Coulter v Queensland Building and Construction Commission [2024] QCAT 167

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Coulter v Queensland Building and Construction Commission [2024] QCAT 167 PARTIES: MARIA COULTER (applicant) v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (respondent) APPLICATION NO/S: GAR245-22 MATTER TYPE: General administrative review matters DELIVERED ON: 12 April 2024 HEARING DATE: 2 August 2023 HEARD AT: Brisbane DECISION OF: Member Davies ORDERS: The Queensland Building and Construction Commission decision dated 30 May 2022 is set aside. The Applicant’s claim under the statutory Insurance Scheme is returned to the Queensland Building and Construction Commission for reconsideration with the direction that the Queensland Building and Construction Commission make a decision about the scope of works to be undertaken under the SIS to rectify or complete the work required. CATCHWORDS: PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – where a claim was made upon the Queensland Home Warranty Scheme and disallowed – whether circumstances exist to allow the applicant to advance claim. Queensland Building and Construction Commission Act 1991 (Qld) Queensland Building and Construction Commission Regulation 2018 (Qld) Queensland Civil and Administrative Tribunal Act 2009 (Qld) -- 1 of 14 -- 2 Frugtniet v Australian Securities and Investments Commission (2019) 266 CLR 250 Imam v Life (China) Company Limited & Ors [2023] QCA 19 Queensland Building and Construction Commission v Whalley [2018] QCATA 38 Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 (2022) 406 ALR 632 Taylor v Johnson (1983) 151 CLR 422 APPEARANCES & REPRESENTATION: Applicant: T W Ambrose of Counsel instructed by Baker Merz Respondent: S Hedger, Solicitor of HWL Ebsworth Lawyers REASONS FOR DECISION Introduction [1] This proceeding is an application that invokes the Tribunal’s review jurisdiction.1 The Act that confers the Tribunal with jurisdiction to conduct this review is the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’). [2] The Applicant, Ms Coulter (‘Applicant’) has, by an application made on 13 June 2022, applied for external (Tribunal) review of an internal review decision made by the Respondent, the Queensland Building and Construction Commission (‘QBCC’).2 The internal review decision, which was made on 30 May 2022, was to uphold an earlier decision, dated 17 March 2022, to disallow a claim by the Applicant made by her under the statutory insurance scheme administered by the QBCC (‘SIS’). The decision under review, of 30 May 2022, was rendered into a Decision Notice (‘Decision Notice’). Statutory framework [3] The objects of the QBCC Act are set out in s 3 and relevantly include the regulation of the building industry by ensuring the maintenance of proper standards in the industry so as to achieve a reasonable balance between the interests of building contractors and consumers and to provide remedies for defective building work. One of these remedies is the SIS. [4] The SIS, also known as the Queensland Home Warranty Scheme,3 is continued, and governed by the QBCC Act.4 The purpose of the SIS is to provide assistance to 1 Queensland Civil and Administrative Tribunal Act 2009 (Qld), Chapter 2, Division 3 (‘QCAT Act’). 2 QBCC Act, s 87, provides that a person affected by a reviewable decision of the QBCC may apply as provided under the QCAT Act to the Tribunal for a review of the decision. The term ‘reviewable decision’ is addressed in s 86 of the QBCC Act and includes, in subsection (h), a decision to disallow a claim under the statutory insurance scheme either in whole or part. The intermediate step of internal review is governed by Part 7, Division 3, Subdivision 1 of the QBCC Act. 3 Queensland Building and Construction Commission Regulation 2018 (Qld), s 25. 4 QBCC Act, s 67X. -- 2 of 14 -- 3 consumers of residential construction work for loss associated with work that is defective or incomplete.5 [5] The terms of cover under which a person is entitled to assistance under the SIS are prescribed by regulation.6 The regulation relevant to this proceeding is the Queensland Building and Construction Commission Regulation 2018 (Qld) (‘QBCC Regulation’). The QBCC Regulation, in Schedule 6, sets out the terms of cover (‘Terms of Cover’) for the SIS. Part 2 of Schedule 6 provides for assistance to a consumer for residential construction work that is incomplete, and Part 3 provides for the assistance of a consumer for residential construction that is defective. [6] The purpose of the Tribunal’s review is to produce the correct and preferrable decision. This purpose is sought to be achieved by the Tribunal hearing and deciding this review by way of a fresh hearing on the merits.7 [7] Further, in coming to a decision, this Tribunal must consider any human right relevant to the decision.8 This is because in a review such as this the Tribunal is a ‘public entity’ and is therefore required to comply with s 58 of the Human Rights Act 2019 (Qld) (‘HRA’). Subject to some presently irrelevant exceptions, that section prohibits a public entity with making a decision that is not compatible with human rights or without considering human rights that are relevant to the decision. Factual and procedural background [8] The factual background that gave rise to the decision by the QBCC’s acting senior assessment officer of 17 March 2022 and to the subsequent internal review decision that was rendered into the Decision Notice of 30 May 2022 are not in contention. Nonetheless, a summary of those events gives context to the decision under review. [9] In or about May 2021 the Applicant contracted with a builder, one Craig Francis (‘the builder’), to undertake some building work at a house owned by her. [10] The Applicant contends, and QBCC accepts, that this builder fraudulently claimed to hold a licence under which the builder could enter into a contract with the Applicant to carry out residential work.9 [11] The QBCC also accepts that, under s 68H(1)(c) of the QBCC Act, a policy insurance came into force in relation to the contracted work, that the terms of cover under the SIS are contained in the Terms of Cover and that the Applicant was a ‘consumer’ for ‘residential construction work’ as those terms are defined in s 67WA of the QBCC Act.10 [12] Building work by the builder commenced on or about 28 May 2021.11 [13] On various dates from 21 May 2021 to 27 July 2021 the builder issued to the Applicant various pre-printed documents headed ‘Tax Invoice/Statement’ which were endorsed 5 QBCC Act, s 67X(2). 6 QBCC Act, s 67Y; QBCC Regulation, s 30. 7 QCAT Act, s 20. 8 Human Rights Act 2019 (Qld), s 58. 9 QBCC’s statement of reasons for the decision dated 30 August 2022 at 4.4. 10 QBCC’s outline of submissions at paragraphs 4.1 – 5.6. 11 QBCC’s statement of reasons for the decision dated 30 August 2022 at 3.10. -- 3 of 14 -- 4 with handwriting.12 The handwriting consists of a short description, principally the number of the payment, and the word ‘Received’. The Applicant paid these invoices. [14] In early to mid-January 2022 there was an interaction between the Applicant and the builder that, at the very least, indicated that there were difficulties with the building contract. QBCC’s statement of reasons annexes13 an exchange of emails on 8 and 10 January 2022. Although the parties disagree as to the legal consequences of what passed between the parties at this time – a matter discussed further below – what is not in dispute is that the builder expressed an intention to pay back the money he had been paid for the building work and that he was leaving the site. [15] On 14 February 2022, the Applicant lodged with the QBCC a ‘Non-Completion Claim Form’ in respect of ‘Residential Construction Work’.14 [16] The QBCC’s decision of 17 March and the Decision Notice of 30 May 2022 followed on from the above events. [17] The decision of the Principal Review Officer, as set out in the Decision Notice, was twofold. Firstly, that a policy of insurance under the SIS was in force. That aspect of the decision is not contested by the Applicant. [18] What is in contest is the second part of the Principal Review Officer’s decision – namely that ‘the contract had not been validly terminated at the default of the affected party, having the effect of disallowing the claim under the Queensland Home Warranty Scheme (Scheme)’.15 [19] In this context it should be noted that the Decision Notice defines the builder as the ‘Affected party’ and the Applicant in this proceeding (Ms Coulter) is defined as the ‘Applicant’. [20] The apparent clarity of this reading of the Decision Notice – that the Applicant did not validly terminate her contract with her builder and thus is not covered by the SIS – is somewhat clouded by other aspects of the Decision Notice. [21] For example, under the heading of ‘Was the Contract Validly Terminated?’ on page 3 of the Decision Notice the Principal Review Officer commences by stating ‘Pursuant to section 4 of the Terms of Cover, a fixed price contract relevantly ends if the Contract is ‘validly terminated’ on the default of the Applicant’ (emphasis in bold added). [22] That proposition is incorrect. When one turns to s 4 of the Terms of Cover it relevantly provides that a fixed price residential contract ends if the contract is validly terminated on the default of the licensed contractor (emphasis added). [23] Notwithstanding the matters addressed in the preceding three paragraphs, I take, for the purposes of this review, the gravamen of the Principal Review Officer’s decision 12 QBCC’s statement of reasons for the decision dated 30 August 2022 at 3.8 and annexure SOR-05. 13 As annexures ‘SOR-07’ and ‘SOR-08’ to QBCC’s statement of reasons. 14 A copy of this claim form is annexure ‘SOR-17’ to the QBCC’s statement of reasons for the decision dated 30 August 2022. 15 Decision Notice on page 1. -- 4 of 14 -- 5 was that she ‘cannot be satisfied that that the Applicant validly terminated the contract in accordance with section 4 of the Terms of Cover’.16 [24] However, as the matter was argued before the Tribunal, the Applicant contended that it was not only this ‘termination’ issue that required a determination by the Tribunal. The Applicant contended that the Tribunal should also determine what she, through her Counsel, referred to as the ‘jurisdictional issue’.17 It is appropriate to firstly address this jurisdictional issue to facilitate a fresh decision on the merits. Jurisdictional issue [25] The jurisdictional issue is, in summary, whether this Tribunal, in reviewing a decision to disallow a claim under the SIS, may determine that the Applicant is entitled to assistance under the SIS because the work, the subject of the claim, is defective as well as incomplete. [26] Before specifically addressing this jurisdictional issue, some context is necessary. For present purposes it is appropriate to restate that the Terms of Cover are structured in a way that addresses separately claims that are for ‘incomplete residential construction’ (Part 2) and claims for ‘defective work’ (Part 3).18 [27] The Applicant contends that her claim form enlivened claims under both Part 2 and Part 3 of the Terms of Cover and that, even though the QBCC’s decision under review only addressed her Part 2 claim, this does not preclude the Tribunal from considering her Part 3 claim.19 The Applicant submits that the Tribunal has a sufficiently broad jurisdiction to consider the Applicant’s Part 3 claim. [28] For its part the QBCC says that it has not made any decision on a Part 3 claim by the Applicant. That is, it has neither accepted nor denied liability in respect of the Applicant’s Part 3 claim.20 So, it is contended by QBCC, the Tribunal's jurisdiction, standing in the shoes of the decision maker, is limited to reconsidering the decision to disallow the Applicant's Part 2 claim. [29] Is the Tribunal’s jurisdiction on review limited in the way contended for by the QBCC or does the Tribunal have, as contended by the Applicant, a sufficiently broad review jurisdiction to consider the Part 3 claim? To address this question, it is necessary to examine the scope of the Tribunal’s jurisdiction. [30] The Tribunal’s review jurisdiction is contained in Chapter 2 Division 3 of the QCAT Act (ss 17 – 24). [31] Section 17(1) provides as follows: The tribunal’s review jurisdiction is the jurisdiction conferred on the tribunal by an enabling Act to review a decision made or taken to have been made by another entity under that Act. 16 The quoted words are from page 4 of the Decision Notice. 17 Applicant’s closing submissions at paragraph 5. 18 The terms of cover for the SIS are set out in Schedule 6 of the QBCC Regulation. Part 2 of Schedule 6 specifically addresses incomplete residential construction work and Part 3 addresses defective work. 19 This contention is addressed in the Applicant’s closing submissions at paragraphs 8 – 13. 20 QBCC’s closing submissions at 2.11. -- 5 of 14 -- 6 [32] Aspects of sections 19, 20 and 24 are also relevant to this jurisdictional issue. They are as follows: 19 Exercising review jurisdiction generally In exercising its review jurisdiction, the tribunal— (a) must decide the review in accordance with this Act and the enabling Act under which the reviewable decision being reviewed was made; and (b) may perform the functions conferred on the tribunal by this Act or the enabling Act under which the reviewable decision being reviewed was made; and (c) has all the functions of the decision-maker for the reviewable decision being reviewed. 20 Review involves fresh hearing (1) The purpose of the review of a reviewable decision is to produce the correct and preferable decision. (2) The tribunal must hear and decide a review of a reviewable decision by way of a fresh hearing on the merits. 24 Functions for review jurisdiction (1) In a proceeding for a review of a reviewable decision, the tribunal may— (a) confirm or amend the decision; or (b) set aside the decision and substitute its own decision; or (c) set aside the decision and return the matter for reconsideration to the decision-maker for the decision, with the directions the tribunal considers appropriate. (2) The tribunal’s decision under subsection (1)(a) or (b) for a reviewable decision— (a) is taken to be a decision of the decision-maker for the reviewable decision except for the tribunal’s review jurisdiction or an appeal under part 8; and (b) subject to any contrary order of the tribunal, has effect from when the reviewable decision takes or took effect. [33] The nature of the review by this tribunal was explained by the Appeal Tribunal in Queensland Building and Construction Commission v Whalley [2018] QCATA 38 at [14] in the following terms: A tribunal conducting a merits review proceeding is also conducting a hearing de novo because the tribunal is required to consider all the material afresh, including the material that was before the decision-maker and, subject to any modifying provisions, any material or new evidence filed by the applicant and the decision-maker. Unlike a judicial review proceeding that is concerned with the legal merits, a merits review is a proceeding concerned with the factual merits. More importantly, the tribunal in reviewing a decision may make any -- 6 of 14 -- 7 findings of fact and has the power to deal with all questions of law or legal issues relevant to the decision being reviewed. [34] In Frugtniet v Australian Securities and Investments Commission (2019) 266 CLR 250 a plurality of the High Court21 said, when considering the role of the Administrative Appeals Tribunal (‘AAT’) in a similar ‘stand in the shoes’ role of that tribunal, at [51] (omitting footnotes), that where: … the jurisdiction conferred under an enactment, is to stand in the shoes of the decision-maker whose decision is under review so as to determine for itself on the material before it the decision which can, and which it considers should, be made in the exercise of the power or powers conferred on the primary decision- maker for the purpose of making the decision under review. The AAT exercises the same power or powers as the primary decision-maker, subject to the same constraints. The primary decision, and the statutory question it answers, marks the boundaries of the AAT's review. The AAT must address the same question the primary decision-maker was required to address, and the question raised by statute for decision by the primary decision-maker determines the considerations that must or must not be taken into account by the AAT in reviewing that decision. A consideration which the primary decision-maker must take into account in the exercise of statutory power to make the decision under review must be taken into account by the AAT. Conversely, a consideration which the primary decision-maker must not take into account must not be taken into account by the AAT. [35] At first blush the QBCC’s submission that the jurisdictional issue should be determined in its favour has some appeal. The QBCC’s submission is set out in the following way in its closing submissions (footnotes omitted): 2.9 The Tribunal’s role in exercising its review jurisdiction is to reconsider the original decision and to make the correct and preferable decision. In doing so, the Tribunal is required to stand in the shoes of the Respondent and exercise the same powers and discretions as the Respondent. 2.10 The only decision made by the Respondent on 30 May 2023 was the Decision to disallow the Applicant’s Non-Completion Claim. The Respondent did not make a decision to disallow a claim for rectification of defects. 2.11 Accordingly, in the Respondent’s respectful view, the Tribunal’s jurisdiction is equally limited to reconsidering the Decision to disallow the Applicant’s Non-Completion Claim and the Tribunal, standing in the Respondent’s shoes, does not have jurisdiction to consider any claim for rectification of defects under Part 3 of the Terms of Cover (since no such claim was contemplated by the Respondent as part of the Decision). [36] However, the questions the QBCC decision makers (both primary and on internal review) were required to address and the questions that the decision makers did address were, in my view, not the same. [37] Given the material before the decision makers, I consider that the initial question that the decision makers were required to address, on reviewing the Applicant’s claim form, was: How and to what extend did the SIS respond to the Applicant’s claim? 21 Bell, Gageler, Gordon and Edelman JJ. -- 7 of 14 -- 8 [38] To answer that question, it was necessary for the decision makers to review the substance of the Applicant’s claim form. [39] It is the case that the claim form completed by the Applicant contained the wording ‘Non-Completion Claim Form’.22 That bare wording could suggest that the claim form is to be used for an incomplete (or Part 2) claim. However, the form itself addresses work that is alleged to be both incomplete and defective. That is, both Part 2 and Part 3 claims. [40] This is because in section 10 of the claim form the following question is posed: In addition to the work being not complete is any completed work defective? [41] The Applicant answered that question in the affirmative and went on to supply details of the work that she said was defective. In addition, as submitted by the Applicant, the guidance for the filling out of the non-completion claim form also contained the following guidance: If your work isn’t complete, but you have defects in what has been completed, then you are in the right place.23 [42] In the circumstances it is difficult to see what more the Applicant could have done to place her claim for both incomplete and defective work before the QBCC as the administrator of the SIS. [43] A determination that the Applicant’s claim was, properly understood, a claim for both incomplete residential construction work (Part 2) and defective work (Part 3) should have led to a consideration of the Terms of Cover for both of those claims. [44] The failure of the QBCC to address the Part 3 claim was, in my view, a constructive rejection of that aspect of the Applicant’s claim. I therefore do not accept the QBCC’s submission24 that no decision to disallow the Applicant’s claim for rectification has been made. [45] In this context it is to be noted that s 86(1)(h) of the QBCC Act, the section that is headed ‘Reviewable decisions’, does not distinguish between claims for non- completion and claims for rectification. The subsection provides that a decision to disallow a claim under the SIS wholly or in part is a reviewable decision. [46] The QBCC submit25 that because the Terms of Cover do distinguish between claims for non-completion and claims for rectification and different criteria are to be applied for the assessment of each claim there should be a more restricted reading of s 86(1)(h). I am not persuaded by this submission in the circumstances of this matter where, on a proper reading of the Applicant’s claim, it was a claim under both Part 2 and Part 3. [47] In a fresh determination of the Applicant’s claim based on the material before the Tribunal I will sequentially consider the Applicant’s claims under Part 2 and Part 3. 22 See, for example, the Claim form in exhibit 3, commencing at page 98. 23 Statement of Hugo Alberto Merolla dated 3 October 2023. 24 QBCC’s closing submissions at paragraph 2.7. 25 QBCC’s closing submissions at paragraph 2.12. -- 8 of 14 -- 9 Applicant’s claims - consideration Part 2 – incomplete residential construction work [48] Relevantly, the question of whether the Applicant’s claim for assistance under the SIS – insofar as that claim is based on incomplete residential construction work (Part 2) where work has started – can be considered by addressing the following questions, which highlight the issues in contention between the parties: (a) Was the work carried out under a fixed price residential contract?26 (b) When and how did the contract between the Applicant and her builder come to an end?27 [49] In relation to the question of whether the work was carried out under a fixed price residential contract, the QBCC submits that this was not the case. The sole basis for this submission is that ‘on strict application of the Terms of Cover, the definition of a ‘licensed contractor’ has not been satisfied having the consequence that the residential construction work was not carried out under a fixed price residential contract as required by s 6 of the Terms of Cover.’28 [50] I do not consider that the appropriate approach to considering the term ‘licensed contractor’ is the ‘strict application’ contended for by the QBCC. Consequently, I am of the view that the contract in question is a ‘fixed price residential contract.’ [51] The basis for this conclusion is that I consider that the term ‘licensed contractor’ in s 6 of the Terms of Cover, when considered in its legislative context, is not limited to a contractor who holds a license but also includes a person who fraudulently claims to hold a licence. [52] This is because the QBCC Act, in s 68H, which deals with the cover under the SIS for residential construction work, specifically states that cover under the SIS comes into force in a number of situations including where: (c) a person (the defrauded person) enters into a contract for the carrying out of residential construction work with a person (the fraudulent person) fraudulently claiming to hold a licence under which the fraudulent person may enter into contracts with consumers to carry out residential construction work covered by the statutory insurance scheme;29 [53] Further, for subsection 1(c), subsection (5) of s 68H states that its provisions apply as if a reference to a consumer were a reference to a defrauded person and a reference to a licensed contractor were a reference to a fraudulent person. [54] These provisions taken together demonstrate a clear statutory intention to protect consumers from what, in current parlance, would be called ‘rogue operators’. 26 Terms of Cover, s 6(a). The meaning of fixed price residential contract is defined in s 3 of the Terms of Cover. 27 Terms of Cover, s 6(b). 28 QBCC’s outline of submissions at 7.12. 29 QBCC Act, s 68H(1)(c). -- 9 of 14 -- 10 [55] This reading is supported by the very purpose of the SIS, which is to provide assistance to consumers of residential construction work for loss associated with work that is defective or incomplete.30 [56] This determination, that the work here has been carried out under a fixed price residential contract, then raises for consideration the second question – when did the contract come to an end? [57] The competing views as to when the contract came to an end are: (a) The QBCC contends that the contract came to an end because of mutual abandonment on 8 January 2022.31 (b) The Applicant contends that the contract was terminated by her because of the builder’s sufficiently serious breach of certain statutory warranties or, further (or in the alternative) her acceptance of the builder’s repudiation of the contract.32 [58] The Terms of Cover, in s 4, gives guidance as to when a fixed price residential contract ends. Relevantly for this review, a fixed price residential contract ends if the contract is validly terminated on the default of the licensed contractor. The Terms of Cover in s 4(2) stipulates that validly terminated for a fixed price residential contract does not include mutual abandonment of the contract by the parties to the contract. [59] For the reasons set out above I am of the view that licensed contractor in s 4 of the Terms of Cover would include the builder that the Applicant contracted with. [60] Has there been a valid termination other than by way of mutual abandonment? To put the answer to this question into context it is appropriate to refer to recent judicial consideration of what constitutes mutual abandonment. [61] The Court of Appeal considered mutual abandonment in Imam v Life (China) Company Limited & Ors [2023] QCA 19 (‘Imam’). Morrison JA addressed the issue at [106] and [107] as follows: Factual basis for abandonment [106] In Wallera Pty Ltd v CGM Investments Pty Ltd, Kiefel J said: “[40] Whilst the Australian cases may not have discussed the theoretical basis for abandonment to any great extent it is clear that regard is to be had to the conduct of the parties and what might be inferred from it. Abandonment may be seen as a conclusion that parties have no further interest in a contract continuing, even though they may have said nothing to that effect. It may nevertheless be clear that they both regard it as at an end. This can more readily be discerned where one or more of the parties have ineffectively attempted to bring the agreement to an end and both behave as if it was ended as occurred in Summers v The Commonwealth (1918) 25 CLR 144 and DTR Nominees Proprietary Limited v Mona Homes Proprietary Limited (1978) 138 CLR 423 [107] Whether a contract has been abandoned is a question of fact to be inferred from an objective assessment of conduct of the parties. As the learned trial judge 30 QBCC Act, s 67X(2). 31 QBCC’s outline of submissions at paragraph 8.8. 32 Applicant’s submissions in reply at 62 – 75. -- 10 of 14 -- 11 accepted, by reference to what was said by Kiefel J in Wallera, one must have regard to the conduct of the parties, and what might be inferred from that conduct. The authorities establish that the court looks at an objective assessment of the conduct of the parties, and as to whether that conduct results in an inference that neither party maintains an intention to perform the contract. The assessment does not call for an examination of whether a party actually had this objective intention of abandoning, but considers “whether their conduct, when objectively viewed, manifested that intention”. 33 (footnotes omitted) [62] The Applicant appropriately concedes that if the contract was mutually abandoned, she is not entitled to assistance under Part 2 of the Terms of Cover.34 [63] Therefore, the apposite question is – did the conduct of the Applicant and the builder, viewed objectively, manifest an intention of mutual abandonment or was the contract terminated other than by way of mutual abandonment? [64] The QBCC relies in its written submissions35 on references by the Applicant’s solicitors to termination of the contract by ‘mutual consent.’ Although ‘mutual’ may be the common term used, I do not consider that, in context, the Applicant’s solicitors are referring to mutual abandonment of the contract. [65] Furthermore, it has been the case since at least Taylor v Johnson (1983) 151 CLR 422, the rights and entitlements of the parties to a contract are not determined by the intentions of the parties but with the outward manifestations of those intentions. That is to say, the objective theory is in command of the field.36 Hence, the reference in Imam cited above to the objective assessment of conduct. [66] It is thus necessary to objectively assess the conduct of the Applicant and the builder in and around January 2022. The Applicant submits that the builder breached certain (statutory) warranties in the building contract that were of sufficient seriousness to justify the Applicant’s termination of the contract and that termination was made clear to the builder. In the alternative, the Applicant submits that the contract was terminated by the Applicant’s acceptance of the builder’s repudiation of the contract.37 [67] If there was effective termination of the contract on either or both the grounds contended for by the Applicant in January 2022, then I do not consider that there can have been any mutual abandonment. [68] Addressing first the Applicant’s contention that she terminated the contract for breach of (statutory) warranties: the Applicant’s submissions refer to three statutory warranties – warranties implied into every ‘regulated contract’.38 Those warranties were the ones implied by the QBCC Act, Schedule 1B s 21 (compliance with laws and legal requirements), s 22 (carry out work with reasonable care and skill) and s 25 (carry out work with reasonable diligence). 33 See also the comments of McMurdo JA and Davis J at [251] and [252]. 34 Applicant’s submissions in reply to the QBCC’s submissions dated 16 March 2023. 35 QBCC’s Outline of Submissions at 8.7. 36 Taylor v Johnson (1983) 151 CLR 422, 429 (Mason A-CJ, Murphy and Deane JJ). 37 Applicant’s submissions in reply to the QBCC’s submissions dated 16 March 2023 at paragraphs 68 – 70. 38 A term defined in s 5 of Schedule 1B in the QBCC Act. The term relevantly includes a domestic building contract for which the contract price is more than the regulated amount. -- 11 of 14 -- 12 [69] Has there been a breach of one or more of these warranties and, if so, are any established breaches of sufficient seriousness to give rise to an ability to terminate the contract? [70] As to what constitutes a breach of sufficient seriousness to entitle the innocent party to terminate a contract, the position in Australia was recently considered by the High Court in Allianz Australia Insurance Limited v Delor Vue Apartments CTS 39788 (2022) 406 ALR 632, in which Kiefel CJ, Edelman, Steward and Gleeson JJ said at [48], summarizing a number of High Court decisions, that to be of sufficient seriousness the breach must be: a breach that undermines the "root" or basis of the contractual undertakings – as giving rise to a legal power for the innocent party to terminate the entirety of the contract for the future. (footnotes omitted) [71] What is not in dispute is that the builder did not, during the currency of the contract, hold a requisite licence. I have therefore concluded that the builder breached the warranty to comply with laws and legal requirements. Indeed, I am of the view that this breach is one that goes to the root of the contract in circumstances where the statutory scheme to regulate the home or domestic building industry is based on the requirement builders and others engaged in domestic building work are required to be licensed. [72] With respect to the asserted breach of the warranty to carry out the work with reasonable care and skill, what is also apparent from the evidence, in particular the Total Building Inspections Qld report by Rob Pennycuick (‘the Pennycuick Report’),39 is that ‘The construction work is poor and is constructed in an in-tradesman (sic) like manor (sic).’40 The Pennycuick Report goes on to set out the evidence relied on to support this conclusion. By way of non-exhaustive examples, the Pennycuick Report includes comments that the block retaining walls ‘are not water proofed correctly’ which constituted, in the opinion of the Report’s author, a ‘Major Structural Defect or safety hazard’; no termite barrier had been installed, again a ‘Major Structural Defect or safety hazard’; and ‘The foundations to steel posts holding structure have been undermined which can effect (sic) the structural integrity of the posts’, once again a ‘Major Structural Defect’ or safety hazard. [73] In relation to the Pennycuick Report, the QBCC submit that while it is open to the Tribunal to accept the report41 the tenor of the QBCC’s submission is that the Tribunal ought not do so. In support of this submission the QBCC contend that ‘Mr Pennycuick does not identify whether the defects are structural or non-structural and there is no other evidence before the Tribunal to make such a determination.’ [74] Having considered this submission I am of the view that whilst the Pennycuick Report does not comply with rule 428 of the Uniform Civil Procedure Rules 1999 I am prepared to accept it as evidence of the state of the building work as at the date of the inspection on or about 13 January 2022.42 39 Annexure ‘SOR-10’ to the QBCC’s Statement of Reasons for the decision. 40 Pennycuick Report under the heading of ‘Inspectors (sic) Comments’. 41 QBCC’s closing submissions at paragraph 2.18(b). See also QCAT Act, s 28(4). 42 QBCC’s statement of reasons at 3.15 state that this report was commissioned on or around 13 January 2022. -- 12 of 14 -- 13 [75] Based on the Pennycuick Report, I have concluded that there were, in January 2022, breaches by the builder of the warranty requiring him to carry out the work with reasonable skill and care. [76] Thus, in or by mid-January 2022 I am satisfied that the builder had breached the warranties that formed part of the building contract by virtue of ss 21 and 22 of Schedule 1B of the QBCC Act. Further, I consider that these breaches were sufficiently serious to give the Applicant the ability to ‘terminate the entirety of the contract for the future.’ [77] Against this background it is necessary to focus on the events of January 2022 to determine if the building contract was validly terminated by the Applicant. [78] The evidence as to whether the Applicant did terminate the contract consists of the Applicant’s statement dated 17 July 2023, her oral evidence, and some limited contemporaneous documents. This last category is an exchange of emails on 8 and 10 January 2022.43 [79] Having considered that evidence, in particular, the Applicant’s statement at paragraphs 8 – 31 which I consider is supported by the emails of 8 and 10 January 2022 and her oral evidence, I find that it was clear that by 8 January or at the latest by 10 January 2022 that the Applicant had terminated her contract with her builder on the basis that the builder was unlicensed and that his work had not been carried out with reasonable care and skill. Indeed, I consider that the builder accepted this termination and, somewhat unusually, seems to have offered to pay back to the Applicant all the payments that she had made to him. [80] This payback may not have occurred, but I do not consider that this derogates from the termination of the contractual relationship. [81] I have thus concluded that the contract was validly terminated and, consequently the Applicant has a valid claim under Part 2 of the Terms of Cover. [82] Given the finding that I have made with respect to the ‘jurisdictional issue’ – that is the QBCC (constructively) disallowed the Applicant’s claim under Part 3 of the Terms of Cover it is necessary to consider the Applicant’s defective work claim. This is because a determination that the QBCC has constructively rejected the Applicant’s claim does not preclude the situation where the Terms of Cover otherwise exclude or limit the Applicant’s claim. Part 3 claim – defective work [83] As is common in any insurance claim it is necessary to consider whether there are any qualifications or exclusions in the Terms of Cover that limit or exclude the Applicant’s claim. [84] I am satisfied that the work done by the builder was defective. In coming to this conclusion, I place reliance on the evidence of the Pennycuick Report. As detailed above, the Pennycuik Report sets out what Mr Pennycuick considered to be a number of defects, including structural defects, in the work carried out by the Applicant’s 43 The emails are Annexures ‘SOR-07’ and ‘SOR-08’ to QBCC’s Statement of Reasons. -- 13 of 14 -- 14 builder. In the hearing before me Mr Pennycuick was not examined by QBCC in relation to his report. [85] The Terms of Cover, in s 16, places limits on assistance for defective work. The QBCC submits44 that s 16(3) – a provision that denies assistance to a consumer unless the consumer makes a claim for a structural defect within 3 months after the day the consumer first becomes aware or ought reasonably to have become aware of the defect in the work – is relevant. [86] From the statement of the Applicant, I have formed the view that she first became aware of what the Pennycuick Report categorises as structural defects in or around 6 January 2022.45 There is nothing in the material before me that suggests that she ought to have reasonably become aware of the defects in the work before this date. [87] Consequently, given that the Applicant’s claim was lodged with the QBCC on 14 February 2022, I conclude that the Applicant has a claim under Part 3 of the Terms of Cover. [88] It was not submitted by either party that there were matters under the HRA that bear on the decision of the Tribunal. Nonetheless, the right to a fair hearing46 is a human right that needs to be considered in this proceeding. I do not consider, having regard to s 58(1) of the HRA, that there has been a breach of either the substantive obligation, not to make a decision that is incompatible with human rights, nor the procedural obligation, not to give proper consideration to a relevant human right in making the decision in this matter. [89] With respect to the question of costs, I do not consider that there are factors in this proceeding that require a departure from the usual rule that each party should bear their own costs. Orders [90] On the basis of what is set out above the orders are: (a) The decision of the QBCC, as set out in the Decision Notice, is set aside. (b) The Applicant is entitled to claim under both Part 2 and Part 3 of the Terms of Cover. (c) The Applicant’s claim under the SIS is returned to the QBCC for reconsideration with the direction that the QBCC make a decision about the scope of works to be undertaken under the SIS to rectify or complete the work required. 44 QBCC’s closing submissions at 2.18(c). 45 Statement of the Applicant dated 17 July 2023 at paragraphs 9 – 13. 46 HRA, s 31. -- 14 of 14 --