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Ganter v Bates; Bates v Ganter QCAT 446
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Ganter t/as Brisbane Kitchen Design v Bates & Anor; Bates & Anor v Ganter T/as Brisbane Kitchen Designs  QCAT 446
MATTHEW GANTER TRADING AS BRISBANE KITCHEN DESIGN
LOUISE JANE BATES
LOUISE JANE BATES
MATTHEW GANTER TRADING AS BRISBANE KITCHEN DESIGN
MCDO1798-17; MCDO60748-18 (Brisbane)
Other civil dispute
10 December 2018
12 October 2018
Dr Collier, Member
Matthew Ganter trading as Brisbane Kitchen Design is to pay Louise Jane Bates and Duncan Gorrie $1,974.05 within 21 days in full and final satisfaction of both claims MCDO 1798-17 and MCDO 60748-18.
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – LEGALITY – whether the builder was appropriately licenced as required in the Queensland Building and Construction Commission Act 1991 (Qld) – whether the contract has effect
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – RECOVERY – what the builder is entitled to be paid for the work – whether the builder is entitled to recover the cost of work under the Queensland Building and Construction Commission Act 1991 (Qld) – what compensation and costs may be recovered by an owner
Queensland Building and Construction Commission Act 1991 (Qld), s 42, sub-ss 42(1) 42(3) 42(4); Schedule 1B; Part 5
Queensland Building Services Act 1991 (Qld), s 42
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 93, s 100, s 102(2)
Queensland Civil and Administrative Tribunal Rules 2009 (Qld), r 83
Cook's Construction P/L v SFS 007.298.633 P/L (formerly trading as Stork Food Systems Australasia P/L)  QCA 75
Marshall v Marshall  1 Qd R 173
Sutton v Zullo Enterprises Pty Ltd  2 Qd R 196
APPEARANCES & REPRESENTATION:
No appearance for Matthew Ganter trading as Brisbane Kitchen Design
Self-represented Louise Jane Bates and Duncan Gorrie
REASONS FOR DECISION
- On 17 May 2017 Ms Bates and Mr Gorrie (the Respondents) contracted with Brisbane Kitchen Design (the Applicant) to supply and install a new kitchen for their residence in Everton Park by 19 June 2017. The agreed price for this work was $18,887.
- The variations requested by the Respondents which involved a variation to the quoted cost were (including GST):
- (a)an additional $242 for some Caesarstone shelving; and
- (b)a reduction of $102.30 for deleting a bank of drawers.
- By 17 July 2017 the Respondents had paid the Applicant $16,998.30 pursuant to the contract.
- The Applicant seeks to have the Respondents pay $2,028.40 representing the outstanding invoice for the contracted work completed plus the agreed variations.
- The Respondents seek to recover the entire amount of money paid to the Applicant, to be relieved of paying the amount presently demanded by the Applicant, and compensation for the loss of their entitlement to be covered under the statutory insurance scheme because the Applicant was not licensed to undertake the building work completed.
- Both parties seek their filing fee, while the Respondents also seek interest, bailiff costs and search fees.
- At the hearing the Respondents gave evidence that they have no complaint in regard to the quality of the work completed by the Applicant, nor against the adequate completion of the Applicant’s obligations under the agreement, nor the time taken to complete the work. Indeed, they have no grievance against the Applicant. Their sole concern is that the Applicant was not properly licensed at relevant times and, therefore, is not entitled to payment for the work completed.
- The decision for this Tribunal is to determine how much money each party may be owed by the other arising from the facts of this matter.
- Unless otherwise noted, all monetary amounts mentioned in this decision include relevant GST.
- This decision covers two applications. The first in time, MCDO1798-17, was initiated by the Applicant against the Respondents; MCDO60748-18 was later initiated by the Respondents here against the Applicant here.
- Both matters deal with the same facts and involve interpretation of the same contract and law. For this reason both applications are dealt with here at the same time.
- This matter was heard by the Tribunal on 12 October 2018. Ms Bates and Mr Gorrie attended the hearing while the Applicant did not.
- The files disclose that the Applicant had been properly served notice of the hearing. Clearly the Applicant was also aware of the issues between the parties because the applications had been on foot for some time. On the basis of s 93 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), the Tribunal is entitled to, and can hear and determine a matter in the absence of one or both parties.
- It is the decision of the Tribunal that it is fair and just to hear and determine this matter in the absence of the Applicant on the basis that the Applicant was aware of the hearing date and time, of the issues in dispute between the parties, and that the position of the Applicant has been made sufficiently clear in its various filings.
- In any event, at the hearing the Tribunal reserved its decision in this matter to a written decision to be prepared after allowing the parties a further opportunity to make final submissions by 9 November 2018.
- The Applicant filed a submission on 7 November 2018, and the Respondents filed a submission on 29 October 2018. These submissions have been considered in this decision.
- The evidence before the Tribunal discloses that Brisbane Kitchen Design is a registered business name owned by Matthew Ganter. Mr Ganter is the person with whom the Respondents have dealt throughout this matter, and the person who signed the contract with the Respondents. The proper party as the Applicant is, therefore, Matthew Ganter trading as Brisbane Kitchen Design, and the Tribunal amends all applications and proceedings accordingly.
- The Respondents sought to have a new kitchen installed in their residence. Following negotiation they entered a contract with the Applicant on 17 May 2017 under which the Applicant would complete the kitchen renovation for a fee of $18,887.00 paid as follows:
- (a)Deposit: $1,888.70
- (b)Progress payment upon check measure: $7,554.80
- (c)Progress payment upon delivery of cabinets: $7,554.80
- (d)Final payment upon installation of benchtops: $1,888.70
- During the course of the project agreed variations involved the addition of a portion of benchtop (costing $242) and the removal of three drawers (involving a credit of $102.30). This meant that the agreed sum for the work, including agreed variations, was $19,026.70.
- During the course of the work by the Applicant the Respondents became aware that they had not been issued a certificate of insurance under the Home Warranty Scheme concerning this work, alerting them to inquire whether the Applicant held a Queensland Building and Construction Commission (‘QBCC’) licence for the building work involved.
- At the time the work was done by the Applicant for the Respondents, the Applicant did not hold a relevant QBCC licence. This has implications for the ability of the Applicant to enforce the terms of the contract, as discussed below.
- According to the terms of the contract the Respondents paid the Applicant $16,998.30, comprising the deposit and the first two progress payments. Upon completion of the work the Applicant demanded the Respondents pay $2,028.40, representing the balance owing for the agreed work. The Respondents refused to pay this bill, and the Applicant now seeks to have this Tribunal order payment.
- The Respondents, however, claim that the Applicant is not entitled to any payment under the agreement because the Applicant did not hold a relevant QBCC licence.
The Applicant’s claim
- The Applicant’s claim was lodged in the Minor Civil Disputes division of this Tribunal as a claim for a minor civil debt of $2,028.40 plus filing fee arising as a liquidated sum owed upon completion of the contract.
- In his submission dated 7 November 2018 the Applicant provided invoices showing his sub-contractor costs incurred in completing the contract were from two sub-contractors, as follows:
- (a)Solid Joinery: $11,873.40; and
- (b)McGwill Enterprises: $3,773.00 (including the additional benchtop cost).
- The Applicant says that, after these costs, the profit on the contract was $2,470.60. This evidence of the Applicant appears credible and is accepted.
The Respondents’ claims
- The Respondents responded to the Applicant’s Application, but commenced a separate claim in the Minor Civil Disputes division, also as a minor debt, claiming $16,998.30 plus their filing fee.
- The Respondents say that, because the Applicant was not licenced for the type of building activity which he undertook, the contract is unenforceable and void.
- The Respondents also say that they should not be required to pay for the work completed under the contract because the Applicant is prohibited from being paid for the work completed because, at all relevant times, the Applicant was not licenced for the type of building activity which he undertook.
- The Respondents further say that they should be compensated for the fact that, because the Applicant was not appropriately licenced, they will not obtain the benefit of the statutory insurance scheme established under Part 5 of the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’).
- The Respondents further claim that there remains a dispute involving costs arising from ‘… a design alteration and the removal of a bank of drawers …’.
- The Respondents also seek their filing fee, bailiff’s costs, ASIC search fee and interest.
- The contract between the parties involves domestic building work within the meaning of that term in Schedule 1B of the QBCC Act.
- The contract is a level 1 regulated contract within the meaning of that term in Schedule 1B of the QBCC Act, being for a value exceeding $3,000, but less than $20,000.
- The evidence discloses that the contract entered by the parties appears to conform to the requirements prescribed in the QBCC Act for a level 1 regulated contract.
- In relation to the Respondents’ claim that the contract is void and unenforceable or, alternatively that the Applicant is not entitled to payment for the work completed, the Respondents rely upon s 42 of the QBCC Act, which says:
- (1)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—250 penalty units.
- (2)However, subsection (1) does not apply to a person to the extent that the person is exempt under schedule 1A.
- (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.
- (4)A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed—
- (a)is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
- (b)does not include allowance for any of the following—
- (i)the supply of the person’s own labour;
- (ii)the making of a profit by the person for carrying out the building work;
- (iii)costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and
- (c)is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
- (d)does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.
The right to payment
- The Applicant has completed the work specified in the contract with the Respondents to a satisfactory standard.
- The work completed by the Applicant for the Respondents was domestic building work.
- In order to undertake building work, including domestic building work, a person must be licenced by the QBCC for the type of work to be undertaken.
- The evidence discloses that, at all relevant times, the Applicant was not licenced to undertake the type of building work that he undertook to, and did, perform for the Respondents.
- Section 42(1) of the QBCC Act says that 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 the Act. Breaching this prohibition renders an offender liable to a civil penalty of up to 250 penalty units.
- Does the effect of this provision render a contract to perform building work in breach of the provision void and unenforceable, or merely voidable? And, if voidable, on whose election would it become void?
- The Respondents referred to a decision of the Queensland Court of Appeal, Sutton v Zullo Enterprises Pty Ltd  2 Qd R 196, to support their contention that the contract is void and unenforceable and that the Respondents are relieved from paying money under the contract.
- The decision in Sutton v Zullo Enterprises was made under the terms of the Queensland Building Services Act 1991 (Qld) (‘QBSA Act’), the predecessor of the QBCC Act. Section 42 of the QBSA Act had terms similar to ss 42(1) and 42(3) of the QBCC Act so that, insofar as the decision of the Court in that case is relevant here, it supports the proposition that the contract has no effect and cannot be enforced.
- Whether the contract is, however, void or voidable need not be decided here.
- The Court in Sutton v Zullo Enterprises held that, as a result of the terms of s 42 of the QBSA Act, the unlicenced builder had no entitlement to seek to be paid for the work he had completed.
- However, the QBSA Act did not have a term equivalent to the combined effect of ss 42(3) and 42(4) found in the QBCC Act, which apply in this case. The QBCC Act permits an unlicenced builder to be paid for the work completed subject to the strict rules contained in s 42(4).
- The Court of Appeal in the case of Cook's Construction P/L v SFS 007.298.633 P/L (formerly trading as Stork Food Systems Australasia P/L)  QCA 75 considered the terms of s 42 of the QBCC Act and decided that an unlicenced builder is entitled to remuneration within the strict terms of s 42(4) and, further, that the burden of proof justifying the claim falls on the builder.
- Keane JA made this plain when he said:
But it is also clear that s 42(4) permits an unlicensed builder to claim "reasonable remuneration for carrying out building work, but only if the amount claimed" satisfies the criteria in paragraphs (a) to (d). It is only the amount of the claim so quantified that the builder may recover despite s 42(3). Absent a good claim so quantified, the operation of s 42(3) is, for practical purposes, unqualified by s 42(4).
There can be no doubt that where the builder is making a claim to recover payment of reasonable remuneration which has not been paid by the other party, the builder bears the onus of proving the amount to which it is entitled in conformity with s 42(4). There is no indication in the text of s 42 that the onus of proof shifts to the other party (and becomes an onus of disproof) if progress payments have been made under the contract which s 42(1) and (3) have sterilised.
- Providing the Applicant has complied with the terms of s 42 of the QBCC Act he is entitled to payment by the Respondents.
- It is also noted that the Applicant appears to have supplied a satisfactory kitchen to the Respondents. He does not appear to be an ‘incompetent’ or ‘dishonest’ builder. Apart from the failure to be properly licenced, he appears to have followed proper procedure and delivered a satisfactory result.
- However, not being properly licenced is no small thing, and Parliament has enacted a legislative scheme intended to protect consumers. If the Applicant is entitled to any payment it should be no more than the minimum to which he is entitled, and the decision of this Tribunal must reflect the serious nature of failing to be properly licenced.
What is the builder entitled to be paid?
- The Applicant is entitled to be paid for his work on the following basis:
- (a)he has the burden of proving what is claimed; and
- (b)the amount claimed:
- is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
- does not include allowance for any of the following:
- the supply of the person’s own labour;
- the making of a profit by the person for carrying out the building work;
- costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and
- (iii)is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
- (iv)does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.
- The Applicant has claimed a total from the Respondent of $19,026.70. The Applicant has demonstrated in paragraph , above, that he incurred direct costs in meeting his obligations under the contract of $15,646.40. The difference between these amounts represents either profit or costs that have not been identified, recalling that the burden of proving the costs incurred by the builder rests in this case on the builder. Therefore, the Applicant is not entitled to any amount above $15,646.40.
- The Respondents have paid the Applicant $16,998.30 and are, therefore, entitled to compensation in the amount of this amount less $15,646.40, or $1,351.90.
- The Respondents have also claimed that, because the Applicant was not licenced, they will not have the benefit of the Home Warranty Scheme. The scheme of the QBCC Act makes it clear that customers are entitled to expect the benefit of the insurance provided under this scheme, and the failure of the Applicant to render this benefit to the Respondents makes him liable to pay compensation. The only practical form of compensation in this case would be by payment to the Respondents of the insurance premium had it been properly paid by the Applicant to the QBCC. At the relevant time this premium was $295.35.
- The Respondents’ assertion concerning a dispute involving the value of removing some drawers from the kitchen was not pursued by the Respondents at the hearing or in their submission dated 29 October 2018. It is not considered further.
- Both parties commenced their claims in the Minor Civil Dispute (‘MCD’) division of this Tribunal as minor civil debts. The Applicant’s claim is a minor civil debt, the Respondents’ is not. The Respondents’ claim is properly characterised in MCD as a consumer-trader dispute.
- The normal rule in this Tribunal is that parties bear their own costs. Where costs may be awarded they are at the discretion of the Tribunal, but costs orders must be considered judicially.
- Generally speaking the rule that costs follow the event will be a starting point. In this case neither party has secured what it sought, so neither appears entitled to the benefit of a costs order.
- In addition, the combined effect of ss 100 and 102(2) of the QCAT Act and r 83 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) means that, except in the case of minor civil debt claims, the only cost that may be awarded is the filing fee, in favour of an applicant against a respondent.
- Taking account of the following factors:
- (a)the intent of Parliament to discourage unlicenced builders engaging in building activities;
- (b)having decided that the Respondents’ claim is not a minor civil debt but a consumer-trader claim;
- (c)noting that the Respondents commenced their own separate action against the Applicant; and
- (d)that, as a result, the only cost that can be awarded in this matter in favour of the Respondents involves the filing fee.
The Tribunal determines that the Respondent is entitled to costs amounting to its filing fee of $326.80.
- In summary, the Respondents are entitled to be paid $1,974.05 by the Applicant, calculated as follows:
- (a)Reimbursement for amount: 1,351.90; and
- (b)An amount equal to the Home Warranty Scheme insurance premium of: $295.35; and
- (c)Filing Fee of: $326.80.
- The Tribunal makes the following decision:
- (a)Matthew Ganter trading as Brisbane Kitchen Design is to pay Louise Jane Bates and Duncan Gorrie $1,974.05 within 21 days.
Mentioned in paragraph 6 of Background to the Respondents’ Application filed 19 April 2018.
The Applicant is not a person exempt from holding an appropriate class of contractors licence under Schedule 1A.
 QCA 75, .
 QCA 75, . By ‘sterilised’ the learned judge refers to payments having been made bona fide by the customer, but may be considered as having been made otherwise than in reliance on the unenforceable contract.
Marshall v Marshall  1 Qd R 173.
Information obtained 14 November 2018 from
- Published Case Name:
Matthew Ganter t/as Brisbane Kitchen Design v Louise Jane Bates and Duncan Gorrie; Louise Jane Bates and Duncan Gorrie v Matthew Ganter t/as Brisbane Kitchen Designs
- Shortened Case Name:
Ganter v Bates; Bates v Ganter
 QCAT 446
10 Dec 2018