No certifier immunity under the QBCC Statutory Insurance Scheme

Nov 10 2016

Publications

In the recent decision of Queensland Building and Construction Commission v Marshall & Ors [2016] QSC 200, the Queensland Supreme Court has determined that certifiers are not immune from recovery of payments made under the QBCC Statutory Insurance Scheme.

Background

Vynian Pty Ltd, the owner of land at Brendale, entered into a contract with Nolimit Pty Ltd for building work in relation to the construction of a residential village, later known as “The Grange”. Nolimit carried out the building work under the contract between 2002 and 2004.

At the completion of the works, the second defendant in the proceeding, Brisbane Certification Group (BCG), certified the relevant building work as compliant.

It was later alleged that the building work was wholly defective, because the fire separation walls between adjoining residential units or in the roof spaces of the adjoining units did not comply with the requirements of the Building Code of Australia. Consequently, the owner’s corporation made claims for the rectification of the defective work under the QBCC statutory insurance scheme which were ultimately paid for by the scheme.

The QBCC then brought a claim against BCG and its directors (the other defendants named in the proceeding) in respect of the amount paid pursuant to the scheme.

Relevant Issue

Section 71(1) of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) provides that:

‘If the commission makes any payment on a claim under the 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.’
(emphasis added)

Section 71(2)(b) of the QBCC Act further provides that:

‘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.’

The defendants made an application to have the QBCC’s claim and statement of claim struck out on the grounds that section 71 of the QBCC Act does not apply to a building certifier.

The Court considered that the defendants’ application turned on whether or not BCG was a person “through whose fault the claim arose” within the meaning of section 71 of the QBCC Act. BCG contended that as certification work is excluded from the definition of “building work” within the QBCC Act, it was not subject to the same regime as a building contractor and as a result, it could not be considered to be an “other person” under section 71 of the QBCC Act.

Decision

The Court held that “any other person through whose fault the claim arose” under section 71 of the QBCC Act is not limited only to a person who carried out the work. The Court further noted that the grounds advanced by the defendants, seeking to exclude BCG from liability under section 71 of the QBCC Act, were not persuasive.

The application was dismissed and the defendants’ were ordered to pay the QBCC’s costs. Although the ultimate decision in this case is yet to be determined, it does show that where a builder is insolvent or deregistered (as the case maybe), the QBCC will likely seek to recover payments made under the statutory insurance scheme from certifiers.

What this means for you

This decision highlights the importance, particularly for building certifiers, of ensuring that building work complies with the relevant code (for example, the Building Code of Australia).  If not, the effect is that building certifiers are likely now to be exposed to claims by the QBCC for recovery of monies paid made under the statutory insurance scheme.

For further information please contact:
Andrew Kelly | Partner | +61 7 3338 7550 | akelly@tglaw.com.au
Andrew MacGillivray | Senior Associate | +61 7 3338 7903 | amacgillivray@tglaw.com.au