Queensland Building Services Authority v Namour (No 1)
[2013] QDC 200
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- Unreported Judgment
- Appeal Determined (QCA)
- Queensland Building Services Authority v Namour (No 1)[2013] QDC 200
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Queensland Building Services Authority v Namour (No 1)[2013] QDC 200
Queensland Building Services Authority v Namour (No 1)[2013] QDC 200
DISTRICT COURT OF QUEENSLAND
CITATION: | Queensland Building Services Authority v Gus Namour & Ors (No 1) [2013] QDC 200 |
PARTIES: | QUEENSLAND BUILDING SERVICES AUTHORITY v GUS NAMOUR and THOMAS JOHN SEAN FITZPATRICK and LING HUA ZHAO and DEAN HAMMOND DRUCE |
FILE NO: | 1664/2011 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court Brisbane |
DELIVERED ON: | 21 August 2013 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 6 December 2012 |
JUDGE: | Reid DCJ |
ORDER: | Judgment for the Plaintiff against the First Defendant for $192,878.37 together with interest. Application for summary judgment against the Third Defendant dismissed. |
CATCHWORDS: | Summary Judgment – Queensland Building Services Authority Act (1991), s 71 & s 111C – through whose fault the claim arose – building work the subject of the claim – whether reference only to defective or incomplete work |
CASES REFERRED TO | Elderslie Property Investments No. 2 Pty Ltd v Dunn & Anor [2007] QSC 192 LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd [2011] QCA 105 Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2003] 1 Qd R 259 at 265 Queensland Building Services Authority v Orenshaw & Anor [2012] QSC 241 Lange v Queensland Building Services Authority [2011] QCA 58 |
COUNSEL: | A Freeman for the Plaintiff N Cooke for the First Defendant S Gray for the Third Defendant |
SOLICITORS: | Rostron Carlyle Solicitors for the Plaintiff A.J. Torbey & Associates for the First Defendant Hatzis Lawyers for the Third Defendant. |
- [1]In this matter the plaintiff has applied for summary judgment against the first and third defendants in the sum of $192,878.37 as a debt due pursuant to s 111C (3) and (6) of the Queensland Building Services Authority Act 1991 (hereinafter the Act) together with interest and costs.
Background
- [2]The first and third defendants were at various times directors of a company Trans Asia Pacific Projects Pty Ltd (the company). The first defendant was a director from 23 February 2007 until 11 December 2011. The third defendant was a director from 15 January 2004 to 8 July 2007. The company entered into eight separate contracts to perform building work at various times between 6 December 2005 and June 2007 although one of the contracts, described as being for property 3 has no date shown. The pleadings assert that a deposit of $38,000 was paid in respect to that contract on 26 September 2007. Consequently it seems possible, perhaps even likely, that this contract was not entered into until a time after the third defendant had ceased to be a director. The first defendant was a director at the time the company entered into contracts for what are described as properties 3, 5, 6 and 7. He was also a director during times when building work was performed in respect of each of the properties. The third defendant was a director at the time the defendant entered into contracts to perform building work with respect to each of the properties, except, quite possibly, property no. 3. He had resigned prior to building work being completed on any property and perhaps before work was in fact commenced on some properties.
- [3]On 29 May 2008 the company went into external administration. At that time the third defendant was no longer a director of the company but the first defendant was then a director. Subsequently each of the contracts was terminated on various dates between March and August 2008 i.e. after the third defendant had resigned but during the period the first defendant was a director.
- [4]Each of the contracts were for the company to perform building works covered by the Queensland Home Warranty Scheme (QHWS). Each of the eight owners sought separate indemnification under the Act. Subsequently the plaintiff, in each case, sent a letter to the company advising of the complaint and nominating a time for inspection of the works on the subject property. In each case QBSA found the works were defective. The owners sought tenders for completion of the building work. The plaintiff issued a notice of debt to the company with respect to each contract. Subsequently the works were completed. The total of all eight claims was $192,878.37 which is the amount the plaintiff seeks to recover. Of this, the sum paid with respect to property number 3 was the sum of $9,883.08.
- [5]It is not in dispute that neither the company, nor either of the first defendant or third defendant, ever sought a review of the decision of QBSA to make the various payments or in respect of the decision to initially suspend and then cancel the company’s licence.
- [6]The plaintiff relies on ss 71 and 111C of the Act. Section 71 relevantly provides:
“s 71
- (1)If the authority makes any payment on a claim under the insurance scheme, the authority may recover the amount of the payment, as a debt, from the building contractor by whom the relevant residential construction work was, or was to be, carried out or any other person through whose fault the claim arose.
- (2)For sub-section (1) –
- (a)A building contractor by whom the relevant residential construction work was, or was to be, carried out is taken to include –
- (i)A licensed contractor whose licence card is imprinted on the contract for carrying out the work; and
- (ii)A licensed contractor whose name, licence number and address are stated on the contract; and
- (iii)A licensed contractor whose name is stated on the contract for carrying out the work; and
- (iv)A licensed contractor whose name is stated on an insurance notification form for the work; and
- (v)A licensed contractor whose licence number is stated on the contract for carrying out the work; and
- (vi)A licensed contractor whose licence number is stated on an insurance notification form for the work; and
- (vii)A licensed contractor whose PIN was used for putting in place, for the work, insurance under the statutory insurance scheme; and
- (viii)A building contractor by whom the work was, or was to be, carried out; and
- (ix)a person who, for profit or reward, carried out the work; and
- (b)a person through whose fault the claim arose is taken to include a person who performed services for the work if the services were performed without proper care and skill.”
- [7]Section 111C relevantly provides as follows:
“(3) This section also applies if a company owes the authority an amount because of a payment made by the authority on a claim under the insurance scheme.
…
- (6)If this section applies because of subsection (3), the liability to pay the amount attaches to –
- (a)each individual who was a director of the company when building work the subject of the claim was, or was to have been, carried out; and
- (b)each individual who was a director of the company when the payment was made by the authority .
- [8]The plaintiff’s application is under s 292 of the Uniform Civil Procedure Rules for summary judgment. It therefore bears the burden of proof of establishing its entitlement to such a judgment. When it does so, the onus shifts to the other party to show evidence of an available defence or a need for a trial (see per Daubney J in Elderslie Property Investments No. 2 Pty Ltd v Dunn [2007] QSC 192 and, on appeal 2008 QCA 158). It is important to note that pursuant to r 292(2), the relevant test is that the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim and there is no need for a trial of the claim or the part of the claim. Only in such circumstances can a court give such summary judgment. It has been emphasised that there must consequently be a high degree of certainty about what the ultimate outcome of a proceeding would be if it were allowed to go to trial in the ordinary way before there can be such a judgment. (See LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd [2011] QCA 105 and Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2003] 1 Qd R 259 at 265.)
Claim against first defendant
- [9]In respect of each of the eight properties the first defendant admits that the company and the owner of the respective properties entered into written contracts for construction of a residence thereon. It is clear that at the time the first defendant became a director of the company on 23 February 2007 none of the building contracts had been completed (and, indeed, some had not been entered into). The first defendant admits in his defence that on 29 May 2008 the company went into external administration but does not admit that the building works were then incomplete. Despite this non-admission affidavits attesting to that fact were not disputed on the hearing before me.
- [10]In respect of the relevant contracts the first defendant says that after the plaintiff cancelled the company’s building licence on 15 February 2008 it was unable to perform further building work. The first defendant says that the cancellation of the licence was based upon the purported failure of the company to comply with the requirements of a compliance audit and notice issued given on 17 December 2007 to produce documents.
- [11]The first defendant says that the company, while not complying with the compliance audit or notice to produce, did subsequently deliver an independent review report of 6 December 2007 and delivered financial records of the company on 18 January 2008. The first defendant contends that the licence should therefore not have been cancelled. In such circumstances the first defendant asserts that the first defendant is therefore not a person “through whose fault the claim arose” and submits therefore that the necessary conditions of s 71 of the Act have not been met.
- [12]In addition to relying on the assertion that the defendant was not a person through whose fault the claim arose within the meaning of s 71 of the Act, the first defendant also does not admit the circumstances in which the claims were made and paid by the plaintiff. The first defendant’s counsel submits that the plaintiff is therefore required to prove these matters.
- [13]In his submissions counsel for the first defendant relies on the judgment of Henry J in Queensland Building Services Authority v Orenshaw [2012] QSC 241. In that case his Honour also considered a situation in which there had been no application to the Tribunal to review a decision to recover the amount paid out from the building contractor as a debt pursuant to s 71. His Honour in paragraph 31 posed the question of whether the absence of a provision for a challenge of such matters by review before QCAT should preclude a dispute about such matters in the defence of a party before the court. At paragraph 32 his Honour said:
“[32] Whether the decision to pay the claims was reviewable under the QBSA Act or by way of judicial review cannot be determinative of the legal legitimacy of the first defendant‘s defence. The determinative question is whether the statutory right of recovery under which the claim is brought can be defended by reliance upon denials effectively alleging that the QBSA ought not have paid the amounts it now seeks to recover. …
- [33]In the present context the critical element in s 71(1) is that the QBSA must have made a ‘payment on a claim under the insurance scheme’ and similarly in s 111C(3) that there was a ‘payment made by the authority on a claim under the insurance claim’ ”
- [14]His Honour then considered the case of Lange v Queensland Building Services Authority [2011] QCA 58 and at para 36 continued:
“It is undoubtedly correct that the relevant element, or trigger as Wilson AJA called it, is that there has been a payment on a claim under the insurance scheme. However, it is conceivable there may be incorrect facts or incorrect inferences of fact relied upon, in respect of a claim purportedly made under the insurance scheme and the nature of the error may be such that on the correct facts it cannot be said to have been a claim under the insurance scheme at all.”
- [15]The first defendant’s counsel submits that on a proper construction of s 71(1) as a whole it cannot have been intended that the plaintiff could recover from any personal entity a payment made by QBSA unless that loss is caused by the person or entity. It is submitted that the use of the words “or any other person through whose fault the claim arose” indicates the person or entity from whom recovery is sought must have been responsible for the loss. She contended that it was not shown that the first defendant was in fact responsible for the loss, but rather that it was the unjustified actions of the plaintiff in cancelling the building licence which brought about the loss suffered by the property owners.
- [16]In my view the proper construction of s 71 does not support the first defendant’s counsel’s contention in this case. In my view the effect of s 71 of the Act is that the authority is entitled to recover the amount of any payment made on a claim from any person through whose fault the claim arose, or, additionally, from the building contractor by whom the relevant residential construction work was or was to be carried out. In my view it is not necessary that fault be attributed to that building contractor. It is, after all, an insurance scheme designed to protect property owners, and the QBSA is provided with a right of recovery from the contractor. The phrase “through whose fault the claim arose” at the end of s 71(1) merely extends the capacity of the authority to recover money from persons, other than the building contractor, who, through fault, may have brought about the claim. The phrase does not qualify the liability of the building contractor, who can, in my view, be liable even in the absence of such fault.
- [17]Because of the provisions of s 111C, the liability of directors, who were directors when the building work the subject of the claim was to have been carried out or who were directors when the payments were made by the authority, are also liable. In my view there is no basis for construing s 71 as the first defendant’s counsel submits. I do not think the decision of Henry J in QBSA v Namour (supra) militates against finding in the plaintiff’s favour against the first defendant. The question before his Honour was whether or not payment made on a claim in respect of a cost plus contract was a “payment on a claim under the insurance scheme”. In my view the assertion made in the defence of the first defendant that the cause of the company’s incapacity to perform the building work was the inappropriate cancellation of the building licence by the plaintiff does not entitle the first defendant to effectively go behind the provisions of s 71 and 111C of the Act, in circumstances where the decision to cancel the building licence was not challenged by the company of which the first defendant was a director or by the first defendant himself.
Claim against the third defendant
- [18]The third defendant defends the claim on the basis that liability under s 111C(6)(a) applies only to defects in the work, or incompletion of the work whilst he was a director, and that, in fact, such defects or incompletion occurred only after he had ceased to be in such a position. The cessation of his directorship occurred, as I have said, on 8 July 2007. It is also to be noted that the owner of property number 4 paid a deposit on 26 September 2007 after the third defendant had in fact ceased being a director. There is it seems to me no other evidence of the date that contract was entered into so it may well have been entered into after the third defendant had ceased to be a director.
- [19]If the construction put forward by the third defendant of s 111C is to be accepted, the words “building work the subject of the claim” would mean defective or incomplete work, rather than meaning all building work related to the construction of the particular residence.
- [20]“Building work” is defined in schedule 2 of the Act as “the erection or construction of a building”. It does not seem to me that consideration of that definition is of assistance.
- [21]The plaintiff’s submission, if it be correct, would mean that if a director was a director of a viable building company which commenced work upon a project and during construction, and at a time when there were no defects in the quality of construction or concerns about the viability of the company, then resigned and, subsequently, building work was not completed satisfactorily, the former director would nevertheless be liable in the event of a claim under QHWS arising from such later defects. That construction could result in significant injustice.
- [22]An alternative construction, advanced by the third defendant, is that the words “the subject of the claim” qualify that building work for which such a director would be liable. It would, the third defendant submits, only be liable under QHWS and so pursuant to s 111C if he was a director when building work which was defective or not completed as required was performed.
- [23]As I have said, if the plaintiff’s construction was correct, that construction would then make directors liable for defective “building work” for which they and the company, when they were involved, had no responsibility for. In the scenario I used above, if a director was, for example, an architect, and was involved with a building company which contracted to design and build a residential property but resigned after he or she had appropriately designed the building but before work commenced, then the director would be liable for a defect in completing the building work, possibly with respect to a matter which was not even part of his or her original design but related to a variation in the contract. Such a construction is strongly counterintuitive.
- [24]The plaintiff submits that s 71 defines the contractor’s liability in such a way that there can be no dispute about the extent of its liability – it is the amount of the payment made on the claim. It submits that because the section “does not provide for an apportionment of that liability” and because the work the subject of the claim is fixed not by time but by reference to a particular contract that the phrase “building work the subject of the claim” in s 111C is a reference to all work the contractor carries out on the building.
- [25]A difficulty with that argument, besides the counterintuitive matter I have raised, is that s 111 does refer to a liability by reference to time. It provides that the directors liability attaches to persons who were directors when building work the subject of the claim was performed. In my view it is reasonably arguable that building work “the subject of the claim” is a reference to work the subject of an allegation of defective workmanship or incompletion as required. I am far from satisfied to the requisite high degree of certainty that the outcome of the proceeding against the third defendant would be favourable to the plaintiff. In such circumstances the plaintiff’s claim for summary judgment against the third defendant is dismissed.
- [26]I therefore give judgment for the plaintiff against the first defendant in the sum of $192,878.37 together with interest. I ask that the parties prepare a schedule of interest, from the date payments were made. I order that the application for summary judgment against the third defendant is dismissed.
- [27]I will hear argument as to costs.