A recent Queensland District Court case has shown again the importance of timely response to directions to rectify issued by the Queensland Building and Construction Commission (QBCC) before it approves claims under the statutory Queensland Home Warranty Scheme (QHWS). 

In November 2023, the District Court heard the matter of the QBCC v Grenier Developments Pty Ltd (ACN 603 049 234) [2024] QDC 6 regarding a challenge by the defendant and its sole director to the QBCC’s application for summary judgment for a claim for recovery of money paid out under the QHWS. 

Background

Mr Harsha Rajeewa Weerasinghe was the director of Grenier Developments Pty Ltd (Grenier) at the time that it entered into three separate construction contracts between September 2016 and December 2017. In the period that these contracts were on foot, Grenier had its license suspended by the QBCC due to a failure of the company to meet the minimum financial requirements for its class of license, as required by the supporting regulations to the QBCC Act. In turn, the three contracts which were on foot at the time of the suspension were subject to claims for defective and incomplete works. The QBCC, upon review of the applications, approved each of the claims for compensation under the QHWS and pursued Grenier and Mr Weerasinghe personally as director, for the debt arising pursuant to sections 71C and 111C of the QBCC Act.

Mr Weerasinghe submitted in the District Court that these were not valid claims. He argued that, pursuant to section 53 of Schedule 6 of the QBCC Regulations, the QBCC was a third party who had contributed to the consumers harm by suspending and then cancelling Grenier’s building license. He also claimed that the amounts paid out for the claims was excessive and unreasonable, and filed a counterclaim alleging negligence by the QBCC regarding its conduct in suspending and cancelling Grenier’s license.

District Court’s Decision

The Court allowed the QBCC’s application for summary judgment and dismissed the defendant’s counterclaim. The defendants’ submissions turned on making out that the claims under the QHWS were not valid claims. The Court considered the defences in section 71 of the QBCC Act and relevant case law for a defence to QHWS recovery claim and found that the only valid defences to a claim, other than those listed under section 71, were that a payment made was not for a claim, or that the claim itself was invalid. 

The Court determined that the defence put forward by Grenier – that the QBCC had interfered as a third party and contributed to the damage suffered by the consumers – led to an absurdity when properly considered. By alleging the QBCC fell into the category of a third party when doing no more than what was required for it to do administer the QBCC Act, the result of the submission would be that the QBCC could recover money from itself for causing the alleged harm.  

The Court went on to determine that as appropriate processes had been followed in deciding who would undertake the rectification works, and that there didn’t appear to be any impropriety in the decision-making process, then the amounts paid for the works were not unreasonable. 

Conclusion

In coming to its decision, the Court reconsidered the case law that surrounds defences to claims on the QHWS and again determined that the avenues for defence to a claim under the QHWS are narrow. This serves as a warning to builders who may find themselves in similar situations where they have failed to respond in time to a direction to rectify that has resulted in a claim on QHWS. As the legislation provides what grounds can be used as a defence, it is not necessary for a court to consider any other defence put forward. 

Defences that attempt to pursue an argument about the reasonableness of the decision, or arguments that would otherwise have been valid avenues for judicial review of an anterior decision are not valid defences. The Court has made it clear that the time frame for judicial review of a decision ends before a QHWS claim has been paid.

This hard line on the suitability of defences against a QHWS claim should sound as a warning to any building and construction entity in Queensland to heed and take early action to any notice from the QBCC regarding a direction to rectify, and not needlessly lose the opportunity to review the decision.

Tags: ,