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Schneider v Queensland Building and Construction Commission[2018] QCAT 412

Schneider v Queensland Building and Construction Commission[2018] QCAT 412

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Schneider & Anor v Queensland Building and Construction Commission [2018] QCAT 412

PARTIES:

HEINZ (HENRY) GUNTHER SCHNEIDER

and

MARIE LOUISE SCHNEIDER

(applicants)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

APPLICATION NO:

GAR046-17

MATTER TYPE:

General administrative review

DELIVERED ON:

3 December 2018

HEARING DATE:

23 October 2018

HEARD AT:

Brisbane

DECISION OF:

Member Dr Collier

ORDERS:

  1. The decisions of the Respondent to deny the Applicants indemnity under the statutory insurance scheme are set aside.
  2. The Respondent is to pay the Applicants $128,205 within 30 days
  3. The parties are to make submissions to the Tribunal by 31 January 2019 in respect of the costs of remediation of the House as it presently stands sufficient to restore it to a sound condition in respect of frame stage. The parties are at liberty to negotiate and agree the compensation payable by the Respondent to the Applicants prior to 31 January 2019, in which case the parties must notify the Tribunal of any agreement reached by them in this regard.
  4. The Respondent is to pay the Applicants’ costs of $35,907.85 within 30 days.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – whether an assignment or a novation – purported assignment of contractual obligations – effect of de-registration by ASIC of builder company – termination notices

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – STATUTORY INSURANCE SCHEME FOR RESIDENTIAL BUILDING WORK – fraud on home-owners by builder – payments by home-owners in reliance on fraudulent misrepresentations by builder – effect on right to recover – termination notices – statutory insurance policy terms – calculation of extent of loss

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where Applicants successful – whether costs should be awarded under s 102 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) – indemnity costs

Queensland Building and Construction Commission Act 1991 (Qld), s 24(1), s 24(1)(b), s 24(1)(c), s 107(1), Schedule 1B, Sub-division 1 of Division 3 of Part 7

Queensland Building and Construction Commission Regulation 2003, Schedule 2C

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 102

Cachia v Hanes (1994) 179 CLR 403

Latoudis v Casey (1990) 170 CLR 534

Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723

Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444

Oshlack v Richmond River Council (1998) 193 CLR 72

APPEARANCES & REPRESENTATION:

 

Applicant:

C Garlick

Respondent:

S Tabaiwalu, in-house solicitor

REASONS FOR DECISION

  1. [1]
    Mr and Mrs Schneider, who live near the Murray River in rural New South Wales, had the misfortune to attend a property spruiking seminar in Victoria. As a result of attending this seminar they decided to purchase a block of land in Roma, Queensland, and have a residence built upon that block.
  1. [2]
    The block of land, Lot 450 Lomandra Avenue, Clearview Rise, Roma, Queensland[1] (the “Land”), was purchased from the Queensland Minister for Economic Development on 3 February 2014 for $122,000.
  2. [3]
    Prior to settlement on the Land, the Schneiders entered into a contract with Contract Build Pty Ltd (“Contract Build”) on 26 November 2013 under which Contract Build was to build a 4-bedroom steel frame and fibre cement cladding house (the “House”) on the Land (the “First Contract”).
  3. [4]
    The agreed price for the construction of the House was $284,900. It was to be paid in stages as follows:
    1. (a)
      Deposit: $14,245
    2. (b)
      Base stage: $42,735
    3. (c)
      Frame stage: 56,980
    4. (d)
      Enclosed stage: $71,225
    5. (e)
      Fixing stage: $56,980
    6. (f)
      Practical completion: $42,735
  4. [5]
    At the date when this contract was entered into Contract Build held a Queensland Building and Construction Commission (QBCC) licence of the appropriate class to build the House.
  5. [6]
    The First Contract was a level 2 regulated domestic building contract within the meaning of those terms in Schedule 1B of the Queensland Building and Construction Commission Act 1991 (QBCC Act).
  6. [7]
    At all relevant times the sole director and secretary of Contract Build was Grant Donald Page. Mr Page appears again later in this narrative.
  7. [8]
    On 5 June 2014 the QBCC issued a Certificate of Insurance under the Queensland Home Warranty Scheme in favour of the Schneiders in respect of the House.[2] This insurance was subject to the terms and conditions expressed in the relevant insurance policy (the “First Insurance Policy”).[3]
  8. [9]
    In accordance with the terms of the agreement with Contract Build the Schneiders paid Contract Build progress payments of $14,245 (on 31 January 2014), $42,735 (on 27 June 2014), and $56,980 (on 3 July 2014), amounting to a total of $113,960. This took the work completed to ‘frame stage’, that is, the site had been prepared, the steel frame of the house had been erected and the timber flooring installed.
  9. [10]
    On 1 August 2014 Contract Build sent a letter to the Schneiders to advise them that the QBCC had suspended the builder’s licence held by Contract Build.
  10. [11]
    On 29 August 2014 the QBCC advised the Schneiders by letter that Contract Build had had its builder’s licence cancelled.
  11. [12]
    On 12 September 2014 Nexus Legal wrote to Contract Build on behalf of the Schneiders advising that the First Contract was terminated forthwith. This letter contained the following statement:

In reliance on clause 26.1 of the General Conditions for the reasons set out in the above Default, the Owner hereby terminates the Contract and relies on clause 26.3 of the General Terms in addition and without limitation to any other rights, claims or causes of action whether past, present or future under the Contract, Statutory or Common Law.

  1. [13]
    On or about 11 September 2014 the Schneiders made a written complaint to the QBCC containing details of the default by Contract Build. This notice was sufficient to constitute a claim under the First Insurance Policy
  2. [14]
    The Federal Court of Australia, Brisbane Registry, appointed a liquidator, David Clout & Associates, to Contract Build on 17 October 2014.[4]
  3. [15]
    By email dated 30 October 2014 the Schneiders advised the QBCC that the First Contract had been assigned to another builder to complete construction of the House, with the email also implying that the insurance claim against Contract Build in terms of the First Insurance Policy would not be pursued.

Purported Assignment of the First Contract

  1. [16]
    By an agreement dated 16 October 2014 (which, it should be noted, was one day before the liquidator was appointed to Contract Build) Contract Build purported to assign all its ‘… legal and equitable rights contained in the [First Contract] to [Line Constructions Pty Ltd] …’ (the “First Assignment”).[5]
  2. [17]
    By a similar agreement, also dated 16 October 2014, Contract Build purported to assign all its ‘… legal and equitable rights contained in the [First Contract] to [Australian Master Homes Pty Ltd] …’ (the “Second Assignment”).[6]
  3. [18]
    In each case the purported assignment stated that the ‘Unpaid Draw Down set out in [First Contract]’ was $170,940.
  4. [19]
    Grant Donald Page, who was the sole director and secretary of Contract Build, promoted these assignments to the Schneiders, while Yvonne Leigh Page, the wife of Grant Donald Page, is listed as a director of Line Constructions Pty Ltd (“Line Constructions”).
  5. [20]
    It also appears that the nominee licence holder of both Line Constructions and Master Homes was Elliott John Coulson, a long-standing friend of Grant Donald Page.
  6. [21]
    The Schneiders were persuaded to enter into these assignments without having had disclosed to them that there were evident personal relationships between Grant Donald Page and the other officers and directors of Line Constructions and Master Homes.
  7. [22]
    It also appears that, notwithstanding the failure of the First Contract, the Schneiders either did not check the bona fides of either Line Constructions or Master Homes, or were prepared to continue to deal with Mr Page.
  8. [23]
    One of the effects of the First Assignment was to revive the First Contract. It did this by purporting to have the Schneiders withdraw ‘… any notice of termination of the Construction Contract issued by or on behalf of the [Schneiders] and confirms that the Construction Contract is valid and enforceable’,[7] and ‘For the Assignment of the Construction Contract and this Deed of Assignment to take full force and effect, the [Schneiders] by execution hereof formally consents to this Deed of Assignment’.[8]
  9. [24]
    Since Contract Build was placed in liquidation the day following the First Assignment it has no further effective role to play. The First Assignment has the practical effect of establishing a legal relationship involving just the Schneiders and Line Constructions. This is referred to hereon as the “Second Contract”.
  10. [25]
    Apart from entering into the Second Assignment with the Schneiders, the role of Master Homes in this series of fraudulent transactions appears to have progressed no further, and Master Homes becomes irrelevant in this matter. There is no evidence that Master Homes ever made a claim arising from the Second Assignment nor was it ever paid anything under the terms of the resulting agreement. The record discloses that Master Homes ACN 169 665 767 was deregistered on 15 October 2017.[9]
  11. [26]
    On 21 May 2015 the QBCC issued a Certificate of Insurance (the “Second Insurance Policy”) in favour of the Schneiders as a result of the Second Contract involving Line Constructions undertaking to complete construction of the House.[10]
  12. [27]
    In reliance on the Second Contract, Line Constructions sent the Schneiders photographs showing apparent progress on construction of the House. In accordance with the terms of the Second Contract the Schneiders duly arranged payment, in the following amounts:
    1. (a)
      $71,225 on 17 June 2015 (based on completion to Enclosed Stage); and
    2. (b)
      $56,980 on 11 September 2015 (based on completion to Fixing Stage).
  13. [28]
    Unfortunately for the Schneiders, who were some 1,300km from the Land and did not visit the property, Line Constructions had done no work whatsoever on the House and had made fraudulent claims. The photographs describing progress on the House sent by Line Constructions to the Schneiders showed a different property.
  14. [29]
    Line Constructions was de-registered by ASIC on 9 December 2015.
  15. [30]
    On or about 18 February 2016 the Schneiders became aware of the fraud perpetrated by Line Constructions, Grant Donald Page and others and subsequently made a complaint to the Queensland Police.[11]
  16. [31]
    On or about 15 August 2016 the Schneiders submitted a complaint to the QBCC concerning Line Constructions. This complaint was sufficient to commence a claim under the Second Insurance Policy.
  17. [32]
    The Schneiders issued a Termination Notice dated 16 August 2016 on Line Constructions in respect of the Second Contract. While this Termination Notice was issued after Line Constructions no longer existed – it was de-registered by ASIC on 9 December 2015 – ultimately this has no effect on the Schneiders’ remedy for the reasons explained below.

Assessment by the QBCC of the Schneiders’ insurance claim

  1. [33]
    In a memorandum dated 26 October 2016 to the QBCC Director of Insurance Services, Katrina Ennor, Assessment Officer, submitted a detailed assessment of the facts of this case and recommended that the claim by the Schneiders be admitted. In her recommendations she said:

As the owners were under the impression they assigned over their Building and Construction Contract to Line Constructions to complete a new dwelling at 6 Lomandra Avenue, Roma … QBCC has established that Grant Donald Page has fraudulently misrepresented himself as being an organisational representative of Line Constructions Pty Ltd

Therefore I would recommend for QBCC Home Warranty Insurance Policy to be raised for the purposes of a claim under Part 1 – Non-Completion – Completion of the QBCC Home Warranty Scheme against Grant Donald Page. Grant Donald Page is not licensed with the QBCC, therefore I would also recommend that a request to create a new policy for an unlicensed participant in this case.

  1. [34]
    However, by 10 November 2016 the QBCC wrote to the Schneiders declining their claim under the insurance policy on two grounds:
    1. (a)
      That the Schneiders had not terminated the contract within the two year period in which a notice of default had to be lodged by a claimant; and
    2. (b)
      That the Schneiders had made pre-payments, that is, payments for contracted works before they were undertaken.
  2. [35]
    In this letter to the Schneiders the QBCC expressed the view that the First Contract, the First Assignment, and the Second Contract were one continuous transaction - that the contract started on 23 November 2013, was assigned by the Schneiders on 16 October 2014, and continued in force until finally terminated on 16 August 2016. On this basis the insurance claim had been made out of time, being later than two years after the contract commenced.
  3. [36]
    Some time after the decision by the QBCC communicated in the letter of 10 November 2016 the Schneiders made a further written representation to the QBCC which considered the further representations and, by letter dated 19 December 2016, confirmed its earlier decision to reject the Schneiders’ insurance claim.
  4. [37]
    In respect of its conclusion that the Schneiders’ claim was out of time the QBCC in its letter of 19 December 2016 said:

It is the QBCC’s opinion that even though you issued a Notice of Default and Notice of Termination Letter dated 12 September 2014 to terminate the contract with Contract Build Pty Ltd, you continued to affirm the contract after the purported termination by:

  1. a)
    entering into a deed of assignment;
  2. b)
    continuing to insist on performance of the contract; and
  3. c)
    making payments to Line Construction for performance of the contract.

… the assignment of the Contract does not create a new Contract. By continuing to make payments after the purported Contract Build Pty Ltd Termination, and corresponding with Line Constructions regarding performance of the contract works, these actions were inconsistent with a termination of the contract. Therefore it is QBCC’s opinion that the Contract was not validly terminated pursuant to the Contract Build Pty Ltd Termination.

It is also QBCC’s opinion of the existence of a prepayment need only be based on its reasonable belief that the Insured has paid the contractor any moneys for the contracted works before they become due under the contract.

In addition, QBCC notes that you have made stage payments in accordance with Line Constructions Pty Ltd Tax Invoices for Enclosed Stage and Fixing Stage. However, a physical inspection by yourself identified that “… only a frame stands with a wooden floor in a state of severe deterioration …” at 6 Lomandra Avenue, Roma. In accordance with clause 1.6(b) of the Insurance Policy Conditions, it has been determined that you have made payments for contracted works under the contract before being undertaken.

  1. [38]
    By letter dated 9 January 2017 the Schneiders again appealed to the QBCC to reconsider its decision to decline the Schneiders the benefit of the Insurance Policies. The QBCC treated this request by the Schneiders as a request for an internal review to be conducted by the QBCC (the Internal Review).[12]
  2. [39]
    This Internal Review was conducted by the Acting Manager Internal Review Unit, Jonathan Pacey, who disallowed the claim, and advised the Schneiders that they were entitled to bring the matter before this Tribunal.
  3. [40]
    On 27 February 2017 the Schneiders filed an Application to review the decision of the QBCC to reject their insurance claim.

Can a notice of termination be withdrawn?

  1. [41]
    When the breach of the First Contract by Contract Build occurred the Schneiders had the option of affirming the contract or terminating it. The Schneiders made their election on 12 September 2014 and terminated the contract.
  2. [42]
    The QBCC in its letter of 19 December 2016 stated that the Schneiders had ‘affirmed’ the First Contract by entering into a deed of assignment, continuing to insist on performance of the contract, and making payments to Line Constructions for performance of the contract.
  3. [43]
    Can a contract that has been validly terminated be revived or affirmed? As Neil and Chin explain:[13]

The common law principle is that, because giving a valid notice of termination is a unilateral act, it takes effect in accordance with its terms. This principle may be modified by statute. Where it applies, the common law principle means that notice does not depend for its effect on acceptance by the person to whom it is directed, and may not be unilaterally withdrawn once received. Nor can a second, and different, notice be given; the right to terminate a contract by the giving of notice, once exercised, is exhausted.

  1. [44]
    Cheshire and Fifoot state the law as being:[14]

An election to terminate for breach puts an end to the contract from the time of its communication. Thereafter, the breach cannot be cured or retracted. The contract cannot be revived except by the consent of the parties.[15]

Both the terminating party and the party in breach are released from all further performance of the contract.

  1. [45]
    In the case of Ogle v Comboyuro Investments Pty Ltd referred to in Cheshire and Fifoot, Barwick CJ said:

It is also a consequence of the acceptance of the repudiation that the contract, being duly terminated, may not be revived except by consent of the parties. It will not be revived, if duly terminated by the unilateral action of the promise.

  1. [46]
    It is not clear in this quote whether Barwick CJ is suggesting that, upon consent of the parties to revive the contract, the revival of the contract in question gives new life to the old contract, or whether it is a new contract containing the same terms as the earlier contract.
  2. [47]
    Macken’s Law of Employment deals with the case of mutual agreement to the withdrawal of a valid notice of termination:[16]

If a notice of termination is withdrawn by agreement, a question arises whether the employment continues under the old contract or under a new contract. There seems to be no clear authority on this, but the better view is that the original contract continues. Of course, if there is more than a withdrawal of notice, and the employee continues to work, but under changed conditions, such as different duties, salary, etc, there may be a new contract. But its existence is explained not by operation of the consensual withdrawal but by other principles of contract law.

  1. [48]
    The law concerning whether a validly terminated contract may be revived is sufficiently clear: such a contract may be revived by agreement among the parties to the original contract. What is not clear is whether the contract so revived gives new life to the formerly terminated contract or revives the terms of the earlier contract as a new contract.
  2. [49]
    In this case the First Contract was terminated on 12 September 2014, and the agreement to revive this contract was made on 16 October 2014, the relevant term in the First Assignment, clause 33, being:

By execution hereof the Owner [the Schneiders] withdraw any notice of termination of the Construction Contract [the First Contract] issued by or on behalf of the Owner and confirms that the Construction Contract is valid and enforceable.

  1. [50]
    There can be little doubt that the First Contract did not remain on foot during the period between its termination and revival. And, necessarily, for the contract to have been revived, it had first to have been terminated. So, for a period of not fewer than 33 days, the First Contract was not on foot and its primary obligations could not be enforced.
  2. [51]
    It is evident from this analysis that, if there were nothing more:
    1. (a)
      the First Contract had been validly terminated by the Schneiders on 12 September 2014. By that date the Schneiders had paid Contract Build $113,960; and
    2. (b)
      the First Contract was revived, mutatis mutandis, by mutual agreement among the parties on 16 October 2014.
  3. [52]
    The proper view on the effect of reviving a contract is expressed in Carter on Contract where it is stated:[17]

Once the promisee has exercised a right to terminate and the parties have been discharged, the promisee cannot go back on the election. Neither party is permitted to reinstate the contractual obligations of the parties unilaterally. The parties may together reach an agreement for reinstatement, but the agreement involves the formation of a new contract.

  1. [53]
    The conclusion of Rich, Dixon and Evatt JJ concerning an election to revive a contract after it had been lawfully ended by one of the parties was:[18]

But an election once made by the Society and communicated to the assured is final. If an intention to disaffirm is thus evinced, the insurance is at an end, and its revival or reinstatement involves a new contract.

  1. [54]
    Although some authorities may be equivocal, the proper law in this case is that once a contract has been lawfully terminated by one party the contract is at an end and any agreement among the parties to revive it creates a new contract.
  2. [55]
    The contract between the Schneiders and Contract Build was terminated on and from 12 September 2014. Any revival of the contract between them was a new contract and did not alter the fact that the contract had been terminated. The purported ‘assignment’ of the contract had no effect on the fact of its termination.
  3. [56]
    The implications of these conclusions upon the Schneiders’ entitlement to indemnity from the Insurance Policies are examined later. However, before turning to this issue, an examination of the terms of the purported assignment of the First Contract provides further insight concerning whether the First Contract could be lawfully assigned on the day on which it purportedly occurred.

‘Assignment’ of the First Contract

  1. [57]
    The termination of the First Contract with Contract Build was effective on and from 12 September 2014. In the absence of any other actions, this contract was terminated apart from any secondary rights arising from its termination.
  2. [58]
    In order to ‘assign’ the First Contract (or so much of it as could be assigned), the First Contract had to be on foot. This could only be achieved if the termination was made ineffective.
  3. [59]
    The First Assignment purports to achieve this in cl 33 of the First Assignment, which says:

By execution hereof the Owner [the Schneiders] withdraw any notice of termination of the Construction Contract [the First Contract] issued by or on behalf of the Owner and confirms that the Construction Contract is valid and enforceable.

  1. [60]
    The Schneiders, Contract Build, and Line Constructions all appear to have executed this agreement on 16 October 2014.
  2. [61]
    On its face the First Assignment was effective from 16 October 2014, the day before Contract Build was placed in liquidation. There is no evidence available to the Tribunal that contradicts this conclusion, while the letter from the Schneiders to the QBCC dated 9 January 2017 requesting an Internal Review acknowledges the date as correct. On the balance of probabilities the First Assignment was effective on and from 16 October 2014.
  3. [62]
    The recitals in the First Assignment purport to assign ‘the Construction Contract from the Assignor to the Assignee’.[19] An assignment is not capable of removing contracting parties, but it may confer on a new party to the contract certain rights arising under the contract. This is recognised in the operative terms of the First Assignment.
  4. [63]
    First, clause 1 of the First Assignment says:

The Assignor [Contract Build] as the legal and beneficial owner of the Construction Contract [the First Contract] hereby absolutely assigns and transfers all of the Assignor’s legal and equitable rights contained in the Construction Contract to the Assignee including but not limited to the right to receive monies from the Owner [the Schneiders] or the Owner’s Financier for carrying out the Builders Work pursuant to the Construction Contract.

  1. [64]
    An assignment may assign the contractual rights of a party to another party to the assignment, as clause 1 appears to do, if permitted under the contract and all relevant parties agree. However, at the same time, clause 25 of the First Assignment appears to record an agreement between Contract Build and Line Constructions whereby Line Constructions undertakes to complete the remaining obligations of Contract Build under the First Contract; it says:

The Builders [being Contract Build and Line Constructions] have agreed that the net effect of the assignment is that the Assignee will complete the Construction Contract and carry out the works required to be undertaken by the Assignor in consideration for the payments set out in the Deed of Assignment.

  1. [65]
    Contract Build and Line Constructions may have made a separate agreement between themselves as contemplated here by which Line Constructions undertakes all the obligations of Contract Build, the details of which are not disclosed and appear unknown to the Schneiders, but there is no evidence of such a separate agreement.
  2. [66]
    In order to become effective the First Assignment was subject to several further conditions precedent including the consent of the Schneiders. The evidence suggests that the conditions precedent, including the consent of the Schneiders, were satisfied. Without more, it may appear that the Assignment is effective in creating a new set of rights and obligations between the Schneiders and Line Constructions (the Second Contract). However, there are two issues that need to be considered.
  3. [67]
    The first issue is whether the purported First Assignment was, indeed, an assignment, or whether it constituted a novation of the First Contract.
  4. [68]
    The second issue is, assuming that the First Contract had been revived by the terms of the First Assignment, had the Schneiders satisfied the terms and requirements of the Insurance Policies[20] such that a valid claim could be made upon it and sustained, irrespective of the ‘assignment’ of the First Contract on 16 October 2014 and, if they had, did it give rise to any right to indemnity?
  5. [69]
    There is also the issue of whether, if the First Assignment was valid on its face, were the Schneiders induced to enter this agreement as a result of fraudulent misrepresentation on the part of Grant Donald Page or some other person, would this vitiate the First Assignment and would this, in turn, give rise to a valid claim under the First Insurance Policy? Because the Schneiders are entitled to indemnity under the Insurance Policies for other reasons this issue is not examined further.

An assignment or a novation?

  1. [70]
    The First Assignment, if it is an assignment, could not transfer the obligations of Contract Build under the First Contract to Line Constructions. As Greig and Davis explain:[21]

Assignment is the means by which one party to a contract may transfer his rights thereunder to another. It is a transaction solely between the person transferring the right (the assignor or creditor) and the third party to whom the right is assigned (the assignee), and does not require the assent or co-operation of the other party to the contract.

  1. [71]
    Because the First Contract had been terminated by the Schneiders no rights accruing under the First Contract to Contract Build could be transferred to anybody unless the First Contract was revived. To enable this to happen it was necessary for the Schneiders to agree to withdraw the termination, and thus they had to be a party to the First Assignment, if it was an assignment, but only in respect of reviving the First Contract. Their consent was unnecessary in respect of any other part of the transaction, if it was an assignment.
  2. [72]
    But the tenor of the First Assignment is to transfer all rights and obligations from Contract Build to Line Constructions. This is evident in Recital P of the First Assignment, which says:

… the Owner [the Schneiders] consents to the assignment of the Construction Contract [the First Contract] from the Assignor to the Assignee on the terms and condition(s) set out in the Deed of Assignment.

  1. [73]
    The intent of this provision is to have the Schneiders consent to the assignment of the First Contract in its entirety to Line Constructions, not merely the rights of Contract Build arising under the First Contract. There is an evident intent to place all rights and obligations previously held by or owed to Contract Build with Line Constructions.
  2. [74]
    In some of its terms the First Assignment purports to transfer only the rights in the First Contract from Contract Build to Line Constructions, but then confuses this in other terms by referring to assignment of the Construction Contract itself (not simply the rights of Contract Build under the Construction Contract). This could give rise to some degree of uncertainty whether the First Assignment is an assignment or a novation. But there are two factors that make it clear that the intent of the parties, and the tenor of the First Assignment, was that of a novation.
  3. [75]
    First, in Annexure “A” of the First Assignment, headed NOTICE IN WRITING OF ASSIGNMENT OF CONSTRUCTION CONTRACT, the Schneiders were advised of the following:

THE ASSIGNOR HEREBY hives [sic: gives] you written notice that by Deed of Assignment dated Thursday 16th October 2014 the Assignor [Contract Build] passed, assigned and transferred absolutely the whole of the Assignor’s rights under the Construction Contract to Line Constructions Pty Ltd (hereinafter called the “Assignee”) with the intent that the Assignee is now the owner of the Assignor’s right under the Construction Contract and that payment of the monies due under the Construction Contract and all other rights and obligations under the Construction Contract vests in in the Assignee. The Assignee now has all rights and other remedies in respect of the Construction Contract including the right to enforce all the terms and obligations of the Assignor against you the Owner and with full power to give you the Owner a good discharge for the Owner’s obligations under the Construction Contract without the concurrence of the Assignor. [my added italics]

  1. [76]
    Had the First Assignment been effective as an assignment the obligations of Contract Build would have remained with Contract Build. But Contract Build was no longer a licenced builder; it had had its licence cancelled by the QBCC on 29 August 2014. It was unable to complete its obligations under the First Contract so, if the House was to be completed, it had to be completed by another licenced builder.
  2. [77]
    The only option open to Contract Build to meet its obligations under the First Contract was to have these obligations completed by another party, in this case Line Constructions.
  3. [78]
    On the issue of novation Greig and Davis state the law as being:[22]

Novation occurs when a contract between A and B is discharged and replaced by a new contract. Such a contract might be between the original parties, or involve a new party, for example, between A and C. The effect of the latter transaction can thus be that a right owing by A to B is thereafter owed to C, or that a liability that B was under to A is replaced by the same liability from C to A.

  1. [79]
    If Contract Build had assigned only its rights to Line Constructions under a valid assignment, the resulting arrangement was incapable of being performed because Contract Build was legally incapable of completing its obligations because it no longer held a valid builder’s licence. The only way for the House to be completed was for Contract Build to have all its all rights and obligations under the contract assumed by Line Constructions, meaning that the arrangement had to involve the novation of the First Contract, mutatis mutandis, to Line Constructions.
  2. [80]
    I conclude that the First Assignment was, in law, a novation of the First Contract in which Line Constructions stood in the place of Contract Build for the purpose of completing the First Contract. Being a novation, this new contract arose on 16 October 2014.
  3. [81]
    This also means that the First Contract, which was revived by agreement between the parties on 16 October 2014, also ended on 16 October 2014 by virtue of the novation. In fact, the revival of the First Contract was nothing but an artifice to permit the novation to occur.
  4. [82]
    As a result of the novation of the First Contract by the First Assignment, the Schneiders entered a new contract with Line Constructions on the same terms, mutatis mutandis, as the First Contract, namely, the Second Contract. The Second Contract commenced on 16 October 2014.
  5. [83]
    On 21 May 2015 the QBCC issued a Confirmation of Insurance in respect of the work to be undertaken by Line Constructions to build the House under the Second Contract. The ‘Notified Contract Value’ is cited in the letter as $284,900.

Consideration of the Schneiders’ claim by the QBCC

  1. [84]
    An assessment of the complaint by the Schneiders and their claim upon the Insurance Policy was assessed by the QBCC, Katrina Ennor, Insurance Assessment Officer, on 13 October 2016. Ms Ennor concluded:

I am of the opinion that the insured has fulfilled the necessary requirements for a claim under Part 1 – Non-Completion-Completion of the QBCC Home Warranty Scheme.[23]

  1. [85]
    This included her assessment under clause 1.7 of the First Insurance Policy that the owner had terminated the contract with the contractor within 2 years of the date of the payment of the insurance premium or contract date, whichever is the earlier.
  2. [86]
    Despite this and the QBCC internal memorandum prepared by Katrina Ennor on 26 October 2016 recommending that the Schneiders’ insurance claim be admitted (as explained in paragraph [33]), on 19 December 2016 the QBCC advised the Schneiders that their claim under the under the Second Insurance Policy had been declined.
  3. [87]
    On or about 9 January 2017 the Schneiders sought an Internal Review by the QBCC of the decision by Ms Ennor to decline the Schneiders’ claim. This was conducted by Mr Jonathan Pacey, acting Manager Internal Review for the QBCC.
  4. [88]
    Mr Pacey made the decision to uphold the QBCC’s earlier decision. By letter dated 3 February 2017 he informed the Schneiders that: “I have decided to disallow the claim in full on the basis that the contract with the contractor was not properly terminated.”
  5. [89]
    In his decision Mr Pacey goes on to say:

… even if I were to accept that you had properly terminated your contract with Line Constructions Pty Ltd on 16 August 2016, I would nevertheless have to decline your claim on the basis that the cover has expired …

  1. [90]
    He goes on to cite the term in the insurance contract that says:

The QBCC is only liable for loss under this Part where the insured has properly terminated the contract with the contractor within 2 years from the date of payment of the insurance premium or the date of entering into the contract (whichever is the earlier).

  1. [91]
    In his letter Mr Pacey says that the contract was executed on 26 November 2013 and that the two years ran from that date, with the assignment not constituting a new contract.
  2. [92]
    The fact that Contract Build’s licence had been terminated by the QBCC meant that Contract Build could not complete the house it had contracted to build for the Schneiders. In turn, this would appear to activate the entitlement of the Schneiders to make a valid claim against the Insurance Policy.
  3. [93]
    Under the terms of the Insurance Policy, the QBCC will pay for loss arising from, among other things, non-completion of the building.
  4. [94]
    Under clause 1.7 of the Insurance Policy:

The QBCC is only liable to pay for loss under this Part[24] where the Insured has properly terminated the contract with the contractor within 2 years from the date of payment of the insurance premium or the date of entering the contract (whichever is the earlier). [italics in the original].

  1. [95]
    As the earlier analysis shows, the contract with Contract Build was terminated on 12 September 2014. The contract with Line Constructions was a new contract that commenced on 16 October 2014.
  2. [96]
    The premium for the second Insurance Policy was paid to the QBCC on 21 May 2015 and a new policy was issued.
  3. [97]
    The Schneiders formally terminated the Second Contract on 16 August 2016.[25] The termination of the second contract occurred within two years of the earlier of entering the Second Contract and payment of the premium on behalf of Line Constructions. The Schneiders have, therefore, satisfied the terms in the Second Insurance Policy requiring that the Second Contract be terminated within two years.
  4. [98]
    The following facts are also found to apply at the relevant times:
    1. (a)
      The Schneiders had a contract, the Second Contract, with Line Constructions, for Line Constructions to complete the House;
    2. (b)
      Line Constructions, was a builder appropriately licenced by the QBCC for the type of work being undertaken under the Second Contract;
    3. (c)
      The Schneiders made payments to Line Constructions for work they had been told, and they honestly believed, had been completed;
    4. (d)
      Line Constructions had paid, or arranged payment of, the premium under the terms of the statutory insurance scheme and the Second Insurance Policy had been issued in favour of the Schneiders; and
    5. (e)
      Line Constructions failed to complete the building,

so that, as a result, the Schneiders are entitled to indemnity under the Second Insurance Policy.[26]

  1. [99]
    The fact that the Schneiders made a claim on the Second Insurance Policy has not been denied by the QBCC and, in fact, by letter to the Schneiders dated 11 October 2016, Katrina Ennor of the QBCC advised that the Schneiders’ complaint has been referred to ‘… Insurance Services for an assessment to your entitlement to a claim under the QBCC Home Warranty Insurance Scheme.”
  2. [100]
    There remain two issues that need to be considered before it is possible to conclude that the Schneiders are entitled to a remedy or as to the quantum of any remedy:
    1. (a)
      the QBCC letter dated 10 November 2016 declined the Schneiders’ claim also on the ground that the Schneiders had made payments for contracted works before they were undertaken; and
    2. (b)
      the QBCC assertion that the Schneiders failed to take adequate precautions to prevent damage to the timber flooring that had been constructed up to frame stage.[27]
  3. [101]
    The Schneiders authorised payments to Line Constructions under the Second Contract on two occasions, totalling $128,205[28] when, in fact, no work had been done by Line Constructions. The QBCC characterised these payments as pre-payments.
  4. [102]
    Clause 1.6(b) of the Second Insurance Policy deals with pre-payments; it says:

Where in the opinion of the QBCC, the Insured pays to or on behalf of the contractor any moneys for the contracted works before they become due (“prepayment”), the QBCC will reduce the amount payable under this policy by the value of that prepayment. (The value of the prepayment is the QBCC’s assessment of the value of the incomplete work in the stage of the contract for which the prepayment was made).

  1. [103]
    The payments made to Line Constructions on behalf of the Schneiders were not prepayments. They were payments made in reliance on false information and fraudulent invoices created and sent to the Schneiders by Line Constructions. The two payments made by the Schneiders to Line Constructions were ‘due’ at the time they were made, albeit that they were made based on false information that was created by Line Constructions.
  2. [104]
    The Schneiders lived 1,300km away from the construction site and could not reasonably perform a personal inspection. They were sent photographs by Line Constructions supposedly showing progress to the extent claimed, and received invoices in accordance with the terms of the Second Contract. They were entitled to, and did, rely on the information supplied and representations made by Line Constructions.
  3. [105]
    It is not open to the QBCC to deny the Schneiders’ insurance claim on the basis of prepayment.
  4. [106]
    The evidence discloses that, as a result of the effluxion of time, the timber flooring that had been constructed as part of the House up to frame stage had deteriorated to the extent that it has become no longer useable and may need to be replaced. There may also be deterioration of the house frame and other parts of the House that require remediation before construction of the House can be continued.[29] The QBCC asserts that these problems arose because of inaction by the Schneiders in protecting the extant construction.
  5. [107]
    However, the Schneiders relied upon Contract Build in the first instance to construct the whole of the House. Had Contract Build done this, the deterioration of the floor and other parts would almost certainly never have become an issue.
  6. [108]
    When Contract Build could not complete the task, the Schneiders believed that they had engaged Line Constructions to complete construction of the House promptly. Because of the fraud perpetrated by the builders involved, this did not occur.
  7. [109]
    A beneficiary under the insurance policy of the statutory insurance scheme is entitled, under Part 4 of the policy, to indemnity for ‘defective construction’ arising in residential construction work that is primary building work.
  8. [110]
    The floor and, possibly, other extant work on the House has become defective construction as a result of the failure of either or both Contract Build and Line Constructions to complete the premises as promised. The only practical way that the Schneiders could have protected the flooring was by the construction of, in the first instance, a roof, which is what they believed, after Contract Build failed, they had contracted Line Constructions to build.
  9. [111]
    Between when the Schneiders became aware of the fraud upon them and the date of this hearing it would be unreasonable to expect the Schneiders to undertake some limited construction for the purposes simply of preserving the timber floor and the steel building frame, even assuming they had the financial ability to do so.
  10. [112]
    Whether the deterioration of the extant work arose as a result of the conduct of Contract Build or Line Constructions, the Schneiders would be entitled to compensation under either the First Insurance Policy (as it concerns Contract Build) or the Second Insurance Policy (as it concerns Line Constructions).
  11. [113]
    The deterioration of the floor and, possibly, the steel frame and other parts of the extant House constitutes ‘defective construction’ within the meaning of that term under the Insurance Policies, and the Schneiders are entitled to indemnity for the associated loss.

Decisions by the QBCC

  1. [114]
    The QBCC has made at least four decisions relevant to this matter:
    1. (a)
      The decision to deny the Schneiders’ insurance claim on 10 November 2016;
    2. (b)
      The further decision to deny the Schneiders’ insurance claim on 19 November 2016;
    3. (c)
      The decision of the Internal Review on 3 February 2017 to deny the Schneiders’ insurance claim; and
    4. (d)
      The reconsidered decision of 16 May 2018 following the Tribunal’s Direction issued on 11 April 2018.
  2. [115]
    For the elimination of doubt, each of these four decisions is hereby set aside.
  3. [116]
    The Tribunal finds that the Applicants are entitled to compensation arising from the Insurance Policies under the Home Warranty Scheme in respect of money paid by them to Line Constructions relating to the enclosed stage and the fixing stage of the House, and for the remediation of the defective construction apparent in the extant House sufficient to bring it to a proper and sound condition.

Calculating the loss suffered by the Schneiders

  1. [117]
    Clause 1.5 of the Second Insurance Policy deals with payments that may be made under the insurance policy where the works have commenced, as they had in this case. It says:

Subject to Parts 6, 7 and 8 of this policy, where the contractor has commenced the contracted works in accordance with clause 1.3, the total amount of the payment under this Part is limited to the total of:

  1. (a)
    the QBCC’s assessment of the reasonable cost of completing the contract less the Insured’s remaining liability under the contract (exclusive of any amount by way of liquidated damages or damages for delay) at the termination of the contract
  1. [118]
    The relevant portions of Parts 6, 7 and 8 of the policy applicable this instance are:
    1. (a)
      The maximum liability of the QBCC is $200,000;
    2. (b)
      The Insured must act in good faith; and
    3. (c)
      The Insured must give the contractor the opportunity to remedy any defective construction.
  2. [119]
    The general limitation of liability of $200,000 should be sufficient to compensate the Schneiders for their loss.
  3. [120]
    The Schneiders have acted in good faith throughout the time covered by the events described in this decision. They are responsible for no tangible contribution to the losses they have suffered.
  4. [121]
    Given that each of Contract Build and Line Constructions are no longer trading, giving either contractor the option to remedy any defective construction is not possible.
  5. [122]
    The Schneiders presently own a building that has been completed to frame stage, but which now suffers from defective construction. They have suffered loss arising from the fraud perpetrated upon them to the extent of the payments of $128,205 they made for construction of the House from frame stage to fixing stage. $128,205 is the sum that should permit them to complete the House to fixing stage, which is the position they would be in had Line Constructions completed the work to that stage as provided in the Second Contract, and for which the Schneiders had paid.
  6. [123]
    In order to bring the House back to frame stage sufficient to continue construction, the Schneiders have to undertake some remediation of the defective work. There has been no detail provided to the Tribunal in respect of what this remediation would cost. The Respondent is liable for the cost of the necessary remediation. The parties will be directed to make submissions to the Tribunal in regard to the monetary amount needed to complete this remediation.
  7. [124]
    After the date for submissions in respect of remediation of the House the Tribunal will make further Orders in terms of compensation and costs as appear necessary or expedient.
  8. [125]
    I am satisfied that under the terms of the statutory insurance scheme policies written in favour of the Applicants the Respondent should pay the Applicants $128,205 plus an amount needed to repair the defective work now present in the House so that it may be completed to fixing stage to the standard contemplated by the Second Contract.

Costs

  1. [126]
    The Applicants in this matter seek their total costs of $59,398.35 up to the date of hearing plus $2,700 for the hearing (excluding GST).
  2. [127]
    The Applicants make a number of points they say are relevant to a decision to award costs in their favour in this matter:
    1. (a)
      Disadvantage caused to the Applicants because of the Respondent’s conduct including vexatiously conducting the proceeding, and deliberate conduct adversely affecting the Applicants;
    2. (b)
      The Respondent’s refusal to consider a settlement offer from the Applicants;
    3. (c)
      The Respondent inviting the Applicants to wait for a settlement offer from the Respondent – an offer that never came;
    4. (d)
      The Respondent negotiating otherwise than in good faith; and
    5. (e)
      The Respondent having several lawyers handle the matter.
  3. [128]
    The Respondent prepared a lengthy submission dated 13 June 2018 seeking to have each party bear its own costs or, if the Tribunal is minded to award costs, not to grant the indemnity costs sought by the Applicants but to prepare a proper assessment of the Applicants’ reasonable and necessary costs.
  4. [129]
    The starting rule concerning costs in this Tribunal is found in s 100 of the Queensland Civil and Administrative Tribunal Act 2002 (QCAT Act), that parties should bear their own costs in proceedings.
  5. [130]
    Section 102 of the QCAT Act sets out the basis on which this Tribunal may award costs in a matter:
  1. (1)
    The tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the tribunal considers the interests of justice require it to make the order.
  2. (3)
    In deciding whether to award costs under subsection (1) or (2) the tribunal may have regard to the following—
  1. (a)
    whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g);
  2. (b)
    the nature and complexity of the dispute the subject of the proceeding;
  3. (c)
    the relative strengths of the claims made by each of the parties to the proceeding;
  4. (d)
    for a proceeding for the review of a reviewable decision—
  1. (i)
    whether the applicant was afforded natural justice by the decision-maker for the decision; and
  2. (ii)
    whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits;
  1. (e)
    the financial circumstances of the parties to the proceeding;
  2. (f)
    anything else the tribunal considers relevant.
  1. [131]
    It is a well-established principle enunciated by the High Court that costs are not awarded to punish an unsuccessful party.[30] The primary purpose of an award of costs is to indemnify the successful party.
  2. [132]
    The Applicants have succeeded in their application, and costs will normally follow the event. There is no reason not to apply that rule here.
  3. [133]
    In its submission dated 20 September 2018 the QBCC raised issues relevant to its conduct as a statutory agency and which may be relevant to a consideration of costs. In particular it said:
  1. The Respondent submits that its statutory task in this matter was to determine whether the Applicants had made a valid claim under the policy governing the Insurance scheme. The Respondent submits that while it ensures that homeowners are indemnified if they come within the policy, the Respondent also has to act with reasonable care as it is administering a public fund and the potential consequences to the builder if a claim is made.
  1. The Respondent submits that its conduct in this proceeding was consistent with the performance of its statutory functions and obligations to the Tribunal.
  1. [134]
    However, this matter is one where the QBCC is exercising not so much its statutory functions as regulator of the building and construction industry, but as manager of a statutory insurance fund. In exercising this function the obligation of the QBCC is to assess the entitlement of the insured to indemnity, that is, to assess whether an insurable incident has occurred, and if it has, to compensate the insured to the degree permitted under the terms of the insurance policy described in detail in Schedule 2C of the Queensland Building and Construction Commission Regulation 2003 and the terms of the Second Insurance Policy.

Has the Respondent unnecessarily disadvantaged the Applicants?

  1. [135]
    There is some evidence that the Applicants have been disadvantaged by the conduct of the Respondent. In this regard is the indication of a possible settlement offer from the Respondent that did not occur, and the handling of the matter by several lawyers within the Respondent leading to some possible delay, but none of these is sufficient by itself or collectively to give rise to a conclusion that such conduct by the Respondent merits criticism.

Nature and complexity of the dispute

  1. [136]
    The issues that this Tribunal has had to consider in this matter make it one that was likely to, and in fact did, involve complex questions of fact and law. This fact added to the costs of both parties, but the Applicants are in a worse position to bear the resulting costs, while the Respondent is familiar with the relevant law and was, until the Applicants engaged a lawyer, in a better position to interpret the law.
  2. [137]
    The Schneiders are people who have no apparent knowledge of legal matters. In dealing with a well-resourced government agency that specialises in matters concerning building and construction and the associated laws, in this case the QBCC, they had little choice but to engage a lawyer to assist. For example, in the hearing of this matter before the Tribunal, the QBCC had the benefit of a lawyer to present its case and, had the Schneiders not engaged a lawyer, they would have been at a clear disadvantage. Their lawyer has presented their case before the QBCC and this Tribunal in a way that an unrepresented party could not.

Relative strengths of the claims made by each of the parties

  1. [138]
    In its dealings with the Schneiders the QBCC appears to have been dismissive of many of the relevant arguments put before it, and not to have given reasonable and sufficient consideration to some of the key issues raised by the Schneiders’ lawyer. In particular, the failure by the QBCC to question whether Contract Build had been entitled to transfer its rights and obligations to Line Constructions under the First Assignment at a date around, but prior to, 10 August 2016, when relevant information about the fundamental flaws in this transaction were sufficiently available to, if not identified by, the QBCC, indicates that the QBCC had made a decision from which it refused to resile from that date, irrespective of the evidence.

Were the Applicants afforded natural justice by the decision-maker?

  1. [139]
    There is no evidence that the Applicants were not afforded procedural fairness, or natural justice, by the Respondent. The Respondent may have made a wrong decision, and could have acted faster, but the process followed allowed the Applicants to understand the issues before the decision-maker (insofar as non-lawyers could do so) and to be heard by the decision-maker. The fact that the Respondent made at least four decisions dealing with the Applicants’ claims attests to this conclusion.

Did the Applicants genuinely attempt to assist the decision-maker to make the decision on the merits?

  1. [140]
    The Applicants communicated with the Respondent on a regular basis and made, or were willing to make available, to the Respondent information relevant to this matter. There is no evidence that the Applicants behaved otherwise other than reasonably throughout.

The financial circumstances of the parties

  1. [141]
    The Respondent is a well-resourced government body that specialises in building and construction matters, while the Applicants are a private couple of, apparently, average means. The Applicants are clearly the weaker party financially.

Other factors

  1. [142]
    I am satisfied that had the QBCC examined this matter in sufficient detail at an appropriate time the duration of the dispute would have been reduced, the likelihood of a negotiated settlement improved, and costs reduced.
  2. [143]
    Because of the time taken for this matter to be resolved – from 2014 to 2018 – the Schneiders have incurred considerable legal costs, equivalent to about one-quarter of the cost of building the House had it proceeded as planned. A failure to be awarded any costs would see the benefit of the damages gained by the Schneiders seriously eroded.
  3. [144]
    The Schneiders, through their Counsel, made an offer of settlement to the QBCC on 14 November 2017 to which the QBCC did not respond. The offer was for an amount that may exceed the amount awarded here, subject to the final amount negotiated between the parties for the remediation of the House, but it was a genuine offer and the fact that it sought a higher sum than that awarded here does not derogate from the Schneiders’ entitlement to costs.

Calculating the Applicant’s costs

  1. [145]
    In its decision in this matter dated 11 April 2018 this Tribunal made the following declaration:

It is declared that the building contract between Contract Build Pty Ltd and Heinz (Henry) Schneider and Maree Louise Schneider dated 26 November 2013 was terminated by the solicitors’ letter dated 12 September 2014.

  1. [146]
    The fact that on 11 April 2018 this Tribunal declared that the relevant contract had been terminated on 12 September 2014 should have made it sufficiently clear to the QBCC by 11 April 2018 that its defence to the Schneiders’ claim was hollow and substantially without merit.
  2. [147]
    Section 107(1) of the QBCC Act requires that, ‘If the tribunal makes a costs order under this Act or an enabling Act, the tribunal must fix the costs if possible’. It is possible in this case to determine the costs incurred, and thus to fix the costs.
  3. [148]
    Based on this analysis I assess costs in this matter in favour of the Schneiders on the following basis:
    1. (a)
      Until 12 October 2016: on a standard costs basis.
    2. (b)
      From 13 October 2016 to 10 April 2018: on a standard costs basis.
    3. (c)
      From 11 April 2018, up to and including the hearing: on an indemnity basis.
  4. [149]
    The date 12 October 2016 relates to the internal memorandum prepared by Katrina Ennor of the QBCC dated 13 October 2016, concluding: ‘I am of the opinion that the insured has fulfilled the necessary requirements for a claim under Part 1 – Non-Completion-Completion of the QBCC Home Warranty Scheme’. It was clear by this stage that the QBCC should reasonably have settled the matter.
  5. [150]
    The date 10 April 2018 relates to the date on which this Tribunal declared that the First Contract had been terminated.
  6. [151]
    For costs incurred up to 12 October 2016, I allow costs on a standard costs basis assessed as 40% of actual costs incurred by the Applicants.
  7. [152]
    For costs incurred from 13 October 2016 to 10 April 2018, I allow costs on a standard costs basis assessed as 60% of actual costs incurred by the Applicants.
  8. [153]
    For costs incurred after 10 April 2018, I allow costs on an indemnity basis assessed as 100% of actual costs incurred by the Applicants.
  9. [154]
    Expenses relating to this matter are allowed on the basis of 50% of actual costs incurred.
  10. [155]
    Legal costs and expenses incurred by the Applicants in this matter are set out in the submission of Mr Garlick, Counsel for the Schneiders, in his submission tendered at the end of the hearing. In addition, Counsel for the Applicants advised during the hearing that his costs for the day were $2,700 (ex-GST).
  11. [156]
    The filing fee in this matter of $315.70 is also allowed in favour of the Applicants.
  12. [157]
    On the basis of this analysis I determine that the Respondent must pay the Applicants’ costs in this matter amounting to $35,907.85 inclusive of GST.

Decision

  1. [158]
    Section 24(1) of the QCAT Act says that in a proceeding for a review of a reviewable decision, the tribunal may:
  1. (a)
    confirm or amend the decision; or
  2. (b)
    set aside the decision and substitute its own decision; or
  3. (c)
    set aside the decision and return the matter for reconsideration to the decision-maker for the decision, with the directions the tribunal considers appropriate.
  1. [159]
    Relying on the power given in s 24(1)(b) and (c) the Tribunal makes the following decisions in respect of this application to review:
    1. (a)
      The decisions of the Respondent in this matter are set aside.
    2. (b)
      The Respondent is to pay the Applicants $128,205 within 30 days.
    3. (c)
      The parties are to make submissions to the Tribunal by 31 January 2019 in respect of the costs of remediation of the House as it presently stands sufficient to restore it to a sound condition in respect of frame stage. The parties are at liberty to negotiate and agree the compensation payable by the Respondent to the Applicants prior to 31 January 2019. The parties must notify the Tribunal of any agreement reached by them in this regard.
  2. [160]
    The Tribunal makes the following decision in respect of costs:
    1. (a)
      The Respondent is to pay the Applicants $35,907.85 within 30 days.

Footnotes

[1] Also described as 6 Lomandra Avenue, Clearview Rise, Roma, Queensland

[2] Construction Notification Number: 11177546.

[3] The relevant insurance policy is the QBCC Insurance Policy Conditions, Edition 8, Effective 1 July 2009.

[4] Proceeding QUD 448 of 2014. Contract Build was de-registered as a company by the Australian Securities and Investments Commission on 12 June 2016.

[5] Line Constructions QBCC Licence Number 1116487.

[6] Australian Master Homes QBCC Licence Number 1279757.

[7] First Assignment clause 33.

[8] First Assignment clause 26.

[9] Extracted from ASIC's database at AEST 17:23:40 on 02/11/2018.

[10] Construction Notification Number: 11177546.

[11] Queensland Police reference: QP 1601300517.

[12] Within the terms of Sub-division 1 of Division 3 of Part 7 of the QBCC Act.

[13] Neil, I and Chin, D, The Modern Contract of Employment, 2nd ed., 2017, Lawbook Co, Sydney, [10.71]

[14] Cheshire and Fifoot Contract Law, Eleventh Australian Edition, by N C Seddon and R A Bigwood, LexisNexis Butterworths, 2017 [21.38].

[15] Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444.

[16] Macken's Law of Employment 8e, C Sappideen, P O'Grady, J Riley eds, Law Book Coy, 2016, [9.120].

[17] J W Carter, LexisNexis, Carter on Contract (at 9 November 2018) [38.020].

[18] Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723, 733.

[19] Recital P in the First Assignment.

[20] The expression the Insurance Policies used here embraces both the First Insurance Policy and the Second Insurance Policy.

[21] The Law of Contract, Greig and Davis, 1st ed., 1987, Law Book Company, Sydney, p 1016.

[22] D W Greig and J L R Davis, The Law of Contract, Law Book Company, Sydney 1987, p 1023.

[23] File Note QBCC Home Warranty Claim Assessment Reason for Decision-Part 1: Non-Completion.

[24] This refers to Part 1 of the Insurance Policy dealing with non-completion.

[25] Although it must have been terminated, in fact, by not later than 9 December 2015, the date on which Line Constructions was de-registered by ASIC.

[26] Specifically, Part 1 of the insurance policy dealing with non-completion.

[27] Respondent’s submissions dated 20 September 2018, par 10.

[28] $71,225 on 17 June 2015 (based on completion to Enclosed Stage); and $56,980 on 11 September 2015 (based on completion to Fixing Stage)

[29] The QBCC Inspection Report dated 8 August 2017 and the comments of Rob Hughes dated 10 January 2018 refer.

[30] Latoudis v Casey (1990) 170 CLR 534, 543 (Mason CJ), 562-563 (Toohey J), 566-567 (McHugh J); Cachia v Hanes (1994) 179 CLR 403, 410 (Mason CJ, Brennan, Deane, Dawson and McHugh JJ); Oshlack v Richmond River Council (1998) 193 CLR 72.

Close

Editorial Notes

  • Published Case Name:

    Schneider & Anor v Queensland Building and Construction Commission

  • Shortened Case Name:

    Schneider v Queensland Building and Construction Commission

  • MNC:

    [2018] QCAT 412

  • Court:

    QCAT

  • Judge(s):

    Collier M

  • Date:

    03 Dec 2018

Litigation History

EventCitation or FileDateNotes
Primary JudgmentQueensland Building and Construction Commission (No Citation)10 Nov 2016Queensland Building and Construction Commission's decision to deny the Schneiders' insurance claim.
Primary JudgmentQueensland Building and Construction Commission (No Citation)19 Nov 2016Queensland Building and Construction Commission's further decision to deny the Schneiders' insurance claim.
Primary JudgmentInternal Review of Queensland Building and Construction Commission03 Feb 2017Queensland Building and Construction Commission's internal review decision to deny the Schneiders' insurance claim.
Primary JudgmentQueensland Building and Construction Commission (No Citation)11 Apr 2018Queensland Building and Construction Commission's reconsidered decision to deny the Schneiders' insurance claim.
Primary Judgment[2018] QCAT 41203 Dec 2018Decisions of the Queensland Building and Construction Commission to deny the Applicants indemnity under the statutory insurance scheme set aside; QBCC to pay the applicants $128,205 together with costs of remediation to the real property to restore it to a sound condition: Member Collier.
Primary Judgment[2020] QCATA 12421 Aug 2020Orders that QBCC to pay the applicants $128,205 together with costs of remediation to the real property to restore it to a sound condition set aside on the ground that the Schneiders made 'prepayments' within the meaning of cl 1.6(b) of the Insurance Policy: Senior Member Aughterson and Member Poteri.
Notice of Appeal FiledFile Number: Appeal 10005/2017 Sep 2020-

Appeal Status

Appeal Pending

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