DISTRICT COURT OF QUEENSLAND

1. [1]
   This is an appeal pursuant to s 92 of the Queensland Building Tribunal Act 2000 (Qld) (“the QBT Act”). It relates to a decision of the Queensland Building Tribunal delivered on 3 May 2002 confirming a decision of the Queensland Building Services Authority (“the Authority”) to refuse insurance cover to the appellants under the statutory insurance scheme. That scheme of insurance was established under s 69 of the Queensland Building Services Authority Act 1991 (Qld) (“the QBSA Act”).

2. [2]
   The claim of insurance by the appellants related to alleged defective work in respect of rusted steel support posts in residential premises built in Port Douglas, North Queensland. A dispute notification against the builder, G K Mullins Pty Ltd, was filed by the appellants on 24 November 1997 with the Authority.  That dispute related to rusting stumps discovered in an inspection of the residential premises in that month.  At a later time, at the request of the Authority, the appellants completed a further notification of dispute with another builder, Mr E Szabo.  Various directions to remedy the defects were issued by the Authority against Mr Szabo.  Those directions were not complied with.  The Authority, in a letter of 19 April 2000, apparently advised the appellants that their claim was not covered by the statutory insurance scheme.  On 30 May 2000 the appellants initiated the review proceedings in the Queensland Building Tribunal (R-058 of 2000).  The hearing of that review occurred on 24 May 2001 and on 3 May 2002 the decision was handed down.  On 7 June 2002 the appellants commenced an appeal in the District Court, Cairns.

3. [3]
   On 5 December 2003 his Honour Judge White DCJ ordered, by consent, that leave to appeal was not required pursuant to s 92 QBT Act and transferred the appeal to the District Court, Brisbane.

4. [4]
   The matter has a long and troubled history dating back to 1993. It has been the subject of previous decisions of the Queensland Building Tribunal in relation to various claims and counter-claims. In order to properly consider the decision under appeal it is necessary to set out some of that history.

History of the subject building and disputes

5. [5]
   An appropriate summary of the history, as relevant to this appeal, appears in the Decision and Reasons for Decision by the Queensland Building Tribunal in relation to R-058 of 2000. It has not been contended by either of the parties that the summary is incorrect.

6. [6]
   The Tribunal member said:

“The relevant facts are of short compass.  They are part of a complicated and unfortunate history relating to the construction of the house, culminating in my decisions in applications C078-94, C300-94, R049-94 and R099-95 following a lengthy hearing in 1996.  The parties in the present application accept that relevant findings of fact in the earlier decision apply in the present application.

In 1993 Mr Elmer Szabo gave a quote to Mr Skinner for the building of the house.  At the time, Mr Szabo did not hold a relevant licence to do that work and, as I specifically found in the earlier decision, at all material times Mr Skinner knew that.  After some negotiations, Mr Skinner accepted a reduced quote from Mr Szabo and a written building contract, in the Authority’s standard form for residential construction, was prepared and signed by Mr and Mrs Skinner as owners and by Mr Szabo as builder.  Mr Szabo subcontracted a Mr Wall to do some of the work, including installation of post bases.

The contract and plans were submitted to the Douglas Shire Council.  On discovering that Mr Szabo was not relevantly licensed, the Council said that the plans could not be approved with him as builder.  Mr Szabo then arranged for a licensed builder to take over the contract, with Mr Szabo acting as subcontractor.  Mr Skinner was informed of this arrangement and approved it.  A second written building contract was produced and signed, again in the Authority’s standard form for residential construction.  The builder was named as G K Mullins Pty Ltd.  By mutual agreement of the relevant parties, the first contract was abandoned.

The new contract was lodged with the Douglas Shire Council in October 1993 and on 14 October 1993 the Authority received a copy of the contract impressed by the local authority together with the relevant premium for the statutory insurance.  Subsequently, the Authority sent to Mr and Mrs Skinner a Certificate of Insurance and Insurance Policy Conditions booklet relating to the construction work for the house.  In the relevant letter (1 June 1994, Mr Skinner’s item 34) a paragraph in bold typeface stated –

‘This certificate is issued by virtue of the Queensland Building Services Authority Act 1991 and is evidence that the Residential Construction Work is covered by a policy of insurance under the Statutory Insurance Scheme.’

Between about 19 and 23 October 1993, Mr Szabo and/or Mr Wall and a Mr Hackett, working pursuant to the contract with G K Mullins Pty Ltd, placed the metal stumps which are the subject of the present application.  Although there was some confusion, at first, as to who did this work and pursuant to which contract, ultimately it was accepted by Mr Skinner, and by Mr Robinson for the Authority, that the work was done pursuant to the G K Mullins Pty Ltd contract and not pursuant to the original (and later abandoned) Szabo contract.

Work progressed and some payments were made.  In early 1994, in circumstances which are not presently material, Mr Szabo was dismissed from the job.  The contractual situation then was that G K Mullins Pty Ltd was bound to complete its contractual obligations under the second building contract, that involving the rectification of any defective work, or work not in accordance with the plans, which had been performed by Mr Szabo before his dismissal, and the performance of the further work necessary to bring the contract works to the state of completion which, in the circumstances of that particular contract was, as I found in the previous decision, something well short of the traditional meaning of ‘completion’, given that various parts of the works required for traditional completion were, by agreement, Mr Skinner’s responsibility.

In the first quarter of 1994, G K Mullins Pty Ltd continued the construction work and received various payments from Mr Skinner.  In circumstances which are not relevant for present purposes, Mr Skinner and Mr Mullins of G K Mullins Pty Ltd fell into dispute and G K Mullins Pty Ltd stopped work before it had completed what it was obliged to do.  I found that the builder repudiated the contract by refusing to continue with it, but that the Skinners did not accept the repudiation and terminate the contract.  They complained to the Authority and sought a direction that the builder complete, which direction was, in fact, given in late June 1994, being a direction to complete the construction of the dwelling in accordance with the contract as impressed by the Douglas Shire Council on 14 October 1993.  G K Mullins Pty Ltd challenged this direction in Review Application R049-1994;  the Authority withdrew this direction in March 1995 and it was dismissed by the Tribunal in April 1995.”

7. [7]
   It is necessary to interpose here that the Authority withdrew its direction to G K Mullins Pty Ltd on the basis that it was of the view that the contract with G K Mullins Pty Ltd was a sham. That decision was confirmed by the Queensland Building Tribunal (078 of 1994) but was overturned in an appeal to the District Court (Robin QC DCJ, appeal number 138 of 1995) and referred back to the Queensland Building Tribunal for further consideration. That occurred during a nine day hearing during April and June 1996 which culminated in the decisions in applications C078-94, C300-94, R049-94 and R099-95. In those decisions the Queensland Building Tribunal ruled that the contract with G K Mullins Pty Ltd was a valid contract.

8. [8]
   The Tribunal member continued,

“Mr Skinner engaged another builder and the work was completed.  In December 1999 the Authority’s Manager Insurance wrote to Mr Skinner, indicating that if appeal proceedings then on foot were successful on grounds which would entitle Mr Skinner to the benefit of an insurance claim, he would need to have accurate records to clearly establish the actual extent and cost of rectification work and the cost of completion following rectification, the letter stating ‘completion work should be strictly limited to the parameters of the original contract and specification including quantities and PC allowances’.  The letter also stated ‘under the present circumstances, it would be inappropriate for the Authority to restrict your ability to proceed with completion of your property.  If a decision is made in your favour, policy condition 6.1 will not be enforced;  however accurate records to establish and quantify your loss are essential’.

In the present proceedings it is conceded for the Authority that, in the light of this letter, the Authority may not avail itself of policy condition 6.1.

At some stage, Mr Skinner (or perhaps Mr and Mrs Skinner) applied to the Authority for insurance cover.  This was refused and application R099-1995 was commenced to challenge that decision.  I visited this application in my earlier decision and found that there was a policy of insurance in force pursuant to s 69(2) of the Act, reflecting the view of the matter originally taken by the Authority as set out in its Certificate of Insurance of 1 June 1994.  In my earlier decision, in the other proceedings, I made necessary determinations with respect to the insurance claim which had been made at that time.  The present proceedings concern a different claim, namely, a claim for compensation and cost of rectification of defective work in respect of the steel stumps or posts which has resulted in rusting of the posts.  In the present proceedings, the Authority does not challenge the fact of defective work and, as I have said, proceeds on the basis that this work was performed pursuant to the G K Mullins Pty Ltd contract, which was abandoned by that company before completion.  Originally, the Authority directed Mr Szabo to rectify this defective work, but this direction was not pursued.”

9. [9]
   It was apparent that the Authority issued a number of directions to Mr Szabo to remedy the defects but these were not complied with as Mr Szabo’s whereabouts could not be discovered. No direction was ever issued to G K Mullins Pty Ltd.

The findings of the Queensland Building Tribunal in 1996

10. [10]
    Some of the findings made by the Queensland Building Tribunal on 11 October 1996 in relation to applications C078-94, C300-94, R049-94 and R099-95 are, in my view, relevant to the present appeal.  None of those findings have been challenged in a way which lessens their relevance here.

11. [11]
    The Tribunal member found that “the first contract between the Skinners and Mr Szabo was abandoned by mutual agreement between those parties and a new contract, on terms equivalent to those of the first contract was entered into between the Skinners and G K Mullins Pty Ltd as builder, with the expressed intention that the works should be performed and/or organised on the site by Mr Szabo but under the supervision of G K Mullins Pty Ltd, by Mr Mullins, who was to have the right to hire and fire subcontractors and to ensure performance as per plans and specifications and to have ultimate responsibility, in a practical and contractual sense, for the job” (Decision page 19).

12. [12]
    The Tribunal member also found that, “in early 1993, the contractual situation was that Mr Mullins’ company was obliged to complete the contractual obligations owed to Mr and Mrs Skinner under the second building contract, that involving the rectification of any defective work, or work not in accordance with the plans, which had been performed by Mr Szabo before his dismissal, and the further work necessary to bring the contract works to the state of completion…” (Decision page 43).

13. [13]
    He also found that, “in terms of the contractual situation between the Skinners and G K Mullins Pty Ltd, I find that, in late April or early May 1994, the builder repudiated the contract, by refusing to continue with it. … In a legal sense, it meant that the Skinners were entitled to accept the repudiation, and bring the contract to an end, leaving them with residual rights in respect of the builder’s breaches of contract and with rights under the statutory insurance scheme, or to elect to hold G K Mullins Pty Ltd to its contract. The evidence as to whether the Skinners accepted the repudiation and brought the contract to an end, or whether they left the contract on foot (as they were entitled to do) was confusing but, ultimately, I find that the contract was not determined. Up to the hearing, the Skinners’ conduct was consistent only with them regarding the contract as being on foot.” (Decision page 54).

14. [14]
    The tribunal member also found that at the end of June 1994, the Authority gave a formal direction to G K Mullins Pty Ltd to complete the construction in accordance with the contract as impressed by the Douglas Shire Council on 14 October 1993 (Decision page 57).  He found that on 31 March 1995 the Authority withdrew its direction to G K Mullins Pty Ltd to complete the house because it was not convinced that a contract existed between the Skinners and that company as builder (Decision page 62).  On 22 August 1995 the Authority wrote to the Skinners refusing insurance cover on the basis of a finding that the G K Mullins contract was a sham (Decision page 63).  As noted above, this finding was overturned in an appeal to the District Court and the Building Tribunal subsequently found that the contract was a valid one (paragraph [7] above).

15. [15]
    The Tribunal member further found that various claims by the Skinners against G K Mullins Pty Ltd as to defective work and work not in accordance with plans, were made out (Decision pages 65-66).  He ordered G K Mullins Pty Ltd to pay various amounts of damages to cover the rectification of that defective work.  None of that defective work related to the rusting of the stumps, although some of the defective work had been performed by Mr Szabo so that there was a set-off of various amounts found to be owing by the Skinners to Mr Szabo.

16. [16]
    The Tribunal member also ordered that G K Mullins Pty Ltd pay an amount to the Skinners as damages because of a failure to complete the house according to the contract (Decision page 85).  In the circumstances of the case, the learned member did not think it was appropriate to direct G K Mullins Pty Ltd to complete the works nor to give any such direction to Mr Szabo (Decision page 92).

17. [17]
    The Skinners had also made a claim against the statutory insurance fund. That claim had originally been refused on the basis that the contract with G K Mullins Pty Ltd was a sham and that Mr Szabo was the real builder. The Tribunal member found that he needed to reconsider that determination (Decision page 86).  He found that there was a policy of insurance in force pursuant to s 69(2) of the Act (Decision page 86) and that there was a valid claim for indemnity under the scheme.  This particular claim for insurance related to compensation for non-completion rather than for defective construction as there had been no “practical completion” to found such a claim under the conditions of the policy (Decision page 87).  In order to claim for loss suffered by a failure of a builder to execute the work to practical completion, a condition was that the owner had to have “properly terminated the Contract with the Contractor for the performance of the Residential Construction Work because of the neglect or default of the Contractor” (clause 2.2).  The Tribunal member found that the Skinners had not properly terminated the contract and had elected to hold the builder to the contract.  It was thus found that the Skinners were not entitled to indemnity under the insurance scheme (Decision pages 88-89).

18. [18]
    The current claim for indemnity is, of course, on a different basis and relates to a claim for compensation and cost of rectification of defective work in relation to the rusting of the steel stumps or posts.

The statutory insurance scheme

19. [19]
    A statutory insurance scheme is established by Part 5 of the QBSA Act.  Pursuant to s 69(2), a policy of insurance comes into force in the terms prescribed by regulation if a consumer enters into a contract for the performance of residential construction work in certain circumstances.  As found in the decision of the Building Tribunal on 11 October 1996, in this instance there was a valid policy of insurance in force and there was a valid claim for indemnity under the scheme (paragraph [17] above).  The respondent’s written submissions accept that the respondent received a copy of the contract between the appellant and the builder on 14 October 1993 which was impressed by the local authority together with the relevant premium for statutory insurance.  The residential construction work was covered by a policy of insurance under the statutory insurance scheme.  Pursuant to regulation, the relevant terms of the insurance policy are contained in Edition 1, which were effective from 1 July 1992 (Decision R-058 of 2000, page 6).  The present claim relates to defective construction which is covered by clause 3 of the conditions.

20. [20]
    Clause 3 states,

The hearing of Review 058-2000

21. [21]
    At the hearing of the review the parties made various relevant concessions.

22. [22]
    The Authority conceded that the stumps were poured and installed under the Mullins contract (Transcript page 26).  The Authority conceded that a policy of insurance in relation to the work performed under the G K Mullins Pty Ltd contract did issue and was in force at the time (Transcript page 62).  The Authority also did not challenge the fact that defective work had been performed (Decision page 5).

23. [23]
    The Authority’s submission on the hearing was that the appellants were precluded from indemnity under the statutory insurance scheme as a result of clause 3.1 of the policy, which provided that the Authority agreed to compensate the owner for loss suffered by the owner from the contractor failing to rectify defects in the residential construction work after practical completion.  It was submitted that no practical completion had been achieved by the contractor G K Mullins Pty Ltd but had been achieved by a different (third) builder.  It was submitted that as practical completion had not been made by the contractor, the condition contained in clause 3.1 had not been met and the insurance policy did not apply.

24. [24]
    The Tribunal member rejected that submission (Decision page 8).  He found that if the Authority’s submission was correct, an innocent owner, who elected not to determine a building contract upon a builder’s refusal to complete, would be left without cover if the works were completed by another builder and later defective work performed by the original builder was discovered.  It seems to me the Tribunal member was clearly correct in his rejection of the submission based, in part, on the natural construction of the words in clause 3.1.  No issue was taken by the respondent as to this finding on the appeal.

25. [25]
    The respondent also submitted that the appellant was also limited in recourse to the statutory insurance scheme by clause 3.2 and that none of the subclauses had been satisfied.  There had been no failure by G K Mullins Pty Ltd to comply with a direction to remedy.  (The directions had, in fact, been issued against Mr Szabo (paragraph [9] above)).  There had been no failure by G K Mullins Pty Ltd to comply with a determination of the Queensland Building Tribunal to rectify the defective constructions.  It was also submitted that there had been no failure to remedy because of “the insolvency, bankruptcy or liquidation of the Contractor.”  It was submitted that there had been no causal link shown between any insolvency or liquidation and a failure to remedy any defects.  It was submitted (Transcript page 56) that the insolvency of G K Mullins Pty Ltd was subsequent.  It was submitted that it was evident that at the relevant time (whatever that was) G K Mullins Pty Ltd was not insolvent.  In my view this was not evident, as the only evidence as to this came in a letter tendered by Mr Skinner (part of Exhibit 5) which clearly indicated that G K Mullins Pty Ltd was insolvent throughout the 1993/1994 financial year.

26. [26]
    With respect to the relevance of the failure by the Authority to direct G K Mullins Pty Ltd to remedy any defects, during the hearing the following passage occurred,

“Mr Wensley:  Well is there any issue now about the decision not to issue a direction to rectify against Mullins?

Mr Robinson (for the Authority):  Not to my knowledge.  Mr Skinner is only reviewing the decision of the Authority to refuse insurance for the rusting posts.

Mr Wensley:    Is that correct?

Mr Skinner:    I wouldn’t care if Mullins or Szabo or anyone did it.  I just want to be …

Mr Wensley:    No, no.  We are here to respond to your application.  It’s not a roving Royal Commission.

Mr Skinner:    No.  But the way I looked at it we can’t issue one against Mullins because the company no longer exists.”  (Transcript pages 7-8).

27. [27]
    In that regard Mr Skinner had introduced into evidence at the hearing (part of Exhibit 5) a letter from KPMG dated 24 March 1998 which indicated that G K Mullins Pty Ltd (In Liquidation) was insolvent at the commencement of the 1993/1994 financial year and remained insolvent at the end of that financial year.  Further documents, relied on by Mr Skinner on the appeal, and consisting of an ASIC company extract in relation to G K Mullins Pty Ltd indicates that the company was placed under a liquidator on 14 April 1997 and that continued until 14 April 2000.  The company was deregistered on 28 July 2000.

28. [28]
    Although this ASIC search was not before the Tribunal member at the hearing of the review, it is clear that the issue was squarely raised by Mr Skinner both in the letter he tendered from KPMG and his oral arguments (Transcript pages 7-8 (above), 54) and final submissions in response to the Authority’s argument that the insurance cover was excluded by the operation of clause 3.2.  At page 59 of the hearing Mr Skinner responded,

“We’re [the Authority] (sic) saying basically that Mullins was not declared insolvent or liquidated until after he abandoned the contract.  I’m saying at what stage does insolvency occur?  I’d say that the letters from KPMG which I have given you show that Mullins was clearly insolvent at the time he entered the contract.”

In my view there was clearly an issue raised as to whether the contractor was able to remedy any defective work because of the company’s financial position.  This was clearly the case at the time of the hearing of the review (24 May 2001).  At that date the company had been deregistered by ASIC.  It is of relevance in this regard to note that Mr Skinner represented himself in the hearing before the Building Tribunal.  The issue was squarely raised.

29. [29]
    The Tribunal member found that the appellants’ entitlement to compensation under the statutory insurance scheme was further limited by clause 3.2.  He ruled that subclauses (a) and (b) did not apply (Decision page 8).  He further found that subclause (c)(i) and (ii) also had no application.  With regard to subclause (c)(iii) he found that the question was whether G K Mullins Pty Ltd had failed to rectify the defective construction because of “the insolvency, bankruptcy or liquidation” of that company.  He noted that there was evidence to the effect that G K Mullins Pty Ltd may have been insolvent at relevant times (Exhibit 5) and it was apparent that G K Mullins Pty Ltd had been liquidated (Decision page 8).  The Tribunal member found that if clause 3.2(c)(iii) was to apply, there must be a causal link between the failure to rectify and the insolvency or liquidation.  He found that that had not been demonstrated.  He noted that it was not suggested that there had been any demand made to G K Mullins Pty Ltd to rectify the work in question (notwithstanding the directions which the Authority issued to Mr Szabo) and commented that there did not seem to be any circumstances which logically linked, “in a cause-and-effect manner” the insolvency or liquidation of G K Mullins Pty Ltd and the fact that the company had not rectified the defective construction (Decision page 8).

30. [30]
    The application for review was dismissed and the decision of the Queensland Building Services Authority to refuse insurance cover was confirmed.

The grounds of appeal

31. [31]
    The grounds of appeal as contained in the appellants’ notice of application are:

32. [32]
    The appellants submitted extensive written outlines in support of these grounds and added further grounds concerning alleged inconsistency between the State Act (QBSA Act) and Commonwealth legislation, specifically the Insurance Contracts Act 1984 and the Trade Practices Act 1974.

Nature of the appeal

33. [33]
    This appeal is pursuant to s 92 of the Queensland Building Tribunal Act 2000.  Section 92(4) provides that the appeal is by way of rehearing, unaffected by the Tribunal’s decision, on the material before the Tribunal and any further evidence allowed by the District Court.  This is an appeal by way of rehearing not an appeal de novo (Pointon v Redcliffe Demolitions Pty Ltd [2002] QDC 131, McGill DCJ, unreported).  Section 92(6) provides that on appeal the District Court may confirm, annul, vary or reverse the Tribunal’s decision;  or remit the case to the Tribunal for further hearing or rehearing;  or make consequential or ancillary orders or directions.

Determination

34. [34]
    Considering the view I have taken in respect of the matter it is unnecessary to consider the grounds of appeal in any detail, except in relation to the aspects that deal with the nature of the statutory insurance scheme and any inconsistency with Commonwealth legislation.

35. [35]
    In relation to the grounds of appeal which relate to the nature of the statutory insurance scheme (grounds 1, 2, 3, 10 and 11), I am of the view that it is clear that the insurance scheme is beneficial for the protection of consumer but is subject to the policy conditions in the terms prescribed by regulation.  It comes into force whether or not a premium has been paid or a certificate of insurance has been issued (s 69(3)).  It is compulsory and there is no opportunity for a consumer to accept, reject or seek to vary the policy conditions.  There is no basis for the appellants’ complaints about the nature of the scheme.

36. [36]
    With respect to the appellants’ arguments that the statutory insurance scheme is inconsistent with Commonwealth legislation, I am of the view that the scheme is “state insurance” as defined in s 9(2) of the Insurance Contracts Act 1984.  That Act has no application to this statutory insurance scheme.  Further, s 5(1) of the Insurance Contracts Act 1984 provides that the Act does not bind the Crown in right of the states.  It is also clear that Part V of the Trade Practices Act 1974 does not bind the Crown either directly or by an authority of a state (s 2B Trade Practices Act 1974).  There is no basis for the appellants’ contentions.

37. [37]
    The Queensland Building Tribunal determined that an insurance policy was in force at all relevant times and that policy conditions Edition 1 applied.  The Tribunal member determined that clause 3.2(c) of the policy conditions denied indemnity.  It was not in contest that defective workmanship had occurred and that that had occurred pursuant to the contract with G K Mullins Pty Ltd.

38. [38]
    Clause 3.2(a) provides that the owner is entitled to compensation for defective construction where the contractor has failed to comply with a direction of the Authority to rectify the defective construction. The appellants filed a dispute notification against G K Mullins Pty Ltd in November 1997. This was after the various determinations made by the Queensland Building Tribunal in its decision of 11 October 1996.  At the request of the Authority the appellants later filed a dispute notification against Mr Szabo.  Various directions to rectify were issued by the Authority to Mr Szabo.  They were not complied with.  In my view the Authority should have issued such directions to G K Mullins Pty Ltd.  After the decision of the Tribunal of 11 October 1996 it was clear that the building contract under which the defective work was performed was with G K Mullins Pty Ltd.  As found in that decision, that firm clearly had a supervisory role in the work performed by Mr Szabo.  Various amounts of damages for defective work had in fact been ordered in that decision.  Some of that work had been performed by Mr Szabo.  In issuing directions to Mr Szabo, the Authority still seemed to be operating under its (mistaken) presumption that the contract with G K Mullins Pty Ltd was a sham.  That presumption had been clearly overturned in the decision of 11 October 1996.

39. [39]
    The Authority’s error in not issuing proper directions to G K Mullins Pty Ltd is now relied on to exclude the appellants from the operation of the statutory insurance scheme. That causes me grave concerns. The regulation is however clear. It must be interpreted strictly. It is clear that no direction was issued to the contractor (G K Mullins Pty Ltd) and thus clause 3.2(a) has no application.  That the appellants are excluded from recourse to the statutory insurance scheme pursuant to that sub-clause because of an error of the Authority (which compounded earlier errors) is most unfortunate.

40. [40]
    However, I am of the view that the Tribunal member was in error in determining that clause 3.2(c)(iii) had no application.  It is clear from material before the Tribunal that the contractor (G K Mullins Pty Ltd) was insolvent at the time of the original contract in 1993, was in the hands of a liquidator from 1997 to 2000 and was deregistered on 28 July 2000.  As noted above (paragraph [27]) G K Mullins Pty Ltd had been deregistered at the time of the hearing of the review (24 May 2001) and had been under the control of a liquidator from April 1997 throughout the relevant period after the defective stumps were discovered (November 1997).

41. [41]
    In my view, in the circumstances, it was clearly open to determine that it would have been pointless to require G K Mullins Pty Ltd to rectify the defects because of that company’s financial position. That company was no longer in existence at the time of the review proceedings. By that time the contractor was clearly not in a position to rectify the defective construction because of the liquidation of that company. In my view the appellants fall squarely within clause 3.2(c)(iii).  In my view the appellants are entitled to compensation under the statutory insurance scheme.  That is particularly the case considering the history of the matter and the errors made by the Authority referred to above.

42. [42]
    The appeal is allowed. I reverse the Tribunal’s decision. The decision of the Queensland Building Services Authority to refuse insurance cover is set aside. I will hear the parties as to the appropriate orders and costs.