Source: https://www.queenslandjudgments.com.au/case/id/72817
Timestamp: 2019-11-14 14:48:51
Document Index: 131197380

Matched Legal Cases: ['art 1', 'art 1', 'art 2', 'art 3', 'art 4', 'art 5', 'art 6', 'art 7', 'art 8', 'art 9', 'art 1', '§3']

[2011] QCA 58 - Lange v Queensland Building Services Authority
Lange v Queensland Building Services Authority
[2011] QCA 58
Reported at [2012] 2 Qd R 457
Lange v Queensland Building Services Authority [2011] QCA 58
SHANE ANDREW LANGE
Appeal No 9164 of 2010
SC No 1930 of 2009
Margaret McMurdo P, Margaret Wilson AJA and Ann Lyons J
PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – where appellant’s company contracted to build three townhouses for owners – where townhouses comprised one detached dwelling and one duplex – where owners covered by insurance policy pursuant to the Queensland Building Industry Services Authority Act 1991 (Qld) – where respondent’s liability limited under the policy – where work was not completed – where owners terminated contract – where owners successfully claimed $200,000 from respondent on policy – where respondent sought indemnity from appellant pursuant to Queensland Building Industry Services Authority Act 1991 (Qld) s 111C – whether exclusion clause in policy applicable
STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – PARTICULAR WORDS AND PHRASES – where insurance policy a statutory instrument – whether exclusion clause applicable – whether "residential construction work" has same meaning throughout policy – whether contra proferentem maxim applicable – whether later legislative amendment can inform interpretation of policy – whether "payment on a claim under the insurance scheme" pursuant to Queensland Building Industry Services Authority Act 1991 (Qld), s 71 and s 111C
Acts Interpretation Act 1954 (Qld), s 14B
Judicial Review Act 1991 (Qld), s 4, s 20
Queensland Building Services Authority Act 1991 (Qld) (Reprint No 8E), s 3, s 4 (Schedule 2), s 5, s 9(a), s 9A, s 69(2), s 71(1), s 111C
Queensland Building Services Authority Act 1991 (Qld) (Reprint No 8F), s 70A
Queensland Building Services Authority Insurance Policy Conditions, Edition 7, 29 September 2006, cl 1.1, cl 1.9, cl 2.1(a), cl 2.4(c), cl 2.6 3.1(a), cl 3.4(b), cl 3.6, cl9
Queensland Building Services Authority Regulation 2003 (Qld) (Reprint No 2E), s 9, s 10, s 11, s 12
Statutory Instruments Act 1992 (Qld)
Allina Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 203; [1991] FCA 78, cited
Insurance Commission (WA) v Container Handlers Pty Ltd (2004) 218 CLR 89; [2004] HCA 24, cited
Interlego AG & Anor v Croner Trading Pty Ltd (1992) FCR 348; [1992] FCA 624, cited
King v Victoria Insurance Co Ltd [1896] AC 250, cited
Lange v Queensland Building Services Authority [2010] QSC 266, cited
McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579; [2000] HCA 65, cited
G J Gibson QC, with S J Armitage, for the appellant
D A Savage SC, with M J Luchich, for the respondent
Kelly Lawyers for the appellant
Pattani Lawyers for the respondent
[1] MARGARET McMURDO P: This appeal should be dismissed with costs. It concerns the construction of an insurance policy between clients of the appellant's construction company ("the insured") and the respondent, the Queensland Building Services Authority ("QBSA"). The policy was created under Pt 5 Queensland Building Services Authority Act 1991 (Qld) ("the Act").[1] The respondent made a payment under the policy to the insured and sought to recover the amount of that payment from the respondent by way of s 71 and s 111C(3), (6) and (7) of the Act.
[2] For the reasons given by Wilson AJA at [5] to [63] I consider the primary judge was right in concluding that:
"When, in clause 1.9(a)(ii) [of the policy], there is a reference to 'more than one duplex', that necessarily involves a consideration of the class of items for which there is more than one. Clause 1.9(a)(i)-(v) contains references to particular types of dwellings and numbers of them. It is internally consistent with that delineation of types of structures that one should adopt the construction that each sub-clause necessarily refers to a type of building; thus, a reference to more than one type of building means no more than that the exclusion will apply if the contract or contracts involves more than the specified number of particular types of construction. Had the legislature intended that the policy could be excluded in the circumstances of this case then it would have been a relatively simple task for that to have been incorporated into clause 1.9.
The QBSA was correct in its appreciation that clause 1.9 did not apply and that the insured were entitled to payment."[2]
[3] That conclusion is sufficient to dispose of this appeal. Wilson AJA at [64] to [74], discusses a further contention of QBSA as to the construction and effect of s 71(1) and s 111C(3), (6) and (7) of the Act. The contention was not raised at first instance and nor did the QBSA raise it in a notice of contention. This Court heard only brief argument about it. In those circumstances, it is in my view undesirable to express a concluded view on the point. I observe, however, that it seems unlikely that parliament would have intended for QBSA to recover from building contractors (or where building contractors are companies, their directors) payments wrongly made to those insured by the QBSA on policies entered into under Pt 5 of the Act.
[4] I agree with the order proposed by Wilson AJA.
[5] MARGARET WILSON AJA: This is an appeal from the dismissal of an application for judicial review of the respondent’s decision that Daniel Sebastian Demy-Geroe and Jillian Jane Koosey ("the owners") were entitled to indemnity under a statutory policy of insurance in force pursuant to the provisions of the Queensland Building Services Authority Act 1991 ("the QBSA Act")[3] in respect of a claim made by them under the policy for non-completion of a contract.[4]
[6] The appellant was at all material times a director of Lange Construction Pty Ltd ("the company").
[7] Pursuant to a residential building contract dated 2 May 2007 ("the contract"), the company agreed to build three townhouses for the owners, who were "consumers" under the QBSA Act.[5] The three townhouses comprised one single detached dwelling and one duplex.
[8] The work was not completed, and on 15 April 2008 the owners terminated the contract. The company went into liquidation.
[9] The owners made a claim on a statutory policy of insurance issued pursuant to the QBSA Act, and in December 2008 the respondent approved the claim and paid them $200,000.
[10] The respondent sought to recover the amount it had paid from the company[6] by lodging a proof of debt with the liquidators.
[11] Then it sought indemnity from the appellant pursuant to s 111C of the QSBA Act.
[12] The appellant contends that an exclusion clause in the policy was applicable in the circumstances, and that accordingly the respondent ought not to have paid the owners.
[13] The primary judge rejected the appellant's contention, and dismissed his application for judicial review of the respondent's decision to make the payment to the owners.
The statutory insurance scheme
[14] The respondent was established by s 5 of the QBSA Act. One of its functions is to manage the statutory insurance scheme set up under Pt 5 of that Act.
[15] If a consumer enters into a contract for the performance of "residential construction work" with a contractor licensed to perform such work, a policy of insurance in terms prescribed by regulation comes into force.[7] The policy is a statutory instrument to which the Statutory Instruments Act 1992 applies.
[16] In this case the policy conditions were those in Queensland Building Services Authority Insurance Policy Conditions, Edition 7, which came into force on 29 September 2006 ("the policy").[8] Under Part 1 of the policy, the respondent agreed to pay the owners for loss suffered by them in the event of the company’s failing to complete the contract. The relevant exclusion cl was clause 1.9, to which I will turn shortly.
[17] The policy provided insurance cover to "the insured". By clause 9.1 "Insured" meant:
"(a)the owner of the land; or
(b)a consumer who had entered into a contract with the contractor to have residential construction work carried out in Queensland;..." (Emphasis added).
[18] The policy had nine Parts:
Part 1: Non-completion
Part 2:Defective construction
Part 3:Subsidence or Settlement
Part 4:Limits of Liability
Part 5:General Exclusions
Part 6:Claims
Part 7:Payments
Part 8:Reviewable Decisions
Part 9:Definitions and Interpretation.
[19] By clause 1.1 –
"1.1 Payment for non-Completion
Subject to the terms of this policy, BSA agrees to pay for loss suffered by the Insured in the event of the contractor failing to complete the contract for the residential construction work." (Emphasis added.)
[20] The respondent’s liability under Part 1 of the policy was limited by clause 1.9, which provided –
"1.9 No Liability in Certain Circumstances
BSA is not liable under this Part:
(a)in relation to a contract or contracts for:
(i)residential construction work involving more than two single detached dwellings between the Insured and the one contractor;
(ii)residential construction work involving more than one duplex between the Insured and the one contractor;
(iii)residential construction work involving more than two residential units within a multiple storey dwelling between the Insured and the one contractor;
(iv)residential construction work to the common property of a multiple storey dwelling other than a duplex between the Insured and the one contractor, unless at least 50% of the units were occupied when the contract was entered into, and when the contract was terminated;
(v)residential construction work involving the construction of a multiple storey dwelling other than a duplex.
(b)where the Insured has exercised the Insured’s right to withdraw from the contract during the 'cooling off period' in accordance with the terms of the contract, or pursuant to the provisions of the Domestic Building Contracts Act 2000."
The decision sought to be reviewed
[21] The respondent determined that the exclusion clause was not applicable: the residential construction work the subject of the contract was not within this clause as it:
"… provided for the construction of one single, detached dwelling and one duplex whereby the First Townhouse was a single detached dwelling for the purposes of the Insurance Policy and the Second and Third Townhouses were a duplex for the purposes of the Insurance Policy."[9]
The rival contentions
[22] Counsel for the appellant submitted that the residential construction work exceeded the limits prescribed by cl 1.9(a)(ii): it involved more than one duplex, because it involved a duplex and a detached dwelling. They submitted that therefore the exclusion applied, and the respondent was not liable on the policy.
[23] Counsel for the respondent submitted that because the number of single detached dwellings did not exceed the maximum in sub-cl (i) and the number of duplexes did not exceed the maximum prescribed in (ii), the exclusion did not apply.
[24] The primary judge held that the respondent was correct in concluding that cl 1.9 did not apply and that the owners were entitled to payment.
[25] His Honour reasoned –
[28]The construction advanced by the applicant would result in a situation where QBSA could escape liability where a contract for the construction of a duplex also contained a requirement that there be a simple concrete path leading to the front door of that duplex as the latter would be 'residential construction work' within the meaning of the legislation. As Jordan CJ said in Hall v Jones[10]:
'A court is entitled to pay the legislature the not excessive compliment of assuming that it intended to enact sense and not nonsense.'
[29]To adopt the construction advanced by the applicant would allow for nonsensical results and I do not accept that the purpose of the legislation as set out in the Act, the Regulation and the insurance policy was to allow for such a result.
[30] When, in clause 1.9(a)(ii), there is a reference to 'more than one duplex', that necessarily involves a consideration of the class of items for which there is more than one. Clause 1.9(a)(i)-(v) contains references to particular types of dwellings and numbers of them. It is internally consistent with that delineation of types of structures that one should adopt the construction that each sub-clause necessarily refers to a type of building; thus, a reference to more than one type of building means no more than that the exclusion will apply if the contract or contracts involves more than the specified number of particular types of construction. Had the legislature intended that the policy could be excluded in the circumstances of this case then it would have been a relatively simple task for that to have been incorporated into clause 1.9.
[31]The QBSA was correct in its appreciation that clause 1.9 did not apply and that the insured were entitled to payment. It follows that the application is dismissed. I will hear the parties on costs."
Purposive approach to interpretation of the policy
[26] Because the policy is a statutory instrument, the interpretation of clause 1.9 which will best achieve the purpose of the QBSA Act is to be preferred to any other.[11]
[27] The objects of the Act are set out in s 3:
"3 Objects of Act
(a)to regulate the building industry—
(i) to ensure the maintenance of proper standards in the industry; and
(ii) to achieve a reasonable balance between the interests of building contractors and consumers; and
(b)to provide remedies for defective building work; and
(c)to provide support, education and advice for those who undertake building work and consumers." (Emphasis added.)
[28] A "consumer" is –
"a person for whom building work is carried out, but does not include a building contractor for whom building work is carried out by a subcontractor."[12]
[29] By s 69(2) a policy of insurance comes into force when a consumer enters into acontract for residential construction work with an appropriately licensed contractor.[13]
[30] Thus, the purpose of Pt 5 of the Act is consumer protection, and the policy is to be construed in the way which will best achieve that purpose.
[31] "Residential construction work" has the same meaning in the Act, the Queensland Building Services Authority Regulation 2003[14] ("the QBSA Regulation") and the policy.[15] Under s 10 of the QBSA Regulation both "primary building work" (for example, the construction of a residence) and "associated building work" (for example, the construction of a fence under a contract for primary building work) are classified as "residential construction work".[16]
[32] In other provisions of the policy the expression "residential construction work" clearly has the same meaning as in the QBSA Regulation – that is, it encompasses both primary building work and associated building work. For example, where associated building work is not intended to be included, there is reference to "residential construction work that is primary building work" in cll 2.1(a) and 3.1(a), and where primary building work is not intended to be included, there is reference to "residential construction work that is associated building work" in clauses 2.6 and 3.6.
[33] There is no warrant for giving "residential construction work" a different meaning in clause 1.9(a) from the meaning it has elsewhere in the policy, and I do not think that either party’s contention ultimately turns on doing so. In construing sub-cll (i), (ii), (iii) and (v) of cl 1.9(a), it does not matter whether the residential construction work in any particular case includes associated building work – because the focus is on whether it includes a greater number than two residences. In this regard I respectfully disagree with the primary judge.
[34] Clause 1.9(a) provides that the respondent is not liable "in relation to a contract or contracts" for residential construction work beyond the quantitative limits it prescribes.
[35] Sub-clauses (i), (ii) and (iii) begin with the words –
"residential construction work involving more than..."
[36] One of the definitions of "involve" in the Shorter Oxford Dictionary[17] is "to include, contain, comprehend", which is similar to one of the definitions in the Macquarie Dictionary[18] – "to include, contain, or comprehend within itself or its scope".
[37] Elsewhere in the policy the expression "residential construction work comprising more than one separate residence" is used.[19]
[38] The use of the words "involving more than" rather than "comprising more than" is an indication that the sub-clauses are concerned with residential construction work that includes more than what follows those words.
[39] The Shorter Oxford English Dictionary contains a number of definitions of "more", including[20] –
"..something of greater importance or magnitude"
and when used in conjunction with the word "than" –
"...a greater number of the class specified."
[40] Grammatically, the words "more than" qualify what follows them. In other words, sub-cll (i), (ii) and (iii) are concerned with residential construction work that includes a greater number than two single detached dwellings, a greater number than one duplex, et cetera.
[41] "Duplex" is defined in clause 9 of the policy as a building which is a detached dwelling comprising two residential units, and "residential unit" is defined in that clause as a part of a building designed for separate occupation as a residence.
[42] "Residence" is defined in s 9 of the QBSA Regulation as a building or part of a building fixed to land and designed to be used for residential purposes, whether or not it is part of commercial or industrial premises, with certain exceptions not presently relevant.
[43] Counsel for the appellant submitted that there is a common thread in sub-cll (i), (ii), (iii) and (v) – that the respondent is not liable in relation to a contract or contracts for more than two residences. They submitted that to exclude liability in relation to a contract or contracts for more than two residences would be consistent with the consumer protection purpose of Pt 5 of the Act. They submitted that the Legislature’s purpose of excluding liability in relation to a contract or contracts for more than two residences would be achieved if sub-cll (i) and (ii) were read together.
[44] These submissions would be attractive were it not for sub-cl (iv), by which the respondent would be liable in relation to a contract or contracts for residential construction work to the common property of a multi-unit multiple storey dwelling if at least 50 percent of the units were occupied when the contract was entered into and when it was terminated. Whether to restrict the number of residences in relation to which the respondent should be liable under the insurance policy is a policy question within the province of the Legislature. Although in principle it may be possible to divine such a policy from the legislation and the terms of the insurance policy, it is not possible to do so in the present case.
[45] Counsel for the appellant submitted further that if the respondent’s interpretation were correct, the respondent could be liable in relation to a contract or contracts for up to six residences, which would hardly be consistent with the consumer protection focus of the statutory insurance scheme.
[46] However, although restricting the number of residences to two would be consistent with the consumer protection focus of the statutory insurance scheme, the absence of such a restriction does not necessarily detract from that focus.
[47] Senior counsel for the respondent accepted that if his client's interpretation of the policy were correct, it might have the unintended consequence of authorising cover in the unusual circumstance of a potpourri of structures suggesting a commercial purpose. But, as he pointed out, although a single detached dwelling and a duplex is an unusual combination, in this case it was common ground that the owners were consumers; there was no suggestion that they were property developers or that they were engaged in large scale property development.[21]
The sub-clauses should be read disjunctively
[48] Curiously, the various sub-clauses of cl 1.9(a) are not linked by "and" or "or" or "and/or". In all the circumstances I am satisfied that the Legislature intended that they be read disjunctively. I agree with the primary judge that each sub-clause of cl 1.9(a) refers to a type of building and that the exclusion will apply if the contract or contracts involve more than the specified number of particular types of buildings.
[49] It follows that the appeal should be dismissed. But out of deference to counsel, I shall express my views on several other arguments advanced in written and oral submissions.
[50] Counsel for the respondent placed some reliance on the contra proferentem maxim.[22]
[51] This maxim encapsulates an old rule of construction to the effect that intractable ambiguities in printed instruments, such as insurance policies, should be resolved in favour of the person receiving them and against the person propounding them.[23] In the case of an insurance policy, this usually means against the insurer. As Kirby J explained in Johnson v American Home Assurance Co[24]–
"it is not unreasonable for an insured to contend that, if the insurer proffers a document which is ambiguous, it and not the insured should bear the consequences of the ambiguity because the insurer is usually in the superior position to add a word or a clause clarifying the promise of insurance which it is offering."
[52] Recent authorities ascribe limited utility to the rule. It may be invoked as a last resort, rather than as a substitute for analysis in accordance with orthodox principles for the interpretation for contracts.[25]
[53] The contra proferentem maxim is of doubtful assistance in construing a statutory policy of insurance. As Kirby J explained in Insurance Commission (WA) vContainer Handlers Pty Ltd[26] –
"[98]...This appeal, which concerns a statutory policy of insurance, illustrates another limitation in the usefulness of the maxim.
[99] In construing a policy, issued in terms adopted by a Parliament to achieve legislative objectives, the interpreter enters a different realm of discourse. The object there is not, as such, to uphold a bargain fairly defined between private parties. Ultimately, it is to uphold the purpose of the legislature in enacting that form of policy."
Later legislative amendment
[54] The Legislature amended the QBSA Act by the introduction of s 70A,[27] with effect from 21 December 2007. Although the new section does not apply to the present case, counsel for the appellant relied on it in support of the interpretation of the policy for which their client contends.
[55] Section 70A is in these terms –
"70A Persons not entitled to indemnity under insurance scheme
(1)A building contractor who carries out speculative residential construction work is not entitled to indemnity under the statutory insurance scheme for the work.
(2) Where a person has entered into 1 or more building contracts, in force at the same time, to construct 3 or more living units, the person is not entitled to indemnity under the statutory insurance scheme for the work.
(3) For subsection (2)—
(a) a single detached dwelling is taken to be 1 living unit; and
(b) a residential unit is taken to be 1 living unit; and
(c) a duplex is taken to be 2 living units.
(4) A policy of insurance for residential construction work, in the terms stated in the board’s policies, may include other circumstances in which a person is not entitled to indemnity under the statutory insurance scheme.
(5) Nothing in this section affects the right of a subsequent owner of residential construction work mentioned in this section to claim indemnity under the statutory insurance scheme."
[56] If the meaning of a statute is obscure or fairly and equally open to more than one interpretation, the terms of a later amendment may throw some light on it. This was recognised by this court in Johnston v Jewry[28] where White J cited authorities referred to by Dixon, Evatt and McTiernan JJ in Deputy Federal Commissioner of Taxes (SA) v Elder’s Trustee and Executor Co Ltd[29]–
"[31] I make reference to these amendments to see if they may throw some light on the provisions under examination. Dixon, Evatt and McTiernan JJ in The Deputy Federal Commissioner of Taxes (South Australia) v Elder’s Trustee and Executor Company Ltd,[30] confronted with ambiguity as to the intended temporal operation of the Land Tax Assessment Act 1914 (Cth), quoted with approval from high authority at 625-6
'… Where the interpretation of a statute is obscure or ambiguous, or readily capable of more than one interpretation, light may be thrown on the true view to be taken of it by the aim and provisions of a subsequent statute’ (per Lord Atkinson) [Ormond Investment Co v Betts[31]].
In Cape Brandy Syndicate v Inland Revenue Commissioners,[32] Lord Sterndale said: 'I quite agree that subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier'. In reference to this statement, Lord Buckmaster said in Ormond Investment Co v Betts:[33] 'That is, in my opinion, an accurate expression of the law, if by 'any ambiguity' is meant a phrase fairly and equally open to divers meanings'. But it is not permissible to construe an unambiguous phrase in an earlier Act by an erroneous assumption of its effect contained in a later Act which did not purport to alter or amend the earlier Act (per Lawrence LJ, Port of London Authority v Canvey Island Commissioners[34]).'"
[57] The authorities counsel a cautious approach, and stress the need to distinguish an amendment intended to address an omission or to alter the previous legislative intent from an amendment made out of an abundance of caution to remove possible doubt about the intent of the original provision.[35]In Allina Pty Ltd v Commissioner of Taxation[36] the Full Court of the Federal Court said –
"There was some debate before us as to the circumstances in which courts are entitled to examine a later statute to determine whether it throws any light upon the interpretation of an earlier statute. Plainly this course can be taken when the words of the earlier statute are ambiguous, but if the words of the earlier statute are clear, little assistance may be gained from the later statute. Also, care must be exercised to ensure that the words in the later statute have not been inserted to remove possible doubts: see Re MacManaway, Re House of Commons (Clergy Disqualification) Act 1801;[37] Kirkness v John Hudson & Co Ltd;[38] and Thompson v J T Fossey Pty Ltd (No 1);[39] D C Pearce & R S Geddes, Statutory Interpretation in Australia.[40] We do not discern any ambiguity in the relevant words of s 160ZH(9)(a), so do not find it necessary to call in aid the language of the amendment to par (a)."
And in Interlego AG v Croner Trading Pty Ltd[41] Gummow J said –
"There is a line of authority that an amendment may be taken into account in determining the scope of the prior legislation, at least to avoid a result which would render the amendment unnecessary, or futile or deficient: see especially Grain Elevators Board (Vic) v Dunmunkle Corporation;[42] Hunter Resources Ltd v Melville.[43] But in doing so caution should be exercised: see D C Pearce and R S Geddes, Statutory Interpretation in Australia.[44] It is, after all, a curious way of revealing parliamentary intention at the time of passing the earlier provision. As was observed by Viscount Haldane LC in Re Samuel:[45]
'It is not a conclusive argument as to the construction of an earlier Act to say that unless it be construed in a particular way a later enactment would be surplusage. The later Act may have been designed, ex abundante cautela, to remove possible doubts.'"
[58] In the present case counsel for the appellant submitted that the new s 70A could be used to throw light on the meaning of the insurance policy, a statutory instrument made under the legislation before the section was introduced.
[59] Section 70A was inserted as part of a raft of amendments to the QBSA Act relating to the statutory insurance scheme. It introduced a new expression "living unit", and made it plain that there was to be no insurance cover where the contract or contracts were for the construction of three or more living units. At the same time there was a raft of amendments to the QBSA Regulation,[46] and a new version of the policy of insurance was subsequently published in the Queensland Government Gazette.[47] Counsel relied only on s 70A.
[60] By s 14B of the Acts Interpretation Act 1954, extrinsic material may be used to confirm the interpretation conveyed by the ordinary meaning of a provision. When the amending legislation was before the Parliament, the Minister said in his Second Reading Speech –
"The Bill also amends the QBSA Act to ensure developers cannot claim on the Home Warranty Scheme for defective building work carried out as part of their development.
The purpose of the Scheme is to provide protection for home owners. It is not and never was intended to cover business risks associated with commercial development projects."[48] (Emphasis added)
[61] The Minister’s reference to the Home Warranty Scheme was clearly a reference to the statutory insurance scheme. He was referring to a raft of amendments to the statutory provisions about the scheme, and not just to the introduction of s 70A. It is apparent that the purpose of those amendments was to clarify the consumer protection focus of the provisions. But his speech is not of any assistance in determining whether the restriction of the insurance cover to contracts for the construction of no more than two "living units" was intended to alter the previous position.
[62] Until the enactment of s 70A the QBSA Act did not contain any provision limiting the number of residences which might be the subject of contracts in relation to which insurance cover was available. That was left to a statutory instrument, namely the policy – in particular clause 1.9(a). Section 70A marked a clear change in the legislative intent as to how this matter should be regulated, and as I have said, it introduced the new expression "living unit".
[63] In all the circumstances, s 70A does not assist in the interpretation of clause 1.9(a) of the policy of insurance.
Respondent’s submissions that the appellant’s argument is irrelevant in any event
[64] Counsel for the respondent submitted –
"In any event the Appellant's argument ignores the fact that the Respondent’s right against the Appellant arises under s 111C(3) by reason of the payment having been made under the Policy. That provision plainly enough comprehends the pre-existing position at common law that a bona fide payment by an insurer under a colourable construction of the policy cannot be impeded by a third party such as the Appellant here."[49]
[65] Senior counsel for the respondent expanded on this in oral argument. He said[50]–
"The administrative decision that's involved here is not an administrative decision about paying the claim. It's not an administrative decision about whether or not the insured was an insured under a policy of insurance. The only thing in issue here that s 111C authorises is the commencement of a claim by reason that money has been paid. That does not, in our submission, involve any argument about the rightness or otherwise of some decision to which the appellant was not even a party and which is not disputed by the builder who was a party to the contract, or by the authority or by the insured under the contract. It is a decision to which they are not a party, they are a foreigner and they have no right to complain about it."
[66] In making the submission they sought to invoke a principle of the general law of insurance summarised in Sutton on Insurance Law in Australia and New Zealand as follows[51] –
"A third party tortfeasor cannot resist liability on the ground that the insurer has made a payment to the assured which is voluntary in the sense that, with the benefit of hindsight, the insurer is not liable to indemnify the assured. While the payment may not have been legally recoverable, the right of subrogation remains if the insurer acted in good faith and honestly intended the payment to be in satisfaction of a loss under the policy, believing that he or she was or might be liable. It is not good law to say that, in order to sue the third party for the damage suffered, an insurer must show that, if he or she has disputed the claim by the assured rather than settling it, the assured must have succeeded in her or his action.[52] But the payment must be made under the policy for subrogation to arise. If the assured sues the insurer on the claim and the action is compromised, with partial payment being made in settlement as a goodwill gesture and to stop further legal costs, the payment is by way of compromise and is not a payment made under the policy."[53]
[67] This argument was not raised before the primary judge, and the respondent did not file a notice of contention in relation to it. The appellant nevertheless had notice of it, because it was included in the respondent’s written submissions, and its counsel made some submissions with respect to it in reply, acknowledging that the appellant was not prejudiced by the argument being raised on appeal (except perhaps in relation to costs if the primary point were decided against it.)[54]
[68] In the present case the respondent's right to recover from the appellant the amount it paid the owners is a statutory right rather than a right arising under the general law relating to subrogation.
[69] Section 71(1) of the QBSA Act provides –
"71 Recovery from building contractor etc.
(1)If the authority makes any payment on a claim under the insurance scheme, the authority 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."
[70] So far as relevant, s 111C of the Act provides –
"111C Liability of directors for amounts
(3)This section also applies if a company owes the authority an amount because of a payment made by the authority on a claim under the insurance scheme.
(6)If this section applies because of subsection (3), the liability to pay the amount attaches to—
(a)each individual who was a director of the company when building work the subject of the claim was, or was to have been, carried out; and
(b) each individual who was a director of the company when the payment was made by the authority.
(7) A liability under subsection (4), (5) or (6) to pay a penalty or an amount applies regardless of the status of the company, including for example, that the company is being or has been wound up."
[71] Counsel for the appellant submitted –
"It is our submission that, for the reasons we have advanced, the payment that was made by the QBSA was not paid under the insurance scheme. The insurance scheme obliged the insurer to pay in certain circumstances. It excluded its liability to pay in certain circumstances. Relevantly, those circumstances are at clause 1.9(a). So if the Court accepts our construction of 1.9, the authority was not only not obliged to pay, but the payment was not made under the scheme, as I submitted earlier, it was a decision that was made beyond jurisdiction.
Accordingly, the triggering circumstance upon which the QBSA relies does not arise if our interpretation is accepted."[55]
"[T]he key difference is that to which we refer in our submissions. The key difference between this situation and that which is in fact the case of common law – we acknowledge that – is that that is a contractual relationship not influenced by a statutory regime, a contractual relationship in respect of which there's no statutory entitlement to review, and a contractual relationship which through the history of the common law has sought to protect insurers who have, in good faith, indemnified."[56]
[72] Sections 71 and 111C provide for recovery of the amount of a "payment on a claim under the insurance scheme" rather than the recovery of the amount of a "payment under the insurance scheme". For this reason, I do not accept counsel for the appellant's submission that the triggering circumstance on which the respondent relies does not apply.
[73] The administrative decision sought to be reviewed is one about entitlement to indemnity under the statutory policy. The appellant is a person aggrieved by that decision because, in consequence of it, a payment was made to the owners and he was exposed to recovery proceedings pursuant to s 111C. He is entitled to seek judicial review of that decision pursuant to s 20 of the Judicial Review Act 1991.
[74] In summary, the principle on which the respondent relies is one applicable to the general law of insurance, but not to this statutory policy.
[75] I respectfully disagree with the primary judge's conclusion that the construction advanced by the appellant would lead to nonsensical results. Nevertheless, I agree with his Honour that each sub-clause necessarily refers to a type of building and that the exclusion is applicable where the contract or contracts involves more than the specified number of particular types of buildings.
[76] I would dismiss the appeal with costs.
[77] ANN LYONS J: I agree with Margaret Wilson AJA and the President that this appeal should be dismissed with costs. I similarly consider that the primary judge was correct in his conclusion that the QBSA was correct in its conclusion that cl 1.9 did not apply and that the insured were entitled to payment pursuant to the statutory insurance scheme established pursuant to s 5 of the QBSA Act. I agree that the various sub clauses of clause 1.9(a) need to be read disjunctively.
[78] I also agree with the observations of the President that the arguments in relation to the construction and effect of s 71(1), s 111C(3), (6) and (7) of the QBSA Act were only briefly canvassed in arguments before the Court. I am similarly reluctant to express a concluded view on the matter.
[79] I agree with the orders proposed by Margaret Wilson AJA.
[1] It was common ground that Reprint No 8E was the applicable reprint in force.
[2] Lange v Queensland Building Services Authority [2010] QSC 266, [30]-[31].
[3] The parties agreed that Reprint No 8E contains the provisions of the Act in force at all material times.
[4] Amended application for a statutory order of review (Appeal Record pp 22 - 25).
[5] QBSA Act s 4, Sch 2 (Dictionary).
[6] QBSA Act s 71(1).
[7] QBSA Act ss 69(2), 9(a), 9A; Queensland Building Services Authority Regulation 2003 (Reprint No 2E) s 34A, Sch 1A.
[8] Published in the Queensland Government Gazette, No 27, 29 September 2006, 466–479.
[9] Amended Statement of Reasons for the Decision, 22 December 2009, [3.6] (Appeal Record p 41).
[10] (1942) 42 SR (NSW) 203, 208.
[11] Statutory Instruments Act 1992 s 14(1), Sch 1; Acts Interpretation Act 1954, s 14A.
[12] QBSA Act s 4, Sch 2 (Dictionary).
[13] See also cl 4.10 of the policy, which imposes limits on the respondent’s liability where the insured work is contained in a building incorporating both residential purposes and commercial purposes.
[14] The parties agreed that Reprint No 3E contains the provisions of the Regulation in force at all material times.
[15] QBSA Act s 4, Sch 2 (Dictionary); QBSA Regulation (Reprint No 2E) s 10; policy cll 9.1 and 9.2.
[16] QBSA Regulation (Reprint No 2E) ss 11 and 12.
[17] Lesley Brown (ed), The New Shorter Oxford English Dictionary (Oxford University Press, 1993) 1412.
[18] The Macquarie Dictionary (The Macquarie Library Pty Ltd, 2nd ed, 1987, 921.
[19] Cll 2.4(c) and 3.4(b).
[20] Lesley Brown (ed), The New Shorter Oxford English Dictionary (Oxford University Press, 1993), 1829.
[21] Transcript 1-29.
[22] Verba cartarum fortius accipiuntur contra proferentem: the words of the deed should be construed strongly against the grantor.
[23] See Insurance Commission (WA) v Container Handlers Pty Ltd (2004) 218 CLR 89, 122 per Kirby J.
[24] (1998) 192 CLR 266, 275.
[25] McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, 602; Insurance Commission of (WA) v Container Handlers Pty Ltd (2004) 218 CLR 89, 122.
[26] (2004) 218 CLR 89, 122-123.
[27] QBSA Act Reprint No 8F.
[28] [2008] 1 Qd R 360, 367.
[29] (1936) 57 CLR 610, 625–626.
[30] (1936) 57 CLR 610.
[31] [1928] AC 143, 164.
[32] [1921] 2 KB 403.
[33] At 9.
[34] [1932] 1 Ch 446.
[35] This distinction was observed recently in Fletcher v Kakemoto [2011] QCA 46, [39].
[36] (1991) 28 FCR 203, 212.
[37] [1951] AC 161, 177-178.
[38] [1955] AC 696, especially per Viscount Simonds, 712-713.
[39] (1978) 20 ALR 496, per Franki J, 501-502.
[40] (3rd ed, 1988), [3.25].
[41] (1992) 39 FCR 348, 382.
[42] (1946) 73 CLR 70, 85-86.
[43] (1988) 164 CLR 234, 254-255.
[44] (3rd ed, 1988), §3.26.
[45] [1913] AC 514, 526.
[46] Effected by 2007 SL No 303.
[47] Published in Queensland Government Gazette, No 65, 26 June 2009, 798-821, effective 1 July 2009.
[48] Queensland, Parliamentary Debates, Legislative Assembly, 22 May 2007, 1526 (Hon RE Schwarten, Minister for Public Works, Housing and Information and Communication Technology).
[49] Respondent’s amended outline of argument [54].
[50] Transcript 1-33. Apparently clear grammatical errors have been corrected in the excerpts from the transcript.
[51] KCT Sutton, Insurance Law in Australia (LBC Information Services, 3rd ed, 1999), 1261.
[52] King v Victoria Insurance Co Ltd [1896] AC 250; Wellington Insurance Co Ltd v Armac Diving Services Ltd (1987) 37 DLR (4th) 462, (British Columbia Court of Appeal); Rose v Borisko Brothers Ltd (1981) 125 DLR (3d) 671, 677.
[53] John Edwards & Co v Motor Union Insurance Co Ltd [1922] 2 KB 249, 254-255; Wellington Insurance Co Ltd v Armac Diving Services Ltd (1987) 37 DLR (4th) 462.
[54] Transcript 1-35.
[55] Transcript 1-36.
[56] Transcript 1-37.
[2012] 2 Qd R 457
McMurdo P, M Wilson AJA, A Lyons J
Primary Judgment [2010] QSC 266 28 Jul 2010 -
Appeal Determined (QCA) [2011] QCA 58 01 Apr 2011 -