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The Trustee For Hardev Property (Dev 10) Unit Trust v Palmgrove Holdings Pty Ltd

 

[2019] QSC 208

SUPREME COURT OF QUEENSLAND

CITATION:

The Trustee For Hardev Property (Dev 10) Unit Trust v Palmgrove Holdings Pty Ltd & others [2019] QSC 208

PARTIES:

THE TRUSTEE FOR HARDEV PROPERTY (DEV 10) UNIT TRUST, TRADING AS HARDEV PROPERTY (DEV 10) PTY LTD (ABN 70 342 914 520)

(applicant)

v

PALMGROVE HOLDINGS PTY LTD, TRADING AS CARRUTHERS CONTRACTING (ABN 37 010 870 925)

(first respondent)

And

PETER SARLOS

(second respondent)

and

THE ADJUDICATION REGISTRAR, QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(third respondent)

FILE NO/S:

BS No 7185 of 2019

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

23 August 2019

DELIVERED AT:

Brisbane

HEARING DATE:

23 July 2019

JUDGE:

Lyons SJA

ORDER:

The orders of the Court are:

  1. The Originating Application filed 8 July 2019 be dismissed.
  2. The Registrar is directed to pay to the First Respondent the monies described at paragraph 10 of the affidavit of Lucinda Mary McPhee filed 11 July 2019 and which were paid by the Applicant into Court on 12 July 2019.
  3. The Applicant pay the First Respondent’s costs of and incidental to the Originating Application to be assessed or agreed, on the standard basis.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – ADJUDICATION OF PAYMENT CLAIMS – where the applicant and first respondent entered into contract for construction of a subdivision – where contract related to water services, sewerage services and retaining wall and fencing works – where then applicant contends that the work is building work – where the applicant argues that the first respondent contravened s 42(1) of the Queensland Building and Construction Commission Act 1991 (Qld) by undertaking to carry out the work – where the applicant seeks final declaratory relief that the adjudication decision is void together with consequential orders for payment of the adjudicated amount – whether the first respondent breached s 42(1) of the Queensland Building and Construction Commission Act 1991 (Qld) – whether the adjudication decision should be void

Queensland Building and Construction Commission Act 1991 (Qld), s 42, Schedules 1, 1A, 1B, 2.

Queensland Building And Construction Commission Regulation 2018 (Qld)

Building Industry Fairness (Security of Payment) Act 2017 (Qld), Schedule 1

Land Sales Act 1984 (Qld)

Land Title Act 1994 (Qld), 49A

Craig v State of South Australia (1995) 184 CLR 163

Dart Holdings Pty Ltd v Total Concept Group Pty Ltd & Ors [2012] QSC 158

Ooralea Developments Pty Ltd v Civil Contractors (Australia) Pty Ltd [2015] 1 Qd R 311

COUNSEL:

M Ambrose QC for the applicant

M Jones for the first respondent

SOLICITORS:

Clayton Utz for the applicant

Butler McDermott Lawyers for the first respondent

Current application

  1. [1]
    The applicant (Hardev Property) seeks final declaratory relief that an adjudication decision issued by the second respondent pursuant to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act), is void by reason of jurisdictional error together with consequential orders for the payment out of court of the adjudicated amount of $226,945.95. The other forms of relief sought in the application are no longer pursued.
  2. [2]
    The parties agree that the only question for the court is whether the first respondent (Carruthers Contracting) breached s 42(1) of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) by carrying out or undertaking to carry out building work without holding an appropriate licence. It is not disputed that the first respondent does not hold a QBCC licence of any kind. The issue turns on the construction of the QBCC Act and the work identified in the contract.
  3. [3]
    The second and third respondents have indicated they submit to all orders of the court.

Factual background

  1. [4]
    On or about 15 February 2019, Hardev Property as principal and Carruthers Contracting as contractor, entered into a contract for the construction of a 23 lot subdivision at Boondall in Queensland. The contract basically related to the provision of water and sewerage services to each lot as well as some retaining wall and fencing works. The contract was for a lump sum price of $1,244,624.36. The contract does not contain a severance clause.
  2. [5]
    The contract works involved the construction, by Carruthers Contracting, of various civil services for the 23 lots, including (so it was contended):
    1. The “Retaining Wall Works”[1];
    2. The “Sewer Connection Works”[2];
    3. The “Water Reticulation Works”[3]; and
    4. An acoustic fence, 1.8 metres high and 42 metres long, together with a 1.8 metre high paling fence – “Fencing Works”[4].
  3. [6]
    Hardev Property contends that the work identified in the contract is “building work” as defined in the legislation for which a licence is required. Accordingly, it is argued that the first respondent contravened s 42(1) of the QBCC Act by undertaking, that is by tendering for and entering into the contract, to carry out the work. In addition, it is argued that the first respondent has undertaken to carry out and has carried out the building work by carrying out “building work services” within the meaning of the QBCC Act in respect of the retaining wall works, the sewer connection works and the water reticulation works.
  4. [7]
    The scope of work under the contract is described as follows:[5]

“The project is for 1 into 23 lot subdivision and includes the construction of all civil services; sewer, water, road works, drainage, electrical/communications, cross-road/driveway conduits, as well as earthworks and landscape items.”

  1. [8]
    It would seem that the 23 lots are proposed lots as they do not currently exist as lots under a survey plan. There is no evidence before me that a plan of subdivision has as yet been registered.

The adjudication

  1. [9]
    On 2 April 2019, Carruthers Contracting delivered a payment claim to Hardev Property for $355,913.84. Whilst Hardev Property did not deliver a payment schedule within time, one was delivered on 29 April 2019. In that schedule, Hardev Property certified payment of $138,492.31, and that amount has been paid to Carruthers Contracting.
  2. [10]
    On 27 May 2019, Carruthers Contracting filed an adjudication application pursuant to the BIF Act with the third respondent.

Statutory Background

  1. [11]
    Sections 42(1), (2) and (3) of the QBCC Act provide as follows:

Unlawful carrying out of building work

  1. (1)
    Unless exempt under schedule 1A, a person must not carry out, or undertake to carry out, building work unless the person holds a contractor’s licence of the appropriate class under this Act.

Maximum penalty—

  1. (a)
    for a first offence—250 penalty units; or
  1. (b)
    for a second offence—300 penalty units; or
  1. (c)
    for a third or later offence, or if the building work carried out is tier 1 defective work—350 penalty units or 1 year’s imprisonment.
  1. (2)
    An individual who contravenes subsection (1) and is liable to a maximum penalty of 350 penalty units or 1 year’s imprisonment, commits a crime.
  2. (3)
    Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.”
  1. [12]
    The expression “carry out” used in s 42(1) is defined in Schedule 2 of the QBCC Act to include for building work to:
    1. (a)
      Carry out the work personally; or
    2. (b)
      Directly or indirectly cause the work to be carried out; or
    3. (c)
      Provide building work services for the work.
  2. [13]
    The expression “undertake to carry out” building work means:[6]
    1. (a)
      Enter into a contract to carry out the work;
    2. (b)
      Submit a tender to carry out the work;
    3. (c)
      Make an offer to carry out the work.
  3. [14]
    Section 8, Schedule 1A of the QBCC Act provides as follows:

Head contracts to carry out building work

  1. (1)
    An unlicensed person who enters into a contract to carry out building work does not contravene section 42(1) merely because the person entered into the contract if the building work—
  1. (a)
    is not residential construction work or domestic building work; and
  1. (b)
    is to be carried out by a person (an appropriately licensed contractor) who is licensed to carry out building work of the relevant class.
  1. (2)
    Also, the unlicensed person does not contravene section 42(1) merely because the person—
  1. (a)
    directly or indirectly causes the building work to be carried out by an appropriately licensed contractor; or
  1. (b)
    enters into another contract, with an appropriately licensed contractor, to carry out the work.
  1. (3)
    However, subsection (1) ceases to apply to the unlicensed person if the person causes or allows any of the building work to be carried out by a person who is not licensed to carry out building work of the relevant class.”
  1. [15]
    Section 42(1) of the QBCC Act contains two separate prohibitions:
    1. A person is prohibited from undertaking to carry out building work unless they hold a contractor’s licence of the appropriate class under the Act; and
    2. A person is prohibited from carrying out building work unless that person holds a contractor’s licence for the appropriate class under the Act at the time when the building work is carried out.
  2. [16]
    The distinction was explained by McMurdo J in Dart Holdings Pty Ltd v Total Concept Group Pty Ltd & Ors,[7] where his Honour said:

“…if the plaintiff can prove that the defendant, by the Contract, undertook to perform unlicensed work so that the Contract was unenforceable, then it would follow that the Payments Act did not apply and the adjudication was of no effect.

Therefore, the present enquiry concerns the work which was agreed to be performed rather than that which was performed…”

  1. [17]
    His Honour went on to say:[8]

“…Where s 42(1) is engaged, it is not simply the promise by which the builder undertakes to carry out unlicensed work which is affected. Rather it is the contract by which that promise is made. As McPherson JA said in Sutton, in such a case, s 42(1) “prohibits the very process of formation of a contract”. The consequence of this statutory prohibition is that a court will not enforce the contract, at least in favour of the party which contravened the prohibition…

Consequently, s 42(1) affects the Contract as a whole, rendering it unenforceable at least by the defendant. More particularly, s 42(1) has the consequence of precluding the enforcement of such provision or provisions of the Contract which would otherwise entitle the defendant to payment.”

Preliminary observations

  1. [18]
    I note that s 49A (2) of the Land Title Act 1994 (Qld) provides that a lot defined in a plan (being a plan of subdivision) is created as a lot when the plan is registered. I also note that the affidavit of Mr Austin[9] refers to proposed lots and title references which are to issue. Furthermore, whilst there are references to contracts for the sale of the lots, I note that only one contract of sale is exhibited to that affidavit.[10] Special condition 2 in the contract, which relates to disclosure documents for off-plan contracts as required by the Land Sales Act 1984 (Qld), provides that the contract is conditional upon the creation of title and settlement will only occur 21 days after notice of the creation of title. It would seem therefore that the contracts referred to are conditional on the lots coming into existence following the registration of the plan of subdivision.

Basis for the applicant’s case

  1. [19]
    There can be no doubt that the scheme of the BIF Act and its predecessor the BCIPA Act is that there must be a construction contract pursuant to which the claimant has carried out construction work and a claim is given to a person who, under the relevant construction contract, is or may be liable to make a payment. It is clear that the essential element of the entitlement to utilise the statutory recovery regime is the existence of an enforceable construction contract.
  2. [20]
    The applicant has argued that there is no enforceable construction contract in this case because the first respondent has breached the QBCC Act by both carrying out and by undertaking to carry out a building work without an appropriate licence.
  3. [21]
    There can be no doubt that an adjudicator’s functions under the BIF Act are subject to review and the concept of jurisdictional error has been explained in many decisions. In Craig v State of South Australia,[11] the High Court indicated that:[12]

“Jurisdictional error will occur where an inferior court disregards or takes account of some matter in circumstances where the statute or other instrument establishing it and conferring jurisdiction requires that that particular matter be taken into account or ignored as a pre-condition of the existence of any authority to make an order or decision in the circumstances of the particular case.”

  1. [22]
    The applicant has argued that the Retaining Wall Works, the Sewer Connection Works, the Water Reticulation Works and the construction of the acoustic and paling fences are all building work for the purposes of the QBCC Act, which the respondent has undertaken to carry out; that the respondent has carried out building work by carrying out the Retaining Wall Works and the Sewer Connection Works; and the respondent has also carried out building work by providing “Building Work Services”; all in breach of the QBCC Act. As a result, the respondent cannot enforce any contractual obligation for payment, and was not entitled to a payment under the BIF Act. It is therefore necessary to consider whether the works and services identified by the applicant were building work and whether they came within an exception to the prohibition found in s 42 of that Act.

Were the Sewer Connection Works and the Water Reticulation works building work?

  1. [23]
    The term “building work” is defined in Schedule 2 of the QBCC Act as follows:

““building work” means –

  1. a)
    the erection or construction of a building; or
  1. b)
    the renovation, alteration, extension, improvement or repair of a building; or
  1. c)
    the provision of lighting, heating, ventilation, air conditioning, water supply, sewerage or drainage in connection with a building; or
  1. e)
    any site work (including the construction of retaining structures) related to work of a kind referred to above; or
  1. f)
    the preparation of plans or specifications for the performance of building work; or
  1. fa)
    contract administration carried out by a person in relation to the     construction of a building designed by the person; or
  1. g)
    fire protection work; or
  1. h)
    carrying out site testing and classification in preparation for the erection or construction of a building on the site; or
  1. i)
    carrying out a completed building inspection; or
  1. j)
    the inspection or investigation of a building, and the provision of advice or a report, for the following—
  1. termite management systems for the building;
  2. termite infestation in the building;

but does not include work of a kind excluded by regulation from the ambit of this definition. 

  1. [24]
    That definition should be read with the definition of “building” in the same Schedule:

““building” –

  1. (a)
    Generally, includes any fixed structure; or

Examples of a fixed structure–

  • a fence other than a temporary fence
  • a water tank connected to the stormwater system for a building
  • an in-ground swimming pool or an above-ground pool fixed to the ground”
  1. [25]
    Section 5 and Schedule 1 of the Queensland Building And Construction Commission Regulation 2018 (Qld) (QBCC Regulation) exclude certain work from the definition of building work in the QBCC Act, amongst the exclusions being that set out in clause 11:

Work for water reticulation systems, sewerage systems or stormwater drains

  1. (1)
    Construction, extension, repair or replacement of a water reticulation system, sewerage system or stormwater drain, other than works connecting a particular building to a main of the system or drain.
  2. (2)
    In this section

building” includes a proposed building.”

  1. [26]
    While accepting that much of the sewerage work came within the exclusion, the applicant contended that branch connections, which extended approximately one metre into proposed residential allotments did not, because they were works connecting a proposed building to a main. A similar submission was made with respect to branch water supply connections, extending to, or just inside, the proposed boundaries of allotments. It was also submitted, with reference to an unnamed dictionary, that the word “particular” in clause 11 meant single, or individual.
  2. [27]
    For the respondent, it was submitted that the Sewer Connection Works and the Water Reticulation Works were not building work, by reason of the exclusion found in clause 11. They did not connect a particular proposed building to the system, there being no “particular proposed building” to a main of the relevant system.
  3. [28]
    It is apparent that the Sewer Connection Works and the Water Reticulation Works would not be building work, unless, as a result of the extended definition of the term “building”, they are works connecting a particular proposed building to a main of the system. In my view, it cannot be said that the works connect a particular proposed building to the relevant main.
  4. [29]
    The parties entered into the contract on 15 February 2019. The applicant had by then taken steps to market the proposed lots. There is evidence from Mr Austin, the managing director of the applicant, that by then the applicant had undertaken steps to market the proposed lots. At least by 14 February 2019, “high level terms” had been agreed between the applicant, Freedom Property Investors Pty Ltd (Freedom), and a house building company, Sunvista Homes Pty Ltd (Sunvista), relating to the marketing of the proposed lots, and the subsequent construction of houses on them. It is clear from the email from Mr Massie of that date that the design of houses had not by then been decided for individual blocks. There is no evidence to suggest that the respondent had any knowledge of the steps taken to market the proposed lots.
  5. [30]
    At the time of the contract between the parties, no proposed building was identified, and accordingly it cannot be said that the respondent undertook to do works to connect a particular proposed building to a main. Rather, it undertook to provide the branch connections which would make the relevant service available to proposed lots, which themselves have not yet come into existence.
  6. [31]
    Mr Austin’s evidence is that on 7 March 2019, a Heads of Agreement was entered into between the applicant, Freedom, Sunvista, and CBM Investments (said by Mr Austin to have been engaged by the applicant to facilitate the “deal”).[13]  Under it, Freedom agreed to purchase two of the proposed lots under a “2 conditional contract subject to registration” (presumably of individual titles to the lots), and to enter into Put and Call Agreement for 20 of the lots.[14]  Freedom was given the right to nominate purchasers with whom the applicant would enter into a contract for the sale of a specific lot. Between April and July 2019, the applicant entered into such contracts for the sale of 12 lots, conditional on title being registered for the lot within 18 months. Purchasers have entered into building contracts with Sunvista. Obviously, construction cannot commence until the relevant purchaser obtains title, a fact recognised in the building contract exhibited to Mr Austin’s affidavit. It may be accepted that by April 2019, for some of the lots, a particular building was proposed, at least between Sunvista and the ultimate purchaser. There is no evidence that the respondent had any knowledge of this. Its contractual undertaking was not directed to such buildings as are now proposed; and the work it carried out cannot be said to have been work connecting any particular proposed building to a main.
  7. [32]
    I have reached this conclusion from a consideration of the language used in clause 11.  I should add that this seems to me to be consistent with the legislative intention apparent in clause 11, to exclude works associated with the subdivision of land from building work and accordingly from the prohibition in s 42 of the QBCC Act. It is to be expected that local governments, when approving subdivisions for residential or other urban purposes, would ensure by appropriate conditions of the subdivision approval, the provision of water supply, sewerage, and drainage services to the proposed lots. This seems to be the sort of work intended to be excluded from building work, and the scope of s 42, by clause 11. Its intent is likely, at a practical level, to be defeated, if the branch connections to proposed lots were found to be building work.
  8. [33]
    The applicant relied upon the decision of Daubney J in Ooralea Developments Pty Ltd v Civil Contractors (Australia) Pty Ltd,[15] where his Honour found that the construction of sewerage and water supply reticulation as part of subdivisional works was building work for the purpose of the QBCC Act, and thus came within s 42 of that Act. His Honour’s decision predates the introduction of clause 11, and accordingly does not assist in the present case.
  9. [34]
    I therefore find that the respondent has neither undertaken to carry out building work, nor has it carried out building work, in relation to the Sewer Connection Works and the Water Reticulation Works.

Retaining walls and fencing

  1. [35]
    The affidavit of Mr Carruthers, the director of the respondent, assumes that a licence under the QBCC Act was required for the construction of the retaining walls.[16]  The application can be disposed of on the basis of the assumption, without determining that it is correct.
  2. [36]
    The applicant’s submissions referred to an acoustic fence. It can be seen on Drawing C0310 M,[17] which calls for a 1.8 metre high acoustic fence along the northern and eastern boundaries of proposed lot 1, and nominates a specification for it. These boundaries appear to be the boundaries of proposed residential allotments which are closest to Sandgate Road, though separated from it by a proposed drainage reserve and some other land. The acoustic fence is also identified in Item 14.3.1 of the Schedule of Rates,[18] again with a reference to the specification, in that part of the schedule dealing with roadworks. Its length is said to be 42 metres, and the estimated cost being $13,398.
  3. [37]
    The applicant’s submissions also referred to a paling fence, pointing to a reference to it in the Schedule of Rates. Curiously, the schedule does not refer to the length of such a fence, nor to any specification, nor is there an estimate of its cost. I have been unable to identify any reference to it in the drawings. These factors strongly suggest that the contract did not call for the construction of a paling fence, the entry in the schedule being the result of the use of a standard form. I am not satisfied that such a fence forms part of the contractual works, and do not propose to refer to it in these reasons. In any event, it is no different for present purposes from the acoustic fence. There is evidence[19] confirming that the contract did not require the construction of a paling fence.
  4. [38]
    Mr Carruthers gave evidence that, at the time that the respondent entered into the contract with the applicant, it was his intention, in accordance with what he described as the respondent’s invariable practice, that any works requiring a QBCC licence would be carried out by a person or persons with the appropriate licence. Such persons had been contacted before the respondent entered into the contract for quotations for such work, for the purpose of the respondent’s tender. He also gave evidence that two companies had been engaged to construct retaining walls and of the licences they held under the QBCC Act.
  5. [39]
    As noted earlier, s 8 of Schedule 1A of the QBCC Act provides (with qualifications) that a person who enters into a contract to carry out building work does not contravene s 42(1) of the Act if the work is not residential construction work or domestic building work; and the work is to be carried out by an appropriately licensed contractor. Nor is s 42(1) breached if that person enters into a contract with an appropriately licensed contractor to carry out the building work, or causes such a person to carry out the work.
  6. [40]
    The respondent submitted that the evidence of Mr Carruthers showed that there was no breach of s 42(1), notwithstanding that some of the work was building work to which the section would otherwise apply. The applicant accepted that the work was not residential construction work of domestic building work, but submitted that s 8 of Schedule 1A only applied where there is an agreement or acknowledgment in the contract that the work is to be carried out by a person licensed to carry it out. This view of the effect of s 8 was said to accord with the Parliamentary Committee Report (Committee Report)[20] which was the genesis of the amendment which introduced s 8.
  7. [41]
    The language of s 8 makes it clear that the exemption from s 42 of the QBCC Act applies to entry into the contract. The condition stated in s 8 is that the work is to be carried out by an appropriately licensed contractor. The language used in the section is not particularly apt to specify that the contract itself must include some provision relating to the carrying out of the work by such a contractor, and it would not have been difficult to draft the section in a way that made it clear that the exemption was only available where the contract required or recorded that the work be carried out by such a person. On the other hand, there is nothing in the language of the section to indicate that the exemption would not be available when the head contractor intends that work requiring a licence would be carried out by a person with the appropriate licence. The underlying intention of the legislation is to ensure that work which requires a licence is carried out by an appropriately licensed person. The achievement of that intention does not require some provision in the contract relating to the carrying out of the work by such a person. Given the significant consequences of a breach of s 42, these considerations seem to me to tell rather strongly against the submission made on behalf of the applicant.
  8. [42]
    In my view, the Committee Report does not provide support for the applicant’s position. It is apparent that the Committee was giving consideration to the early adoption of a recommendation made in its earlier Report.[21]  The recommendation[22] was that “Section 42 (of what is now the QBCC Act) … be revised to make it clear that there is no breach of the Act if the ‘building work’ is carried out by an appropriately licensed builder”. In the course of the Report, the recommended amendment was described in various ways, including as an amendment:

“to provide that a contractor’s licence is not required for a person who agrees with a principal under a building contract… to cause commercial building work to be carried out by an appropriately license (sic) building contractor and the licensed building contractor carries out the building work.” 

It is that formulation on which the applicant’s submissions fastened. However, when discussing the submission from Master Builders Queensland, the Report described the proposal as a “proposal to amend the licensing requirements contained in section 42 of the QBCC Act to allow a special purpose vehicle to undertake to carry out building work as long as that work is carried out by an appropriately licensed building contractor.”  As I read the Report, it was not making a recommendation that the exemption would only apply if the contract identified that the work was to be carried out by an appropriately licensed contractor.

  1. [43]
    That view is consistent with the Explanatory Notes for the Amendment Bill. They described Recommendation 33 as a recommendation for an amendment of s 42 “to make it clear that there is no breach of the QBCC Act if an appropriately licensed builder carries out the construction work”[23]. Although the Explanatory Notes also used the formulation on which the applicant relied, there is no reason to understand it to have a different meaning.
  2. [44]
    In my view, it is not necessary to show that the contract provides for work requiring a licence to be carried out by a person with such a licence, in order for the exemption in s 8 to be available.
  3. [45]
    The evidence of Mr Carruthers, referred to earlier, shows clearly that, at the time when the contract was entered into, the retaining wall works were to be carried out by an appropriately licensed person. The respondent did not breach s 42 by undertaking to do these works.
  4. [46]
    The evidence is not quite as compelling in relation to the acoustic wall. Mr Carruthers did not refer specifically to the acoustic fence. Nevertheless, he expressed a general intention that any works requiring a licence would be carried out by an appropriately licensed person. His evidence was not challenged by cross-examination or otherwise, and the fact that he did not deal with this work may perhaps be explained by the fact that the applicant’s submission to the adjudicator did not refer to it, though it referred to the retaining wall works, the sewer connection works, and the water reticulation works. I consider his evidence to be sufficient to establish an intention, at the time of the contract, to have the acoustic fence constructed by an appropriately licensed contractor. I also note the evidence of Mr King, of the intention to engage a sub-contractor who has an appropriate licence, to construct the acoustic fence, though I am conscious that this relates to a time after the parties entered into the building contract.
  5. [47]
    I also note that the contract clearly envisages that work to be performed under the contract might be carried out by sub-contractors.[24]  Clause 46 prohibits the respondent from carrying out work requiring a licence under the QBCC Act, unless it holds the required licence. In my view, the effect of the contract is that the respondent was required to engage an appropriately licensed person to carry out work required by the contract, for which a licence was required, if it did not itself hold the licence.  Notwithstanding the view expressed earlier about the effect of s 8 of Schedule 1A, the contract required the retaining wall work and the construction of the acoustic fence to be carried out by appropriately licensed sub-contractors (there being no suggestion that the respondent itself had the appropriate licences). On this basis also, the work was to be carried out by an appropriately licensed sub-contractor. The respondent has not caused or allowed this work to be carried out by an unlicensed person, and has therefore not lost the benefit of s 8 of Schedule 1A of the QBCC Act.
  6. [48]
    I am therefore satisfied that the respondent was not in breach of s 42 of the QBCC Act by entering into the contract, and thereby undertaking to carry out the retaining wall works and to construct the acoustic fence.

Building work services

  1. [49]
    The applicant has contended that the respondent has performed building work services in respect of the Retaining Wall Works, Sewer Connection Works, and Water Reticulation Works. That was because the effect of the definitions in the QBCC Act was that the provision of these services was building work of a kind for which the respondent did not have a licence, and the respondent therefore breached s 42. The respondent submitted that the exception in s 8 of Schedule 1A extended to supervision, management and administration of the kind ordinarily performed by a head contractor in relation to a subcontract, where work requiring a licence was carried out by an appropriately licensed subcontractor.
  2. [50]
    The following definitions are relevant from Schedule 2 of the QBCC Act:

“carry out” , for building work (other than for part 4A ) means any of the following—

  1. k)
    carry out the work personally;
  1. l)
    directly or indirectly cause the work to be carried out;
  1. m)
    provide building work services for the work.

“building work services” means 1 or more of the following for building work—

  1. a)
    administration services;
  1. b)
    advisory services;
  1. c)
    management services;
  1. d)
    supervisory services.

“administration services” , for building work or tribunal work, includes the following—

  1. a)
    preparing tender documentation and calling and selecting tenders;
  1. b)
    arranging and conducting on-site meetings and inspections;
  1. c)
    arranging payment of subcontractors;
  1. d)
    arranging for certificates, including certificates from a local government, to be issued;
  1. e)
    administration for the work usually carried out by—
  1. a construction manager; or
  2. a project manager under a project management agreement;
  1. f)
    other administration for the work usually carried out by a licensed contractor in the course of the contractor’s business.

“advisory services” , for building work or tribunal work, includes the provision of advice or a report about building work other than—

  1. a)
    the carrying out of a completed building inspection; or
  1. b)
    the inspection or investigation of a building, and the provision of advice or a report, for the following—
  1. termite management systems for the building;
  2. termite infestation in the building.

“management services” , for building work or tribunal work, includes—

  1. a)
    coordinating the scheduling of the work by building contractors including as agent for another person; and
  1. b)
    management for the work usually carried out by—
  1. a construction manager; or
  2. a project manager under a project management agreement; and
  1. c)
    other management for the work usually carried out by a licensed contractor in the course of the contractor’s business.

"supervisory services" , for building work or tribunal work, includes—

  1. a)
    the development, implementation and management of a system for the supervision of the work; and
  1. b)
    the coordination or management of persons undertaking the supervision of the work; and
  1. c)
    the personal supervision of the work; and
  1. d)
    any other supervision of building work under this Act.
  1. [51]
    It is apparent from the definition of “carry out” that the services must relate to building work. I have already determined that the Sewer Connection Works and the Water Reticulation Works were not building work. These works therefore do not require further consideration.
  2. [52]
    The evidence of Mr Rozis, a director of the Superintendent for the contract, shows that activities of the respondent come within the language used in the definitions of the various types of services which are building work services. For example, he deposes that the respondent gave directions to a sub-contractor who was then physically performing work to construct a retaining wall. He also pointed out that the respondent had undertaken to conduct on-site inspections of the Retaining Wall Works, it had paid the sub-contractors for carrying out these works, it had co-ordinated and scheduled the performance of these works, and (it would appear that this is an inference drawn by Mr Rozis, but is likely to be correct) it had done the “usual project administration work” to manage the performance of the Retaining Wall Works by the sub-contractors.
  3. [53]
    The matters relied upon by Mr Rozis appear to be matters inevitably involved in the engagement by a contractor of a sub-contractor to carry out works which are required by the head contract. If the applicant’s submissions are correct, the exemption introduced by s 8 (it would seem from the Committee Report, a matter of some importance, which was “needing to be progressed for implementation as soon as possible”) would be deprived of effect. Indeed, it borders on the farcical to suggest that the legislature intended that a head contractor would not breach s 42 by entering into a contract for building work, if the work was to be carried out by an appropriately licensed sub-contractor, nor by causing the sub-contractor to carry out the work, but then breached the section if the sub-contractor was paid. In my view, the matters relied upon by the applicant come within s 8(2), being incidental to the entry into the contract with an appropriately licensed sub-contractor, and causing that sub-contractor to carry out the work. It follows that these activities do not result in a breach by the respondent of s 42 of the QBCC Act.

Conclusion

  1. [54]
    In my view, the correct interpretation of both the contract and the QBCC Act is that the work is not captured by the definition in Schedule 1B of “domestic building work”. It is not domestic building work and is not residential work because it is work which needs to be carried out prior to the subdivision. In that situation I consider that it cannot be work connected with a dwelling or a residence. In my view, this work must be completed as a pre-requisite to the creation of the residential lots. Numerous other steps are required before any domestic building work can be performed. The building “is yet to be”.
  2. [55]
    I accept the argument of the respondents that on a fair reading of the contract as a whole when read with the statutory scheme, the form and substance of the contract are consistent with the role of a civil works contractor performing work which results in the registration of a survey plan and the creation of lots upon which ultimately dwellings may later be built.
  3. [56]
    I accept the argument of the respondents that the QBCC Act’s licencing requirements are not designed to protect commercial property developers when engaging contractors for these types of work. Whilst some of the terms in the contract in this case do fall within some of the examples of domestic building work such as fencing, water supply, sewerage and drainage etc., they will only be domestic building work when considered together with the actual contract in question. It would seem to me, work falling within those descriptions is domestic building work only where the work under the contract relates to a dwelling or an intended dwelling. The present contract did not extend to work of that nature in my view.
  4. [57]
    The applicant’s case has depended entirely on showing that the respondent has breached s 42 of the QBCC Act, so that the respondent has no contractual right to a progress payment under the BIF Act, and the adjudicator had no jurisdiction to make an adjudication decision in favour of the respondent. It has failed to establish any breach. The application should be dismissed.

Footnotes

[1]  Described in the Affidavit of Nicholas Rozis at [14] to [16], and in Exhibit NR-3, commencing at p 188.

[2]  Described in the Affidavit of Nicholas Rozis at [17] to [19], and in Exhibit NR-4, commencing at p 196.

[3]  Described in the Affidavit of Nicholas Rozis at [20] to [22], and in Exhibit NR-5, commencing at p 201.

[4]  First Affidavit of Ms McPhee, Exhibit LMM-2, commencing at p 3, more particularly at p 99, items 14.3.1 and 14.3.2.

[5]  First Affidavit of L McPhee sworn 8 July 2019, Exhibit LMM-2, p 85, Contract, Part D.

[6]  QBCC Act, Schedule 2.

[7]  [2012] QSC 158 at [15]-[16].

[8]  At [39].

[9]  Sworn 15 July 2019, p 64.

[10]  Affidavit of Mr Austin sworn 15 July 2019, Exhibit DA-5, p 62.

[11]  (1995) 184 CLR 163.

[12]  At 177.

[13]  Affidavit of D Austin sworn 15 July 2019.

[14]  At Exhibit DA-4.

[15]  [2015] 1 Qd R 311.

[16]  Affidavit of J E Carruthers sworn 22 July 2019.

[17]  First Affidavit of L McPhee sworn 8 July 2019, Exhibit LMM-2, p 128.

[18]  At p 99.

[19]  Affidavit of B King filed by leave on 23 July 2019.

[20]  Parliamentary Committees, Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Bill 2013, Report No 35, transport, Housing and Local Government Committee, October 2013.

[21]  Report No. 14 Report into the Operation and Performance of the Queensland Building Services Authority.

[22]  Recommendation 33.

[23]  See Explanatory Notes, p 4.

[24]  See in particular cl 9; but see also cll 12.3, 15.1, 17 b), 18, 23, 29.6, 36.6. 38, and 39.5.

Close

Editorial Notes

  • Published Case Name:

    The Trustee For Hardev Property (Dev 10) Unit Trust v Palmgrove Holdings Pty Ltd & others

  • Shortened Case Name:

    The Trustee For Hardev Property (Dev 10) Unit Trust v Palmgrove Holdings Pty Ltd

  • MNC:

    [2019] QSC 208

  • Court:

    QSC

  • Judge(s):

    Lyons SJA

  • Date:

    23 Aug 2019

  • Selected for Reporting:

    Editor's Note

Litigation History

Event Citation or File Date Notes
Primary Judgment [2019] QSC 208 23 Aug 2019 Application for declaratory relief that an adjudication decision issued pursuant to the Building Industry Fairness (Security of Payment) Act 2017 (Qld), is void by reason of jurisdictional error together with consequential orders; application dismissed: Lyons SJA.

Appeal Status

No Status