Dollar Quality Pty Ltd v Queensland Building and Construction Commission & Anor [2026] QCAT 339

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Dollar Quality Pty Ltd v Queensland Building and Construction Commission & Anor [2026] QCAT 339 PARTIES: DOLLAR QUALITY PTY LTD (applicant) v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (first respondent) and SHARMA LOUISE SONDERGELD (second respondent) APPLICATION NO/S: GAR121-22 MATTER TYPE: General Administrative Review DELIVERED ON: 28 July 2026 HEARING DATE: 26 June 2026 HEARD AT: Cairns DECISION OF: Member Alex Nelson ORDERS: The answer to the preliminary question is: “No, the QBCC is not bound by the decision of the District Court” Pursuant to s23(2)(a) of the QCAT Act the First Respondent has 28 days in which to reconsider the decision it made on 7 February 2022. The proceeding is to be listed for further directions on a date to be fixed not less than 35 days from the date of these orders. CATCHWORDS: PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – where the QBCC determined that a home owner had validly terminated a contract and paid a claim by the home owner under the statutory insurance scheme in respect of incomplete building work – where the builder sought a review of the decision regarding termination and separately sought and obtained a declaration against the home owner in the District Court of Queensland – where the QBCC was not a party to the District Court proceeding - whether the declaration is binding upon the Tribunal and the QBCC Queensland Building and Construction Commission Act -- 1 of 11 -- 2 1992 (Qld), s 26A, s 67X, s 71 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3, s 4, s 9, s 20, s 21, s 23, s 23(2), s 114 Queensland Building and Construction Commission Regulation 2018 (Qld), sch 6 r 4(1), Agius v Queensland Building and Construction Commission & Anor [2023] QCATA 148 ECX v Office of Fair Trading, Industry Licensing Unit [2016] QCAT 410 Murphy v Number One Quality Homes Pty Ltd [2021] QCATA 128 Number One Quality Homes Pty Ltd v Murphy & Anor [2020] QCAT 339 Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495 State Government Insurance Office (Queensland) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228 APPEARANCES & REPRESENTATION: Applicant: First Respondent: Second Respondent: Mr S. Kelly with Mr J McDiarmid Mr Schmitt Appearance excused REASONS FOR DECISION [1] Subrogation is the right of one person or entity to step into the shoes of another to collect a debt or pursue a claim for damages. Quintessentially, it allows an insurer to pay a claim and then pursue the at-fault party to recover those monies. [2] Section 67X of the Queensland Building and Construction Commission Act 1992 (Qld) (‘QBCC Act’) establishes a statutory insurance scheme known as the Queensland Home Warranty Scheme (‘the Scheme’). Pursuant to s 26A of the QBCC Act, the Queensland Building and Construction Commission (‘QBCC’) manages the Scheme. [3] Payments made by the QBCC to homeowners under the Scheme would generally attract the common law right of subrogation, but that right of recovery is also a statutory one, found in s 71 of the QBCC Act which (so far as is relevant) provides as follows: 71 Recovery from licensed contractor etc (1) If the commission makes any payment on a claim under the statutory 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. (2) For subsection (1)— (a) a building contractor by whom the relevant residential construction work was, or was to be, carried out is taken to include— -- 2 of 11 -- 3 (i) a licensed contractor identified in a copy of the licensed contractor’s licence included in, or attached to, the contract for carrying out the work; and (ii) a licensed contractor whose name, licence number and address are stated on the contract; and (iii) a licensed contractor whose name is stated on the contract for carrying out the work; and (iv) a licensed contractor whose name is stated on an insurance notification form for the work; and (v) a licensed contractor whose licence number is stated on the contract for carrying out the work; and (vi) a licensed contractor whose licence number is stated on an insurance notification form for the work; and (vii) a building contractor by whom the work was, or was to be, carried out; and (viii) a person who, for profit or reward, carried out the work; and (b) a person through whose fault the claim arose is taken to include a person who performed services for the work if the services were performed without proper care and skill. (3) The commission is subrogated, to the extent of any payment that the commission has made, or has undertaken to make, to the rights of a person to whom, or for whose benefit, the payment has been, or is to be, made in respect of the matter out of which the insurance claim arose. [4] The Applicant in this proceeding is a registered Builder. It entered into a contract with the Second Respondent (‘Home Owner’) for the construction of a new dwelling. The work under that contract had commenced, but it was not completed when some problems arose, and the Builder gave notice and terminated the contract on 14 October 2021. The Home Owner treated the Builder’s termination as a repudiation and on 18 October 2021 gave her own notice terminating the contract. [5] On 28 October 2021, the Home Owner made a claim under the Scheme. [6] On 7 February 2022, a delegate of the QBCC decided that the Builder had repudiated the contract and that the Home Owner had validly terminated ‘on the default of the licenced contractor’ within the meaning of r 4(1)(a) of Schedule 6 of the Queensland Building and Construction Commission Regulations 2019 (Qld), a circumstance which entitles the Home Owner to make a claim under the Scheme. [7] On 6 April 2022 the Builder applied to this Tribunal for review of the QBCC decision. [8] Consequent upon that decision, the QBCC made a payment of $200,000 under the Scheme to the Home Owner on 6 June 2022. [9] On 19 October 2022 the Builder commenced separate proceedings in the District Court against the Home Owner and another person associated with her, seeking among other relief a declaration that the Builder had validly terminated its contract with the Home Owner. While at first glance that might appear to be an abuse of process, it would not be if the Home Owner’s and the QBCC’s interests were different. -- 3 of 11 -- 4 Indeed, the Builder’s submissions in the District Court included that the declaration it sought was a matter of private contractual rights between the parties. [10] By consent, the Tribunal proceedings were stayed on 24 November 2022. [11] It appears, but I may be wrong, that the Builder was seeking to pull the rug out from under the QBCC by having the District Court make a declaration that would bind the QBCC in the Tribunal. In the end, that is what this current aspect of the dispute is about, whether or not the QBCC is bound by the District Court declaration was ultimately made. [12] The QBCC was notified of the District Court proceeding, and it consented to a stay of Tribunal proceedings until the District Court proceeding had been determined, but it was never joined as a party. [13] The Home Owner filed a counterclaim in the District Court for damages against the Builder, but I note that her counterclaim was for damages she sustained less the amount that had been paid to her by the QBCC. [14] On or about 3 May 2024 the Builder and the Home Owner settled their District Court dispute between themselves, with the Home Owner signing a Deed of Settlement which authorised the Builder to file an application in the District Court of Queensland for a declaration to issue by consent in the terms which had been sought in the Builder’s Claim. [15] On 7 May 2024 the QBCC wrote to the Builder and the Home Owner, putting them on notice that the QBCC: (a) was aware of their negotiations to end the District Court litigation; and (b) did not consider itself or the Tribunal bound by the outcome in the District Court, especially where that outcome was the result of a consent order without a full hearing. [16] On 8 May 2024 the Builder signed the settlement deed with the Home Owner and then responded to the QBCC, confirming its intention to proceed with an application for consent orders to be made in the District Court and providing the QBCC with copies of the Home Owner’s consent and the Builder’s application for that declaration. The Builder’s correspondence included the statement, ‘…should the Commission wish to be heard in respect of the final orders, it has ample time to make arrangements in that regard’. [17] It was always open to the Builder to apply to join the QBCC so that any determination made in the District Court would be binding upon it, but the Builder chose not to take that course. [18] On 16 May 2024 the District Court declined to make a declaration on the basis of the parties’ consent. The Builder’s application for that relief was adjourned, further material was filed and relied upon without witnesses being called and cross examined. [19] On 22 May 2024 the District Court delivered its judgment including a declaration: It is declared that [the Builder] lawfully terminated the level 2 residential building contract to construct a new house, a pool and associated decking at 6 Calophyllum Close, Wonga, dated 9 June 2020 on 14th of October 2021. -- 4 of 11 -- 5 [20] At the risk that the latter part of my summary might appear critical of the District Court, it is not intended to be. The parties to the District Court proceeding chose to resolve it in the way that they did. There was an evidentiary basis put forward, unchallenged to the Court. There was, in effect, no contradictor. In making the declaration, His Honour Judge Morzone KC said: Ordinarily, the Court would not make declarations by consent unless the matter were merely one of private right between the particular parties, for example, under a contract such as this and the public and other parties cannot be affected, let alone bound by such declaration. Care must be taken to ensure that the outcome of the proceedings do not, in some circumstances, affect parties not before the Court and the Court should be slow to acceding to an application for consent declaratory orders where there is that prospect. In this case, it seems to me that prospect looms as a real one. As alluded to above, there are pending proceedings before QCAT in relation to its action in the wake of the determination of the contract in relation to the statutory insurance scheme. By an application filed on the 6 th of April 2022, the [Builder] seeks a review of the [QBCC’s] decision that the [Home Owner] had validly terminated her contract with the [Builder] and accordingly, was entitled to relief under the statutory insurance scheme. The Plaintiff also filed an application on the 28 th of July 2022 seeking review of the [QBCC’s] decision to issue directions to rectify. As those proceedings presently stand, both are stayed pending conclusion of this proceeding, whereupon the Tribunal and the Commission will be advised in writing with a view to continuing those proceedings. In circumstances where Tribunals and Courts are at risk at arriving at inconsistent decisions in relation to the same subject matter, albeit in a different context, care must be taken to avoid such risk. The [Builder] was enlivened to the undesirability of that prospect and has provided to the [QBCC] a copy of this application and invited the [QBCC] to participate in this proceeding. The [QBCC] has declined that opportunity but nevertheless maintains its position that the [Home Owner] validly terminated the contract (contrary to the [Builder’s claim in the declaration sought here) and asserted that the consent orders proposed in the construction proceeding would not, in its view, bind the Tribunal in its proceeding. …….It is a matter for the Tribunal as to whether it considers the determination of this proceeding to be one made on the merits or not, for example, by consent, and whether the determination of this Court ought have weight to estop its re- litigation in the Tribunal by an interested third party, being the [QBCC], in the administration and enforcement of rights under the statutory insurance scheme. [21] Pursuant to the settlement deed between the Builder and the Home Owner, the District Court’s declaration triggered the Builder’s release ‘from any issue or dispute arising from the contract’ and the Home Owner’s agreement ‘not to be heard in relation to any finding that [the Builder] properly terminated the contract’. [22] After the declaration was made by the District Court, the parties discontinued the balance of their proceedings in that Court. [23] The proceedings in this Tribunal have now been reinvigorated, although on 10 October 2024 a direction was given by the Tribunal that the Home Owner need not participate further in this particular proceeding; that is, the determination of preliminary question which is ‘Whether the [District Court] declaration binds the -- 5 of 11 -- 6 Tribunal or the QBCC in this proceeding, whether on principles of estoppel or res judicata or otherwise?’. [24] That question was narrowed by the parties themselves who sensibly agreed before the hearing that the District Court declaration did not bind this Tribunal. The issue that remains then, is whether the declaration binds the QBCC. Determination of a Preliminary Issue [25] While there is no specific power for the Tribunal to make a preliminary determination on a separate, preliminary or threshold question, it has the power to do so in an appropriate case where that would contribute the Tribunal’s achievement of the Objects or the Tribunal’s statutory functions under the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’). Those powers derive from: (a) Section 3 of the QCAT Act which makes it an object of the Act to ‘deal with matters in a way that is accessible, fair, just, economical, informal and quick’; (b) Section 4 of the QCAT Act which requires the Tribunal to: (a) encourage the early and economical resolution of disputes before the tribunal, including, if appropriate, through alternative dispute resolution processes; … (b) ensure proceedings are conducted in an informal way that minimises costs to parties, and is as quick as is consistent with achieving justice. … (c) Section 9 of the QCAT Act, ‘The tribunal may do all things necessary or convenient for exercising its jurisdiction’; and (d) Section 114(b) of the QCAT Act, The tribunal’s power to make a decision in a proceeding (the primary power) includes a power: … (b) to make an ancillary order or direction the tribunal considers appropriate for achieving the purpose for which the tribunal may exercise the primary power. [26] The principles that govern the circumstances in which an order for the determination of a separate, preliminary or threshold question might be made were set out in Reading Australia Pty Ltd v Australian Mutual Provident Society:1 (a) the term “question” in O29 r 1 includes any question or issue of fact or law in a proceeding. The distinction in the rule between an “issue” and a “question” is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an “issue”, and less decisive matters of dispute 1 (1999) 217 ALR 495, [8]. -- 6 of 11 -- 7 being “questions” (Landsal Pty Ltd (in liq) v REI Building Society (1993) 113 ALR 643 at 647); (b) a question can be the subject of an order for a separate decision under O29 r 2 even though a decision on such a question will not determine any of the parties’ rights (Landsal Pty Ltd (in liq) v REI Building Society at 647); (c) however, the judicial determination of a question under O29 r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties (Bass v Permanent Trustee Co Ltd [1999] HCA 9 at [45]); (d) where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined (Jacobson v Ross [1995] 1 VR 337 at 341, referring to Nissan v Attorney-General [1970] AC 179 at 242-243 per Lord Pearson; Bass v Perpetual Trustee at [53]); (e) care must be taken in utilising the procedure provided for in O29 r 1 to avoid the determination of issues not “ripe” for separate and preliminary determination. An issue may not be “ripe” for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved (CBS Productions Pty Ltd v O’Neill per Kirby P at 606); (f) factors which tend to support the making of an order under O29 r 2 include that the separate determination of the question may – (i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or (ii) contribute to the settlement of the litigation (CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 601 per Kirby P at 607); (g) factors which tell against the making of an order under O29 r 2 include that the separate determination of the question may – (i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial (GMB Research & Development Pty Ltd v The Commonwealth [1997] FCA 934; (ii) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of -- 7 of 11 -- 8 the hearing of the proceeding (GMB Research & Development Pty Ltd v The Commonwealth; Arnold v Attorney-General for Victoria [1995] FCA 727). This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or (iii) prolong rather than shorten the litigation (GMB Research & Development Pty Ltd v The Commonwealth). [27] A preliminary issue was determined by this Tribunal in ECX v Office of Fair Trading, Industry Licensing Unit2 where the Chief Executive, Department of Justice & Attorney-General, Industry Licensing Unit had refused a tattoo operator’s licence under the Tattoo Parlours Act 2013 (Qld) and upon an Application for Review being made, the Tribunal was called upon to determine the preliminary issue of whether or not information that had been relied upon by the decision maker was properly categorised as ‘a criminal intelligence report or other criminal information’. That needed to be determined in advance because the Applicant did not know the nature or content of the evidence that the decision maker had withheld from disclosure on the basis that it was a ‘criminal intelligence report’. If it had been properly categorised as such, the Applicant was not entitled to be appraised of it. If it was wrongly classified, then the decision maker might withdraw it before the Tribunal conducted its rehearing. Early determination of the question was therefore necessary in order to advance the proceeding fairly. [28] This Tribunal refused to determine a ‘preliminary issue’ in Number One Quality Homes Pty Ltd v Murphy & Anor.3 The question posed by the Murphys was whether or not they had validly withdrawn from their building contract and were thereby entitled to a refund of monies they had paid. They contended that it was a question of law only and, if resolved, it would bring an end to the litigation. Senior Member Brown identified at paragraph [2]: While the determination of a preliminary issue may result in savings in costs and delay, a separate determination should only be ordered if the utility, economy and fairness to the parties of a separate question is beyond issue, citing Tepko Pty Ltd v Water Board (2001) 206 CLR 1, [170]. [29] At paragraph [38], Senior Member Brown found that determination of the preliminary question involved questions of law, fact and statutory construction. Further, if resolved in the builder’s favour, it would require determination of the further question of whether an estoppel arose. At paragraph [56], it was said: This of itself raises the very real prospect that the determination of the preliminary issue will give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of the final hearing and result in overlap between the evidence adduced on the hearing of the preliminary issue and at the final hearing. There is also the very real possibility that this will lead to the prolongation rather than the shortening of the proceedings. [30] At paragraph [70], Senior Member Brown concluded that answering the preliminary question would likely give rise to further factual disputes, that the litigation would not 2 [2016] QCAT 410. 3 [2020] QCAT 339. -- 8 of 11 -- 9 be shortened or the cost to the parties minimised and declined to determine the preliminary issue. That refusal was upheld on appeal in Murphy v Number One Quality Homes Pty Ltd.4 [31] In Agius v Queensland Building and Construction Commission & Anor,5 a member of the Tribunal was found to have erred at law and the determination of a preliminary issue was overturned on appeal because it was made ‘without first establishing that the facts were concrete and established or agreed’. [32] I am satisfied that this is an appropriate case for the Tribunal to answer a preliminary question because: (a) the process is more economical, fair and quick than requiring the parties to prepare and argue all issues, including this one, at a final hearing where determination of this question may change the course of the litigation or even obviate the need for a final hearing; (b) the decision will give a degree of certainty to the parties which is likely to encourage the early and economical resolution of the broader dispute before the tribunal, including, if appropriate, through alternative dispute resolution processes or reconsideration of the decision; and (c) it involves a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties. Builder’s Contentions [33] The Builder contends that the District Court declaration does bind the QBCC because it is a privy of the Home Owner and, being subrogated to the rights of the Home Owner, it has no greater or lesser power, right or obligation than the Home Owner herself. [34] The Builder says that an outcome other than one in which the QBCC is bound by the District Court declaration as privy of the Home Owner would be absurd because the Home Owner might find herself subject to competing outcomes. [35] The Builder argues that the outcome in the Tribunal cannot be any different from that in the District Court because the QBCC ‘proffers no further evidence than was available in the District Court’. [36] It also argues that, because the QBCC is estopped as a privy from pursuing an outcome which differs from, or which undermines, the District Court declaration, the outcome in the Tribunal cannot in practical terms be any different.6 Despite the Applicant’s expressed position that the Tribunal is not bound by the declaration, the real importance of this submission is that the Tribunal stands in the shoes of the QBCC when it conducts a fresh hearing, and when it is standing in those shoes it too is bound by the District Court declaration. QBCC Contentions [37] The QBCC contends that it is not bound by the District Court declaration because it does not act in this proceeding as privy of the Home Owner, nor does it act on her behalf, or pursue the rights that she may have had if other circumstances had prevailed. 4 [2021] QCATA 128. 5 [2023] QCATA 148. 6 Paragraph 2 of the Applicant’s submissions. -- 9 of 11 -- 10 In that regard, it identifies that in this Tribunal it is not seeking to recover damages for breach of contract against the Builder, which would have been the Home Owner’s right to which the QBCC had been subrogated. Instead, it is pursuing the statutory right to recover a payment made under the Scheme from the Builder and that is not a right that the Home Owner ever had. [38] It identifies that its role in this Tribunal is also that of the original decision maker with the obligation to assist the Tribunal in reaching the correct and preferable decision, and that is not an obligation that the Home Owner ever had. [39] To the extent that it pursues a finding which differs from the outcome in the District Court, it does so as the industry regulator with a statutory duty to protect the Scheme which includes keeping the Scheme financially viable by pursuing Builders to recover payments that have been made under the Scheme. [40] The QBCC accepts that it has no new evidence, but it points to: (a) the differing roles of the District Court and the Tribunal, the latter of which is tasked with making the correct and preferable decision; (b) the fact that the rules of evidence do not strictly apply in the Tribunal; and (c) the fact that there was no true contradictor in the District Court proceeding such that cross examination of witnesses in the Tribunal could lead to a different outcome. Consideration [41] It seems to me that the answer to the preliminary question lies largely within the chronology. [42] When the QBCC paid the Home Owner $200,000 on 6 June 2023,7 it was subrogated to the rights and obligations of the Home Owner, at least to the extent of that payment.8 I agree with the Builder that the QBCC had no more rights and no less obligation than the Home Owner, but only in respect of, and to the extent of, the monies it had paid under the Scheme. [43] From that point forward, the Home Owner no longer had the right to sue the Builder for that $200,000, nor did she have the unfettered tight to give the Builder the release that she purported to give because it was so wide that it amounted to a release for that part of her claim which had been subrogated to the QBCC. [44] In State Government Insurance Office (Queensland) v Brisbane Stevedoring Pty Ltd,9 Barwick CJ said at p 241: It is also settled law that an insured may not release, diminish, compromise or divert the benefit of any right to which the insurer is or will be entitled to succeed and enjoy under his right of subrogation. [45] In circumstances where: (a) the Home Owner had no right to release, diminish, compromise or divert the benefit of the rights obtained by the QBCC via subrogation; 7 And likely from an earlier point in time, when it committed to making that payment 8 s 71(3) QBCC Act 9 (1969) 123 CLR 228 -- 10 of 11 -- 11 (b) the Builder and the Home Owner knew or ought to have known that the Home Owner had no such right; (c) the Builder or the Home Owner could have joined, or applied to join, the QBCC as a party to the District Court proceeding, but they chose not to do so; (d) the QBCC has the right, and in the context of being charged with management of the Scheme, has a prima facie obligation, to pursue recovery of the monies that it paid to the Home Owner and that right/obligation exists separate from the Home Owner’s right to have claimed damages form the Builder; and (e) the QBCC has the obligation under s 20 and s 21 of the QCAT Act to use its ‘best endeavours to help the tribunal so that it can make’ the ‘correct and preferable decision’ on the review, which are obligations that the Home Owner did not ever have. I am satisfied that neither the Tribunal nor the QBCC are bound by the declaration made in the District Court of Queensland on 22 May 2024. [46] The answer to the question is ‘No, the QBCC is not bound by the District Court declaration’. Future Conduct of Proceeding [47] The answer to the question that was posed does not finally dispose of the matter. [48] As already identified, the Tribunal’s function is to make the correct and preferable decision. Error on the part of the First Respondent is irrelevant. The correct and preferable decision can only be made after a final hearing at which the Tribunal would: (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. [49] At the hearing, I flagged with the parties that in the event that the answer to the preliminary question was ‘No’, then I would be inclined to invite the QBCC, pursuant to s 23 of the QCAT Act, to reconsider the decision which is under review. [50] Neither party opposed that course being taken and it will save the parties and the Tribunal the expense and delay of having another directions hearing where such a course is likely to be embarked upon, having regard to the fact that the Home Owner has disclosed facts in the District Court proceeding which were not known to the QBCC when it made its decision which is now under review in this proceeding. [51] Accordingly, pursuant to s 23(2)(a) of the QCAT Act the First Respondent has 28 days in which to reconsider the decision it made on 7 February 2022 [52] I also direct that the proceeding be listed for further directions on a date to be fixed not less than 35 days from the date of these orders. -- 11 of 11 --