- Unreported Judgment
- Appeal Determined (QCA)
Samimi & Anor v Queensland Building and Construction Commission  QCA 106
Appeal No 9134 of 2014
DC No 1264 of 2012
Court of Appeal
General Civil Appeal
District Court at Brisbane –  QDC 198
19 June 2015
8 May 2015
Margaret McMurdo P and Morrison JA and Boddice J
Separate reasons for judgment of each member of the Court, each concurring as to the orders made
PROCEDURE – INFERIOR COURTS – QUEENSLAND – DISTRICT COURT – CIVIL JURISDICTION – APPEAL AND NEW TRIAL – APPEAL TO SUPREME COURT – where the trial judge gave summary judgment against the appellants in favour of the respondent – where there were two requirements for summary judgment: first, that there was no real prospect of success in any defence of the claim, and second, that there was no need for a trial – where the appellant submitted that a factual dispute which was relevant to the respondent’s prospects of success in relation to the claim – where the factual dispute was not sufficiently explained such as to allow the primary judge to conclude there was no need for a trial – whether the primary judge erred in giving summary judgment
INSURANCE – where there was a statutory insurance scheme – where the respondent paid a building owner $400,000 pursuant to the statutory insurance scheme due to the defective work of a builder – where the appellants were the directors of the builder, which was a corporation – where the respondent sought to recover that payment from the appellants – whether the payment made was “on a claim under the insurance scheme”
Queensland Building and Construction Commission Act 1991 (Qld), s 71(1)
Uniform Civil Procedure Rules 1999 (Qld), r 292
Mahony v Queensland Building Services Authority  QCA 323, applied
Namour v Queensland Building Services Authority  QCA 72, applied
D G Clothier QC, with P A Ahern, for the appellant
B E Codd for the respondent
Peter Ryan Lawyers for the appellant
Rostron Carlyle Solicitors for the respondent
 MARGARET McMURDO P: I agree with Boddice J’s reasons for allowing this appeal and with his Honour’s proposed orders.
 MORRISON JA: I have had the advantage of reading the draft reasons of Boddice J. I agree with those reasons and the orders his Honour proposes.
 BODDICE J: Part 5 of the Queensland Building and Construction Commission Act 1991 (Qld) (“the Act”) establishes a statutory insurance scheme. On 1 September 2014, summary judgment was entered in favour of the respondent against the appellants on a claim by the respondent for recovery of monies paid by it pursuant to that scheme. The appellants were ordered to pay $400,000.00 plus interest and costs.
 The appellants appeal that decision. At issue is whether the primary judge erred in finding there was no factual dispute requiring a trial, and that the appellants’ grounds for defence of the claim, namely that the payment had been made in error and was not a payment properly made on a claim under the Insurance Scheme, was not justiciable under s 71(1) of the Act.
 In 2007, the respondent received a claim from the owner of two new residential dwellings constructed at St Lucia. The construction work had been commenced following entry into a residential building contract between the owner and the builder on 20 November 2006. The appellants were the directors of the builder, which was a corporation.
 The date for practical completion of the project under the contract was 13 April 2008. However, in the course of the work, relations between the owner and the builder deteriorated. By July 2007, the owner had delivered a notice of intention to terminate the contract. The owner delivered a notice of termination on 10 August 2007. The builder also delivered a notice of termination dated 30 August 2007, having delivered a notice of intention to terminate the contract dated 13 August 2007.
 In October 2007, the respondent’s inspector prepared reports in relation to the properties. These reports identified items of defective work which, by notices dated 13 December 2007, the respondent required the builder to rectify. The respondent subsequently advised the builder, by letter dated 15 February 2008, that the defective work had not been satisfactorily rectified by the builder. By further letter dated 22 February 2008, the respondent advised the builder it had determined the contract had been validly terminated, for reasons other than the owner’s fault, allowing a claim for non-completion under the statutory insurance scheme.
 The owner obtained a Quantity Surveyor’s report in relation to completion of the project. That report, dated 19 June 2009, revealed the cost to complete each building was $560,000.00, making the total cost to complete the residences $1,120,000.00. This was based on an assessment that the total construction cost for each property was $750,000.00, and that the market value of the builder’s work on each building was $190,000.00.
 On 5 September 2011, QCAT determined, in a proceeding between the owner and the respondent, that the maximum amount payable in respect of each residence under the statutory insurance scheme was $200,000.00, for a total of $400,000.00 for both residences. The respondent subsequently paid to the owner $400,000.00. That payment was made on 10 November 2011.
 On 2 April 2012, the respondent filed a notice of claim seeking recovery from the appellants of the amount of $400,000.00 it had paid to the owner under the statutory insurance scheme. Its claim for recovery was pursuant to ss 71(1) and 111C of the Act.
 Relevantly, s 71(1) provides:
“(1)If the authority makes any payment on a claim under the insurance scheme, the authority may recover the amount of the payment as a debt, from the building contractor by whom the relevant residential construction work was, or was to be, carried out or any other person through whose fault the claim arose.”
 Section 111C makes a director of a corporate building contractor liable for any such amount. The first and second appellants were sued on the basis they were directors of the builder at the relevant time.
 The appellants defended the respondent’s claim. By their amended defence filed 1 May 2013, the appellants put in question the owner’s entitlement to have received a payment from the respondent in relation to the building contracts.
 By application filed 10 July 2014, the respondent sought summary judgment in respect of its claim against the appellants. The respondent contended none of the matters raised by way of defence had any real prospect of successfully defending all or part of its claim, and there was no need for a trial of the claim or part of the claim.
 The appellants resisted summary judgment on the basis the respondent had made an error in carrying out its functions of administering the insurance policy, and had made an assessment contrary to the terms of the insurance policy, in that the owner’s remaining liability in each instance exceeded the amounts properly payable under the policy, such that any payment made was not made “on a claim under the insurance scheme”.
 The appellants also contended there was a factual dispute requiring a trial of the claim. The factual dispute was said to arise because the respondent, by letter dated 30 January 2008, had advised the owner it had determined the owner had paid $220,000.00 under the contract. That amount was significantly less than the sum of $700,000.00 relied upon by the respondent at the application as having been paid by the owner.
 The appellants submitted to the primary judge that if the respondent’s determination as at 30 January 2008 was correct, the owner’s remaining liability under the contract would have been $1,165,260.00, which was more than the cost to complete the contract. On that scenario, the amount payable under the Scheme would have been nil. In making this submission, the appellants accepted this contention relied upon an un-pleaded defence that the monies paid by the respondent had not been validly paid under s 71(1) of the Act as the payment made was not a “payment on a claim under the insurance scheme”.
 The application for summary judgment, brought pursuant to Rule 292(2) of the Uniform Civil Procedure Rules 1999 (Qld), was heard on 1 September 2014. The primary judge concluded the respondent was entitled to summary judgment in the proceeding.
 In reaching this conclusion, the primary judge held it was sufficient for recovery pursuant to s 71(1) of the Act for the respondent to establish it had made a payment on a claim under the Insurance Scheme. Recovery was not conditional on the correctness of the determination by the respondent to make that payment, or the correctness of any anterior step taken by the respondent leading to the decision to make that payment.
 In the course of his reasons, the primary judge observed he was satisfied the plaintiff’s calculations were correct, but held that even if there had been an error, that error occurred in the administration of the statutory insurance scheme and was not a factual error of such a nature that the claim was not made under the scheme.
 The appellants accept that in order for the respondent to recover under s 71(1) of the Act, it is sufficient for the respondent to establish it has made a payment on a claim under the statutory insurance scheme. Once that is established, the statutory right to recover is not conditioned upon the legal quality of any interior steps taken by the respondent. However, the appellants contend the defence relied upon related to whether the payment made was “on a claim under the insurance scheme”.
 The appellants submit the material placed before the primary judge raised a dispute of fact. The respondent’s claim was therefore not appropriately the subject of a successful application for summary judgment. The appellants submit a factual error of such a nature that the payment was not a payment on a claim made under the statutory insurance scheme may form a valid defence to claim for recovery pursuant to s 71(1) of the Act.
 The respondent submits the primary judge correctly held the unpleaded defence raised by the appellants did not have reasonable prospects of success and there was no need for a trial. Section 71(1) of the Act precludes any inquiry as to whether the respondent has complied with the policy. The respondent submits the availability of merit reviews on a range of decisions made by the respondent has been recognised as providing a sound basis for a conclusion that the legislative intention was that decisions of the respondent were not justiciable in recovery proceedings under s 71(1) of the Act.
 The respondent further submits that in any event there was unchallenged evidence at the summary judgment application that the owner had paid the builder $700,000.00. Accordingly, it was open to the primary judge to conclude the respondent’s calculations were correct, and that there was no factual dispute necessitating a trial of the claim.
 Finally, the respondent submits its assessment of the reasonable costs of completing a contract was not justiciable in proceedings brought pursuant to s 71(1) of the Act. That assessment is administrative in nature. Any error in relation to it does not affect the validity of a claim made by an owner under the statutory insurance scheme, and does not affect whether the payment made on such a claim is “a payment on a claim under the insurance scheme”.
 The material placed before the primary judge by the respondent included correspondence from the respondent to the owner’s solicitor dated 30 January 2008. That letter advised the respondent it had determined the owner had paid a total of $220,000.00 to the builder in respect of the contract. Whilst the respondent also relied on further affidavit material, to the effect that $700,000.00 had been paid to the builder by the owner, that affidavit material did not explain the circumstances of the respondent’s early determination, nor why that determination was incorrect or had been revised by the respondent.
 This factual inconsistency, raised in the respondent’s own material, was of great significance to the appellant’s allegation, albeit unpleaded, that the payment made by the respondent was outside the limit of the policy.  If the owners had only paid to the builder $220,000.00, the amount payable on the claim under the insurance scheme was nil. If that be established at trial, there was clearly raised an issue whether the money paid by the respondent was a payment “on a claim under the insurance scheme” as it was a payment in excess of the liability under the policy.
 Whilst the respondent contends the primary judge determined the respondent’s later assertion of payments of $700,000.00 was correct, a review of the primary judge’s reasons reveals no such determination. The primary judge’s only reference to this issue was in the sentence: “I have already noted that I am satisfied that the plaintiff’s calculations are such that”, when dealing with a submission there was no obligation to pay. No such earlier notation appears in the reasons for judgment or in the transcript of the hearing.
 The Act provides a legislative scheme for the prompt and efficient resolution of complaints by owners in respect of building work undertaken as part of residential building contracts. That scheme includes the establishment of a statutory insurance policy and steps for the making of a claim under that policy, and for payments by the respondent in relation to such claims.
 The Act contains a number of mechanisms for merit reviews of decisions made by the respondent in its administration of the statutory scheme. Those review rights are wide ranging and extensive. It is unsurprising, against that background, that s 71(1) of the Act has been interpreted as providing the respondent with a right of recovery, as a debt, of payments made by it on a claim under the insurance scheme which is not dependent upon the respondent establishing the legal correctness of a determination made by it to make that payment or any anterior step taken by it that has led to the decision to pay. It is also not enough to avoid liability for a builder to point to a mere error of fact connected with the claim process.
 However, it does not follow that no factual error can be the subject of a proper defence to a claim for recovery made pursuant to s 71(1) of the Act. The inclusion of the words “on a claim under the insurance scheme”, in s 71(1) of the Act, indicate a legislative intention to require the right of recovery to pertain to payments made “on” claims under the insurance scheme. The use of those words connotes a requirement the payment made be within the policy. If that were not so, the legislature could simply have provided that the respondent could recover under s 71(1) of the Act any payment it had made pursuant to the insurance scheme.
 This conclusion is consistent with the proper approach to statutory interpretation enunciated by the High Court in Lacey v Attorney-General for the State of Queensland, as “giving the words of a statutory provision the meaning which the legislator is taken to have intended them to have”. The interpretation contended for by the respondent would render unnecessary the inclusion of the words “on a claim” in s 71(1) of the Act.
 Support for this conclusion is also derived from a number of authorities of this Court. In Mahony, Gotterson JA (with whose reasons the President and Douglas J agreed) observed at :
“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 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.’” (citations omitted)
 In agreeing with Gotterson JA’s reasons for dismissing the appeal with costs, the President particularly noted her agreement with these observations. The President further observed:
“In , the builder contended at trial and on appeal that he was not liable under the insurance scheme created by Pt 5 Queensland Building Services Authority Act 1991 (Qld) because his clients were excluded from claiming under the scheme by cl 1.9 of the statutory insurance policy. I agreed, for the reasons given by Wilson AJA, that the primary judge rightly rejected that argument. My observations, on which the present appellant placed reliance at trial and in this appeal, should be understood in that context. Where the statutory insurer has made payments to those who were not entitled to claim under the scheme, I presently remain unpersuaded that parliament intended, in enacting s 71(1) Queensland Building Services Authority Act, to allow the insurer to recover the amount of such payments from the builder.” (citations omitted)
 Further support for factual matters properly founding a defence to a claim for recovery under s 71(1) of the Act is derived from the observations of Fraser JA (with whose reasons the President and Douglas J agreed) in Namour v Queensland Building Services Authority:
“Neither the reasonableness of a payment made by the respondent nor the amount owing by a claimant under the insurance scheme to the contractor is made a criterion of liability under s 71(1). Those criteria would be relevant in a recovery action under s 71(1) only if they were relevant to the determination of the question whether the amount sought to be recovered by the respondent is the amount of the ‘payment on a claim under the insurance scheme’.”
 Whilst Fraser JA, in Namour, found the matters sought to be raised by way of defence were not justiciable under s 71(1) of the Act, that conclusion occurred in circumstances where there was “no reason to doubt that each claim was paid in accordance with the terms of the policy”. A different conclusion may follow where there is reason to question whether the payment was made in accordance with the terms of the policy.
 Gotterson JA, in Queensland Building and Construction Commission v Lifetime Securities (Australia) Pty Ltd & Anor also recognised that a matter of relevance to a recovery action under s 71(1) of the Act may include if the payment was not a valid payment under the scheme.
 Contrary to the respondent’s submission, the consideration of whether a payment sought to be recovered under s 71(1) of the Act was a valid payment under the scheme does not merely raise an element of the respondent’s administrative processes anterior to that payment. That issue raises whether the payment was made “on a claim under the insurance scheme”, a condition for recovery of the payment under s 71(1) of the Act.
 Rule 292 of the UCPR contains two requirements for giving summary judgment. First, that there is no real prospect of success in any defence of the claim. Second, that there is no need for a trial. The appellant relied on a factual dispute raised in the respondent’s interest which was relevant to the respondent’s entitlement to succeed in the claim. The factual dispute was not sufficiently explained such as to allow the primary judge to conclude there was no need for a trial. A trial may well have resulted in a finding the respondent was not entitled to recover the amount claimed in the proceeding. That was a valid defence to the respondent’s claim for recovery under s 71(1) of the Act.
 The primary judge erred in concluding the matters raised by the appellants were not justiciable in respect of a claim for recovery of a debt under s 71(1) of the Act. The primary judge also erred in concluding that the requirements of r 292 UCPR were met such that it was appropriate to grant summary judgment on the respondent’s claim.
 I would order:
- The appeal be allowed.
- The orders below be set aside.
- The respondent’s application for summary judgment be dismissed.
 Unless the respondent files written submissions on costs within seven days of the making of these orders in accordance with Practice Direction 3 of 2013, paragraph 52(4), I would further order the respondent pay the appellants’ costs of the appeal and of the application for summary judgment, to be assessed on a standard basis.
 Mahony v Queensland Building Services Authority  QCA 323 at .
 AB 246.
 See policy, clauses 1.1, 1.2, 1.4, 2.1 and 2.2; AB 212 – 217.
 cf. Queensland Building Services Authority v Ward  QSC 138.
 Mahony v Queensland Building Services Authority  QCA 323 at ; Namour v Queensland Building Services Authority  QCA 72 at -.
 Queensland Building Services Authority v Orenshaw & Anor  QSC 241 at .
 (2011) 242 CLR 573 at , adopting Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at .
 At .
  QCA 72 at .
 At .
  QCA 161 at .
- Published Case Name:
Samimi & Anor v Queensland Building and Construction Commission
- Shortened Case Name:
Samimi v Queensland Building and Construction Commission
 QCA 106
McMurdo P, Morrison JA, Boddice J
19 Jun 2015
|Event||Citation or File||Date||Notes|
|Appeal Determined (QCA)|| QCA 106||19 Jun 2015||-|