Queensland Building and Construction Commission v Turcinovic

This matter concerned an appeal from an order refusing an application by the appellant for summary judgment. It principally turned upon the interpretation of s 71(1) of the Queensland Building and Construction Commission Act 1991, which permits the Commission to recover a payment made on a claim under an insurance scheme from the building contractor who was at fault in respect of that claim. The respondent had successfully opposed the appellant’s application for summary judgment for recovery of the payment on the basis that the costs claimed were so unreasonable as to make the payments not a payment on a claim under the insurance scheme. The Court of Appeal allowed the appeal, finding that in a proceeding for recovery of a payment made on a claim under an insurance scheme pursuant to s 71(1) it is not open to challenge the reasonableness of the payments the subject of the claim.

Morrison and Philippides JJA and North J

28 April 2017

This matter concerned an appeal from an order refusing an application by the appellant for summary judgment. [16]. It concerned the interpretation and application of s 71(1) of the Queensland Building and Construction Commission Act 1991 (“the Act”), which provides:

“If the commission makes any payment on a claim under the insurance scheme, the commission 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.”

The respondent had carried out residential construction work on various properties. In each case, there was a policy of insurance, on which the owners made claims in relation to rectification works done on the properties. [19]. The appellant sought to recover from the respondent payments made by it in respect of the claims as “payment[s] on a claim under the insurance scheme” within the meaning of s 71(1). [20].

In an amended defence, the respondent contended that the costs claimed were “so unreasonable so as to make the monies paid out not a payment on a claim under the insurance scheme”. [21].  In dismissing the application for summary judgment, her Honour considered that there was “sufficient evidence to raise a real, not fanciful prospect of defending the claim in whole or in part”. [22].

North J (with whom Morrison and Philippides JJA agreed) canvassed the relevant authorities dealing with s 71(1) of the Act and the matters that are justiciable in action for recovery under that section. [23]–[27]. His Honour referred ([23]) to Mahony v Queensland Building Services Authority [2013] QCA 323, in which Gotterson JA (with whom McMurdo P and Douglas J agreed) said:

“Section 71(1) confers a right to recover as a debt from any of the designated persons ‘any payment on a claim under the insurance scheme’. It is sufficient for recovery under the section that the authority has made a payment on a claim under the insurance scheme. The statutory right to recover is not conditioned upon the legal quality of a determination by the authority to make the indemnity payment or of any anterior step taken by the authority that he [sic] led to the decision to pay.”

In that case, Gotterson JA noted that this did not mean that a decision to make an indemnity payment, or any anterior step, is not reviewable (Mahony at [35]). His Honour pointed out the availability of review mechanisms under the Act and the possibility of seeking judicial review of the decision to recover an amount under s 71(1). His Honour continued:

“The availability of review of those kinds and at those stages provides a sound rationale for a legislative intention that the types of decisions to which I have referred, not be justiciable in s 71(1) debt recovery proceedings.”

Although Gotterson JA was dealing with the Queensland Building Services Authority Act 1991, North J observed that “[t]he provisions of the Act and other legislation touched upon by Gotterson JA were materially indistinguishable from those relevantly applying here” [24] and that Mahony remained an authoritative statement of the law. [28].

North J noted that the “evident purpose and intent” of s 71(1) was that “the recovery of the debt authorised by the section is not to become bedevilled by the factual convolutions that can emerge in actions in courts, tribunals or arbitrations for recovery of reasonable and necessary costs of defective work”. [32]. His Honour considered that the respondent’s pleaded defence, “that the payments were ‘so unreasonable so as to make the monies paid out not a payment on a claim under the insurance scheme’ [was], in relation to each payment, no more than a rhetorical assertion designed to enliven an adjudication at the stage of debt recovery inconsistent with the operation of s 71(1)”. [32]. In a similar vein, Philippides JA said:

“The respondent’s defence to the claim against him was no more than an attempt to seek a merits review of the payment made by the respondent under the insurance scheme. Section 71(1) … should not be construed so as to permit a backdoor judicial review or a merits review of the appellant’s decision to make a payment under the statutory insurance scheme set up under the Act.” [15].

In the result, the Court concluded that the “error in her Honour’s reasoning can be seen from para [37] of her reasons where, in the context of a claim under s 71(1) of the Act, she focuses attention upon a factual enquiry into reasonableness without inquiry whether the payment was made on a claim under the scheme”. [33]. The appeal was allowed and orders made accordingly. [35].

J English