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  4. Edwards v Sovereign Homes Qld Pty Ltd - [2022] QCA 4

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Edwards v Sovereign Homes Qld Pty Ltd[2022] QCA 4

Edwards v Sovereign Homes Qld Pty Ltd[2022] QCA 4

SUPREME COURT OF QUEENSLAND

CITATION:

Edwards v Sovereign Homes Qld Pty Ltd [2022] QCA 4

PARTIES:

DONALD BRUCE EDWARDS

(applicant)

v

SOVEREIGN HOMES QLD PTY LTD

ACN 091 716 906

(respondent)

FILE NO/S:

Appeal No 12560 of 2020

QCATA No 244 of 2018

QCATA No 356 of 2018

DIVISION:

Court of Appeal

PROCEEDING:

Application for Leave Queensland Civil and Administrative Tribunal Act

ORIGINATING COURT:

Queensland Civil and Administrative Tribunal Appeal Tribunal at Brisbane – [2020] QCATA 146 (Senior Member Brown and Member Burke)

DELIVERED ON:

4 February 2022

DELIVERED AT:

Brisbane

HEARING DATE:

4 May 2021

JUDGES:

Fraser and McMurdo JJA and Davis J

ORDER:

The application for leave to appeal is dismissed with costs.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – CERTIFICATES – FINALITY OF CERTIFICATE – where the applicant applies for leave to appeal from a decision of the QCAT appeal tribunal which dismissed the applicant’s appeal and application for leave to appeal from a decision by a tribunal member – where the application concerns the proper construction of provisions of a building contract about practical completion of the contract works – where under a residential construction contract in the HIA Queensland Plain Language Alteration, Addition and Renovation Contract (QC 3) standard form the respondent contractor undertook to carry out alterations and additions to the applicant owner’s house – where before the contractual date for practical completion, building work completed by the respondent was damaged by heavy rain and a hailstorm – where the respondent made claims under an insurance policy in respect of the damage caused by those weather events – where, on 11 December 2014, the respondent delivered to the applicant a “Certificate on Practical Completion” and its final claim under the contract – where at that time there remained unrepaired damage to the works and the respondent did not subsequently repair that damage – where the respondent contended that it was willing to do so but the applicant refused it access to the site – where the respondent commenced proceedings in QCAT claiming the amount of its final claim and interest and legal costs alleged to be payable under the contract – where the applicant disputed the respondent’s claim and cross applied for various amounts, including the cost of rectifying damage caused by the weather events and damages for delay – where after a hearing, the tribunal member found practical completion of the contract work had been achieved on 11 December 2014 – where “practical completion” was relevantly defined in the contract as “when the works have been completed in accordance with this contract” – where the applicant submits the tribunal member erred in law in finding that a separate contract or scope of works was required for the damaged works and that practical completion was achieved before the damaged works were rectified – whether the tribunal member erred in finding practical completion had been reached under the contract on 11 December 2014 – whether the appeal in this Court raises a question of law or a mixed question of law and fact or a question of fact – whether leave should be granted in this Court

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 142(3)(b)

Ryan v Worthington [2015] QCA 201, cited

Seirlis & Ors v Queensland Building and Construction Commission [2020] QCA 283, cited

Sovereign Homes Qld Pty Ltd v Edwards (No 2) [2018] QCAT 410, cited

COUNSEL:

J B Sweeney for the applicant

T Lambert (sol) for the respondent

SOLICITORS:

Saal & Associates Lawyers for the applicant

Cornwalls for the respondent

  1. [1]
    FRASER JA:  The applicant applies for leave to appeal from a decision of the QCAT appeal tribunal which dismissed the applicant’s appeal and application for leave to appeal from a decision by a tribunal member.  A great many points were in issue in QCAT.  I will refer only to matters that bear significantly upon the issue raised by the application in this Court, which concerns the proper construction of provisions of a building contract about practical completion of the contract works.
  2. [2]
    Under a residential construction contract dated 30 June 2014 in the HIA Queensland Plain Language Alteration, Addition and Renovation Contract (QC 3) standard form the respondent contractor undertook to carry out alterations and additions to the applicant owner’s house.  Before the contractual date for practical completion, building work completed by the respondent was damaged by heavy rain in August 2014 and, much more substantially, by a hailstorm in November 2014.  The respondent made claims under an insurance policy in respect of the damage caused by those weather events. On 11 December 2014 the respondent delivered to the applicant a “Certificate on Practical Completion” and its final claim of $46,155.20 under the contract. At that time there remained unrepaired damage to the works.  The respondent did not subsequently repair that damage.  The respondent contended that it was willing to do so but the applicant refused it access to the site.
  3. [3]
    The respondent commenced proceedings in QCAT claiming the amount of its final claim and interest and legal costs alleged to be payable under the contract.  The applicant disputed the respondent’s claim and cross applied for various amounts, including the cost of rectifying damage caused by the weather events and damages for delay.  After a hearing, the tribunal member found practical completion of the contract work had been achieved on 11 December 2014.  The applicant’s claim for damages for delay was rejected.  The tribunal member ordered (order 1) the applicant to pay the respondent $46,155.20 in respect of its claim, plus interest of $32,770.63, and (order 2) the respondent to pay the applicant $79,938.30 (being the sum of $1,344.00 for the rain damage, $64,954.00 for the hail damage, and the balance amount for defects) in respect of the applicant’s cross application, plus interest of $25,625.27.  The tribunal member also ordered (order 3) the applicant to pay 70 per cent of the respondent’s costs and (order 4) the respondent to pay 30 per cent of the applicant’s costs of the cross-application, such costs in each case to be assessed (if not agreed) on the Magistrates Court scale appropriate to amounts exceeding $50,000 on a standard basis.
  4. [4]
    The contract defines “practical completion” to mean:

“(a) where the works are for the erection or construction of a detached dwelling or the renovation, alteration, extension, improvement or repair of a home to a stage suitable for occupation – the stage when the works:

  1. (i)
    have been completed in accordance with this contract and all relevant statutory requirements apart from minor defects or minor omissions; and
  1. (ii)
    are reasonably suitable for habitation
  1. (b)
    in all other cases – when the works have been completed in accordance with this contract apart from minor defects or minor omissions.”

It is the reference to “completed in accordance with this contract” in paragraph (a)(i) that is relevant.  There does not appear to be any real question that at least the hail damage was too substantial to be characterised as “minor defects” or “minor omissions”.

  1. [5]
    Clause 24 of the general conditions provides:

“24.1 The contractor must, at the owner’s request from time to time, give a non-binding estimate of when practical completion will be reached.

24.2 On reaching practical completion the contractor must give the owner:

  1. (a)
    a notice of practical completion stating the contractor’s opinion of the date of practical completion; and
  1. (b)
    the final claim.

24.3 Subject to subclause 24.4, the owner must, within 5 working days of receiving the final claim, pay the amount of the final claim to the contactor.

24.4 The final claim is not due until the contractor:

  1. (a)
    gives the owner a defects document signed by the contractor listing minor defects and minor omissions;
  1. (i)
    that are agreed to exist and the time for when those items will be completed or rectified; and
  1. (ii)
    that the owner claims to exist but the contractor does not agree with; and
  1. (b)
    makes all reasonable efforts to have the owner sign the document to acknowledge its contents.

24.5 If the owner believes that practical completion has not been reached the owner must, within 5 working days of receiving the notice of practical completion, give the contractor a written notice stating:

  1. (a)
    the owner’s requirements for the work to reach practical completion; and
  1. (b)
    the provisions of this contract that relate to each requirement.

24.6 The contractor must, on receiving the owner’s notice, complete those requirements that, in the contractor’s opinion, are necessary to reach practical completion.

24.7 On completion of those requirements the contractor must give a further notice of practical completion stating the new date of practical completion and subclause 24.3 applies.

24.8 The owner’s payment of the final claim is conclusive evidence of the contractor’s satisfaction, and discharge, of the contractor’s obligations in connection with the subject matter of this contract except for:

  1. (a)
    fraud, dishonesty or fraudulent concealment relating to the works;
  1. (b)
    the contractor’s liability under subclause 26.1; and
  1. (c)
    the contractor’s liability under a statutory warranty set out in Clause 35.

24.9 The date stated in the last notice of practical completion is deemed to be the date of practical completion unless within 5 working days of receiving the last notice of practical completion the owner gives the contractor written notice:

  1. (a)
    disputing the date; and
  1. (b)
    detailing the reasons why the date is disputed.”
  1. [6]
    By clause 26, during the “defects liability period” of six calendar months after the date of practical completion, the contractor is obliged to rectify any defects or other faults (expect for minor settlement or minor shrinkage) due to the works not being in accordance with the contract that appear and are notified in writing by the owner to the contractor within that period.
  2. [7]
    The tribunal member made the following findings:
    1. (a)
      At a site meeting on 11 December 2014 attended by the applicant and his partner, Ms Ogilvie, the respondent’s project manager, Mr Marshall, presented a document entitled “Certificate on Practical Completion”.[1]
    2. (b)
      The Certificate on Practical Completion fulfilled the requirements of a notice of practical completion referred to in clause 24 of the contract.[2]
    3. (c)
      Before signing the Certificate on Practical Completion, Mr Marshall and the applicant toured and inspected the premises, and they identified, agreed upon, and added to the Certificate a list of minor defects that were outstanding.[3]
    4. (d)
      The Certificate on Practical Completion included an acknowledgment that the owner had inspected the works, the contractor had duly performed the contract to owner’s satisfaction, and the owner agreed that the works had reached practical completion and were in good order except for the minor defects listed in the certificate.  The certificate included a payment authority directed to the owner’s lending body to pay the balance of the money payable under the contract immediately.[4]
    5. (e)
      Upon completion of the inspection, Mr Marshall gave Mr Edwards the Certificate on Practical Completion and payment authority, together with the respondent’s final claim in the sum of $46,155.20 (inclusive of GST).  The applicant signed the Certificate on Practical Completion in duplicate and retained a copy.[5]
    6. (f)
      At the meeting, the applicant told Mr Marshall that he would forward the bank transfer form to the respondent that evening.[6]  At no time during the meeting did the applicant indicate an intention to dispute the respondent’s final claim.[7]  When the applicant signed the certificate, he was satisfied that practical completion had been reached “and that the damage from the weather events was a separate issue”.[8]
    7. (g)
      At the time of the meeting on 11 December 2014 the applicant had taken possession of the works.[9]
    8. (h)
      On 12 December 2014 the applicant sent a text message to the effect that he was happy to sign a bank transfer and Ms Ogilvie sent a text message advising Mr Marshall that the applicant had signed the forms but had not had a chance to send them.[10]  In the following week the applicant advised that he would sign the payment authority and forward it to the respondent.[11]
    9. (i)
      The defects referred to in the Certificate were attended to, other than one defect for which the applicant sought a cash settlement rather than rectification.[12]
    10. (j)
      The applicant subsequently conveyed that he withheld payment of the respondent’s final claim pending resolution of issues set out in an email dated 5 January 2015.  The respondent replied by requesting payment of the balance amount the applicant had identified as being the amount of the final payment.  The applicant replied that his email was not an exhaustive list of costs and further items would be added.[13]
  3. [8]
    The tribunal member concluded:

“I find, as a fact, that practical completion was reached on 11 December 2014 pursuant to Clause 24.9 of the contract.  That disposes of the claim for damages by Mr Edwards for delay based on the claim that practical completion had not been reached.”[14]

  1. [9]
    The tribunal member went on to make specific findings about the weather events and the respondent’s insurance claims for them.  The tribunal member recorded that the applicant argued the insurance works were part of the contract works, that work was not minor work, and as it had not been carried out the practical completion stage had not been reached.[15]  The respondent argued that the repair work associated with the rain and hail events was “separate and distinct from the Works it was required to carry out under the Contract and requires a separate contract, new insurances and a new completion date”.[16]  After referring to the contractual provisions about risk and insurance, the tribunal member reasoned:

“[65] The Contract does not provide for the situation where work, already completed under the contract, is damaged or destroyed by events not within control of the builder. In some construction and engineering contracts there are standard clauses which qualify the liability of the builder in such circumstances. It is not uncommon for insurance clauses to provide that it is the builder’s responsibility to reinstate the works, but not until the insurance claim has been settled. In those circumstances, unless the settlement is delayed by an act or omission of the builder, the builder would be entitled to claim an extension of time for any delay. Provision can be made for the insurance monies to be paid into a joint account pending the reinstatement of the works. It is also the case, that the builder can only recover the monies received from the settlement of the claim for that work, exclusive of fees and costs.

[66] The construction favoured by Mr Edwards that Sovereign should have proceeded in reinstating the works prior to the settlement of the insurance claim, in my opinion, is unreasonable. Such a requirement, hypothetically, could place an unreasonable financial burden on a builder.

[67] It seems sensible that the reinstatement of the works should be the subject to separate scopes of works. It is submitted, on behalf of Mr Edwards, that the insurance work should have been completed before Practical Completion had been achieved. The fact is, that Practical Completion has occurred as I have already found. Mr Edwards and his family had moved into possession. He was aware that there was an insurance claim by Sovereign relating to damage to the works and that work would be attended to when the claim had been settled.”

  1. [10]
    The applicant appealed and sought leave to appeal to the appeal tribunal from the tribunal member’s orders.  Leave to appeal was required for so much of the appeal as involved a question of fact or a question of mixed law or fact.[17]  The appeal tribunal refused leave and dismissed the appeal.
  2. [11]
    In this Court the applicant applies for leave to appeal from the appeal tribunal’s decision to the extent only that the decision dismissed ground 10 of the applicant’s appeal to that tribunal.  Ground 10 contended that the tribunal member “erred in law in finding, at [65] to [67] of the Reasons, that a separate contract or scope of works was required for the damaged works and that practical completion was achieved before the damaged works were rectified.”
  3. [12]
    In relation to that ground, the appeal tribunal referred to a submission by the applicant that the tribunal member erred in finding that a separate contract or scope of works was required for the damaged works and that practical completion was achieved before the damaged works were rectified.  Other submissions by the applicant recorded by the appeal tribunal included that the tribunal member erred in finding that the contract did not provide for circumstances where completed work was damaged by events outside the contractor’s control, the tribunal member failed to take into account that clause 16 of the contract entitled the contractor to apply for an extension of time where there was a delay arising from an insurance claim and the undertaking of rectification work, and the tribunal member should have found that the insurance work had to be completed before the contractor completed the practical completion stage of the construction.[18]
  4. [13]
    The appeal tribunal observed that it would “confine this ground of appeal to the errors of law asserted by Edwards being the failure to provide adequate reasons and the denial of natural justice”.[19]  In the course of addressing the adequacy of the reasons relating to the tribunal member’s finding in [67] that it was “sensible” that reinstatement of the damaged works be the subject of a new “scope of works”,[20] the appeal tribunal referred to the absence of any appeal from the tribunal member’s finding that the applicant had taken possession of the works and was aware of the respondent’s insurance claim relating to the works and that the works would be attended to when the insurance claim was settled.  The appeal tribunal observed:

“[114] The reference by the learned tribunal member to ‘separate scopes of works’ must be read and understood in the context of his finding that practical completion had occurred. In these circumstances it is reasonably readily apparent that the learned tribunal member did not consider the works required to be undertaken as a result of the weather events were variation works under the subject contract. Such a finding would be inconsistent with the finding that practical completion had occurred. Seen this way, it is also reasonably readily apparent that the learned tribunal member’s reference to ‘separate scopes of works’ is a reference to the need for a separate contract to be entered into between the parties in respect of the building works relating to the weather events. It follows from the above analysis that in circumstances where the learned tribunal member found practical completion had been reached and that, on a proper construction of the contract, the works relating to the weather events were not within the contractual scope of works, a separate contract would be required to be entered into between the parties in respect of the weather event related works. We will address these issues further in considering ground of appeal 9.”

  1. [14]
    The effect of appeal ground 9 was that the tribunal member erred in failing to find that clause 16 of the contract enabled the respondent to seek an extension of time for completion of the works relating to the weather events.  The appeal tribunal observed:

“[227] … As we have set out earlier in these reasons, ground of appeal 10 asserts an error of law by the learned tribunal member in finding that a separate contract or scope of works was required for the weather-related works and that practical completion was achieved before the damaged works were rectified. We have found that ground of appeal 10 involves both questions of law and questions of mixed law and fact and that, in the absence of Edwards seeking leave to appeal, the ground of appeal would be confined to questions of law.”

  1. [15]
    The appeal tribunal concluded that because leave to appeal was not granted, it was not open to the applicant to challenge the findings at [65] to [67] of the tribunal member’s reasons.
  2. [16]
    The grounds of the applicant’s proposed appeal to this Court from the appeal tribunal’s decision are:

“1. On a proper interpretation of Schedule 1, item 10 (building period); clauses 14.1, 14.2, and 14.3 (insurance and risk); clause 16.1 and 16.2 (delays and extensions of time), clause 24.2 (practical completion and final claim), and the definition of “works” in clause 37.1 of the contract, before the respondent was entitled to deliver a “final claim” under clause 24 , all damage to building work caused by “storm & tempest” risk had to be completed (apart from minor defects or minor omissions).

  1. By failing to find in accordance with ground 1 above, and by concluding (at Reasons [106, 117] that Ground 10 was a ground agitating an error “of mixed law and fact” the Appeal Tribunal erred in law.
  2. Had the Appeal Tribunal not made those errors, it would have ordered that orders 1 and 3 of the Queensland Civil and Administrative Tribunal made on 3 December 2018 in BDL 253/15 be set aside, and in lieu thereof, there be an order that the respondent builder’s claim be dismissed.”
  1. [17]
    In addition to the orders identified in appeal ground 3, the notice of appeal seeks an order that the question of costs be remitted to the tribunal.
  2. [18]
    Ground 1 in the notice of appeal raises a question about the proper construction of the parties’ contract.  That contract is wholly in writing.  In Ryan v Worthington,[21] which also concerned an application for leave to appeal from the QCAT appeal tribunal, this Court decided that, as had been held in the many cases the Court cited, a question about the proper construction of a written contract is a question of law.  No disputed fact is relevant to the resolution of the question raised by ground 1.  It raises a “pure” question of law of the kind upon which an appeal may be brought to this Court by leave.[22]
  3. [19]
    Contrary to one of the respondent’s arguments, that question of law was in issue in QCAT, both at first instance and in the appeal tribunal.  That clearly appears both from the written submissions in the appeal record books[23]  and from the descriptions in [9] and [12] of these reasons of some of the applicant’s arguments before the tribunal member and in the appeal tribunal.  Whilst [67] of the tribunal member’s reasons might be understood as describing a conclusion based in part upon the parties’ conduct, [65] and [66] of those reasons endorse a construction of the contract that is inconsistent with the construction advocated by the applicant in QCAT and in this Court.  Ground 10 of the appeal to the appeal tribunal is not a model of clarity, but it comprehends the applicant’s unambiguous written submission that the tribunal member erred by rejecting the construction of the contract which the applicant advocated before the tribunal member and the appeal tribunal.
  4. [20]
    It is therefore open to this Court to exercise the discretion to grant leave to appeal, upon a question of law.  That discretion will usually not be exercised unless there is a reasonable argument that there is an error to be corrected and either the appeal is necessary to correct a substantial injustice to the applicant or some important principle arises.[24]
  5. [21]
    Under clause 31 of the general conditions the owner is entitled to liquidated damages at a specified rate for each day after the contractual date for practical completion until the earlier of the date of practical completion, the date the contract is ended, or the date the owner takes control of, possession of, or uses the site or any part of the site.  In light of the unchallenged finding by the tribunal member described in [7](g) of these reasons, success in the proposed appeal would not justify an award for liquidated damages in the applicant’s favour.
  6. [22]
    The applicant argues that for different reasons he will suffer a substantial injustice if the error for which he contends is not corrected on appeal.  He argues that order 1 made by the tribunal member should be set aside because clause 24.2 permits the contractor to give its final claim only when “practical completion”, as defined, has been reached; and upon the proper interpretation of the contract contended for in ground 1 of the notice of appeal practical completion had not been reached.  Upon that premise, the applicant’s outline of argument contends that the loss he would suffer if the error for which he contends is not corrected is likely to exceed $100,000.
  7. [23]
    That argument assumes a determination of the construction question in the applicant’s favour should result in him retaining as loss of bargain damages the repair costs of $79,938.30 awarded by order 2 without being required to deduct from that amount the $46,155.20, which the applicant would have been obliged to pay the respondent upon completion of the contract works (including the rectification of any defective works and the damage caused by the weather events).  The assumption is inconsistent with the applicant’s case in the appeal tribunal, as it was explained by counsel then appearing for the applicant:

“It’s also accepted by the appellant that the calculation mechanism of the learned member below in deducting the final claim for the 46–odd thousand dollars from the damages awarded to the appellant is the appropriate method of undertaking the manner in finding the ultimate result in the matter.  There is something we’ll say about the amounts involved insofar as the damages are concerned but we don’t cavil with the amount of the final claim.”[25]

  1. [24]
    In oral argument in this Court, counsel who now appears for the applicant acknowledged that if the applicant succeeded in his proposed appeal the proper measure of the applicant’s loss of bargain damages would require the deduction of $46,155.20 from the gross amount of the applicant’s claim of $79,938.30.  Having made that acknowledgment, counsel for the applicant submitted that it would be appropriate to remit the matter to QCAT, not merely for the purpose of reviewing the costs orders as sought in the notice of appeal, but also for the purpose of formulating the appropriate money orders.
  2. [25]
    If the applicant succeeded in the proposed appeal, on remitter he might secure an order in his favour in the net amount of $33,783.10 ($79,938.30 - $46,155.20), together with interest on that sum.  Such an order would be more beneficial to the applicant than orders 1 and 2 made by the tribunal member.  The interest of $32,770.63 added to the respondent’s claim under order 1 was calculated at the contractual rate of 18 per cent per annum,[26] whereas the tribunal member found that a statutory provision required the amount ordered in the applicant’s favour to bear interest at the rate of 10 per cent per annum.[27]  The date from which interest upon any net amount of an order in the applicant’s favour should run is not discussed in the parties’ submissions, but it seems that such economic advantage as the applicant might stand to gain on this account would be modest in comparison with the costs of the proceedings in this Court and in any remitted proceeding.  That would be so even without taking into account the respondent’s argument that the manner in which the applicant conducted the litigation in QCAT was inefficient and unnecessarily expensive.
  3. [26]
    As was submitted for the applicant, success in the proposed appeal might result in costs orders in QCAT that are more favourable to him than orders 3 and 4 made by the tribunal member.  The monetary effect of such cost orders is speculative.  Aspects of the conduct of the applicant which influenced the costs orders made against the applicant might not be affected by a successful appeal,[28] the costs orders made upon remitter would in any event depend upon an exercise of discretion, and any monetary advantage to the applicant of such costs order would come at the expense of further costs being incurred in the remitter.  Nor should this Court encourage any general view that leave to appeal is likely to be granted for the purpose of facilitating the revision of costs orders.
  4. [27]
    The matters discussed up to this point do not support a grant of leave to appeal.  The applicant submits, however, that there is an important principle at stake because the general conditions of contract in issue are in a standard form of residential construction contract widely used in the State.  The contention that this form of contract has general application in Queensland is supported by an affidavit and is not contradicted by the respondent.  That does supply support for a grant of leave to appeal upon the question of contractual construction raised by ground 1 of the notice of appeal.
  5. [28]
    It is also relevant that the appeal tribunal recorded the tribunal member had found “that, on a proper construction of the contract, the works relating to the weather events were not within the contractual scope of works”,[29] the appeal tribunal found that ground 10 involved both a question of law and a question of mixed law, and the appeal tribunal also found that ground 10 asserted an error of law in the tribunal member’s finding that a separate contract or scope of works was required for the weather-related works; yet in the course of considering ground 10 the appeal tribunal did not adjudicate upon the construction of the contract advocated by the applicant.  If those were the only relevant reasons given by the appeal tribunal, its failure to address the construction question advocated by the applicant would also support a grant of leave to appeal.
  6. [29]
    As I will explain, however, the appeal tribunal did address the relevant question in a different part of its reasons and the applicant’s argument about the proper construction of the contract is insufficiently persuasive to justify the Court in granting leave to appeal.
  7. [30]
    The following general conditions of the contract bear upon the scope of the contractor’s work:
    1. (a)
      Clause 1 describes the obligation of the contractor to complete the works and the obligation of the owner to pay the contract price, as adjusted.  Relevantly, cl 1.1 obliges the contractor to “complete the works in accordance with this contract”, and to comply with laws and lawful requirements with respect to carrying out of the works.  The term “works” is defined in cl 37.1 to mean “the works to be carried out, completed and handed over to the owner in accordance with this contract as shown in the contract documents including variations”.
    2. (b)
      Under cl 14, concerning insurance and risk, the contractor is obliged, before commencement, to take out insurance, including insurance cover against loss or damage to the works in an amount equal to the contract price and maintain such cover until the date of practical completion.  By cl 14.3, the contractor is not responsible for loss or damage to the building works from the date of practical completion.
    3. (c)
      Clause 16 entitles the contractor to a reasonable extension of time to the “building period” (defined to mean the number of days stated in item 10 in a schedule called “particulars of contract”, as extended by cl 16) if commencement or the carrying out of the works is delayed by a “claimable delay”.  The definition of “claimable delay” in cl 16 comprehends “a delay … from a cause beyond the contractor’s sole control that was not reasonably foreseeable at the time” of entry into the contract, and it includes matters listed in 12 paragraphs, including “(e) an act of God …”.
  8. [31]
    It is reasonably arguable that the scope of the contractor’s work under clause 1 comprehends the repair of damage to works incurred before practical completion, at least in a case where the damage results from an event in respect of which the contractor was obliged to take out insurance cover and was entitled to an extension of time.  Such a construction derives support from the general conditions described in the preceding paragraph, most obviously from the incorporation in clause 1 of the reference in the definition of “works” in clause 37.1 to “the works to be … handed over to the owner …as shown in the contract documents”.  For that reason, it is reasonably arguable that the tribunal member erred in law by finding in [65] of his reasons that the contract did not provide for the situation where work already completed under the contract was damaged or destroyed by events not within control of the contractor.
  9. [32]
    It does not follow, however, that the tribunal member erred in law in finding that practical completion was reached on 11 December 2014 pursuant to clause 24.9 of the contract.  The appeal tribunal rejected challenges to that finding made in grounds 4 and 5 of the appeal to it.
  10. [33]
    Ground 4 of the appeal to the appeal tribunal contended that the tribunal member erred in law in finding that a builder who has not complied with the plans or specifications of a contract, and who is in breach of a contract may nevertheless have reached practical completion.[30]  In the course of discussing that ground, the appeal tribunal stated:

“[72] The events to which the member refers are set out in paragraph [38] as follows:

[38] The function of establishing the date for (sic) practical completion is, inter alia, to provide evidence of the point in time for a number of events to take place. Under the Contract it:

  1. (a)
    sets a time for the payment of the final claim;
  1. (b)
    allows the owner to dispute whether practical completion has been reached and identify what works if required to reach practical completion;
  1. (c)
    identifies minor defects and omissions to be attended to;
  1. (d)
    triggers the defects period;
  1. (e)
    transfers the risk of the property to the owner; and
  1. (f)
    sets a date for calculation of liquidated damages.

[73] Edwards submits that the learned member erred in finding that the Certificate established the Date of Practical Completion.

[74] A Notice of Practical Completion, or Certificate in this context, is intended to have a clear contractual operation. The purpose of the Certificate is to provide certainty of the Date of Practical Completion for the purpose of establishing further rights and obligations of the parties under the contract.

[75] The alleged error of the member in paragraph [39] of the reasons for the substantive decision concentrates on the member's failure to determine himself whether the works had reached practical completion in fact as opposed to relying solely on the Certificate as the evidence that practical completion had been reached.

[76] The definition of “Date of Practical Completion” in clause 37 states that the term has the meaning in clause 24.

[77] The conclusion must therefore be that the last Notice of Practical Completion establishes the Date of Practical Completion. In the absence of a dispute regarding the Date of Practical Completion, a proper notice is deemed to identify the Date of Practical Completion.”

  1. [34]
    Ground 5 of the appeal to the appeal tribunal contended that the tribunal member “erred in law and in fact in finding at [43] of the Reasons, that practical completion had been reached on 11 December 2014 pursuant to cl. 24.9 of the Contract.”  The appeal tribunal observed, “unlike in respect of claims for progress payments (other than the final claim), the contract stipulated certain consequences flowing from the certificate on practical completion in respect of deeming the Date of Practical Completion which in turn triggered obligations on Edwards in respect of the payment of the final claim.”[31]  The appeal tribunal continued:

“[217] The learned member found, as a fact, that practical completion had been achieved on 11 December 2014 pursuant to clause 24.9 of the contract. We are satisfied that there was no error by the learned member in finding that a Notice of Practical Completion had been given by Sovereign as required by clause 24.2 of the contract. We are satisfied that there was no error by the learned member in finding that Edwards signed the defects document as stipulated in clause 24.4 of the contract. The evidence before the learned member was that, after signing the Certificate on Practical Completion, Edwards first communicated complaints about the building works in an email to Sovereign on 5 January 2015. This was clearly not within the 5 business days stipulated by clause 24.5 of the contract by which Edwards was required to give a notice communicating his belief that practical completion had not been reached. Accordingly, there was no error by the learned member in finding that practical completion had been reached on 11 December 2014 in accordance with clause 24.9 of the contract.”

  1. [35]
    In a particular case, questions might arise about many aspects of clause 24, including the content of the expression “the contractor’s opinion of the date of practical completion” in clause 24.2(a) and whether that requirement is established by the evidence.  No such question is raised in this Court. Upon the findings described in [7] of these reasons:
    1. (a)
      On 11 December 2014 the respondent gave the applicant a notice of practical completion (the Certificate on Practical Completion) and the respondent’s final claim in conformity with cl 24.2 and a defects document signed by both parties in conformity with cl 24.4.
    2. (b)
      The applicant did not within the five working days specified in cl 24.5 give the respondent a notice in conformity with that sub-clause.
    3. (c)
      There was therefore no scope for the operation of cl 24.6 or cl 24.7.
    4. (d)
      The Certificate on Practical Completion found to have been given by the respondent to the applicant on 11 December 2014 was therefore “the last notice of practical completion” in terms of cl 24.9.
    5. (e)
      Practical completion was therefore deemed by that clause to have been achieved on 11 December 2014.
  2. [36]
    The essence of the applicant’s challenge to the construction underlying the appeal tribunal’s affirmation of the tribunal member’s conclusion that practical completion was reached on 11 December 2014 pursuant to clause 24.9 of the contract is that:
    1. (a)
      Clause 24.2 permits the contractor to give the owner a notice of practical completion only upon “reaching practical completion”.
    2. (b)
      The definition of “practical completion” requires the works to be completed in accordance with the contract, thereby requiring the repair of damage to the works incurred before practical completion.
  3. [37]
    The applicant’s argument does not identify any error in in the appeal tribunal’s reasons for rejecting grounds 4 and 5 of the appeal to it.  The argument is unpersuasive because, contrary to a basic principle of contractual construction, it construes clause 24.2 without having regard to its contractual context.  The obligation of the contractor described in clause 1.1 of the general conditions is to complete the works in accordance with the contract.  That comprehends reference to clause 24 of the general conditions.  Clause 24 provides that the contractor’s opinion of the date of practical completion in a notice of practical completion given to the owner is deemed to be the date of practical completion unless the date in the notice is disputed by the owner in conformity with that clause.  It would be inconsistent with that contractual scheme to construe clause 24.2 as though the entitlement of a contractor to give a notice of practical completion (and thus a final claim) is contingent upon an objective conclusion that, upon the proper construction and application of contractual provisions other than clause 24.9, the works have been completed, except only for any minor defects or omissions, and are reasonably suitable for habitation.
  4. [38]
    Where, as the appeal tribunal affirmed had occurred in this matter, clause 24.9 operates to deem a date of practical completion, the contract does not leave room for a contention that the works had not reached practical completion on that date such as to disentitle the contractor from giving its final claim to the owner.
  5. [39]
    It remains necessary to mention that the amended application for leave to appeal adverts to s 67 of the Domestic Building Contracts Act in the application’s formulation of the question of law it seeks to agitate in the proposed appeal:

“… whether, under the HIA ‘Queensland Plain Language Alteration, Addition and Renovation Contract (QC 3) standard form of residential construction contract, to which s 67 of the Domestic Building Contracts Act 2000 (Qld) applies, rectification of any damage to the contract works, caused by an insured risk under clause 14.1 (b) and 14.2 of that form of contract, must have been completed (apart from minor defects or minor omissions) before the contractor is entitled to deliver a certificate of practical completion the final claim under clause 24.2 thereof.”

  1. [40]
    Counsel for the applicant made some brief oral submissions about s 67, but the text I have emphasised does not identify any question about that section.  The grounds of the proposed appeal would confine the issue in any appeal to a question about the proper construction of the contract.  Furthermore, the Domestic Building Contracts Act was repealed more than six years ago on 1 July 2015,[32] and the successor legislation, the Queensland Building and Construction Commission Act 1991 (Qld), does not contain any analogue of s 67.  For all of these reasons, it is not appropriate to grant leave to appeal to consider s 67 of the Domestic Building Contracts Act.
  2. [41]
    The application for leave to appeal should be dismissed with costs.
  3. [42]
    McMURDO JA:  I agree with Fraser JA.
  4. [43]
    DAVIS J:  I agree with the orders proposed by Fraser JA and the reasons his Honour gives for making those orders.

Footnotes

[1]  [2018] QCAT 276 at [14].

[2]  [2018] QCAT 276 at [23].

[3]  [2018] QCAT 276 at [18], [21].

[4]  [2018] QCAT 276 at [17].

[5]  [2018] QCAT 276 at [22].

[6]  [2018] QCAT 276 at [29].

[7]  [2018] QCAT 276 at [31].

[8]  [2018] QCAT 276 at [36].

[9]  [2018] QCAT 276 at [20], [44].

[10]  [2018] QCAT 276 at [29].

[11]  [2018] QCAT 276 at [24].

[12]  [2018] QCAT 276 at [24] – [25].

[13]  [2018] QCAT 276 at [30].

[14]  [2018] QCAT 276 at [43].

[15]  [2018] QCAT 276 at [59].

[16]  [2018] QCAT 276 at [60].

[17]Queensland Civil and Administrative Tribunal Act 2009, s 142(3)(b).

[18]  [2020] QCATA 146 at [108] (a), (b), (d).

[19]  [2020] QCATA 146 at [109].

[20]  [2020] QCATA 146 at [111].

[21]  [2015] QCA 201 at [12].

[22]  See Pivovarova v Michelsen (2019) 2 QR 508, at [2], [14]; see also at [36]-[37].

[23]  Applicant’s closing submissions before the tribunal member, filed 15 December 2017, paragraphs 3 – 19, 72 – 73, 76 – 77; 246 to 253; applicant’s written submissions in the appeal tribunal dated 14 December 2018, paragraphs 7 – 11, 24, 26 – 30, 47; applicant’s submissions in response to respondent’s submissions in the appeal tribunal, dated 21 March 2019, paragraph 2.1, 13.

[24]Seirlis & Ors v Queensland Building and Construction Commission [2020] QCA 283 at [6].

[25]  Transcript 10 June 2019, day 1, p 554.

[26]  [2018] QCAT 410 at [8].

[27]Sovereign Homes Qld Pty Ltd v Edwards (No 2) [2018] QCAT 410 at [9].

[28]  [2018] QCAT 410 at [15] – [18].

[29]  [2020] QCATA 146 at [114].

[30]  [2020] QCATA 146 at [30].

[31]  [2020] QCATA 146 at [216].

[32]Queensland Building and Construction Commission and Other Legislation Amendment Act 2014, s 79.

Close

Editorial Notes

  • Published Case Name:

    Edwards v Sovereign Homes Qld Pty Ltd

  • Shortened Case Name:

    Edwards v Sovereign Homes Qld Pty Ltd

  • MNC:

    [2022] QCA 4

  • Court:

    QCA

  • Judge(s):

    Fraser JA, McMurdo JA, Davis J

  • Date:

    04 Feb 2022

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Edwards v Sovereign Homes (QLD) Pty Ltd [2020] QCATA 146
7 citations
Jump To
Cite 1 - [2020] QCATA 146
Cite 2 - [2020] QCATA 146
Cite 3 - [2020] QCATA 146
Cite 4 - [2020] QCATA 146
Cite 5 - [2020] QCATA 146
Cite 6 - [2020] QCATA 146
Cite 7 - [2020] QCATA 146
Pivovarova v Michelsen(2019) 2 QR 508; [2019] QCA 256
1 citation
Jump To
Cite 1 - (2019) 2 QR 508
Ryan v Worthington [2015] QCA 201
2 citations
Jump To
Cite 1 - [2015] QCA 201
Cite 2 - [2015] QCA 201
Seirlis v Queensland Building and Construction Commission [2020] QCA 283
2 citations
Jump To
Cite 1 - [2020] QCA 283
Cite 2 - [2020] QCA 283
Sovereign Homes Qld Pty Ltd v Edwards [2018] QCAT 276
16 citations
Jump To
Cite 1 - [2018] QCAT 276
Cite 2 - [2018] QCAT 276
Cite 3 - [2018] QCAT 276
Cite 4 - [2018] QCAT 276
Cite 5 - [2018] QCAT 276
Cite 6 - [2018] QCAT 276
Cite 7 - [2018] QCAT 276
Cite 8 - [2018] QCAT 276
Cite 9 - [2018] QCAT 276
Cite 10 - [2018] QCAT 276
Cite 11 - [2018] QCAT 276
Cite 12 - [2018] QCAT 276
Cite 13 - [2018] QCAT 276
Cite 14 - [2018] QCAT 276
Cite 15 - [2018] QCAT 276
Cite 16 - [2018] QCAT 276
Sovereign Homes Qld Pty Ltd v Edwards (No 2) [2018] QCAT 410
4 citations
Jump To
Cite 1 - [2018] QCAT 410
Cite 2 - [2018] QCAT 410
Cite 3 - [2018] QCAT 410
Cite 4 - [2018] QCAT 410

Cases Citing

Case NameFull CitationFrequency
Edwards v Sovereign Homes (Qld) Pty Ltd (no. 2) [2022] QCATA 442 citations
Edwards v Sovereign Homes Qld Pty Ltd [2022] QCAT 2443 citations
McGuire v Nikola McWilliam t/as McGrath Legal [2022] QCATA 642 citations
1

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