Queensland Building Services Authority v Carey
[1997] QDC 162
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- Unreported Judgment
- Queensland Building Services Authority v Carey[1997] QDC 162
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Queensland Building Services Authority v Carey[1997] QDC 162
Queensland Building Services Authority v Carey[1997] QDC 162
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND | Appeal No. 1209 of 1997 |
IN THE MATTER of the Queensland Building Services Authority Act 1991, Section 94
AND
IN THE MATTER of the Queensland Building Tribunal Application No. R122 of 1995
AND:
IN THE MATTER of an application by the Queensland Building Services Authority for Leave to Appeal
AND
QUEENSLAND BUILDING SERVICES AUTHORITYApplicant
AND
MATTHEW TROY CAREYRespondent
REASONS FOR JUDGMENT - JUDGE BRABAZON Q.C.
Delivered the 20th day of June 1997
Counsel: | Mr Savage for the applicant Mr Major for the respondent |
Solicitors: | Phillips Fox for the applicant McDonalds for the respondent |
Hearing Date(s): | 12 May and 6 June 1997 |
IN THE DISTRICT COURTAppeal No 1209 of 1997
HELD AT BRTSBANE
QUEENSLAND
BETWEEN:
QUEENSLAND BUILDING SERVICES AUTHORITYApplicant
AND:
MATTHEW TROY CAREYRespondent
REASONS FOR JUDGMENT - JUDGE BRABAZON Q.C.
Delivered the 20th day of June 1997
This case is about a home owner (Mr Terry), a registered builder (Mr Carey) and the Queensland Building Services Authority (the Authority).
Disputes about Mr Carey's performance as a builder have twice come before the Queensland Building Tribunal (the Tribunal). On each occasion, the Tribunal was constituted by a different member - Dr. Jensen at first, and then Mr Burnett. They came to different conclusions about Mr Carey's work, and his legal position. The Authority is very concerned about those inconsistent decisions, and its position according to the decision of Mr Burnett. It now asks leave to appeal against Mr Burnett's decision. The question is, did he go too far in reviewing a decision of the Authority? Should Mr Burnett's decision be the subject of an appeal to this Court? What is the ultimate position of the Authority?
The Facts
The principal facts are not in doubt. They can be set out this way:
- (a)Mr Terry and Mr Carey entered into a contract, whereby Mr Carey agreed to build a cottage for Mr Terry. That was “domestic building work” under the Queensland Building Services Authority Act (“the Act”).
- (b)The Authority is the statutory insurer of home owners in respect of inadequate performance of building work in Queensland, according to the provisions of Part 5 of the Act.
- (c)In the usual way, the Authority issued a certificate of insurance in respect of the work done in building this cottage.
- (d)A dispute arose between Mr Terry and Mr Carey, and no further work was done pursuant to the building contract.
- (e)The building contract between Mr Terry and Mr Carey was determined in controversial circumstances - each of them contended that the other had repudiated the contract.
- (f)Mr Terry made a claim under the statutory insurance scheme. He asked for the cost of rectifying and completing the work to build the cottage.
- (g)Section 2.2 of the Insurance Policy Conditions followed the standard form. In effect, it provided that the builder was deemed to have failed to execute the work to practical completion where the owner had properly terminated the contract for the performance of the work because of (various circumstances, including the neglect or the fault of the builder). The word “properly” means “legally, according to the precise terms of the contract”.
- (h)The Authority declined to pay the claim, because it believed that Mr Terry had not satisfied condition 2.2 - that is, he had not legally terminated his contract with Mr Carey.
- (i)Mr Terry relied on s. 99 of the Act and requested the Tribunal to review that decision of the Authority. There was a contested hearing before Dr Jensen, a member of the Tribunal. The parties before him were Mr Terry and the Authority - Mr Carey was not a party, but he was in contact with counsel for the Authority.
- (j)After the hearing, Dr Jensen found that Mr Terry had legally determined the building contract. He directed the Authority to consider Mr Terry's claim, in accordance with his decision.
(k) The Authority then decided to pay the insurance claim. It notified Mr Carey of its approval, by a letter dated 5 September 1995.
(l) The Authority paid $23,486 to Mr Tracey on 5 September 1995. Mr Carey did not pay that money to the Authority.
(m) In a second letter, that of 12 September 1995, the Authority told Mr Carey that he was indebted to it in that sum, and that it would initiate legal proceedings under s. 103 of the Act to recover the money as a debt, the did not pay within 30 days.
(n) On 12 November 1995, Mr Carey filed an application asking the Tribunal to review the Authority's decision to pursue him for the money. In due course, the application was heard by a different member, Mr Burnett.
(o) The parties who appeared by their counsel before Mr Burnett were the Authority and Mr Carey. Mr Terry was not a party.
(p) The Authority submitted that Mr Burnett should not review the merits of its decision to pay the insurance claim, and re-open the merits of the dispute between Mr Terry and Mr Carey.
(q) Mr Burnett found that:
- (i)Mr Carey was not estopped in any way by the previous proceedings, as he was not a party to them.
- (ii)On evidence additional to and different from that put before Mr Jensen, it should be held that Mr Terry had not legally terminated the building contract because of Mr Carey's default.
- (iii)That the Authority's decision of 12 September 1995 should be annulled that is, because Mr Terry had not legally terminated the building contract, and because the builder's conduct did not justify it.
The Authority now asks for leave to appeal to this Court against Mr Burnett's decision.
The Act
It is helpful to understand the scheme of the Act which has given rise to the present problems:
- (a)Part 5 provides for a statutory insurance scheme, to protect a consumer who enters into a contract for the performance of residential construction work.
- (b)A person claiming an indemnity has to give notice of the claim to the Authority - s. 70(1).
- (c)A dissatisfied claimant can ask the Tribunal to review the Authority's decision about the claim - s. 70(2).
- (d)If the Authority pays a claim then it is subrogated to the rights of the consumer, and it may recover the amount of the payment as a debt from the building contractor - s. 71.
- (e)A decision of the Authority that adversely affects any person is subject to review by the Tribunal - s. 98.
- (f)An application for review must be made within 28 days of receipt of the notice of decision to the Tribunal. The Tribunal may order that a person who may be affected by the review be joined as a party to the review, and it may make orders against and give directions to, that person - s. 99(4).
- (g)On an application for review, the Tribunal may confirm, annul, vary or reverse the decision subject to the review and make consequential orders and directions - s. 99(5).
- (h)The Tribunal may facilitate a negotiated settlement between the parties to a review - s. 99A(1).
- (i)The Authority's claim against a builder, based on an insurance payment to a consumer, may be recovered as a debt by application to the Tribunal - s. 103(1).
- (j)When there is such a claim under s. 71, the Tribunal may make the appropriate orders, and give the appropriate directions, to resolve any issue and dispute between the Authority and the builder - s. 103(2).
The First Review
Dr Jensen found that the Authority's decision to reject Mr Terry's insurance claim was wrong. In short, he found that Mr Terry had validly terminated the building contract and had satisfied s. 2.2 of the Insurance Policy Conditions. He therefore referred the matter back to the Authority, with a direction to consider the claim in accordance with his decision.
There is no information before me, as to why the builder was not joined as a party to the review before Dr Jensen, under s. 99(4) of the Act. On the face of it, he could have been joined, and should have been joined, as a person “who may be affected by the review”. (See also, Mr Burnett's comments on that issue, at p. 6 of his decision of 26 February 1997)
The Second Review
Faced with the Authority's letters of 5 and 12 September 1995, Mr Carey had a choice between two courses. He could have waited until sued before the Tribunal under s. 103 of the Act. He then could have resisted the Authority's claims by attempting to demonstrate that Mr Terry had no enforceable rights against him, and that he had not owed any money, by way of damages or otherwise, to Mr Terry.
Alternatively, he could attack the Authority's decision, or decisions, which affected his position. That meant going on the offensive, and filing an application for review under s. 98 of the Act. That is the course that he has taken.
The Authority is now complaining about the course taken by Mr Burnett. It submits that Mr Burnett should only have reviewed the decision to commence proceedings against the builder in an attempt to recover its insurance payout to Mr Terry. It says that Mr Burnett went too for in reviewing the issue about the termination of the building contract, for two reasons:
- (a)the Authority had made a decision merely to try to recover its insurance payout from Mr Carey, and there was no error in that decision;
- (b)that decision involved a narrow investigation, as to whether or not the Authority had a reasonable and honest view that it was entitled to be subrogated to the rights of Mr Terry. That issue did not depend upon the merits of any dispute between the Authority and Mr Carey, about the quality of the work he had done, and the question of the termination of the building contract.
Mr Burnett did not accept such a narrow view of the Tribunal's role. In effect, he conducted a review of the merits of a substantial part of the dispute between the owner and the builder. He heard fresh evidence about the facts. Mr Burnett recounted the events before Dr Jensen. He found that there was no issue estoppel as against the builder, Mr Carey. (There is now no suggestion that such a view was wrong.)
He went on to consider the question of the termination of the building contract. He heard evidence from three witnesses, and also received written evidence from two other witnesses. In the result, he found that any breaches of the building contract by Mr. Carey were not so fundamental as to give rise to a remedy of rescission. The machinery provided for in Clause 25 (a notice of default provision) was not adopted by the homeowner. He found that there was no proper termination of the contract by Mr Terry. Therefore, he considered that the Authority was not justified in paying out the insurance claim. He found that the Authority was not entitled to “an indemnity” from the builder.
He therefore annulled the Authority's decision to issue a demand against the builder, in terms of its letter of 12th September 1995. In reaching that decision, he considered that the scope of the review extended to an examination of whether or not the termination was lawful. His reasons were set out in an earlier decision of 23rd January 1997. There, under the heading “Scope of Application”, he held that the issue of the termination of the building contract was necessarily “an incidental fact, for that fact predicated the decision to indemnify under the insurance. Furthermore, as the issue of entitlement to insurance is a jurisdictional fact, the authority's determination on the point could not be held to be conclusive on the matter and, accordingly, deny a right to administrative review of that decision (see also Southern Farmers' Group Limited v. Deputy Commissioner of Taxation (1989) 92 A.L.R. 317 and Eastman v. Somes (1992) 106 F.L.R. 346 at 351.” He therefore found that the issue of termination was itself reviewable, and he proceeded to review it.
It is necessary to read the letters of 5th September and 12th September together to see what decisions the Authority had made about Mr Carey's position. They are these:
- (a)The Authority had made a decision to approve Mr Terry's insurance claim in the sum of $23,486.
- (b)The Authority had made a decision to attempt to resolve the matter of Mr Carey's liability to the Authority without recourse to legal proceedings.
- (c)The Authority then decided that Mr Carey was justly indebted to it in the sum of $23,486.
- (d)The Authority decided that, if the sum of $23,486 was not paid by Mr Carey within 33 days of 12th September, then it would list the debt with the Credit Reference Association of Australia and initiate legal proceedings under s. 103 of the Act to recover the outstanding debt.
It is clear that, in substance, Mr Carey sought a review of all those decisions. His application says that he was seeking a “review of a decision of the QBSA - s. 99(1). He also made an application pursuant to s. 99(3) (for an extension of time). The application form on a page headed “Dispute Schedule” referred to the allegation that no direction to rectify was ever given to Mr Carey, and that he wanted to review the lawfulness of the demand on him, or in the alternative, the quantum. The application included, as the form invited, a copy of the decision of the Authority - a copy of a letter of 12th September was enclosed. When the matter came on for hearing before Mr Burnett, the Authority, by its counsel, handed up a helpful book of relevant papers. That included a Statement of Reasons for the Authority's decision. The facts were recounted, including the fact (so it was alleged) that the owner of the land had terminated the building contract between himself and Mr Carey. In conclusion, a critical reason for the decision was that “the owner terminated the contract with the builder”.
Therefore, it seems clear that the Authority's decision about the issue of termination, and its right to recover the insurance monies from Mr Carey, were clearly raised by his application for review. See also Mr. Burnett's decision of 26 February 1997, p. 1, to the same effect. It also seems clear that he was not asked to consider an issue which is now raised by the Authority - even if the owner did not lawfully terminate the building contract, could he still recover something from the builder, particularly for damages for breach of contract? Whether or not such an issue could have been determined as part of the review process is an interesting question that need not be determined here.
The Nature of the Review
The fundamental question is - what is the scope of the Tribunal's power to review a decision of the Authority? Uncertainty about the width of that power conferred by s. 98 has been the main reason for the present differences of opinion.
The Act itself does not make it immediately clear what is meant by the expression “review by the Tribunal”. The word “review” is not conclusive, as it is a word of variable meaning. That was pointed out by the High Court in Brandy v. Human Rights Commission (1995) 69 A.L.J.R. 191 at 199, in the discussion of a review power contained in the Racial Discrimination Act. The Court said:
“In considering the nature of the ‘review’ contemplated by (that Act) it is relevant to note that the expression “review’ is commonly used in the context of judicial control of administrative action and in the context of administrative action and in the context of comprehensive administrative review by an administrative tribunal of administrative decisions. But what emerges from the judicial decisions and, for that matter from statutes is that “review’ has no settled pre-determined meaning; it takes its meaning from the context in which it appears.”
However, any particular review usually falls into one of two models - a review on the merits of the case, or judicial review. The existence of those two models, and the distinctions between them, are constantly referred to in the decided cases and the writings on administrative law. For example, see Douglas and Jones, Administrative Law - Commentary and Materials 2nd Ed., Federation Press 1996 Chapter 9; Craig, Administrative Law 3rd Ed., Sweet and Maxwell 1994 Chapter 1 pp. 145 and 146; Mr. Justice Kirby, Administrative Review on the Merits: The Right or Preferable Decision 1978-80, Monash University Law Review 171, Galligan (Editor) Administrative Law Dartmouth 1992 at 92 (Sir Anthony Mason) and 383 (Galligan) and an article by David Bennett Q.C., “The Assimilation of Judicial Review to Review on the Merits” (Canberra Bulletin of Public Administration, No. 58, p. 94). The distinction was mentioned by the Full Court of the Federal Court in Drake v. Minister of Immigration 24 A.L.R. 577 at 589, when it was said, with reference to the Administrative Appeals Tribunal:
“The function of the Tribunal is as we have said an administrative one. It is to review the administrative decision that is under attack before it. In that review the Tribunal is not restricted to consideration of the questions which are relevant to ajudicial determination of whether a discretionary power allowed by statute has been validly exercised. Except in a case where only one decision can lawfully be made, it is not ordinarily part of the function of the court either to determine what decisions should be made in the exercise of an administrative decision and given case or, where a decision has been lawfully made in pursuance of the permissible policy, to adjudicate upon the merits of the decision or the propriety of the policy. That is primarily an administrative rather than a judicial function. It is a function which has been entrusted to the Tribunal.”
In Australia, the judicial review model has been adopted in those statutes which now prescribe the modern practice - such as the Administrative Decisions (Judicial Review) Act of the Commonwealth. By way of contrast, a full review on the merits is seen in the Administrative Appeals Tribunal Act, also of the Commonwealth.
The scope of judicial review, at least in the Federal context, was discussed by the High Court in Australian Broadcasting Tribunal v. Bond (1990) 170 C.L.R. 321, in the judgments of Mason C.J. and Deane J. If this power to review were judicial review, then the Authority would wish to rely on the approach taken by Mr. Justice Mason, in examining the effect of a conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision. It was held that such a step would not ordinarily be a reviewable decision, unless the Statute provided for the making of a finding or ruling on that point.
The Chief Justice then went on to say:
“To say that a reviewable decision is an ultimate or operative determination does not mean that antecedent conclusions or findings which contribute to the ultimate or operative decision are beyond reach. Review of an ultimate or operative decision on permissible grounds will expose for consideration the reasons which are given for the making of the decision and the processes by which it is made... if the statute requires or authorises the decision maker to determine an issue of fact as an essential preliminary to the taking of ultimate action or the making of an ultimate order, then it would follow for what has already been said that the determination of the issue of fact would be a reviewable decision...in ordinary circumstances, a finding of fact, including an inference drawn from primary facts, will not constitute a reviewable decision because it will be no more than a step along the way to an ultimate determination. Of course an ultimate determination which depends upon a finding of fact vitiated by error of law or made without evidence is reviewable (see s. 5(1)(f) of the ADJR Act). In such a case the finding of fact may be challenged as an element in the review of the ultimate determination. But the point remains that ordinarily a finding of fact will not be susceptible to review independently of the ultimate decision.
Powerful considerations support the conectness of this view. The Administrative Appeals Tribunal Act (Cth) (“the A.A.T. Act”) provides specifically for review on the merits by the Administrative Appeals Tribunal. It is scarcely to be supposed that the Parliament, in so providing, nevertheless intended to invest the Federals Court with a similar jurisdiction under the A.D.(J.R.) Act, for that would be the effect of that Act if it were to confer jurisdiction to review findings of fact generally. Indeed, the concept of judicial review which finds literal expression in the title of the A.D.(J.R.) Act and in its operative provisions tells against the existence of such a wide jurisdiction. The expression “judicial review”, when applied to the traditional review functions of the superior courts in our system of justice, exercisable by means of the prerogative writs and the grant of declaratory relief and injunction, ordinarily does not extend to findings offact as such. To expose all findings of fact, or the generality of them, to judicial review would expose the steps in administrative decision-making to comprehensive review by the courts and thus bring about a radical change in the relationship between the executive and judicial branches of government. Amongst other things, such a change would bring in its train difficult questions concerning the extent to which the courts should take account of policy considerations when reviewing the making of findings of fact and the drawing of inferences of fact.
It follows that in my opinion the Federal Court did not have jurisdiction to review the six findings of fact (nos 5 and 7-11 inclusive in my earlier summary) of which the respondents sought review on the footing that they were reviewable decisions.”
For a general outline of judicial review, the judgment of Deane J. should be noted.
A similar problem to the present one was dealt with by the Tribunal in the matter of Morrison v. QBSA (15th August 1995, Mrs C Roney, Member). There, the Tribunal found that the decision subject to review was the decision to seek to recover an amount paid out under an insurance policy, from the builder. The approach to the scope of the review was put this way:
“In my view, a review of a decision pursuant to s. 99(1) involves a reconsideration or re-examination of the material matters or facts which facilitated or caused the decision maker to arrive at the decision. It involves also an analysis as to whether those facts, issues or points once identified justify and are logically supportive of the decision reached.”
In that case, it was the Tribunal's view that the facts which had to be established to support and validate the decision to sue the builder were four in number.
- That the applicant was the licensee for the work.
- That the applicant was the contractor for the purpose of the policy of insurance.
- That a claim was paid by the authority, and
- That the authority had properly exercised its discretion to seek to recover the amount of an insurance payment from the applicant.
As the claim had been paid, it was the Tribunal's view in that case that the question of the proper termination of the building contract was not a matter which was pertinent to the decision under review. That is the approach which the Authority contends for here.
Counsel for Mr Terry says that the Act provides for a full review of the merits. He informed me that the position accepted by the majority of members of the Tribunal was in favour of a review of the merits. On reflection, I have reached the same conclusion. There are a number of factors which point in that direction:
- (a)The Tribunal is an administrative tribunal. It is not a court. There is no reason to restrict it to the relatively narrow notions of judicial review, which are well established for constitutional reasons.
- (b)It is notable that the Queensland Parliament enacted the Judicial Review Act and this Act in the same year. The Judicial Review Act deals with the powers of the Supreme Court. It is apparent that it deals, in the traditional way, with the propriety of the decision making process, while the Act here deals with the decision itself
- (c)While this Act is sparse in its detail, there is enough to make it clear that it is not dealing with judicial review. Section 99A(1) give the Tribunal to facilitate and negotiate a settlement between the parties to the review - that is not a power appropriate to judicial review. Section 99(5) gives the Tribunal power to confirm, annul, vary or reverse the decision subject to the review and make consequential orders and directions. That is a wider power than the Supreme Court has, and shows the Tribunal's concern with the merits of the decision. Section 99(4) allows the joinder of persons who may be affected by the review. Orders may be made against such persons. Again, that indicates a wider power than judicial review.
- (d)Indeed, in s. 100, the Judicial Review Act is actually mentioned by way of contrast - in some cases, the decision of the Tribunal itself may be subject to judicial review.
- (e)From an administrative point of view, there is nothing surprising in having a generalist Tribunal, staffed by lawyers, being given the power to review decisions made by specialist administrators.
Therefore, the correct view is that the power in s. 98 is a full administrative review of an administrative decision, by an administrative tribunal. The Tribunal does stand in the shoes of the Authority, and can exercise its powers, but it does so in the light of all the evidence available to it - including fresh evidence - the decision in re Brindle 1992 35 F.C.R. 506 illuminates the similar position of the former Taxation Board of Review.
It follows that the principal submission made for the Authority cannot be accepted. Mr Burnett did not go beyond the powers given to him by the Act. He had power to review the decision of the Authority, to proceed against Mr. Carey, and he also had power to review the merits of the “termination of contract” issue, as between Mr. Terry and Mr. Carey. Such a review necessarily meant another examination of the facts.
The Remaining Issues
The Authority relies on the position of an insurer, who asserts a right of subrogation to bring a claim against the person alleged to be responsible for the loss. In that case, it is not competent for a defendant to investigate whether or not the insurer was obliged to pay the insured, according to the terms of the policy. That has been established since the decision of the Privy Council in King v. Victoria Insurance Co. Ltd. (1896) A.C. 250. It was there held that a payment honestly made by insurers in consequence of a policy granted by them and in satisfaction of a claim by the insured was a claim made under the policy, and that entitled the insurers to the remedies available to the insured. Such remedies cannot be resisted on the ground that the payment was not within the terms of the policy. Such settlements of claims between the parties concerned ought not to be reopened for a “by-purpose” at the instance of parties not concerned.
That decision still represents the correct approach in principle so much can be seen in Derrington & Ashton, “The Law of Liability Insurance” (Butterworths 1996) at pp 653, 754 and 755, and in Sutton, “Insurance Law in Australia, (Law Book Co, 2nd Ed 1991) para. 16.34. While a payment might not have been legally recoverable by the insured, the right of subrogation remains if the insurer acted in good faith and honestly intended the payment to be in satisfaction of a loss under the policy, believing that it was, or might be, liable.
Therefore, it does not follow that Mr. Carey has had a complete victory, and that the decision of the Authority to proceed against him should be entirely annulled. Mr. Burnett's decision, because no submission about subrogation was made to him, did not take into account the principle in King v. Victoria Insurance Co Ltd. In this case, the consequence is that the Authority may still have the right to proceed against Mr. Carey, being subrogated to Mr. Terry's rights to do so, notwithstanding that Mr. Terry did not lawfully terminate his contract with the builder, so that the Authority was under no obligation to pay him the insurance monies. The facts here show that the Authority might take advantage of the principle outlined above and proceed to assert whatever Mr. Terry's other rights may be, notwithstanding a mistaken payment of the insurance monies. In principle, the issue of termination is not necessarily co-extensive with the issue of damages, or the recovery of other money.
It is apparent from a reading of Mr. Burnett's two decisions, that he was concerned with the question about the proper termination of the agreement. That is why his first four conclusions are quite correctly set out in this way:
“1. No issue estoppel arises concerning the matter of termination;
- The matter of termination is one which should properly be the subject of the review application;
- That there was no proper termination of the contract by the home owner;
- That the Authority's failure to issue a direction to rectify was not fatal to its right to seek indemnity from the builder.”
However, Mr. Burnett then went on to conclude, as point number 5, “That the Authority's decision should be annulled”. That is, he was concluding that its decision to proceed against Mr. Carey should be entirely annulled. In my view, and with the benefit of the further submissions, that conclusion is not sustainable for the above reasons. Even if there were no proper termination of the agreement, it does not follow that the Authority is necessarily disentitled to recover anything from Mr. Carey. In principle, there is no reason why it might not recover, for example, damages for breach of contract by Mr. Carey. The finding that there was no proper termination of the building contract, does not preclude the possibility that the right to those recovered damages is still alive.
There is now no need to refer the dispute back to Mr. Burnett, as the parties have reached a private settlement about them. They have also agreed that there should be no order as to costs in this court.
Therefore, the formal orders of this court are these:
- (a)give leave to the Authority to appeal to this court, against the decision and orders of the Tribunal, made on 26 February, 1997;
- (b)annul the Tribunal's order, “that the Authority's decision of 12 September 1995 be annulled”;
The result is an unhappy one for the Authority. From a procedural point of view, its difficulties started when it decided, for reasons not explored here, not to join Mr Carey as a party to the first review hearing. Rules about the joinder of parties have been framed for a long time now with those difficulties in mind - early joinder of all parties is usually encouraged by rules of court so that the inconvenience of inconsistent findings can be avoided. That is the problem which has arisen here. It should be the aim of the Authority to avoid that problem in the future.