Coral Homes (Qld) Pty Ltd v v Queensland Building Services Authority [2012] QCAT 391

CITATION: Coral Homes (Qld) Pty Ltd v Queensland Building Services Authority [2012] QCAT 391 PARTIES: Coral Homes (Qld) Pty Ltd v Queensland Building Services Authority APPLICATION NUMBER: GAR397-11 MATTER TYPE: General administrative review matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Kate Buxton, Member DELIVERED ON: 27 August 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. Application for summary determination refused. CATCHWORDS: Review – scope of works – where no review of decision to direct rectification – application for summary determination – whether procedural fairness afforded Queensland Building Services Authority Act 1991 APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION [1] The Applicant, Coral Homes (Qld) Pty Ltd (Coral Homes) filed an application on 23 December 2011, seeking review of the decision of the Queensland Building Service Authority (QBSA) made on 8 December 2011 to issue a Notice of Potential Debt and Scope of Works relating to works undertaken by Coral Homes at 1 Binnie Street, Greenmount, Queensland (the "decision"). The decision, insofar as it relates to a scope of works, is reviewable by this Tribunal pursuant to s 86(1)(g) of the Queensland Building Services Authority Act 1991 (Qld) (QBSA Act). [2] Coral Homes, by application filed in these proceedings on 1 June 2012, now seeks a summary determination of the review proceedings (the Summary Judgment Application). Coral Homes seeks an order that the decision be set aside without the need for a full hearing on the merits. -- 1 of 5 -- 2 [3] Fundamental to its application is the submission by Coral Homes that it has not been afforded procedural fairness by the QBSA in its decision making process because Coral Homes has not been permitted to explore the liability issues which they would ordinarily explore in a review of a direction to rectify. This, says Coral Homes, has deprived it of the opportunity to put its case, dispute liability or understand the case against it. The QBSA reject this contention and submit that the review application be determined by the Tribunal at a substantive hearing. Applicable framework [4] Summary determination such as that sought by Coral Homes is available only in the clearest of cases1. In this case, the consequences of the summary dismissal on the grounds agitated by Coral Homes may be significant. If the tribunal were to set aside the decision of the QBSA determining the scope of works, the QBSA would be affected in the further discharge of its other statutory functions in relation to the issues, including managing the carrying out of any defective building works and pursuing Coral Homes for any amount paid out under the insurance policy. There are difficulties with the QBSA progressing such a claim if the decision in relation to the scope of those works is set aside. [5] In their written submissions the parties have each set out the substance of the relevant legislative provisions and I will not repeat those at length. [6] It is common ground that this Tribunal has jurisdiction to review a decision about the scope of works.2 However, Coral Homes submits that the context of this particular decision has not afforded it sufficient procedural fairness. This is because, by reason of the history of this matter, Coral Homes has not substantively responded to any direction to rectify issued by the QBSA under the Act. [7] A direction to rectify was issued outside the prescribed time period by the QBSA and, after an application was filed in OCAT to set the direction aside, it was subsequently withdrawn. No application was made to extend time.3 Issues relevant to the direction to rectify were not substantively considered by this Tribunal or determined either way. So much is conceded by the QBSA.4 Coral Homes submit that the QBSA has now issued a scope of work based on their (unchallenged) view of the works requiring rectification in circumstances where the underlying factual matrix, being the direction to rectify, has not been tested. [8] The course of action taken in this matter is not the usual process which the QBSA would adopt in reaching a decision about the scope of works.5 The departure from that usual process has arisen in this case because the 1 Agar v Hyde (2000) 201 CLR 552 at [57]; Dey v Victorian Railways Commissioner (1948-9) 78 CLR 62. 2 Section 86 (1)(h) QBSA Act. 3 Section 72(8) provides that a direction cannot be given more than 6 years and 3 months later than the building work was completed unless the Tribunal extends that time. 4 Submissions of the QBSA filed 28 June 2012 para 33. 5 Submissions of the QBSA filed 28 June 2012 para 36. -- 2 of 5 -- 3 direction to rectify was issued outside the time limited by the QBSA Act and a decision was made by the QBSA to withdraw that direction. No application was made to extend the time within which to issue the direction to rectify. The next step relevant to these proceedings was the decision under review. [9] Section 74 of the QBSA Act provides the authority to make a decision about rectification of works. In order to advance this process the QBSA settles upon a scope of works for the tender process described in s 74. It is not an express requirement of s 74 that a direction to rectify be issued first. In fact, s 74 contemplates the carrying out of building work which is, in the QBSA's opinion, defective or incomplete in circumstances where the QBSA has decided not to give a direction to rectify that work. [10] Section 71 provides the circumstances in which the QBSA may recover from a builder an amount paid on a claim under the insurance scheme. That amount may be recovered as a debt from the building contractor or any other person through whose fault the claim arose. If Coral Homes’ submission is accepted, and the decision is set aside, this will affect the QBSA's ability to include in a scope of works (and ultimately seek recovery from a builder under s 71 (1) QBSA Act) matters which were capable of being the subject of a direction to rectify. [11] There is an uncomfortable tension between sections 71, 72 and 74 QBSA Act when read in the context of this case: a) There is no express requirement when recovering against the builder under s 71 for the QBSA to have first issued a direction to rectify to the builder at fault. b) If the QBSA is permitted to seek recovery against a builder where no direction to rectify has issued, the builder has not been permitted the option of remedying any defects or incomplete work itself. c) Once the scope of works is determined for the purposes of the process in s 74, s 71 permits recovery against the builder if the Authority considers the builder to be a fault. d) The tension in the construction of these provisions is exacerbated by the fact that a decision under s 71 is not reviewable in this Tribunal.6 That is, once the scope of works is determined, s 71 provides for recovery against the builder in the QBSA's discretion; Coral Homes would need to challenge that recovery process elsewhere. e) If, however, the failure by the QBSA to first issue a direction to rectify leads to procedural unfairness and must be set aside, then this would lead to a curious outcome where the QBSA is constrained in its ability to discharge its statutory function and progress a claim against the insurance scheme and, then, against the builder for those works which require rectification as a result of the builder’s fault. 6 Section 86(2)(a) QBSA Act. -- 3 of 5 -- 4 [12] Put another way, the effect of Coral Homes’ submission is that, if the QBSA does not issue a direction to rectify within time, either as prescribed by the statute or as extended by the tribunal, it cannot take further steps against the builder under s 71, notwithstanding that this is not expressly provided for either in s 71 or elsewhere in the QBSA Act. This is unlikely to have been intended. It leads to a different kind of unfairness and may hamper a homeowner’s ability to have a claim progressed against the fund if the scope of works for the tender process is set aside. Proper construction of the provisions [13] The direction to rectify was of no effect because it was issued outside the scope of the QBSA's authority under the statute. In circumstances where the QBSA had not applied to the tribunal for an extension of time under s 72(8) QBSA Act, and where the notice was then withdrawn by the QBSA (with the consent of Coral Homes) the parties are returned to their previous positions, that is, that there was and is no direction to rectify. [14] There are a range of circumstances in which QBSA may decide not to issue a direction to rectify, including a decision under s 72(14) QBSA that it would be unfair to do so. The QBSA may also be regarded as having made a decision not to issue a direction if it fails to do so within the time period in s 72(8), whether deliberately or, as in this case, inadvertently.7 The combination of facts in this application lead to the conclusion that the QBSA's conduct here should be regarded as a decision not to direct rectification. Such a decision is reviewable under s 86(1)(e) QBSA Act. [15] It was, and remains, open to Coral Homes to apply to this tribunal to review the QBSA's decision not to direct rectification. Coral Homes would now also need to satisfy the Tribunal that it should exercise its discretion to extend the time within which to file the application for review. Procedural fairness [16] Coral Homes’ complaint as to the lack of procedural fairness afforded to it must be examined in the context of the manner in which the earlier QCAT proceedings came to an end. Coral Homes’ legal representatives had, quite properly, identified in correspondence to the QBSA the fact that the direction to rectify was issued out of time.8 That correspondence invited an application to extend time, albeit without consenting to the extension. The QBSA responded by letter indicating that it was prepared to withdraw the direction on the basis that the review proceeding be withdrawn on certain terms which were, ultimately accepted.9 In that letter the QBSA also expressly stated, relevantly: i) The BSA seeks to place you on notice that it will now proceed to an assessment of the defective work as an insurance claim under the Statutory Insurance Scheme ... 7 QBSA Statement of Reasons for decision filed 7 March 2012 (SOR), para 65. 8 Letter Holding Redlich to QBSA dated 27 July 2011, SOR 25. 9 Letter QBSA to Holding Redlich dated 16 August 2011. Although this letter is marked without prejudice, it is annexed to the current review application and no point is taken as to the retention of any claim for privilege by the QBSA in its written submissions. -- 4 of 5 -- 5 ii) A preliminary assessment of such a claim has indicated that the BSA will accept a claim for defective work at the property iii) On that basis, the BSA will be seeking to commence proceedings against your client to recover the amount of any payment made under the Insurance Scheme pursuant to section 71 (1) of the QBSA Act. [17] Therefore, Coral Homes understood QBSA’s intention to pursue it under the scheme even though the QBSA would not be proceeding with the direction to rectify itself. [18] Coral Homes could have explored all of the issues which it says it has not been given the opportunity to explore in a review of the QBSA's decision not to direct rectification or in the original QCAT proceedings by consenting to an extension of time. It was clear to Coral Homes prior to the withdrawal of the direction to rectify that the QBSA would still pursue a claim under the fund and seek recovery from Coral Homes. [19] The agreement by Coral Homes to withdraw the review proceeding·rather than consent to an extension of time, together with the failure, to date, by Coral Homes to take the procedural step of reviewing the decision not to direct rectification, indicate that Coral Homes itself has played a part in what it now seeks to characterise as a lack of procedural fairness. There exists a real question as to the extent to which it has been genuinely deprived of the opportunity to put its case, dispute liability or understand the case it has to meet, in any determination of the proper scope of works to be tendered for and completed under the insurance scheme. Coral Homes could have explored those issues in either context. [20] In this application for a summary determination in its favour, on the grounds of a denial of procedural fairness, Coral Homes has not met the threshold of demonstrating clearly that the matter should be determined in its favour without the need for a merit review. [21] The application for summary determination is therefore refused. -- 5 of 5 --