SUPREME COURT OF QUEENSLAND

1. McPHERSON JA:  I have read the reasons for judgment of Mullins J on this appeal.  I agree with much of what her Honour has said; but there are two issues on which I should state an opinion separately as affecting the outcome of the appeal.

2. The Queensland Building Services Authority Act 1991 introduced a system of licensing builders and, specifically in the case of domestic building contracts, a statutory insurance scheme, meaning the insurance scheme established under Part 5 of the Act.  The scheme is in some ways analogous to and designed to serve purposes similar to the compulsory insurance scheme in force in the case of motor vehicles and of fidelity insurance in the case of solicitors. Like those forms of insurance, a premium is payable, in this instance by the builder to the Queensland Building Services Authority ("the Authority") in respect of building work to be done under a domestic building contract of that kind. By reg 24(3) of the Queensland Building Services Authority Regulation 1992, the insurance premium must be paid to the local authority (now called simply local government), which in this instance was the Maroochy Shire Council as agent for the Authority.

3. The pivotal provision of the Act (in the form it was when this dispute arose) is s 69(2) which provides that a policy of insurance comes into force if a consumer (meaning a person for whom building work is carried out) enters into a contract "for the performance of residential construction work". By s 69(2)(a), the contract must be imprinted with a licensed contractor's licence showing his qualification to carry out such work; but s 69(1)(c) contemplates that a policy of insurance comes into existence even if the contract is made with a person fraudulently claiming to be properly licensed.

4. The function of ensuring that the requirements of the Act are carried out is, in the first place, controlled through the granting or withholding of building approvals (or development approvals as they are now called by s 1.3.2 of the Integrated Planning Act 1997) by an "assessment manager", which in this instance was the local government in the form of the Maroochy Shire Council. By s 68(2) of the Queensland Building Services Authority Acts, development approval for building work "in respect of residential construction work" must not be issued unless satisfactory evidence is produced that the appropriate insurance premium has been paid; and it must be paid by the building contractor to the Authority (or its agent the local government) before residential construction work is commenced: s 68(1). However, once the Authority (presumably in the person of its agent the local government) accepts the premium in respect of residential construction work, a certificate of insurance will be issued by the Authority. As to that, s 68(3) of the Act provides:

"(3)A certificate of insurance issued by the Authority in relation to residential construction work is conclusive evidence that the work is covered by a policy of insurance under the statutory insurance scheme."

5. The problem in the present case essentially revolves around these provisions of the Act; perhaps one should add to that, and, as well, the provisions of reg 24 of the Queensland Building Authority Regulation 1992. But nothing in reg 24(1) significantly adds to what is said in ss 68 and 69 of the Act itself. In substance it provides that, when a consumer enters into a contract with a licensed contractor, whose licence bears the requisite residential construction work indorsement, a policy of insurance comes into force irrespective of whether or not the insurance premium is paid or the certificate issued. By reg 24(1) a policy is to be in the terms set out in the Board's policy, and by reg 24(2) a certificate issued by the Authority under s 69(1) must set out the terms of the policy. The Board is the Queensland Building Services Board established under s 8 of the Act. There appears to be no specific form prescribed by the Act or the Regulation for the policy or the certificate. The Board and the Authority are authorised by the Act or Regulation to adopt their own formats.

6. Under s 69(2), the event that attracts the operation of the statutory insurance scheme is if a consumer enters into a contract for the performance of residential contract work. The expression "residential contract work" is defined in s 4 of the Act to mean "building work classified by regulation as residential construction work". Regulation 4 of the Queensland Building Services Authority Regulation 1992 defines that expression to mean, so far as is material here, as

"… domestic building work -

1. consisting of the construction of a home or a roofed building on the site of a home …, or

2. consisting of an alteration or addition to such home or building affecting -

1. its structure; or

2. its external fabric or weatherproofing; or

3. water supply, sewerage or drainage; or

4. internal fixtures

if the work is performed by a building contractor …".

7. According to s 4 of the Act, the expression domestic building work means "building work related to a home or an associated building"; and home means "any residential premises except premises constituting, or forming part of, commercial or industrial premises". The combined effect of all these provisions, reading them together, is that a policy of insurance comes into force, and the statutory insurance scheme under Part 5 of the Act is attracted, if a consumer enters into a contract for the performance of building work related to any residential premises (except premises constituting or forming part of commercial or industrial premises) consisting of (a) the construction of residential premises, or (b) of an alteration or addition to such residential premises affecting its structure or its external fabric, etc.

8. In the present matter, the first question is whether the building work under the written contract dated 11 July 1998 entered into between Mr and Mrs Parker of Eumundi and the building contractor Mr Ronald Moore (who was licensed as required under the Act) was for the performance of building work "related to" any residential premises. The answer to that is that it plainly was. The work is described by Forde DCJ, from whose decision leave to appeal is now sought, in the following terms:

"The building work was described on the contract schedule as 'combined new structure with renovations. Timber floor iron roof'. The  council approved a plan to add extensions to the existing home for a proposed bed and breakfast facility. It was the intention of [Mr and Mrs Parker] to operate the new premises as a bed and breakfast facility. It was also their intention to use the property as their home which included the additional bedrooms. The lounge and dining area were to be used by the appellants for their own use and by the guests when the bedroom facilities were in use."

I do not think it can be doubted that the work contemplated by the contract was at least "related to" the residential premises that were (and are) Mr and Mrs Parker's existing home, to which it was an addition. The work in contemplation seems to me to fall within para (b), rather than para (a) of the definition of residential construction work in reg 4, in that it consisted not (a) of the "construction of a home", but rather (b) of "an alteration or addition to such a home" which affected its structure or its external fabric, etc. But that conclusion is subject to the exception in the definition of home in s 4(1), which specifically excludes "premises constituting, or forming part of, commercial … premises".

9. The next problem is to determine whether that specific exception has the effect of excluding the subject building work from the ambit of "residential construction work" as defined in the Act and Regulations. There are, in some of the decisions in which a similar question has arisen, statements which, taken out of context, might be thought to suggest that the question is one to be determined when the building work is completed. With respect, that cannot be correct. The work is in every case completed only after the contract is entered into, and the insurance policy has come into existence and the certificate has issued. It would, moreover, be extraordinary if building work gained the benefit of the statutory insurance scheme because, in the course of being performed, it changed its character from construction of premises, say, as a shop, to construction of premises as a home. Some observations in the decisions appear to suggest, as an alternative that it is the work "being carried out" that is the relevant appropriate criterion. Again, however, and for similar reasons, I would not regard this, if take literally, as the proper test for deciding whether the premises, and consequently the building work, is or are residential or commercial. It is not the work in fact being carried out, but the work that was contracted to be performed that is decisive.

10. One is left then with the time at which the contract is entered into. This seems to me to be the appropriate point at which to determine whether the premises and the work are, properly speaking, residential. I respectfully agree with the conclusion of Mullins J that the characterisation of the work cannot be left to depend on the "subjective intentions" of the parties to the contract. It would be impossible for anyone effectively to perform the functions contemplated in s 68(2) and s 69(2) of the Act if the parties, or even perhaps the building owner or the "consumer" alone, had at the time the contract was entered into, secret reservations about the use, whether residential or commercial, to which the completed building was going to be put. Whether premises are, or are to be, for residential or for commercial purposes or use inevitably depends, at least in some circumstances, on the intention of those who construct them; but the only proper and available material from which to determine whether the premises are one rather than the other is the application for building approval, together with the contract, including the plans and specifications, for the work that is to be done. In considering this point at first instance, the Tribunal Chairman spoke of the "design purpose" of the subject building, which seems to me to convey much the same conception, provided it is understood that the purpose is one to be gathered from materials of the kind I have mentioned. They are, after all, what are considered by the assessment manager under s 69(2) at the time the development approval is given.

11. Such a conclusion is consistent with the terminology of the Act, as it was at the time of these events in 1998. It regularly used and uses the expression "contract for carrying out major domestic work": see for example, ss 58, 59, and 60, as those provisions then were. Such a contract was required to be in writing: s 58(1)(a), as was any variation to it: s 59(1). The contract was also required to describe sufficiently the work to which it related: s 58(1)(b). One object of provisions like these plainly is to enable it to be determined whether or not the building work is residential and so attract the statutory insurance scheme under Part 5. Section 69(1) provides that a policy of insurance comes into force "if a contract for the performance of residential construction work" is entered into. In a similar context, reg 24(1) uses the expression "contract .. to have residential construction work carried out". There are slight verbal differences in these various formulations; but they all point to the same conclusion. The time at which to decide whether the construction work is residential is when the contract is entered into. The materials from which it is to be determined consist, as I have mentioned, primarily, if not exclusively, of the building application and the contract documents, including plans and specifications.

12. With this in mind, we may return to the facts of the present case. What appears from the building application and contract documents, including the plans here, is that the addition to the Parker's existing home was a "Proposed Bed & Breakfast Facility". Four bedrooms with kitchen and dining facilities and a lounge were to be added. Unless the guests were to be accommodated free of charge, it is impossible to avoid the impression that the additional premises had a commercial purpose. Does that serve to take them within the ambit of the exception in the definition of home in s 4 of the Act ?  The word home means "any residential premises except premises constituting … commercial .. premises". I agree that this makes the addition to the existing home or premises "commercial" in character, and that it does so even though the Parker family may have had it in mind to use the lounge and dining facilities in that part of the house for their own domestic purposes when no paying guests were staying there, or even perhaps on occasions to share those facilities with those guests.

13. To my mind, however, that is not the end of the matter. The impact of s 68(3) remains to be considered. As will be recalled, it provides that a certificate of insurance issued by the Authority in relation to residential construction work "is conclusive evidence that the work is covered by a policy of insurance under the statutory insurance scheme". The effect of provisions like this is clear. Whether contained in a statute or a contract, they mean what they say, and must be given full force even if it can be clearly demonstrated that the true facts are not what they are conclusively presumed to be. See R v Agricultural Land Tribunal, ex p Hooker [1952] KB 1. The provision concerning conclusiveness of certificate of title under the Torrens system of registration is perhaps the best known Australian example: Land Title Act 1994, s 179. Another is to be seen in Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590, and the decisions cited there, including National Provincial Bank v Charnley [1924] 1 KB 431. Illegality is  one of the few recognised exceptions to the operation of such a provision: Dobbs v National Bank of Australia (1935) 53 CLR 643 at 650-651. Fraud is, I would think, certainly another; for, as is often said, "fraud opens all doors". If a building contractor and a building owner set out to deceive the Authority by deliberately disguising their contract for work on premises that are really commercial as a contract for construction of or on premises that are residential, there is little doubt that s 68(3) would not protect their efforts. Nothing of that kind is suggested there.  Mr and Mrs Parker and the builder Mr Moore disclosed the true character of the addition to the premises that were to be constructed. It or they were described as a Bed & Breakfast Facility. What seems to have happened is that the Council in assessing the work under s 68(2) or the  Authority in certifying under s 68(3), or both, mistakenly classified the work or the premises as residential rather than commercial.

14. I see no escape from the conclusion dictated by s 68(3). The Authority issued a certificate to the Parkers which is dated 14 December 1998. It identifies "The Residential Construction Work Insured" as "New Dwelling". That may, having regard to my impression that it was an addition to an existing home, not be completely accurate. No matter; s 68(3) declares the certificate to be conclusive evidence that the "work" insured, identified in the certificate as Residential Construction Work, is "covered by a policy of insurance under the statutory insurance scheme". It specifies the names and addresses of the contracting parties, and the location and title description of the land on which the work is to be done. No other building work was being undertaken on that land with which it can have been confused. It is true that s 68(3) speaks of a certificate issued "in relation to residential construction work"; but, whatever might be the position in some other cases, the addition that was to be constructed here was certainly "in relation to" residential construction work. It was domestic building work as defined because it was "building work related to a home". It was an addition to Mr and Mrs Parker's home and it involved structural alterations to that home in the course of constructing the addition. The word "premises" is notoriously imprecise; and building work is by its nature quite often incapable of being rigidly segregated into residential and commercial. That may very well be the reason why the provision in s 68(3) was incorporated in the Act, so as to place contentious cases beyond the realm of argument. Its plain purpose is to protect consumers from disputes like this. It would, for example, be a nice question whether the addition of a single room to a home with a view to letting it to a lodger (such as an overseas student) would have the consequence that the premises or the building work to be performed ceased to be residential. Section 68(3) is designed to avoid difficult questions like that or this, which are really questions of mixed fact and law.

15. The subject matter or scope of the conclusive statutory presumption created by s 68(3) is not in question. It creates evidence, which is not capable of being disputed, that the work is "covered" by the policy. It is true that the certificate that was issued by the Authority here is expressed to be issued "subject to the limitations and exclusions expressed in the insurance policy conditions". The policy itself refers to compensation for various events, such as non-completion and defective construction (which happened here) "of the residential construction work described in the certificate of insurance". In the policy, the expression "residential construction work" is expressed to mean "the work described in the certificate ... which is afforded the benefit of this policy by virtue of the Act". These provisions seem to me to confirm, rather than to displace, the conclusion already reached. The benefit of the policy "afforded by virtue of the Act" is one that has the advantage of the certificate that, when issued, is conclusive evidence of the scope of the policy or its cover.

16. Section 68(3) is the dominant provision. Even if in some way, which is not readily identifiable to me, the policy or the policy conditions are to be regarded as inconsistent with the provisions of s 68(3), it cannot avail the Authority. Section 68(3) is statute law, and it is quite specific in its provisions. The "work" is, in law, to be treated as being covered by the policy. As such, the description of the "work" that is "covered" necessarily prevails over and supplants the terms and conditions of the policy and of anything contained in the certificate that is not consistent with that statutory provision. The work, which is described in the certificate as "residential construction work", is conclusively presumed to be within the ambit of the cover afforded by the policy. Regulation 24(1) speaks of "the terms set out in the Board's published policy", and reg 24(2) also says that the certificate must set out those terms; but the Board is not at liberty under that general power to adopt terms that are inconsistent with the specific provision in s 68(3) of the Act. Instead, it must adapt the terms and conditions of the insurance policy to accommodate the overriding force of that provision. The Authority must do the same with its certificate. If that is not done, s 68(3) prevails over anything to the contrary in either of those two instruments.

17. Finally, it was submitted by Mr Holt SC on behalf of the Authority that the question raised here was resolved in his client's favour by the decision of this Court in Progressive Enterprises Pty Ltd v Queensland Building Services Authority (CA 1022 of 1996; Nov 4 1997 unrep). In those proceedings, as in these, reliance was, among other matters, placed by the building owner or consumer on the certificate issued under s 68(3) of the Act. In disposing of the point, the Court (Davies JA and White J, with whom Shepherdson J agreed) said that "… in any event, the certificates issuing as they did a considerable time after the contract of insurance came into effect, could not alter its terms". With great respect, the certificate under s 68(3) necessarily always issues after the contract of insurance has come into existence. That is an invariable consequence of the statutory insurance scheme under Part 5. By s 69(2), the policy of insurance (which is the contract of insurance) comes into force "if a consumer enters into a contract for the performance of residential construction work". By s 69(3) it does so "whether or not an insurance premium has been paid or a certificate has been issued". Regulation 24(1) is to the same effect. Having regard to the fact that the policy of insurance, although  it comes into force contemporaneously with the contract, must necessarily exist before a certificate in respect of it is or can be issued, it is inevitable that the certificate will be created and issue after, and not before, the contract or policy of insurance has been constituted by or under s 68(2).  It is the Authority that must under s 69(1) issue the certificate of insurance when it accepts the insurance premium, and it cannot do so until there is both a contract for the work and a policy of insurance that is capable of being certified. To regard it as fatal to the conclusiveness of the certificate of insurance that it post‑dates the policy, whether by a brief or a lengthy margin of time, would  deprive s 68(3) of all operation and simply deny it any effect.

18. Nevertheless, as a decision of the Court of Appeal, Progressive Enterprises Pty Ltd v QBSA is binding on me if it applies to this case. It was, however, concerned with a somewhat different question. There the consumer was the building owner or developer of nine duplexes comprising 18 residential apartments, in respect of which it entered into nine building contracts, being one for each duplex. In terms of reg 3(1), each duplex was a "multiple dwelling" in that it was a building comprising two or more residential units. This should have meant that there would be nine premiums and nine insurance policies and certificates, one in respect of each duplex.  In fact, however, 18 premiums were paid, the amount of which were arrived at after halving the value of each contract, and 18 policies and certificates issued. The certificate in each case nevertheless correctly described the work as "New Construction - Duplex". The policies were found to contain an exception as follows:

"(i)no amount is payable under this Policy in respect of the Contractor's failure to complete the work except where the Owner occupies or proposes to occupy a residential unit in that multiple dwelling as his or her place of residence; and

(ii)If the Owner owns more than 4 residential units in that multiple dwelling, the Owner is entitled to compensation for non‑completion in relation to 4 of those units only."

19. The Court rejected a submission for the developer that the certificates were conclusive evidence of the fact that each of the 18 residential units was covered by a separate policy of insurance, undertaking to compensate "in relation to the Residential Construction Work described in the Certificate of Insurance". The developer's argument was described as "somewhat artificial" because the residential construction work under each building contract comprised all the construction work on a single duplex, which could not, "except in an artificial sense", be divided in half, and the construction work was in fact described in each certificate as a "duplex". In those circumstances, therefore, there was an ambiguity in the certificate description which enabled the policy description and conditions to be consulted in order to identify what was covered by the insurance. Here there is no such ambiguity in the certificate. It clearly describes the work insured as "Residential Construction Work - New Dwelling" and it gives its location or address, as well as the names of the parties to the contract. It is that "work" (which is the work to be performed under the construction contract dated 11 July 1998) that is covered by the policy of which the certificate is by s 68(3) made conclusive evidence.

20. The matter before us is in my opinion therefore distinguishable from Progressive Enterprises Pty Ltd v QBSA.  I would not doubt that the result might well be different if the matter in dispute were one of pure law. Plainly, however, it is not. Whether or not, in circumstances like these, the work is covered by the statutory policy of insurance is a question of fact or, at the very least, one of mixed law and fact : see SWF Hoists & Industrial Equipment Pty Ltd v Government Insurance Commission (1990) ATPR 41-045, at 51-607-51-068. Indeed, in view of the fact that the Authority is a corporation and that it is engaged in providing insurance, the decision in that case is one that might well repay study by the Authority. Whether the construction work for the addition to the Parkers' home was residential and so covered by the policy is precisely the kind of question that the certificate under s 68(3) was designed to conclude and place beyond the realm of dispute. If s 68(3) does not have such an effect, it is difficult to conceive of its having any scope or area of operation whatsoever.

21. In my opinion the Authority is not entitled to succeed in the appeal. The decision of Forde DCJ was correct and leave to appeal against it should not be granted. The application for leave to appeal should be dismissed with costs.

22. DAVIES JA:  I have had the advantage of reading the reasons for judgment of McPherson JA and Mullins J.  I agree with Mullins J that this appeal must be allowed and with the orders which she proposes.  With one reservation I also agree with her reasons for that conclusion.

23. Because both of their Honours have set out either the precise terms or the effect of the relevant legislation and the relevant facts it is unnecessary for me to repeat them. Accordingly I propose to confine my reasons to two matters; the reservation referred to above and my reason for agreeing with Mullins J, and disagreeing with McPherson JA, on the effect of s 68(3) of the Queensland Building Services Authority Act 1991.

24. Mullins J has concluded that the work purporting to be the subject matter of the relevant policy was not residential construction work because it was not related to a home. Whilst I accept the force of what her Honour has said in this respect, in my opinion the wide ambit of the phrase "related to" in the definition of "domestic building work" in the Act leaves open the construction that the building work here, though it was predominantly the construction of the bed and breakfast facility, was also related to a home as defined. Accordingly I would prefer to reach the conclusion that the work was not residential construction work on the basis that it consisted neither of the construction of a home nor of an alteration or addition to a home. It was plainly not the first; and it was not the second, in my opinion, because it was predominantly not an alteration or addition to a home but the construction of a bed and breakfast facility. That is the way in which it was described in the plans forming part of the contract and, as Mullins J has shown, by far the major part of the work was to provide that facility. The question of what work consists of, for the purpose of the definition of "residential construction work" in s 4 of the Regulation, must, in my view, depend on the dominant purpose of the work as described in the contract. For that reason I agree with her Honour's conclusion that the subject contract was not one for the performance of residential construction work.

25. For the certificate of insurance to have the conclusive effect contemplated by s 68(3) of the Act two pre-conditions must be satisfied under that subsection.  The first is that it be issued by the Authority.  The second is that it be in relation to residential construction work.  Absent compliance with both those pre-conditions the certificate has no conclusive effect.  But once those pre-conditions have been satisfied it is unnecessary to prove, for example, that the contract is imprinted with the licensed contractor's licence card bearing the relevant endorsement^[1] or either that the contract is with a licensed contractor^[2] or that it is with a person who fraudulently claimed to hold a licence.^[3]  Indeed, the contrary of any of these cannot be proved because the certificate is conclusive.  On the other hand it is plain that a policy of insurance covering residential construction work may come into force pursuant to s 69(2) notwithstanding the fact that no certificate of insurance is ever issued.^[4]

26. The phrase "residential construction work" in s 68(3) plainly imports the definitions of "residential construction work" in the Act and Regulation and consequently the definitions of "domestic building work" and "home" in the Act. Thus a certificate of insurance purportedly issued pursuant to s 68(3) has no conclusive effect unless the work which it purports to cover is in relation to residential construction work as so defined.

27. As already mentioned the certificate here was issued in relation to the work described in the contract as proposed bed and breakfast facility which was not, in substance, residential construction work. The certificate accordingly had no conclusive effect.

28. The decision of this Court in Progressive Enterprises Pty Ltd v Queensland Building Services Authority CA No 1022 of 1996, judgment delivered 4 November 1997, in my opinion has no relevance to the question just discussed.  In that case the appellant, a developer, entered into nine contracts with a builder each for construction of a duplex, a multiple dwelling to consist of two units.  Eighteen certificates of insurance were issued, one in respect of each proposed unit.

29. It was common ground that the work the subject of each contract was residential construction work; and it was also common ground that the work was covered by policies of insurance. The principal question was whether an exception in each policy, which applied in some circumstances to multiple dwellings, applied in that case. This depended in turn on whether the work covered by each of the policies comprised or related to a multiple dwelling.

30. On this question the certificate, although it might have had some evidentiary value, was plainly not conclusive. Moreover each certificate described the work as "new construction, duplex" which this Court considered to be an accurate description. The case decided no more than that, in those circumstances, notwithstanding the issue of 18 certificates, one for each proposed unit, the residential construction work the subject of each contract comprised or related to a multiple dwelling.

31. MULLINS J:  This is an application for leave to appeal against the orders of the learned District Court judge made on 30 May 2000 granting leave to appeal against the decision of the Queensland Building Tribunal given on 23 March 2000 affirming a decision of the Queensland Building Services Authority ("Authority") made on 4 October 1994.  The learned District Court judge allowed the appeal and  set aside the decision of the Authority.  The formal orders made were:

1. Leave is granted to appeal with costs.

2. The appeal is allowed with costs.

3. The order of the Tribunal dated 23^rd March, 2000, is reversed.

4. Order in lieu that the review by the Tribunal be allowed.

32. Leave to appeal to this Court is required pursuant to section 118(3) of the District Court Act 1967.

33. The Authority sought to have the appeal heard at the same time as the application. Mr Favell of Counsel who appeared on behalf of Mr and Mrs Parker, the owners of the property situated at 1 Sale Street, Eumundi, and the respondents to the application for leave to appeal to this Court, did not oppose the appeal being argued at the same time as the hearing of the application. That was the course that was followed.

34. On 11 July 1998 the respondents entered into a building contract with builder Ronald Bernard Moore for works described as "combined new structure with renovations, timber floor, iron roof" at 1 Sale Street, Eumundi for the sum of $191,611.

35. The contract used the form of contract schedule published by the Authority and described as a building contract for residential construction.

36. The plans for the works which were incorporated into the contract described the works as "Proposed Bed & Breakfast Facility".

37. The nature of the works was to refurbish and extend the existing dwelling in respect of which the respondents apportioned $90,000 of the contract price and to construct four additional bedrooms with individual ensuites and an external verandah for a bed and breakfast facility. The construction of the additional bedrooms, ensuites and verandah virtually doubled the size of the premises. According to the respondents' evidence, even some of the refurbishments of the existing premises were related to the bed and breakfast facility. The existing lounge and dining rooms were refurbished and extended to be used by the guests when the bedroom facilities were in use, in addition to daily use by the respondents. The refurbishments of the existing residence included a new kitchen. That was to be the only kitchen in the premises after the extension was completed. One of the requirements of the building permit required submission to the Council's Health Services branch of plans indicating the fitout/construction of food preparation areas. From that it can be inferred that the construction of the new kitchen had to comply with the Council's requirements for food preparation areas. The respondents stated that it was their intention to continue to use their property as their place of residence which at times would include the additional bedroom facilities (when not in use for paying guests).

38. The parties to the contract proceeded on the basis that it was a contract for residential construction work, as defined in the Queensland Building Services Authority Act 1991 ("the Act").

39. The contract was imprinted with the builder's licence card in purported compliance with section 58(1)(e) of the Act. Curiously, the imprint of the builder's licence card on the contract includes the endorsement "QBSA Insurance Unavailable". This was not addressed in the reasons of the Tribunal or the District Court, nor was it the subject of submissions in this Court. The material before this Court shows at the relevant time that the builder was the holder of both a general building licence and a house building licence. It is therefore reasonable to proceed on the basis that the endorsement is immaterial.

40. It appears that the builder paid the insurance premium of $287 to the Maroochy Shire Council on 13 July 1998 in purported compliance with section 68(1) of the Act. Under section 23(3) of the Queensland Building Services Authority Regulation 1992 ("Regulation") the local government is the agent of the Authority for receiving the insurance premium.  The Council issued a building permit classifying the works as "Bed & Breakfast Class 1b".  

41. The Authority issued a certificate of insurance relating to the contract on 14 December 1998. It was accompanied by a booklet containing the insurance policy conditions (edition three). The certificate of insurance is expressly stated to be "subject to the limitations and exclusions expressed in insurance policy conditions, edition three". Against the description "The Residential Construction Work Insured" in the certificate of insurance has been inserted the description "New Dwelling". The "Notified Contract Value" in the certificate of insurance is specified as $191,611. There is a statement at the bottom of the certificate of insurance as follows:

"This Certificate is valid in respect of Residential Construction Work as described in the Queensland Building Services Authority Act 1991 as amended, effective 1 January 1997."

42. The builder left the site without completing the work. The respondents lodged with the Authority a dispute notification form dated 7 July 1999. The respondents stated in section 3.1 of that document:

"As the building has Council approval as a proposed Bed & Breakfast business, the building being incomplete we cannot get final inspection (classification of building) therefore cannot commence trading.  We have outlayed (sic) large expenditure on furnishing of building to proposed opening date of business.  Not being able to operate from proposed completion has led to a shortfall in cash flow and a difficult financial situation.  We intend to claim for liquidation (sic) damages."

43. The Authority decided that the work the subject of the contract between the respondents and the builder was not residential construction work as defined by the Act and therefore not afforded the benefits of the statutory insurance scheme provided for by the Act. That decision was conveyed in the Authority's letter dated 4 October 1999 to the respondents' solicitors. That is the decision that was the subject of proceedings in the Tribunal and the District Court.

44. The Tribunal found that the additional bedrooms with their ensuites were being built as bed and breakfast accommodation; the renting out of those bedrooms would constitute commercial activity; and therefore the building work relating to those bedrooms "related to" commercial premises and was not "residential construction work". The Tribunal therefore concluded that the work was not covered by the statutory insurance scheme.

45. The learned District Court judge, in reversing the decision of the Tribunal, found that the works did not change the essential character of the premises as a home and therefore concluded that the work was residential construction work within the meaning of the Act and the insurance policy issued under the Act.

46. There were three interrelated issues raised during the hearing of this appeal. The first was whether the work the subject of the contract between the builder and the respondents was covered by the insurance policy provided for in section 69 of the Act. That raised the issue of whether the work the subject of the contract was residential construction work within the meaning of the Act. The third issue was whether the issuing of the certificate of insurance to the respondents in relation to that work was conclusive as to that work being residential construction work.

47. The definition of "residential construction work" is set out in section 4 of the Act as follows:

"'residential construction work' means building work classified by regulation as residential construction work."

Section 4 of the Regulation contains the following definition of residential construction work:

"'residential construction work' means major domestic building work-

1. consisting of the construction of a home or a roofed building on the site of a home (other than a home or building that is a multiple dwelling of more than 3 storeys); or

2. consisting of an alteration or addition to such a home or building affecting-

  (i) its structure; or

  (ii) its external fabric or weatherproofing; or

  (iii) water supply, sewerage or drainage; or

  (iv) internal fixtures;

If the work is performed by a building contractor other than as subcontractor."

48. Major domestic building work is defined in section 4 of the Regulation as domestic building work of a value exceeding $3,000. Domestic building work is defined in section 4 of the Act as follows:

"'domestic building work' means building work related to a home or an associated building."

 The definition of home is also found in section 4 of the Act:

"'home' means any residential premises except premises constituting, or forming part of, commercial or industrial premises."

49. Section 68 of the Act provides:

"68 (1)A building contractor must, before commencing residential construction work pay to the authority the appropriate insurance premium for the work in accordance with the regulations. Maximum penalty-20 penalty units.

(2)An assessment manager must not, under the Integrated Planning Act 1997, issue a development approval for building work in respect of residential construction work unless the applicant produces satisfactory evidence that the appropriate insurance premium has been paid or that no insurance premium is payable.

(3)A certificate of insurance issued by the authority in relation to residential construction work is conclusive evidence that the work is covered by a policy of insurance under the statutory insurance scheme.

(4)A private certifier who is acting as an assessment manager must not contravene subsection (2).

Maximum penalty-20 penalty units."

50. Section 69 of the Act provides:

"69 (1)When the authority accepts the appropriate insurance premium in respect of residential construction work, the authority must issue a certificate of insurance in respect of the residential construction work.

(2)A policy of insurance comes into force in the terms prescribed by regulation if a consumer enters into a contract for the performance of residential construction work, and-

1. the contract is imprinted with a licensed contractor's licence card bearing an endorsement showing that the licensee may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme; or

2. the contract is with a licensed contractor whose licence bears an endorsement mentioned in paragraph (a); or

3. the contact is with a person fraudulently claiming to hold a licence mentioned in paragraph (b).

(3)Subsection (2) applies whether or not an insurance premium has been paid or a certificate of insurance has been issued."

51. Section 24 of the Regulation provides:

"24 (1)When a consumer enters into a contract with a licensed contractor whose licence bears a residential construction work endorsement, or a person fraudulently claiming to hold such a licence, to have residential construction work carried out in Queensland, a policy of insurance in the terms set out in the board's policies comes into force in relation to the building work irrespective of whether the appropriate insurance premium is paid or the certificate of insurance issued.

(2)A certificate of insurance issued by the authority under section 69(1) of the Act must set out the terms of the policy."

52. The effect of section 24(1) of the Regulation and section 69(1) of the Act is that the policy of insurance provided for by the Act comes into force, generally, when a consumer enters into a contract for the performance of residential construction work where the contract is imprinted with the licensed contractor's licence card bearing the requisite endorsement. On the basis of these provisions, whether a policy of insurance comes into force depends on whether the contract is for the performance of residential construction work, as defined by the Act.

53. In order to be residential construction work as defined in section 4 of the Regulation, the work must be major domestic building work of the type that is set out in paragraphs (a) or (b) of that definition. It is not sufficient for the work to fall literally within paragraphs (a) or (b) of the definition of residential construction work in section 4 of the Regulation. The work must also be major domestic building work which brings in the definition of domestic building work in section 4 of the Act. Domestic building work is building work related to a home or an associated building. That brings in the definition of home in section 4 of the Act. Residential construction work therefore must be building work of a value exceeding $3,000 related to any residential premises (except premises constituting, or forming part of, commercial or industrial premises) or an associated building which is of a type which falls within either paragraphs (a) or (b) of the definition of residential construction work in section 4 of the Regulation.

54. Mr Holt SC who appeared with Mr Roney for the Authority submitted that the approach which must be taken is to consider the work that is done under the contract and the result of that work, in order to ascertain the dominant purpose of the work undertaken. The Authority relied on the statement made by Williams J in Re Watpac Australia Pty Ltd [1996] 1 QdR 229 at 232:

"One must concentrate on the work being carried out by the principal contractor and the subcontractor.  If that work is 'domestic building work' then the motives behind the landowner requiring that construction to be carried out are irrelevant."

55. The definition of residential construction work is critical to the operation of Part 5 of the Act which provides for the statutory insurance scheme. The intention of the Act is to provide the insurance cover for residences and not commercial or professional buildings: The Proprietors of "The View" v Queensland Building Services Authority [2000] 1 QdR 405, 407-408.  It would not be consistent with achieving that object, if the characterisation of the work for the purpose of considering whether it was residential construction work depended on the subjective intentions of the parties to the contract.  To the extent that the purpose of the construction can be objectively determined, it will be done so by focusing on the nature of the work being carried out. 

56. I consider that the approach of Williams J in Re Watpac Australia Pty Ltd which directs the inquiry to the nature of the work carried out is the proper approach to determining whether or not work can be characterised as residential construction work under the Act. The work which must be considered for the purpose of determining whether it is residential construction work is that which is the subject of the relevant contract.

57. This disposes of the respondents' submission that the time when the nature of the work is to be considered is the time when the work is being carried out so that, irrespective of the results of the work, it is work that was "related to a home", if the existing structure was a home.

58. The learned District Court judge was therefore in error when he approached the characterisation of the relevant works by looking at the character of the entire premises after the works had been completed.

59. Where the construction work may be for more than one purpose, as in this case, the question of whether it can be characterised as building work relating to a home within the meaning of the relevant definitions in the Act and the Regulation is a matter of degree.

60. The substantial purpose of the works undertaken under the contract between the respondents and the builder was, in effect, to double the size of the existing house, in order to provide for bed and breakfast facilities in the extension. More than half the contract price was related solely to works to add on the extension containing the additional bedrooms and related facilities. Even if the stated intention of the respondents that they would include those additional bedrooms as part of the their residence (when they were not being used by paying guests) is taken into account, the nature of the works remains predominantly the provision of bed and breakfast facilities, as an extension to the existing residence. The works undertaken under the subject contract can not be characterised as works relating to residential premises and therefore do not fall within the definition of residential construction work.

61. As the contract between the respondents and the builder was not for residential construction work within the meaning of the Act, the entry into that contract did not bring into force the policy provided for by the statutory insurance scheme.

62. The respondents sought to rely on the terms of the policy without recourse to the meaning of residential construction work. As the policy comes into force only if the contract is for the performance of residential construction work, that is the threshold issue. The terms of the policy are not relevant, if the policy does not come into force, because the contract is not for the performance of residential construction work.

63. In any case, the argument of the respondents that the policy covers residential construction work described in the certificate of insurance and not as defined in the Act cannot be sustained.

64. The definition of residential construction work in clause 1.1 of the policy is:

"'residential construction work' means the residential construction work described in the certificate, or, where there is no certificate issued, residential construction work which is afforded the benefit of this policy by virtue of the Act."

65. The respondents relied on clause 1.2 of the policy which states:

"Unless the contrary intention appears, wherever terms defined by the Act or the Regulations appear in this policy, those terms have the same meaning in this policy as in the Act or the Regulations when the policy comes into force."

66. The respondents' submission was that in the case of the definition of residential construction work, there is a contrary intention in the policy to displace the meaning given to residential construction work in the Act and the Regulation. This is on the basis of the express definition of residential construction work which is set out in clause 1.1 of the policy.

67. That definition of residential construction work in the policy refers to the residential construction work in the certificate. It is apparent from the statement at the bottom of the certificate of insurance to the effect that the certificate is valid in respect of residential construction work as described in the Act, that when the expression residential construction work is used in the certificate, it must be given the meaning ascribed to it in the Act. The definition of residential construction work in the policy refers to the actual residential construction work identified in the certificate, but in the sense in which that expression is defined in the Act.

68. The respondents also argued that the issuing of the certificate by the Authority in relation to the work the subject of the contract between the respondents and the builder was conclusive, as to that work being covered by the policy of insurance under the statutory insurance scheme. The respondents relied on sections 68(3) and 69 of the Act.

69. The Authority argued that the policy comes into force by virtue of section 69(2) of the Act and that the subsequent issue of the certificate of insurance under section 68(3) of the Act cannot prevail over the terms of the policy. The Authority pointed out that if the policy did not apply because the work undertaken pursuant to the subject contract did not fall within the definition of residential construction work under the Act, it must follow that the certificate of insurance did not relate to residential construction work and there was no basis for the application of section 68(3) of the Act. The Authority submitted that the certificate of insurance was conclusive to the extent that an insurance policy exists in relation to that work which is being undertaken by the builder which is residential construction work within the meaning of the Act.

70. Support for the Authority's argument is found in the decision of this Court in Progressive Enterprises Pty Ltd v Queensland Building Services Authority (unreported, 4 November 1997, CA No 1022 of 1996).  In that case the developer of nine duplexes of 18 apartments had entered into nine building contacts for each duplex.  The authority issued 18 certificates of insurance and showed the contract price on each certificate as half the contract price for the duplex which partly comprised the apartment in respect of which that certificate issued.  The terms of the policy showed that the construction fell within an exception relating to a multiple dwelling.  The developer relied on the issue of separate certificates and the fact that they were conclusive evidence that the work was covered by a policy of insurance pursuant to section 69(3) of the Act.  It was held that the certificates, issuing as they did a considerable time after the contract of insurance came into effect, could not alter the terms of the policy. 

71. Once the conclusion is reached that the work the subject of the contract to which the certificate of insurance purports to relate is not residential construction work within the meaning of the Act, the issuing of a certificate of insurance in relation to that work is not conclusive.

72. I therefore propose the following orders:

1. The application for leave to appeal against the orders given on 30 May 2000 in Brisbane District Court Appeal No 1624 of 2000 is granted.    

2. The appeal is allowed. 

3. The orders made on 30 May 2000 by the learned District Court judge are set aside.

4. In lieu, it is ordered that:

1. Leave to appeal is granted.

2. The appeal is dismissed.

3. The applicants for leave to appeal to the District Court are to pay the costs of the application for leave to appeal and the appeal to the District Court of the respondent to that application and appeal. 

5. The respondents are to pay the Authority's costs of the application for leave to appeal to this Court and the appeal.

6. The respondents are granted an indemnity certificate under the Appeal Costs Fund Act 1973 in respect of the appeal.