May 5, 2017
Construction | QLD
In a decision handed down on 28 April 2017, Queensland’s highest court has confirmed that once the Queensland Building and Construction Commission (QBCC) has made a payment under the statutory insurance scheme it will be almost impossible to stop the QBCC from recovering the payment from the builder concerned.
What does this mean for me?
If you are a builder and perform work which is covered by the statutory insurance scheme administered by the QBCC (Insurance Scheme) then you need to take every opportunity to challenge decisions made by the QBCC which might result in a payment out under the Insurance Scheme. Examples of these decisions are: your work is defective; you have not complied with a direction to rectify defective work, the scope of work required to rectify defective work. By doing this you give yourself the best chance of avoiding a debt payable to the QBCC.
This case highlights that once a payment is made under the Insurance Scheme it will be too late for you to challenge earlier decisions of the QBCC (like the examples above) and it will be almost certain that you will have to pay the related debt. Of course if you agree with a decision e.g. some of your work is defective, then you would likely have the work rectified.
The builder carried out defective building work at six (6) homes in various southside suburbs of Brisbane. The builder did challenge some of the QBCC’s decisions regarding the alleged defects and by doing so reduced the scope of the defects. In the end however the QBCC made payments under the Insurance Scheme for rectification work carried out by other builders at all the sites.
The QBCC then filed a court claim against the builder seeking to recover the amounts paid out under the Insurance Scheme. At first the builder’s argument that the QBCC should not immediately obtain judgment against the builder was successful. This success was largely based on the fact that there were considerable differences between what a quantity surveyor (QS) said was the value of the rectification work and what the QBCC paid out under the Scheme. So the validity of the payments was called into question.
The Appeal Court’s Decision
The Court found that in this case the difference between the QS’s valuation and what the QBCC paid out under the Scheme was not a valid reason to prevent judgment being given against the builder. The Court noted that the builder could have exercised his other review rights earlier and at this late stage i.e. after payment out under the Insurance Scheme, he had no prospect of successfully challenging the QBCC’s right to recover the payment from him. The builder was ordered to pay the QBCC in excess of $200,000.00 plus interest and legal costs.
What to do
If you are served with a direction to rectify you must seek a merits review within 28 days if you disagree with the direction. The review can be through the QBCC free internal review service, the Queensland Civil and Administrative Tribunal or both. If you fail to do so (and do not have the work rectified) the QBCC will have the matter dealt with under the Insurance Scheme i.e. tenders will be called for the rectification work. Even if you seek a review the QBCC may refer the matter to the Insurance Scheme but if the review is successful then there would be no debt claimable by the QBCC.
If tenders are called and you think any items within the scope of work being tendered for are wrong you must seek a merits review of the scope of work within 28 days.
Finally you should remember that company directors can be pursued for debts owing by the company to the QBCC.