Cummings v Queensland Building and Construction Commission
[2015] QDC 312
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- Cummings v Queensland Building and Construction Commission[2015] QDC 312
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Cummings v Queensland Building and Construction Commission[2015] QDC 312
Cummings v Queensland Building and Construction Commission[2015] QDC 312
[2015] QDC 312 | |
DISTRICT COURT OF QUEENSLAND | |
CIVIL JURISDICTION | |
JUDGE DORNEY QC | |
No 3574 of 2015 | |
ALLAN JAMES CUMMINGS | Appellant |
and | |
QUEENSLAND BUILDING & CONSTRUCTION COMMISSION | Respondent |
BRISBANE | |
11.13 AM, FRIDAY, 27 NOVEMBER 2015 | |
JUDGMENT |
HIS HONOUR: This appeal - which of course is only an appeal if I should allow an extension of time for the filing of the notice of appeal - was filed on the 11th of September 2015. I’ll come in a moment to the reasons why that filing was out of time. The judgment appealed against was a decision of Magistrate Thacker on the 3rd of August 2015. It was with respect to a claim filed in the Magistrates Court of Queensland on the 21st of May 2015. The judgment of the court was that the first and second defendants (which include the present appellant, Allan James Cummings) pay to the plaintiff, which is the Queensland Building and Construction Commission, a specific amount. I won’t go into the details of that amount. They’re not relevant for the purposes of the present matters.
The appeal was required by the Uniform Civil Procedure Rules 1999 to be brought within 28 days. What Mr Cummings (and his then fellow proposed appellant) did was to file an application in the Magistrates Court on the 31st of August 2015 seeking that that earlier judgment be set aside. He asserts that he was misled in doing so; and for the present purposes I accept that that can be accepted as an explanation. He then filed, as I say, the notice of appeal (which is earlier referred to) on the 11th of September 2015 - but there appears to be a document called “Notice of Appeal Subject to Leave” also filed but only on the 6th of November 2015. It matters not in this particular case.
The first issue then is how, under the Uniform Civil Procedure Rules, I consider the issue of extending time. Rule 748 is the relevant rule. And, as I indicated, the notice of appeal must be filed within 28 days after the date of the decision appealed upon. That particular rule is relevant even in this appeal by force of rule 785, which brings the procedure for appeals to the District from the Magistrate Court within that particular rule. The rule says:
(U)nless the Court orders otherwise.
Relevant authorities establish that the principles applicable to extending time include such things as: an explanation for the failure; actions taken by such an applicant; informal notice given; prejudice to the respondent; potential for unsettling other peoples’ well-established practices; and the merits of the appeal.
Given the circumstances of the background outlined and the way that the application for the extension of time has been filed, I accept that the relevant circumstances have been met. As for the merits of the appeal, I was concerned about the fact that the original decision did not consider issues which I think are relevant for the decision. And, therefore, I think it is appropriate in the circumstances that the order be made that the time be extended. Therefore, I will continue from here on in to refer to this matter now as an appeal. The grounds of the appeal are many and somewhat confusing. In the end, the only grounds that really are relevant in this appeal are those that deal with two issues. One is the extent to which the policy in question, which is a statutory policy, can be examined for the purposes of the summary judgment; and the second is in fact whether there was a policy of insurance covering the relevant contract.
It must be said at this stage that the learned magistrate did not turn her mind to the issue of the policy itself. There is no blame that I can see that ought to be laid at her door except to say that the documents when closely examined showed that, in light of the development of principles that the Court of Appeal is undertaking with respect to this area, it is an appropriate matter to look at.
In terms of the basic facts there is, as I indicated, a dispute about when in fact the original contract was entered into. The facts such as they are before the Court are that the contract was entered into on 18 January 2008 and to some extent that conforms to the complaint made by what’s called the “insured” in this particular case (who is the owner of the land in question).
The evidence as presently before me shows that the insurance policy in question, if it applicable, is one that within it states is relevant to a contract dated 15 July of 2008. Again turning back to the complaint made under the relevant legislation, the complaint states that the date the work was commenced was the 15th of July 2008.
It’s clear then that a policy existed with respect to work which did commence on the 15th of July of 2008. Perhaps more importantly for present circumstance is the relevant certificate of insurance issued by the predecessor to the present commission, the Queensland Building Services Authority. It states that the commencement date is 15 July 2008 and refers specifically to: the land in question; the contractor, which was the other potential appellant in this case; and the work to be done.
Just for the moment turning to the other potential appellant, which is Aramac Developments Proprietary Limited, the Supreme Court of Queensland has wound up that particular company recently on 23 October 2015 and, thereupon, it has not sought to be a party to this particular appeal.
But turning then to the issue of the insurance policy. Given the fact that section 68(3) of the Queensland Building and Construction Commission Act 1991 (as it is now called) (“Act”) states that such a certificate is evidence for all the relevant purposes, I accept that there is a certificate of insurance that covers the relevant contractor (Aramac Developments Proprietary Limited) on the relevant land and that its commencement date was 15 July 2008. Therefore, in the circumstances, I accept that there is a relevant policy that can respond to the issues that are raised here.
Before I consider the principles applicable, it’s probably worthwhile referring to some other facts. The document headed “Direction to rectify and/or complete”, which was given to Aramac Developments Proprietary Limited and dated 21 May 2014, does not refer to anything other than the site address, the relevant contractor and what work was necessary to be rectified. For reasons that I’ve just examined, I accept that that applies to the work here and to the insurance policy - if it responds to the particular rectification. Obviously, because of previous decisions of the Court of Appeal, that particular direction actually states that the time period for completion, that is, the 28 days, is from the “date of service” of the direction.
Since one of the purposes in summary judgment is to determine whether a trial of facts is necessary, for the moment I will accept that it is an issue raised by Mr Cummings that the 28 days expired on the 23rd of June 2014.
There was a series of emails between Mr Cummings, on behalf of Aramac Developments Proprietary Limited, and Kellie Cummings, who was the relevant insured owner of the land, which need to be referenced. The first is one sent at 6.46 pm on the 22nd of June 2014, which is clearly the Sunday night. The 23rd of June 2014 was a Monday. In that particular email Mr Cummings indicated that he would be “on site tomorrow”.
Later that evening at 7.19 pm Kellie Cummings responded. In that response email she asserted that the 28 day time period ended on Friday. She asserted that she had a call from the Authority - now the Commission - on Friday afternoon and she was told that the Authority would be in contact with Mr Cummings to find out what was happening. Importantly, she stated:
Until I have heard from the representative of the Authority you cannot have access.
The last of the three emails is one dated the 23rd of June 2014, which of course is the Monday, sent at 8.08 am. In that particular email Mr Cummings writes to Stephen Ferguson of the Commission and asserts that he had sent that email earlier referred to advising that Aramac Developments Proprietary Limited would be there “today” (which is the Monday) and that he had received a reply saying it had to be discussed with a representative of the Commission.
The next important document is a letter which was sent by the Commission to Aramac Developments Proprietary Limited on the 23rd of June 2014. This may reflect the misunderstanding – or potential misunderstanding if the facts be true - about the expiry of the 28 day period. Although when one reads that letter that might be doubted. That particular letter referred to the direction given on the 21st of May 2014 to undertake rectification work. As I say, it was directed at Aramac Developments Proprietary Limited. It then goes on to state that this work was to be completed by 23 June 2014 - which of course accords with the analysis that the 28 days expired on that date.
In two parts of that particular letter reference is made to the Commission’s decision that the rectification work required had not been satisfactorily rectified. That first appears just before the four numbered paragraphs on the first page and then again at the top of the second page. The issue that’s now raised, of course, is the extent to which the policy itself impinges upon some defence that might be raised in this case.
Before I turn to the analysis of the principles in recent Court of Appeal decisions I’ll just refer to the relevant clause in the insurance policy. In the affidavit of Darren Philip, which was filed by leave on the 17th of November 2015, the relevant Queensland Government gazette, which states the insurance policy conditions applied effective from 29 September 2006, is exhibited.
The relevant clause is Clause 2.3. I will just read it for the record. It’s headed “2.3 Limits on Right to Payment” and it goes on to state, relevantly:
BSA’s liability to pay under this Part will not arise:
(a) where, in the opinion of BSA, the Insured unreasonably refuses access to the contractor or his/her agent to undertake rectification; or
(b) in circumstances where BSA issues a direction to rectify defective work, until BSA is satisfied that the contractor will not comply with that direction...
(I will then just put dots in, and that is the end of the extract).
I’ll come back, of course, to that in a moment.
I’ll turn then to the authorities. It’s unnecessary to survey them all. There have been many. I’ll deal only with three. The first is Namour v Queensland Building Services Authority [2014] QCA 72; and in the authorised report: [2015] 2 Qd R 1. In that particular decision there was some examination of the earlier decision of Mahony v Queensland Building Services Authority [2013] QCA 323. In that later case, the major decision was given by Fraser JA. He dealt with a number of issues, but in paragraph [19], at 8, stated this:
The scheme of the Act is that a building contractor or other interested person who wishes to challenge such decisions
(and we’re talking about decisions which are relevant to the recovery under section 71(1) of the Act)
should make the challenge before the respondent pays under the policy.
(the respondent of course being originally the Authority and now the Commission)
A building contractor who does not make such a challenge is liable under section 71(1) whether or not one of those anterior decisions might have been the subject of a challenge. In the case of a building contractor which is a company, a director caught by section 111C(6) is similarly unable to challenge one of those anterior decisions in a proceeding for recovery of a debt.
It’s not in issue that both those sections apply in this case, particular the latter with respect to Mr Cummings. In paragraph [24], at 9, he went on to state as follows:
Neither the reasonableness of a payment made by the respondent nor the amount owing by a claimant under the insurance scheme to the contractor is made a criterion of liability under section 71(1). Those criteria would be relevant in a recovery action under section 71, subsection (1) only if they were relevant to the determination of the question whether the amount sought to be recovered by the respondent is the amount of “payment on a claim under the insurance scheme”. The appellant argued that they were made relevant by the statutory insurance policy. The relevant provision is in clause 1.4(a), which applies where the contractor had embarked upon the contract works. In such a case, the policy limits the amount…
And then the paragraph goes on to state what it states. In paragraph [25], at 9, Fraser JA then said as follows:
Because there is no reason to doubt
(obviously referable to the case that he was considering)
that each claim was paid in accordance with the terms of the policy, it is not necessary to decide whether or to what extent these matters might be justiciable in a recovery action under section 71(1). The detailed affidavit evidence of respondent was not challenged; the amount paid by the respondent to each owner was the cost of completing the work reduced by the amount which remained owing to the company under the construction contract.
The next important case before I turn to the latest decision is Queensland Building v Construction Commission and Lifetime Securities (Australia) Proprietary Limited and Anor [2014] QCA 161. The major decision in that case was given by Gotterson JA. He was concerned in that case with whether or not it was arguable that one could go wider than what had been referred to in the case of Namour. At paragraph [26] he said the following:
In support of its argument, QBCC - which is the Commission in this case - relied upon the decision of this court in Mahony. That case concerned two issues. The first was a statutory construction issue arising from the builder’s argument that section 71(1) require QBCC to prove fault on the builder’s part. The second issue was that, in any event, whether the builder was not at fault is a justiciable issue within the recovery proceedings.
In paragraph [27] he said:
This Court held that the fault issue was not justiciable in recovery proceedings based on section 71(1).
In paragraph [29] he said:
The decision in Mahony supports the view that the right to recover conferred by section 71(1) is not conditioned upon the legal quality of any step that QBCC may have taken antecedent to a decision to make payments under the scheme.
It’s sufficient then just to turn to two further paragraphs in that case. In paragraph [33] he stated as follows:
Section 71(1) does not, by its express terms, condition the right of recovery thereby conferred by reference to regularity in compliance by QBCC with any one of the provisions in Part 6.
He’s referring, of course, to the relevant Act.
Neither section 72 nor section 74 expressly refer to the right of recovery under section 71(1). In these circumstances, for this submission to have validity, it would be necessary that such a condition be implied within the text of the Act itself. I am unable to discern such an implication from the provisions of Part 5 or Part 6.
In paragraph [34] he then adds the following concluding comments:
While the right to recover under section 71(1) is not conditioned as Lifetime Securities submits that it is, that is not to say the compliance by QBCC with the provisions of Part 6 might never have potential relevance to recovery action under section 71(1). For example, such a circumstance might arise in the following way. Under the Insurance Policy Conditions, the amount that QBCC may pay under the insuring clause is limited to the reasonable cost, as determined by QBCC, of undertaking the rectification work: clause 4.2(a). A failure on the part of QBCC to call tenders when it was required to do so under section 74(1) or (2) might give scope for an argument that the amount paid by QBCC in respect of the rectification work exceeded reasonable cost and, to that extent, was not a valid payment under the scheme.
The continuing development of principle with respect to what is justiciable has been most recently determined by the Court of Appeal in Samimi & Anor v Queensland Building and Construction Commission [2015] QCA 106. The decision in that case was given on behalf of the Court by Boddice J. I am not going to the particular reasons for it. I’m going to the principles that are extractable from it. Reference was made, in paragraph [33], in this way:
Support for this conclusion - a conclusion about what 71(1) means - is also derived from a number of authorities of this Court. In Mahony, Gotterson JA (with whose reasons President and Douglas J agreed) observed:
The language of 71(1) would leave open scope for a defence that the payment sought to be recovered was not made upon a claim and a defence that the claim was not validly made under the Act. To my mind, the position was accurately summarised by Henry J in Queensland Building Services Authority v Orenshaw & Anor as follows:
At the other extreme, it is unlikely that section 71 could be avoided by a building contractor disputing discretionary factual conclusions occurring as part of the professional judgment exercised by the QBSA in deciding whether and how much to pay in respect of a claim. It would not be enough to avoid the statutory liability imposed by section 71 for a defendant to point to any error of fact connected with the claim process. It must logically have been a factual error of such a nature that the claim was not, on the facts as correctly known, a claim under the insurance scheme or that the payment sought to be recovered was not a payment on such a claim.
In the next paragraph (at [34]) he deals with an observation by the President in Mahony in which she refers to the following:
Where the statutory insurer has made payments to those who were not entitled to claim under the scheme, I presently remain unpersuaded the parliament intended, in enacting section 71(1) of the Queensland Building Services Authority Act – as it then was – to allow the insurer to recover the amount of such payments from the builder.
I turn then to the concluding paragraphs. Boddice J stated that:
While Fraser JA in Namour - which I first referred to - found the matters sought to be raised by way of defence were not justiciable under section 71(1) of the Act, that conclusion occurred in circumstances where there was “no reason to doubt that each claim was paid in accordance with the terms of the policy”. A different conclusion may follow where there is reason to question whether payment was made in accordance with the terms of the policy.
Then, in paragraph [37]:
Gotterson JA, in – and this is the second case I referred to – Queensland Building and Construction Commission and Lifetime Services Australia Proprietary Limited & Anor also recognised that a matter of relevance to a recovery action under section 71(1) of the Act may include ‘if the payment was not a valid payment under the scheme’.
In paragraph [38]:
Contrary to the respondent’s submission, the consideration of whether a payment sought to be recovered under section 71(1) of the Act was a valid payment under the scheme does not merely raise an element of the respondent’s administrative processes anterior to the payment. That issue raises whether the payment was made “on a claim under the insurance scheme”, a condition for recovery of the payment under section 71(1) of the Act.
In paragraph [39] he then, lastly, refers to the relevant rule 292 of UCPR as containing two requirements: first, that there is no real prospect of success in any defence; and, secondly, there is no need for a trial. I have not descended to the particular facts of those cases, because I think in this particular case we’re dealing with the matters of principle that can be extracted.
When I raised the issue of the width of Clause 2.3, it was pointed out that, for instance, in the cases in question other clauses had been referred to, in particular Clause 1.9. It was submitted to me that Clause 1.9, which appears in Part 1 and deals with non-completion, is to be treated differently from Part 2, which refers to defective construction. I reject that submission, primarily on the basis that Clause 1.9 begins “BSA is not liable under this Part …” and Clause 2.3 begins “BSA’s liability to pay under this Part will not arise …”. While they’re obviously concerned with different issues, they both deal with common issues of liability; and, if anything, Clause 2.3 deals more directly with the issues concerning liability that arise here.
It is, therefore, necessary to consider whether in the circumstances that I originally covered there is something which can be brought within those particular provisions that I have mentioned in Samini (that is, whether there is no real prospect of success in any defence and whether there is no need for a trial). Important in this discussion is the Court of Appeal’s decision in LCR Mining Group Proprietary Limited v Ocean Tyres Proprietary Limited [2011] QCA 105. In that particular case, speaking again for the court, White JA stated the following conclusions. After reference was made to Deputy Commissioner of Taxation v Salcedo – and I omit the citation here – that it was:
concluded, uncontroversially, on the authority of Queensland Pork Proprietary Limited v Lott [2003] QCA 271 at [41], that once an applicant for summary judgment has made out a prima facie case the evidentiary onus shifts to a respondent.
That’s in paragraph [22] of that decision.
In this particular case, of course, that applies to Mr Cummings - and of course would have applied to his company earlier on - if there is something which were to be necessary to have decided as a factual matter. As, then, the onus is on the respondent, once that prima facie case has been raised, to introduce evidence which would lead the court to consider either that there was some defence or there was some issue to be tried at a trial. What is particular to this particular case is that it seems to me that Clause 2.3 raises an issue that hasn’t been directly considered by those Court of Appeal authorities. It is clear from reading those authorities that they appear to deal with whether in fact a matter can be decided one way or the other. This is a subtle variation on that, as can be seen from the reading of the original clauses: as in (a) it depends upon an opinion of the respondent (that is, the Queensland Building & Construction Commission); and as in (b) it relies upon a satisfaction.
On the face of those two matters, of course, they seem to be things that really are more the subject of judicial review under the Judicial Review Act 1991. And, of course, on the authorities that’s one of the avenues that a person such as Mr Cummings, or his company, can avail themselves of prior to the time of being sued under section 71(1). But it seems to me that since these issues arise directly under the terms of the policy of insurance, it is an issue that a court considering summary judgment must turn its mind to - and I do so now.
I’ll deal firstly with Clause 2.3(b). It deals with liability to pay not arising in circumstances where, relevantly, the Commission issues a direction to rectify defective work – which is clear it has done in this case – and until it is satisfied the contractor will not comply with that direction.
As I indicated, the letter expressing the lack of satisfaction was sent on 23 June 2014. That date, of course, is the last of the 28 days. In the circumstances of this particular case where the appellant cannot contest that the amount of rectification work undertaken – which, of course, is the basis of the section 71(1) claim – is in excess of $25,000, it seems to me that I can rely upon that uncontestable fact. The particular provision is framed in terms of “will not comply”. Given that the contractor, Aramac Developments Proprietary Limited, through its agent, Mr Cummings, only was willing to undertake the work on the last day and in light of the fact that there is an evidential onus on the respondent to introduce relevant evidence which might raise an issue that this is a fact which could be in dispute, I reach the conclusion that it could be then satisfied that Aramac Developments Proprietary Limited “will not comply” with that direction even though it was issued on the last day. It is just impossible to imagine the circumstances in the limited information that has been put before both the original court and in this Court on appeal that any such satisfaction could be other than that which is expressed in the letter of 23 June 2014 and, therefore, I find in the terms of rule 292, there is both no defence and not a matter for a trial.
The other issue, of course, is a little more complex. Clause 2.3(a) deals with the opinion of the Commission and it deals with the insured (in this case, Kellie Cummings) unreasonably refusing access to the contractor to undertake rectification. It’s clear that the insured, to use the terms of the policy, did refuse access to the contractor, Aramac Developments Proprietary Limited, to undertake rectification.
The first issue then, of course, is the unreasonable refusal. There is no doubt that the emails show that she acted on an incorrect basis (i.e. on the understanding, as she seems to have been informed by the Commission, that the 28 days expired on the Friday). Nevertheless, I reach the conclusion, as a result of the analysis I’ve just done for Clause 2.3(b) that the refusal would not have had any causative relationship with the ability to undertake rectification. That is, that if she had not refused, then the contractor could not have undertaken rectification in the limited time of one day which was available. One can therefore reach the conclusion that it could not be contested that she “unreasonably” refused in the circumstances.
The second issue though is the opinion of the Commission. Now, of course, there is no evidence that the Commission reached any opinion about this particular matter. In fact, it sent its letter on the 23rd. What must be considered then is whether in terms of rule 292, there is no real prospect of Mr Cummings having success in defence based upon this particular point or that there is no need for a trial. It seems to me that if one reaches the conclusion that, in the circumstances, the insured’s refusal, even if it was unreasonable, had no causal relationship with the inability of a contractor to rectify, then it would be an opinion which must be reached by the Commission that it would not be an unreasonable refusal.
This is obviously not an easy matter to decide in these particular circumstances. Nevertheless, it does seem to me that there is no real prospect of success for Mr Cummings in reliance upon either Clause 2.3(b) or Clause 2.3(a).
Accordingly, I find there is, firstly, no real prospects of success on either of those particular matters and, secondly, there is no need for the trial to investigate what, in fact, the facts were (because, it seems to me, the evidence does not rise to a level which would allow that to be determined). (I’ll just make sure that there’s nothing else I wanted to cover). The conclusion I therefore draw is that those issues which might have been otherwise agitated by the appellant in his notice of appeal, and were perhaps not addressed by the learned magistrate in the first instance, have been addressed by me but are precluded from any consideration as to justiciability because of the authorities that I’ve mentioned. Accordingly, I will dismiss the appeal.
I will order that the appellant - as I’ve now designated him the appellant, Allan James Cummings - pay the costs of the appeal. Now, if you find out that that is not the decision I would make on costs, I’m happy to vacate the order and do one limited to a particular amount.
MR COOKE: It probably should also include reserved costs as I think his Honour, Justice [indistinct] ‑‑‑
HIS HONOUR: His Honour did reserve the matter on the dismissal of the stay ‑‑‑
MR COOKE: Yes. Yes.
HIS HONOUR: ‑‑‑ including reserved costs.
MR COOKE: Thank you, your Honour.
HIS HONOUR: Okay. Okay. Thank you both.
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