Queensland Building and Construction Commission v Turcinovic
[2016] QDC 66
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- Unreported Judgment
- Appeal Determined - Special Leave Refused (HCA)
- Queensland Building and Construction Commission v Turcinovic[2016] QDC 66
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Queensland Building and Construction Commission v Turcinovic[2016] QDC 66
Queensland Building and Construction Commission v Turcinovic[2016] QDC 66
DISTRICT COURT OF QUEENSLAND
CITATION: | Queensland Building and Construction Commission v Turcinovic [2016] QDC 66 |
PARTIES: | QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (applicant/plaintiff) v TURCINOVIC (defendant/respondent) |
FILE NO/S: | 4602/15 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court in Brisbane |
DELIVERED ON: | 31 March 2016 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 25 February 2016 |
JUDGE: | Kingham DCJ |
ORDER: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS – PLEADINGS – APPLICATION TO WITHDRAW DEEMED ADMISSIONS – where original defence pleaded non-admissions to nearly all allegations – whether explanation for doing so complies with UCPR r166 – whether deemed admissions – whether the defendant should have leave to withdraw deemed admissions. PROCEDURE – CIVIL PROCEEDINGS – ENDING PROCEEDINGS EARLY – APPLICATION FOR SUMMARY JUDGMENT – where the plaintiff applied for summary judgment for payments made under a statutory insurance scheme – whether the defendant has no real prospect of successfully defending all or part of the plaintiff’s claim – whether there is no need for a trial. PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – where the plaintiff paid claims by owners in respect of incomplete and defective building work carried out by the defendant – where the plaintiff commenced proceedings against the defendant to recover those amounts as a debt pursuant to s 71(1) of the Queensland Building and Construction Services Authority Act 1991 (Qld) – where defendant argues the payments are so unreasonable as not to constitute payments made on a claim under the scheme – whether the reasonableness of the payments is justiciable in proceedings pursuant to s 71(1). Civil Proceedings Act 2011 s 58(3) Queensland Building and Construction Commission Act 1991 s 71(1) Uniform Civil Procedure Rules 1999 rr 166,188 Agar v Hyde (2000) 201 CLR 552, applied Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352, followed Cassatone Nominees Pty Ltd v Queenslandwide House and Building Reports Pty Ltd & Ors [2008] QCA 102, applied Chen v ANZ Banking Group Ltd [2001] QSC 43, followed Deputy Commissioner of Taxation v Salcedo (2005) 2 Qd R 232, applied Mahony v QBSA [2013] QCA 323, applied Pinehurst Nominees v Coeur de Lion Investments Pty Ltd [2012] QSC 314, followed Turcinovic v Queensland Building Services Authority [2013] QCAT 541, citedNamour v QBSA [2014] QCA 72, applied Samimi & Anor v QBCC [2015] QCA 106, applied |
COUNSEL: | Mr N J Morgan for the Plaintiff/Applicant Mr S Nguyen for the Defendant/Respondent |
SOLICITORS: | Rostron Carlyle Lawyers for the Plaintiff/Applicant Essen Lawyers for the Defendant/Respondent |
- [1]The QBCC administers the Queensland Home Warranty Scheme, a statutory insurance scheme for residential construction. It made payments on claims under the scheme to rectify defects in Mr Turcinovic’s residential construction work at 6 properties in Brisbane. It has applied for summary judgment for those payments. Mr Turcinovic wants to defend the claim because he says the costs of rectification are unreasonable and QBCC failed to use a proper tender process. QBCC argues there is no real prospect of Mr Turcinovic defending the claim and there is no need for a trial.
- [2]Before turning to the merits of those arguments, a preliminary issue was raised at the hearing about Mr Turcinovic’s defence. QBCC seeks judgment on his original defence which, it argues, contains deemed admissions to the claim. Mr Turcinovic contests that is the effect of his defence; but, if it is, he seeks leave to amend the defence. At the hearing I gave leave to withdraw the deemed admissions. My reasons, in brief, follow.
The Amended Defence
- [3]In his original defence, filed on 10 December 2015, Mr Turcinovic stated he did not admit paragraphs 4 to 58 of QBCC’s Statement of Claim. Allegations made in a party’s pleading are deemed to have been admitted unless the responsive pleading satisfies the requirements of r166 of the Uniform Civil Procedure Rules 1999. An admission (including a deemed admission) can only be withdrawn with the Court’s leave.[1]
- [4]Mr Turcinovic is deemed to have made the admissions, unless he has provided a direct explanation for his belief that they cannot be admitted. His Defence did contain an explanation, but QBCC contests it satisfies the requirements of r166.
- [5]Mr Turcinovic pleaded that he has made reasonable inquiries and remains uncertain of the truth or otherwise of the allegations and is unable to admit them because QBCC had failed to provide documents and information requested by Mr Turcinovic’s former lawyer.
- [6]I am not satisfied that a global explanation in such limited terms to all but the first few paragraphs of a detailed Statement of Claim meets the requirements of r166. Mr Turcinovic did not explain what documents or information was requested. Nor did he explain how this had any bearing on his ability to plead his case. Consequently, Mr Turcinovic does require leave to withdraw deemed admissions to [4] to [58] of the Statement of Claim.
- [7]The principles to apply to such an application have been distilled by Martin J in Pinehurst Nominees v Coeur de Lion Investments Pty Ltd[2]. The Court’s discretion is broad and unfettered and parties do not have an inalienable right to a hearing of all issues on the merits. The Court must consider whether there is a genuine dispute, how and when it was raised and whether the plaintiff will suffer prejudice if leave is granted.
- [8]Mr Turcinovic was self-represented when he filed the Defence, although he had previously had some legal representation. It was not well articulated, but his original defence did raise one of the issues pleaded in the amended Defence: the validity of the tender process.
- [9]This is an application for summary judgment and the court should proceed with caution where a party can improve its position by proper amendment to the pleading.[3] There is no apparent prejudice to QBCC if its application for summary judgment is determined on the amended pleading. To the contrary, the QBCC’s sole argument against the court granting leave is that the amended Defence has no real prospect of succeeding and, therefore, there is no utility in granting leave to withdraw the admissions.
- [10]In those circumstances, I consider it appropriate to grant Mr Turcinovic leave to withdraw the admissions and I will determine the application for summary judgment by reference to the amended Defence[4].
The Application for Summary Judgment
- [11]Turning to the application for summary judgment, QBCC seeks judgment for $253,927.57, which includes interest of $39,463.02 (to the date of hearing) on the claim of $214,464.55.
- [12]The Court has a discretion pursuant to r292(2) to give judgment for the plaintiff on all or part of its claim if it is satisfied that:
- (a)the defendant has no real prospect of successfully defending all or part of the claim; and
- (b)there is no need for a trial of the claim or part of the claim.
- [13]The claim relates to payments made by QBCC under the Queensland Home Warranty Scheme, the statutory insurance scheme it administers pursuant to the Queensland Building and Construction Commission Act 1991. If the QBCC makes a payment on a claim under the scheme, under s 71(1) of the QBCC Act, it has a right to recover the payment as a debt from the builder who carried out the relevant residential construction work.[5]
- [14]QBCC has produced certificates of insurance in relation to each property. Those certificates are conclusive proof that the work is covered by the scheme.[6] It is common ground the payments relate to claims by owners about residential construction work undertaken by Mr Turcinovic.
- [15]Mr Turcinovic exercised his right to review some of the decisions by QBCC about rectifying the work. The claim by QBCC does not include an amount it paid in relation to work done to rectify two items at one of the properties: 60 Denham St, Tarragindi. That reflects a finding by a Member of the Queensland Civil and Administrative Tribunal (QCAT) that one of the items was not category 1 work and, for the other, that he would not have issued a Notice to Rectify in relation to that work.[7] The QBCC abandoned its claim for any of that work and only seeks $5,654 of the $31,500.55 of the successful tender for that work.[8]
- [16]It also abandoned its claim in [4(e)(ii)] of the Statement of Claim for a sum of $450 paid for an opinion from an independent expert on what was required to rectify the relevant works.[9] Although the QBCC maintained it was arguable that it was recoverable, it did not wish to press the claim on a summary judgment application.
- [17]QBCC has led sworn evidence about the claims under the scheme in relation to each property, including the amounts paid and the dates upon which they were paid. Its claim for interest[10] is calculated by reference to the dates the payments were made and is set out in the written submissions prepared by QBCC’s solicitors, Rostron Carlyle Lawyers.
- [18]QBCC has filed sufficient evidence to establish a prima facie case for judgment on its claim.
Does Mr Turcinovic have no real prospect of successfully defending all or part of the claim?
- [19]In order to enter judgment in a summary way, the Court must be satisfied that the defendant has no real, as opposed to fanciful, prospect of successfully defending all or part of the claim. [11] Although the Court is not expected to engage in a trial of a claim on a summary judgment application, it does require proper analysis in order to determine whether a defence has a real prospect of success.[12]
- [20]QBCC does not have to demonstrate Mr Turcinovic’s defence is bound to fail, or cannot possibly succeed, or has no prospects of success or is hopeless.[13] Likewise, Mr Turcinovic does not have to provide complete proof of his defence. It is enough to point to the existence of evidence which, if accepted, makes the prospect of a successful defence a real one.[14]
- [21]Mr Turcinovic wishes to defend on the ground that some of the payments were not payments on a claim under the scheme: either because QBCC failed to seek valid tenders or because the amounts paid were unreasonable. QBCC argues Mr Turcinovic has no real prospect of succeeding in defending the claim or part of it on either basis.
- (a)The tenders
- [22]Mr Turcinovic abandoned [4(b)] & [5] of the Amended Defence, which pleaded that an invalid tender was received for the property at 1/50 Waratah Ace, Carina (the first Carina property). On evidence led by QBCC at the hearing, he accepted the allegation was without foundation. This appeared to be the only specific pleading of an issue in relation to tenders.
- [23]However, at the hearing, counsel for Mr Turcinovic maintained that he would challenge whether QBCC conformed with proper tender process. He said that he suspected that QBCC had not obtained 3 quotes for each job. However, when pressed, the only property he could point to was 60 Denham St, for which, he said, only 2 tenders were obtained. This defence is not pleaded and, if it were the only basis for defending the claim, I would find Mr Turcinovic had no real prospect of defending the claim.
- (b)Reasonableness of the payments
- [24]Turning to the issue of reasonableness, Mr Turcinovic pleads the payments made under the scheme were so unreasonable that they are not payments on a claim under the scheme. QBCC has three responses to this argument.
- [25]
- [26]Mr Turcinovic has filed an affidavit by David Horn, a Quantity Surveyor, who provided quotes for the rectification works at 3 properties. QBCC relies on one item in the quote for rectification works at Rialto St, Coorparoo to support its submission the dispute is about scope not reasonableness. A comparison of Mr Horn’s quote with the tender accepted by the QBCC shows there is approximately $70,000 difference between the two documents in relation to the first item: excavation to enable a termite barrier and waterproofing to be installed and backfilled. The quote specifies hand excavation. The tender does not specify how the excavation is to be undertaken, but it is reasonable to assume machine excavation given the large disparity in the cost. QBCC argues this shows the dispute is really about the scope of the rectification works; a matter that cannot be raised in these proceedings.
- [27]I do not accept that is established by the material before the Court. The distinction between the scope of works and whether the payment is reasonable might be a hard distinction to draw on an item by item basis. What is clear, though, is that the quote provides for excavation for the same purpose as is provided for by the tender. It is arguable that this is not a question of scope, but of methodology, with implications for the reasonableness of the payment. That is an argument that cannot be fully explored without hearing evidence about the matter from the authors of the scope, tender and quote documents. Further, for that property, the difference between the quote and the tender, overall, is more than $85,000. So it is not only this one item that distinguishes them.
- [28]QBCC did not identify any other item for any other property to support its argument the dispute between the parties is about the scope of works not the reasonableness of the payments.
- [29]Secondly, QBCC argues the reasonableness of the payments cannot be raised in defence to recovery proceedings. I do not accept that proposition, at least as stated in such broad terms.
- [30]Mr Turcinovic argues the payments were so unreasonable as to render them payments which were not made on a claim under the scheme. This defence rests on paragraph 1.4(a) of the insurance policy (ed 7) which limits the payment by reference to “the (QBCC’s) assessment of the reasonable cost of completing the contract less the owner’s remaining liability under the contract…”. Mr Turcinovic referred to 2 cases which he submitted leave open the possibility of defending a debt recovery claim on that basis: Namour v QBSA[17] and Samimi & Anor v QBCC[18].
- [31]In Namour v QBSA, Fraser JA identified the reasonableness of a payment as relevant to a recovery action only if relevant to the question whether the amount sought to be recovered is the amount of the payment on a claim under the insurance scheme.[19] In that case, the appellant could not identify any material which suggested there might be reason to doubt the quoted cost of completion was reasonable.[20] Mr Turcinovic submitted the case supported his proposition that, with relevant evidence, the defence is arguable.
- [32]In Samimi v QBCC the Court of Appeal confirmed that recovery proceedings could be defended where there was a factual dispute about whether a payment was made in accordance with the terms of the policy.[21] In that case, QBCC’s material revealed vastly differing amounts having been paid by the owner under the contract. Depending on which amount was correct, there might be no liability to make a payment to the owner on a claim under the scheme. As QBCC had not adequately explained the difference in these figures, the Court of Appeal considered it was not a suitable case for summary judgment.[22] Although it involved a different type of factual dispute (what the owner had paid), the reasoning does support Mr Turcinovic’s submission that some factual disputes are justiciable in recovery proceedings.
- [33]I am not aware of any QBCC recovery proceedings which have been successfully defended because the payments were so unreasonable as not to amount to payments on a claim under the scheme. However, subject to evidence to establish the proposition, I am satisfied Mr Turcinovic has raised an arguable defence.
- [34]That leads to QBCC’s third argument, that Mr Turcinovic has not led evidence that demonstrates that he has a real prospect of succeeding in that defence. Although there are 6 properties involved in the claim, Mr Turcinovic has only led evidence about the costs of rectifying 3 of them:
- 4/50 Waratah Ave, Carina - quote $4,024 (cf QBCC payment of $12,639)
- 60 Denham St, Tarragindi - quote $23,079.05 (cf QBCC payment of $45,499.05)
- 18 Rialto St, Coorparoo - quote $45,233 (cf QBCC payment of $130,596)
- [35]Mr Turcinovic does not have to prove his defence at summary judgment; but he must lead sufficient evidence to indicate a real not fanciful prospect of success. While it could not be said that his evidence is comprehensive, the differences between the quotes and the tenders are of such a magnitude to suggest enquiry is warranted.
- [36]I am satisfied there is sufficient evidence to raise a real, not fanciful, prospect of defending the claim in whole or in part. The quotes demonstrate there is a question to be tried, at least in relation to those 3 properties[23]: whether the payments were so unreasonable as not to amount to payments under the scheme.
- [37]That involves two determinations in relation to each payment. Firstly, a factual finding about its reasonableness. Secondly, a legal finding about whether it was so unreasonable as to render it a payment outside the scope of the policy.
Is there no need for a trial of the claim or part of it?
- [38]This second aspect of the test on summary judgment applications addresses a broader issue than the prospects of defending a claim, although the two concepts may be intertwined.
- [39]Counsel for Mr Turcinovic argued the principles that apply to recovery of payments made by QBCC do not yet have definite answers or guiding principles and a trial is necessary to discover and test such principles. QBCC argued the difference in the quotes was not so great that it would render them payments outside the scope of the policy. However, it did not articulate the legal test the Court would use in making that determination. I consider there is a need for full argument of that question, something that was not even touched upon by either party at the summary judgment hearing.
Conclusion
- [40]The power to enter summary judgment must be exercised with care. The claim is a considerable one for an individual to bear. Some factual disputes are justiciable in recovery proceedings. Mr Turcinovic has led evidence to question the reasonableness of some of the payments made by QBCC. Although this related to only 3 of the properties, I was not asked to enter judgment for only part of the claim. It is possible that Mr Turcinovic will be able to establish some of the payments were so unreasonable that they did not amount to payments on a claim under the scheme. This calls for both factual enquiry and proper argument about the legal test the Court should apply. I do not have the necessary high degree of certainty that Mr Turcinovic could not establish his defence, if the claim is allowed to go to trial in the ordinary way.[24]
- [41]The application for summary judgment is refused.
- [42]Unless either party seeks a different order about costs, by filing and serving brief written submissions within 7 days, QBCC must pay Mr Turcinovic’s costs of the application assessed on the standard basis.
- [43]If a party does seek a different order, the other may file and serve brief written submissions in response within 3 business days.
Footnotes
[1] Uniform Civil Procedure Rules 1999 r188
[2] Pinehurst Nominees v Coeur de Lion Investments Pty Ltd [2012] QSC 314 AT [35] [39] [40]
[3] Chen v ANZ Banking Group Ltd [2001] QSC 43 at [1]
[4] At the hearing, counsel for Mr Turcinovic abandoned [4(b)] & [5] of the Amended Defence, which raised an argument about whether a builder who tendered on one of the properties held the relevant licence at the time.
[5] Queensland Building and Construction Commission Act 1991 s 71(1)
[6] Queensland Building and Construction Commission Act 1991 s 68(3)
[7] Turcinovic v Queensland Building Services Authority[2013] QCAT 541 at [35] –[42]
[8] Affidavit of Matthew John Stratford filed 16/12/15 at pp 314-316 (the scope of works); pp 322-324 (the tender) and p348 (the QCAT decision)
[9] Affidavit of Matthew John Stratford filed 16/12/15 at p308 (invoice from expert)
[10] Pursuant to Civil Proceedings Act 2011 s 58(3)
[11] Deputy Commissioner of Taxation v Salcedo [2005]2 Qd R 232 at [10] to [17]
[12] Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 at [48]
[13] Deputy Commissioner of Taxation v Salcedo [2005]2 Qd R 232 at [10]
[14] Cassatone Nominees Pty Ltd v Queenslandwide House and Building Reports Pty Ltd & Ors [2008] QCA 102 at [46]
[15] Queensland Building and Construction Commission Act 1991 s 86(1)
[16] Mahony v QBSA [2013] QCA 323 at [31] – [38]
[17] Namour v QBSA [2014] QCA 72
[18] Samimi & Anor v QBCC [2015] QCA 106
[19] Namour v QBSA [2014] QCA 72 at [24]
[20] Namour v QBSA [2014] QCA 72 at [25]
[21] Samimi & Anor v QBCC [2015] QCA 106 at [36]
[22] Samimi & Anor v QBCC [2015] QCA 106 at [40]
[24] Agar v Hyde (2000) 201 CLR 552 at [57]