions:  EHF17 v Minister for Immigration and Border Protection [2019] FCA 1681… and Fastbet Investments Pty Ltd v Deputy Commissioner of Taxation (No 5) [2019] FCA 2073….” (Footnotes omitted)

  1. [70]
    Even if it was thought that Ms Burslem made an error of fact in assuming that a DTR had issued, this would not be the end of the matter.  Despite the general principle that “there is no error of law simply in making a wrong finding of fact”[77] there are many ways in which fact finding errors may be judicially reviewable.  In some cases, fact finding errors have been successfully challenged under the “relevance grounds”[78]  as the decision maker may make an error described as “proceeding upon an erroneous premise on a fundamental matter”.[79]  This relates to the proposition that a decision “must be based on the most recent and accurate information that the [decision maker] has at hand”.[80]  However, it should be noted that there are conflicting authorities on this point and in many cases an erroneous finding of fact will not invalidate a decision. 
  2. [71]
    In the present case, the issuing of a DTR by the respondent is the underlying premise upon which the respondent is satisfied that the contractor will not comply with the DTR.  Ms Burslem, in being satisfied that the applicant would not comply with the DTR, proceeded on the incorrect premise that the respondent had issued a DTR.  In proceeding on this premise, Ms Burslem took into account an irrelevant consideration, namely that a DTR had issued.  Further, in the circumstances of the present case, Ms Burslem failed to take into account a relevant consideration, namely that Mr Kline had informed her both by telephone and email on 17 December 2018 that the applicant had not been issued with a DTR.  Even though Ms Burslem has no recollection of the telephone conversation, the effect of Mr Kline’s evidence, as outlined above, is that Ms Burslem did not accept Mr Kline’s statement that the applicant had not been issued with the DTR.  The information provided by Mr Kline to Ms Burslem was central to the matter upon which Ms Burslem had to be satisfied under clause 4.3(b) namely “that the contractor will not comply with that direction”.  Ms Burslem’s apparent rejection of Mr Kline’s statement does not constitute a mere error of fact.  In Cairns City Council v Commissioner of Stamp Duties[81] Chesterman J (as his Honour then was) observed:

“It is clear that in many cases an erroneous finding of fact will not invalidate a decision: see, e.g. Australian Broadcasting Tribunal v. Bond (1990) 170 C.L.R. 321.  To allow judicial review on this basis would be tantamount to conferring on an aggrieved person an appeal by way of rehearing of the facts. 

The situation is different where the fact in contention is known by the decision-maker to be wrong or at least where grounds exist for thinking it questionable.  In such a case, if the fact is to be relied upon, it is encumbent upon the decision-maker to make enquiries and to take the fact into account only if, after enquiry, the fact appears accurate.”

  1. [72]
    Ms Burslem, having been informed by Mr Kline that the applicant had not been issued with the DTR, should have made enquiries prior to being satisfied that the applicant would not comply with the DTR.  The reason given by Ms Burslem for being satisfied that the applicant would not comply with the DTR was that there had been no request by the applicant for an extension of time to comply with the DTR.  Such reasoning is flawed in circumstances where the decision maker is informed that the relevant contractor has not been issued with a DTR. 

Disposition

  1. [73]
    The reviewable errors identified in (a) and (b) above require the decision to approve the claim to be set aside.  It is unnecessary to consider the other numerous grounds, including procedural fairness and unreasonableness, raised by the applicant.
  2. [74]
    The Court makes the following orders:
  1. pursuant to s 26(1)(b) of the JR Act, the time for filing the application for review be extended from 19 November 2019 to 27 November 2019;
  1. pursuant to s 30(1)(a) of the JR Act, the decision of the respondent dated 18 July 2019 to approve a claim under the Queensland Home Warranty Scheme in the sum of $106,636.69 for work at 5 Golden Grove Blvd, Reedy Creek, Queensland, is set aside; and
  1. the Court will hear the parties as to any further orders and costs.

Footnotes

[1]Queensland Building and Construction Commission Act 1991 (Qld) s 67X(2).

[2]T 1-7, lines 2-12.

[3]Submissions on Behalf of the Respondent, para 2.

[4]Affidavit of Graydon Kline sworn 10 December 2019, para 3.

[5]Written Submissions for the Applicant, para 4; Exhibit 1, tab 2, page 10.

[6]Written Submissions for the Applicant, para 4.

[7]Written Submissions for the Applicant, annexure A, pages 3-4.

[8]Written Submissions for the Applicant, para 52(a); Written Submissions for the Applicant, annexure A, pages 4-5; Submissions on Behalf of the Respondent, para 5.

[9]Written Submissions for the Applicant, annexure A, pages 6-7.

[10]Written Submissions for the Applicant, annexure A, page 7.

[11]Submissions on Behalf of the Respondent, paras 7-9; Written Submissions for the Applicant, annexure A, pages 8-11.

[12]Written Submissions for the Applicant, annexure A, pages 11-14; Submissions on Behalf of the Respondent, para 10.

[13]Affidavit of Graydon Kline sworn 10 December 2019, para 59.

[14]Submissions on Behalf of the Respondent, para 26.

[15]Submissions on Behalf of the Respondent, para 12.

[16]Written Submissions for the Applicant, annexure A, page 19.

[17]Submissions on Behalf of the Respondent, para 13.

[18]Written Submissions in Reply for the Applicant, para 12(a).

[19]Affidavit of Graydon Kline sworn 10 December 2019, para 28.

[20]T 1-34, line 16 to T 1-36 line 15.

[21]Written Submissions in Reply for the Applicant, para 46(g); T 1-39 lines 3-8.

[22]Written Submissions in Reply for the Applicant, para 46(h).

[23]Submissions on Behalf of the Respondent, para 14.

[24]Affidavit of Graydon Kline sworn 14 February 2020, exhibit K1 at SOR-9 and SOR-11.

[25]Submissions on Behalf of the Respondent, para 19; Written Submissions for the Applicant, annexure A, pages 28-29.

[26]Written Submissions for the Applicant, annexure A, page 29.

[27]Written Submissions for the Applicant, para 28.

[28]Written Submissions in Reply for the Applicant, para 2(b)(i).

[29]Written Submissions in Reply for the Applicant, para 2(b)(ii).

[30]Written Submissions for the Applicant, annexure A, page 32.

[31]Affidavit of Graydon Kline sworn 14 February 2020, exhibit K1.

[32]Affidavit of Graydon Kline sworn 14 February 2020, exhibit K1,  paras 3.7 and 3.11.

[33]Affidavit of Graydon Kline sworn 14 February 2020, exhibit K1, para 4.1.

[34]Written Submissions for the Applicant para 5; Written Submissions for the Applicant, annexure A, pages 34-35.

[35]Written Submissions for the Applicant, para 31.

[36]T 1-54 lines 40-47.

[37]Submissions on Behalf of the Respondent, para 26(b).

[38]Affidavit of Graydon Kline sworn 14 February 2020, para 2.

[39]Affidavit of Jennifer Burslem sworn 12 May 2020, paragraph 4.

[40][2012] 2 Qd R 457, [73].

[41]See also Crocker v Queensland Building and Construction Commission [2020] QSC 24 per Jackson J, 5, lines 28-37.

[42]Lange v Queensland Building Services Authority [2012] 2 Qd R 457, [26].

[43]The relevant regulation is reg 65 of sch 6 of the Queensland Building and Construction Commission Regulation 2018 (Qld).

[44]In the present case, the DTR specified the period from 12 July 2018 to 14 August 2018, which is a period of 33 days.

[45]Lange v Queensland Building Services Authority [2012] 2 Qd R 457 per Margaret McMurdo P, [3].

[46]Affidavit of Jennifer Burslem sworn 12 May 2020, exhibit JB-1.

[47]Affidavit of Jennifer Burslem sworn 12 May 2020, exhibit JB-9.

[48]Affidavit of Jennifer Burslem sworn 12 May 2020, exhibit JB-12.

[49]T 1-19, lines 30-37.

[50]T 1-19, line 44.

[51]T 1-19, line 47; Exhibit 1, page 71.

[52]T 1-20, lines 15-20.

[53]Further Amended Application for Review, grounds 7(e)(i) to (iv) and (f)(i) to (iii).

[54]Written Submissions for the Applicant, paras 59-63.

[55]Written Submissions in Reply for the Applicant, para 47(c) and (d).

[56]Affidavit of Jennifer Burslem sworn 12 May 2020, paras 29-30; Submissions on Behalf of the Respondent, paras 58 and 60.

[57]Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 per Mason J, 39-42.

[58]Brown v Commissioner of Taxation [1999] FCA 563, [49]; McDougall v WorkCover Corporation of South Australia [2018] FCA 353, [5].

[59](1986) 12 FCR 187, 195.

[60][2014] FCA 881.

[61][2003] 1 Qd R 147, [22].

[62]Affidavit of Jennifer Burslem sworn 12 May 2020, exhibit JB-3; Exhibit 1, tab 2, page 10.

[63]Affidavit of Jennifer Burslem sworn 12 May 2020, exhibit JB-9.

[64]Affidavit of Jennifer Burslem sworn 12 May 2020, para 17.

[65]Affidavit of Graydon Kline sworn 14 February 2020, para 38(f).

[66]Affidavit of Graydon Kline sworn 10 December 2019, para 27.

[67]Affidavit of Graydon Kline sworn 10 December 2019, para 28.

[68]T 1-34, lines 19-20.

[69]T 1-34, lines 26-27.

[70]Affidavit of Graydon Kline sworn 10 December 2019, exhibit GK-20.

[71]Written Submissions for the Applicant, para 37.

[72]Submissions on Behalf of the Respondent, para 51.

[73]Submissions on Behalf of the Respondent, para 53.

[74]Affidavit of Jennifer Burslem sworn 12 May 2020, exhibit JB-1; and reg 67 of sch 6 of the Queensland Building and Construction Commission Regulation 2018 (Qld).

[75](1996) 185 CLR 259, 275.

[76][2020] FCAFC 135, [136].

[77]Waterford v The Commonwealth (1987) 163 CLR 54, 77.

[78]Creyke et al, Control of Government Action: Text, Cases and Commentary (LexisNexis Butterworths, 5th Ed, 2019) 859-860.

[79]Akers v Minister for Immigration and Ethnic Affairs (1988) 20 FCR 363, 373.

[80]Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24, 44 (per Mason J).

[81][2000] 2 Qd R 267, 274.

Close

Editorial Notes

  • Published Case Name:

    Kline Industries International Pty Ltd v Queensland Building and Construction Commission

  • Shortened Case Name:

    Kline Industries International Pty Ltd v Queensland Building and Construction Commission

  • MNC:

    [2020] QSC 243

  • Court:

    QSC

  • Judge(s):

    Flanagan J

  • Date:

    11 Aug 2020

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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