Australian International Insurance v Graham [2005] VSC 183
In the Supreme Court of Victoria, Balmford J held, dismissing an appeal from a Master's refusal of leave to appeal from the Victorian Civil and Administrative Tribunal, that the Tribunal had no jurisdiction to extend an insurer's time to determine a domestic building insurance claim once the period for determination had expired, whether under the Ministerial Order, the insurance dispute provision of the Domestic Building Contracts Act (there being no relevant dispute) or any inherent power [23], [26], [28], [29].
What the court decided
The appellant insurer took over the domestic warranty insurance portfolio of Reward [4]. The second and third respondents were the owner-builders of Ms Graham's unit [5]. Ms Graham bought the unit on 2 February 2001, and Reward had issued a policy on 30 January 2001 insuring works done on it by the second and third respondents [6]. The policy followed Ministerial Order S122 made under section 135 of the Building Act 1993 [6]. Clause 8.5 of the Ministerial Order required a policy to provide that, unless the insurer obtained an extension of time from the insured or the Tribunal, it would be deemed to have accepted liability for a claim not determined within ninety days of receipt [7]. Clause 3.6.2 of the policy was to similar effect [8].
Reward's agent received Ms Graham's defects claim on 22 July 2003, and Reward made its determination on 21 October 2003 [9]. It was common ground that the determination was made on the ninety-first day after receipt [9]. Ms Graham refused Reward's request for consent to an extension of time [9].
Section 53 of the Domestic Building Contracts Act 1995 gives the Tribunal jurisdiction over domestic building disputes [10]. The Tribunal rejected the insurer's argument that clause 8.5 was ultra vires the Building Act [10]. It also rejected an extension of time as lacking jurisdictional foundation [11]. It said that, even if a power under section 126 of its Act existed, Ms Graham had obtained a deemed liability which was "a vested valuable right" [11].
Master Kings accepted that clause 8.5 was ultra vires the Building Act, but held that the insurer was in any case bound by its contract, which included clause 3.6.2, and refused leave to appeal [12]. She also held that section 59A of the Domestic Building Contracts Act did not apply because there was no relevant dispute and no decision by the insurer on the claim [15].
On the appeal the insurer abandoned the ultra vires argument [10]. Her Honour gave it leave to amend its notice of appeal to rely on clause 8.5 as a source of jurisdiction [17]. The issue was whether the Tribunal could extend the insurer's time after the expiry of ninety days from receipt of the claim [16].
The insurer argued that the Ministerial Order was an enabling enactment, so that clause 8.5 itself conferred jurisdiction to extend time [18]. Counsel for Ms Graham argued that section 135 of the Building Act gave the Minister no power to confer jurisdiction on the Tribunal by delegated legislation [19]. He also argued that any extension had to be obtained before the ninety days expired [20]. After that, he said, the deemed liability was a vested right [21]. Her Honour accepted those submissions, finding that clause 8.5 conferred on the Tribunal no jurisdiction to extend the time [23].
The insurer argued that its entitlement to an extension was a dispute concerning an insurance claim within section 59A of the Domestic Building Contracts Act [24]. Accepting Ms Graham's submission and agreeing with the Master, her Honour found that liability was accepted by operation of the policy and there was no relevant dispute [26].
Her Honour held that the Tribunal, as a creature of statute, has only the powers expressly conferred on it by its own Act or an enabling enactment [27]. Applying a passage from Ex parte Currie; Re Dempsey approved in Palmer v Clarke, she concluded that the Tribunal had no inherent power to extend time after the ninety days expired [28].
Her Honour found that the claim had been determined by operation of condition 3.6.2 of the policy and that the Tribunal had no jurisdiction to extend the time for its determination [29]. The insurer therefore had no prima facie case, and the appeal was dismissed [29]. Costs were left for submissions by counsel [30].
Why it matters
Where a domestic building policy contains the deeming term the Ministerial Order requires, an insurer which misses the ninety day limit cannot then obtain an extension from the Tribunal. Because the Tribunal has no inherent power to extend that time, an insurer seeking more time must point to an express source of power. It is a single judge's decision on leave to appeal; readers should check the current Ministerial Order and Acts.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.