QUEENSLAND CIVIL AND 
ADMINISTRATIVE TRIBUNAL

CITATION:	King and McDonald v Queensland Building and Construction Commission [2024] QCAT 138	
PARTIES:	caroline king
craig mcdonald	

(applicants)	

	v	
	queensland building and construction commission	

(respondent)	

APPLICATION NO:	GAR459-21	
MATTER TYPE:	General administrative review matters	
DELIVERED ON:	26 March 2024	
HEARING DATE:	26 March 2024	
HEARD AT:	Brisbane	
DECISION OF:	Member McVeigh	
ORDERS:	1.	The decision of the Queensland Building and Construction Commission dated 4 October 2022 that the applicants are not entitled to claim assistance under the Statutory Insurance Scheme is set aside.
2.	The tribunal’s decision that the applicants are entitled to claim assistance under the Statutory Insurance Scheme is substituted.	
CATCHWORDS:	PROFESSIONS AND TRADES – BUILDERS – STATUTORY INSURANCE SCHEME – time limit for making claim in relation to structural defect – when consumer first became aware, or ought reasonably to have become aware, of defect
Queensland Building and Construction Commission Regulation 2018 (Qld), Schedule 6, s 16(c)
Jackson v Queensland Building Services Commission [2018] QCAT 290
Raeburn v Queensland Building and Construction Commission [2020] QCAT 502	
APPEARANCES & REPRESENTATION:	

Applicant:	
Self-represented	

Respondent:	
S Forrest of counsel, instructed by the respondent	

REASONS FOR DECISION
Lessons to be learned
[1]	The Queensland Building and Construction Commission (Commission) decided to disallow a claim under the Statutory Insurance Scheme made by Ms King and Mr McDonald (consumers). It was not the correct decision. It is a sad reflection on the decision-making processes of the Commission that it was not until the commencement of the hearing, almost 4 years after the claim was lodged, that counsel for the Commission conceded that the correct and preferable decision would be to allow the claim for assistance. I made orders accordingly. 
[2]	I also indicated that I would publish my reasons in the hope it would assist the Commission when dealing with similar claims currently on foot or to be made in future.
Facts
[3]	Queensland has a Statutory Insurance Scheme that provides assistance to consumers who contract for the performance of residential construction work, in certain circumstances. The Terms of Cover under the statutory insurance scheme are found in Schedule 6 of the Queensland Building and Construction Commission Regulation 2018 (Qld).
[4]	In order to obtain assistance from the Statutory Insurance Scheme a consumer must make a claim:
(a)	for a structural defect: within 3 months after the day they first became aware (or ought reasonably to have become aware) of the defect; or
(b)	for another defect: within 7 months after the day they first became aware (or ought reasonably to have become aware) of the defect.
[5]	A structural defect is defined to include ‘a defect in the work that allows water penetration of the residence’.
[6]	The consumers entered into a contract for residential construction work on 27 November 2019. 
[7]	On 5 May 2020 the consumers noticed that 5 skylights had not been installed in accordance with the manufacturer’s recommendations. 
[8]	As required by the Commission, the consumers engaged with the builder to attempt to resolve issues between them.
[9]	On 10 August 2020 the consumers observed small water marks on a cornice directly below a skylight. The builder told them that this was a result of a gutter overflow after heavy rain.
[10]	On 13 August 2020 the consumers lodged a complaint with the Commission (Claim).
[11]	On 16 November 2020 an inspector employed by the Commission conducted an inspection with assistance from a specialist plumber. Water penetration testing was carried out on 8 December 2020.
[12]	On 24 December 2020 the Commission directed the contractor to rectify the installation of the Velux window skylights and associated pan flashings which failed to achieve the weatherproofing performance requirements of the NCC. 
[13]	On 9 April 2021 the Commission decided that the rectification work that had been undertaken was not of a satisfactory standard.
[14]	On 21 May 2021 the Commission decided that the consumers were not entitled to assistance under the Statutory Insurance Scheme on the basis that they knew, or ought to have known, of the defect on 5 May 2020, 3 months and 8 days before the Claim was made.
[15]	The consumers’ application for internal review was deemed to have been refused on 7 July 2021.
[16]	On 26 July 2021 the consumers filed this application in the tribunal.
[17]	At a compulsory conference on 11 August 2022 the Commission was invited to reconsider its decision. The Commission maintained its decision that the ‘awareness’ requirement of section 16(3) of the Terms of Cover related to the existence of the defect, not to an understanding of whether or not the defect was structural or otherwise. This view was said to be based on Jackson v Queensland Building Services Commission (Jackson).
Relevant cases
Raeburn v Queensland Building and Construction Commission (Raeburn)
[18]	The terms of the Statutory Insurance Scheme considered in Raeburn are the same as this case. 
[19]	In dealing with a strike out application, Member Cranwell set out the proper construction of section 16(3) of the Terms of Cover as follows:
[7] The reference to ‘the defect’ is clearly a reference to the structural defect mentioned at the beginning of the sentence. In other words, s 16(3)(a) of the Terms of Cover requires a claim for a structural defect to be made within three months of the day the consumer first becomes aware, or ought reasonably to have become aware, of the (structural) defect.
[8] To adopt the QBCC’s interpretation would make it impossible for a consumer to properly inform themselves of the timeframe within which to make a claim, if the circumstances are such that the consumer could not reasonably have become aware that the defect was structural in nature when they first became aware of the defect. The rational consequence of the QBCC’s interpretation could only be to encourage consumers to make claims within three months of first becoming aware of any defect, to protect their position in the event that a particular defect subsequently manifested itself as a structural defect.
Jackson v Queensland Building and Construction Commission
[20]	The terms of the statutory insurance policy under consideration in Jackson were a previous, quite different version of the policy. Accordingly, its precedent value is limited. However, it is worth noting that Member Olding observed:
[31] It is unlikely, in my view, that the intention of the clause would be for the time limits to depend upon a subjective assessment of a claimant’s state of mind. That would be inconsistent with the clause vesting in the Commission the formation of the relevant opinion. Further, the requirement for an objective assessment is consistent with the drafter’s use of the passive voice; if it had been intended that the defect must be evident to a particular person, it would be expected that the person would be identified in the clause, rather than merely leaving when the defect became evident to the opinion of the Commission. Clearly, it was not intended that the time limit would not run until it actually became evident to the Commission.
[32] Additionally, I do not take the clause to require the precise nature of the defect to be evident. The policy would be practically unworkable if the time for lay consumers to exercise their rights were to run from the time the technical nature of a defect became evident. It is, in my view, sufficient if the consequences of a defect are evident, such that objectively it would be concluded that the work is defective in the sense indicated in the definition of a category 1 defect. Again, it seems unlikely that the drafter intended that the practical application of the time limit would depend upon the technical knowledge of the owner. 
[emphasis added to denote words omitted from quotation relied on by the Commission]
Reasons
[21]	The Commission’s interpretation of section 16(3), which it took from 21 May 2021 to the date of the hearing was, and always had been, untenable. Since December 2020 the Commission knew, or ought to have known, that the consumers had three months from the day they first became aware, or ought reasonably to have become aware, of the (structural) defect to make their claim.
[22]	The Claim was made on 13 August 2020. Therefore, provided that the consumers were not, or ought not to have been, aware of the (structural) defect before 13 May 2020 they were entitled to assistance under the Terms of Cover of the Statutory Insurance Scheme.
[23]	The test of awareness is objective, not subjective, as indicated by use of the phrase ‘ought to have known’. It is beside the point that the technical nature of the defect did not become apparent to the Commission until 24 December 2020 when it decided that the skylights had not been installed in accordance with the NCC because the installation did not prevent water penetration.
[24]	Until the morning of the hearing the Commission maintained that a reasonable person in the place of the consumers ought to have known that 5 skylights which had not been installed in accordance with the manufacturer’s recommendations were structurally defective, despite the fact that there were no evident consequences of the structural defect. Until there was evidence of water penetration there could not have been any possibility of knowing that a structural defect was manifest.
[25]	For current purposes it is not necessary to make a finding about whether or not a reasonable person would assume that watermarks on a cornice would constitute a structural defect. The Claim was made on 13 August 2020, a mere 3 days after the consumers noticed the watermarks. In this case all I need do is observe that if watermarks on a cornice would have made a reasonable person aware that there was a structural defect, then the Claim was made well within the prescribed 3-month period. 
[26]	The Commission’s reliance on Jackson in this case has always been misplaced. First, because the terms of the statutory insurance policy relevant to Jackson were significantly different from the terms under consideration in this case. The tribunal’s decision in Raeburn was handed down on 3 December 2020. The Commission included that decision in a list of authorities it provided to the consumers following the compulsory conference on 11 August 2022. There is no explanation of the reason it continued to rely on Jackson, which was a decision about a policy with different terms, and failed to consider Raeburn, which considered a policy with the same terms.
[27]	Second, the Commission’s reliance is misplaced because the extract relied on as authority for its position omits a vital sentence and therefore has been relied on out of context. In Jackson Member Olding observed that it seemed unlikely that the application of the time limit would depend on the technical knowledge of the consumer. In his view it would be sufficient if the consequences of a defect were evident such that objectively it could be concluded that the work was structurally defective. On the Commission’s case the consequences of the defective installation of the skylights were first evident on 10 August 2020. If, objectively, it might be concluded that watermarks on a cornice is evidence of a structural defect, then the Claim was made within the prescribed 3-month period.