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- Appeal Determined (QCA)
Stuart v Queensland Building and Construction Commission QCATA 81
Stuart v Queensland Building and Construction Commission  QCATA 81
Andrew John Stuart
Queensland Building and Construction Commission
8 April 2015
Senior Member O'Callaghan
16 June 2015
APPEAL – whether statutory insurance scheme indemnifies an insured where contract is terminated by mutual abandonment
Queensland Civil and Administrative Act 2009 (Qld), s 20, s 142, s 143, s 146
Queensland Building Services Authority Act 1991 (Qld), s 3, s 26, s 26A, s 86, s 116, Part 5 (1 January 2011 reprint)
Queensland Building and Construction Commission Act 1991 (Qld), s 3, s 26, s 26A, s 71, s 116
Acts Interpretation Act 1954 (Qld), s 14A
Queensland Building Services Authority v Fox  QDC 129
Hicks v Minister for Immigration & Multicultural & Indigenous Affairs  FCA 757
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Wallera Pty Ltd v CGM Investments Pty Ltd  FCAFC 279
Mareva Building Consultants v Zevon  ACTCA 28
Cedar Meats (Aust) PtyLtd v Five Star Lamb Pty Ltd  VSCA 32
Lange v Queensland Building Services Authority  QCA 58
Parker v Queensland Building Services Authority  1 Qd R 644
Andrew John Stuart
Queensland Building and Construction Commission
Andrew John Stuart represented by Mr BE Codd of Counsel instructed by Flehr Law
Queensland Building and Construction Commission represented by Ms S McNeil of Counsel instructed by Holding Redlich Lawyers
REASONS FOR DECISION
- Mr Stuart contracted to perform domestic building work for the Bartons in 2011. The Bartons made a complaint to the then Queensland Building Services Authority that Mr Stuart did not complete the work under the contract. This complaint was taken to be a claim under the statutory insurance scheme and it was decided that the contract had been validly terminated upon the contractor’s default.
- The decision of the Decision Maker 12 September 2012 be set aside so far as it determined that the Contract was lawfully terminated by Mr Robert Barton.
- That the matter be returned to the decision maker to determine whether Mr Stuart was in breach of the Contract as at the date of termination by mutual abandonment namely 4 April 2012.
- In the event that this issue is determined in the affirmative, whether an insurance claim pursuant to the provisions of the Act is appropriate.
- Mr Stuart appeals part of the learned Member’s decision, namely the consequential orders. The decision that the contract had been mutually abandoned as at 4 April 2012 is not appealed and is not a matter for the Appeal Tribunal to reconsider.
Did the Tribunal err in referring the matter back to the QBCC?
- In this matter the Tribunal’s jurisdiction was relevantly to review:
a decision that a domestic building contract has been validly terminated having the consequence of allowing a claim for non-completion under the statutory insurance scheme.
- Mr Stuart contends the learned Member erred in law in making the consequential orders once the finding of ‘mutual abandonment’ was made. He says upon that finding the Commission had no power to further consider a claim under the Policy. We accept this ground raises a question of law such that leave to appeal is not required.
- The primary issue for determination in this appeal is whether as a matter of statutory construction the Policy indemnifies an insured for the loss suffered for non-completion by a contractor, as a result of a proper termination by the insured, when the contract is bought to an end by mutual abandonment.
- If the Policy does not indemnify the insured when the mode of termination is by mutual abandonment then there is no jurisdiction to make the consequential orders.
- The Policy provides:
1.1 Subject to the terms of this policy, the BSA agrees to pay for loss suffered by the Insured in the event of the contractor failing to complete the contract for the residential construction work.
1.2 The BSA is only liable to pay for loss under this Part when the contract is for a fixed price and the Insured has properly terminated the contract with the contractor …
11.1 ‘properly terminated’ means lawfully under the contract or otherwise at law, upon the contractor’s default, which extends to, but is not limited to:
- (a)the cancellation or suspension of the contractor’s licence; or
- (b)the death or legal incapacity of the contractor; or
- (c)the insolvency of the contractor; or
- (d)any breach of the contract by the contractor.
- The Commission contends that:
- a)mutual abandonment is a termination by the Insured as well as by the contractor; and
- b)in view of the consumer protection purpose of the legislation it is not necessary for there to be a link between the termination and the contractor’s default.
- It says there is yet to be a determination about whether Mr Stuart was in breach of the contract at the time of mutual abandonment. It contends if in fact Mr Stuart was in breach prior to the mutual abandonment then the requirements of 1.2 would still be satisfied so as to found a claim under the Policy.
- The Commission relies in particular on comments made by McGill DCJ in QBSA v Fox that mutual abandonment
can be seen as termination by the consumer. It is not inconsistent with default on the part of the other party ... If the contractor is in default and it and the consumer so act as to abandon the contract, that effects the termination of it which in my opinion would be sufficient termination to satisfy the requirements of clause 1.2.
- Prior to the Tribunal being established the Commercial and Consumer Tribunal exercised jurisdiction to review decisions in respect of the circumstances in which the insurance scheme responded and the District Court entertained appeals from such decisions. The Appeal Tribunal now entertains appeals from decisions of the Tribunal in its review jurisdiction. The District Court is not now part of the Tribunal appellate hierarchy.
- McGill DCJ’s comments do not bind this Appeal Tribunal. They were not directly relevant to the decision he made and the reasons do not demonstrate that such matters, as are raised before us, were fully argued and considered in those proceedings. We have considered the comments carefully. We respectfully do not agree with the conclusions.
- We find that the Policy does not indemnify an insured for the loss suffered for non-completion by a contractor, as a result of a proper termination by the insured, when the mode of termination is by mutual abandonment.
- The Policy requires the Insured to have properly terminated the contract. It is not disputed that the Policy is to be construed having regard to ordinary principles of statutory interpretation.
- The interpretation that best achieves the purpose of the legislation is to be preferred. The objects are:
- a)to regulate the building industry to ensure the maintenance of proper standards in the industry and achieve a reasonable balance between the interest of building contractors and consumers;
- b)to provide remedies for defective building work;
- c)to provide support, education and advice for those who undertake building work and consumers.
- We find that the contract was not properly terminated by the insured because mutual abandonment is a discharge by agreement not a ‘termination’ by the insured. The agreement may be express or implied.
- Having regard to the terms of the Policy the loss to be recovered relates to the loss suffered by the homeowner from the contractor failing to complete the contract. Where a contract is abandoned, there is no continuing rights to have the work performed or to receive damages for the failure to perform that work. In these circumstances, there is no loss, which would be suffered by the homeowner, from the contractor failing to complete the contract.
- Abandonment ‘operates prospectively without prejudice to accrued entitlements’. Abandonment is inconsistent with a right to be compensated for a failure to perform obligations from which the other party has been discharged.
- This view is consistent with the ordinary common law meaning of the concept ‘properly terminated’. The Policy does not clearly seek to depart from such a meaning.
- The Commission contends that the contractor’s default does not need to link to the termination because of the consumer protection purpose of Part 5 of the QBSA Act.
- We accept that Part 5 of the QBSA Act has a consumer protection purpose. However, it is clear that the Policy does not respond to all circumstances where the contract has not been completed. The Policy does not respond to protect a consumer from the consequences of their own conduct and does not respond where the contractor has terminated the contract.
- The Policy does not expressly:
- a)include or exclude mutual abandonment as being a proper termination;
- b)refer to a pre-condition being a unilateral termination;
- c)exclude a common law concept of termination.
- We find that the preferable construction is that:
- a)a nexus between a contractor default and lawfully terminated ‘under the contract or otherwise at law’ is required; and
- b)the termination must be a unilateral ending of the contract by the insured.
- If the legislature’s intention was not to require a link between the termination and the default then it is difficult to see why the word ‘upon’ has been used.
- The Policy is a delegated instrument and is subordinate to the provisions of the legislation. This interpretation is also consistent with other provisions in the legislation e.g. the Commission has a right to recover under s 71(1) of the QBCC Act for amounts paid under the scheme from a contractor ‘by whom the relevant residential construction work was, or was to be, carried out’.
- It is unlikely that the legislature intended the Policy to respond to circumstances where a right to recover from the relevant contractor did not exist, except where expressly provided e.g. insolvency, particularly where the scheme is to be self-funding.
- The learned Member was in error in making the consequential orders. The appeal is allowed.
 As from 1 December 2013 known as the Queensland Building and Construction Commission (the Commission).
 The version of the Queensland Building Services Authority Act 1991 (Qld) applicable at the time the contract was entered into was that current as at 1 January 2011 (referred to as the QBSA Act) Part 5 of the QBSA Act established the scheme. The scheme applicable is Edition 8 gazetted on 26 June 2009 (Policy). The version of the Queensland Building and Construction Commission Act 1991 (Qld) at the time of the hearing before the learned Member was that current as at 1 December 2013 (referred to as the QBCC Act).
 QBSA letter dated 12 September 2012.
 QCAT Act s 20.
 Decision at .
 27 June 2014.
 The review application was filed on 9 October 2012. The relevant power was set out in the QBSA Act, s 86(1)(i).
 Ibid, s 142(3)(b).
  QDC 129.
 Ibid at .
Hicks v Minister for Immigration & Multicultural & Indigenous Affairs  FCA 757 at  &  – .
 Acts Interpretation Act 1954 (Qld) s 14A(1).
 QBSA Act s 3; the objects are unchanged in the QBCC Act, s 3.
 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 434; Wallera Pty Ltd v CGM Investments Pty Ltd  FCAFC 279 at ; Mareva Building Consultants v Zevon  ACTCA 28 at ; Chitty on Contracts, Sweet and Maxwell, 31st edition at [022-025].
 Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd  VSCA 32 at .
 Lange v QBSA  QCA 58.
 As enumerated in the Policy in sub-paragraphs 11.1 (a) – (d) in a non-exhaustive way.
 QBSA Act s 116; the making of regulations is unchanged in QBCC Act, s 116; Parker v QBSA  1 Qd R 644.
 QBSA Act s 26 and s 26A; the insurance fund provisions are unchanged in QBCC Act, s 26 and s 26A.
- Published Case Name:
Andrew John Stuart v Queensland Building and Construction Commission
- Shortened Case Name:
Stuart v Queensland Building and Construction Commission
 QCATA 81
Senior Member O'Callaghan, Member Deane
16 Jun 2015
|Event||Citation or File||Date||Notes|
|Primary Judgment|| QCAT 312||27 Jun 2014||QBSA (QBCC) decision-maker decided that residential building contract validly terminated; decision set aside: Member Walker.|
|Primary Judgment|| QCATA 81||16 Jun 2015||Appeal from  QCAT 312. Appeal allowed: Senior Member O’Callaghan and Member Deane.|
|Notice of Appeal Filed||File Number: Appeal 10844/16||20 Oct 2016||-|
|Appeal Determined (QCA)|| QCA 115  1 Qd R 399||02 Jun 2017||Application for leave to appeal refused: Sofronoff P and Morrison JA and Applegarth J.|