Queensland Building and Construction Commission v Grenier Developments Pty Ltd & Anor [2024] QDC 6

Michael Creedon |  Allie Flack  |  Aidan Kleynhans

Key takeout

There are limited defences open to a building contractor against an action by the Queensland Building and Construction Commission (QBCC) to recover payments made under the statutory insurance scheme.

Errors of fact or law arising in the course of the QBCC’s decision to make a payment on a claim generally do not give rise to a valid defence against a recovery action brought under section 71 of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).

If the QBCC cancels a building contractor’s licence under the QBCC Act it is not a valid defence to say that it was the QBCC that caused the loss to the consumer by reason of the licence cancellation.

Facts

Grenier Developments Pty Ltd (Grenier) had been contracted for three unrelated residential building projects. Partway through the projects, Grenier’s  builder’s licence was suspended for failing to satisfy the QBCC that it met the Minimum Financial Requirements required under that licence. The home-owners each made separate complaints for defective and incomplete work, and received payments from the QBCC under the statutory insurance scheme. Pursuant to section 71 of the QBCC Act, the QBCC commenced an action to recover the amount of the payments from Grenier and its director (Defendants).

The Defendants alleged that the claims made by the home-owners were not ‘claims under the statutory insurance scheme’ and that the payments made by the QBCC were not ‘payments of a claim under the statutory insurance scheme’ within the meaning of section 71, and therefore the QBCC had no right to recover from the Defendants. They argued that:

• the consumers were not entitled to make the claims, since any loss they suffered was solely caused by a third party (the third party being the QBCC itself, which the Defendants alleged had in fact caused the loss by cancelling Grenier’s building licence); and
• the scheme entitled the consumers to ‘assistance for the reasonable cost of completing the residential construction work’, but the amounts paid out by the QBCC were so far in excess of what was reasonable that it was extraneous to the consumer’s entitlement for a claim.

The QBCC applied to the District Court seeking that summary judgment be granted in its favour.  

Decision  

The District Court allowed QBCC’s application for summary judgment, granting judgment in in favour of QBCC in the amount of $208,859.

The court affirmed the existing view that the statutory right to recovery under section 71 is not conditional on the correctness of every factual conclusion that led to the QBCC’s decision to make a payment. Other than the defences explicitly described in section 71 (none of which were relevant in this case) the operation of section 71 can only avoided if a defendant establishes that there has been a factual error of such a nature that:

• the claim was not in fact a claim under the insurance scheme; and/or
• the payment sought to be recovered was not a payment on such a claim.

Was the QBCC a ‘third party’ that caused of contributed to the loss?

Under the terms of cover for the statutory insurance scheme, a consumer is not entitled to claim assistance for loss caused or contributed by an act or omission of a third party. The court found that the legislation did not support an interpretation where the QBCC could be said to be a ‘third party’, and concluded that this argument had no real prospects of success.

Section 71 also gives the QBCC the right to recover payment from ‘any other person through whose fault the claim arose’, which would lead to the ‘absurd’ conclusion that the QBCC could recover payment from itself. The court also recognised that there is a separate right to review a decision to cancel a building licence, supporting a legislative intention that an argument about the cancellation of a building licence is not justiciable in section 71 proceedings. 

Were the payments so excessive that they could not be payments on a claim under the statutory insurance scheme?

In relation to the first of the three projects, the Defendants argued that, based on their original quote and the proportion of the works that had been completed, the estimated shortfall required to complete the work was  $68,406.10. They argued that the sum of $197,686.54 paid out was far in excess of the reasonable cost to complete the works.

In relation to the second and third projects, the Defendants said that amounts claimed were respectively 621% and 310% greater than what they estimated to be a reasonable cost of rectification.

The QBCC demonstrated that it had conducted a tender process in accordance with the legislative requirements when engaging contractors to complete the works.

The court found that there was no reason to doubt that the amount paid was paid in accordance with the terms of the policy. It concluded that the Defendants had no real prospects of succeeding and that the Defendants had an opportunity to seek review of the QBCC’s decision to make the payment. Section 71 could not to be construed as a ‘backdoor’ means of reviewing a decision.